Tatry Mountain Resorts A.S.

Tatry mountain resorts, a.s. 315700YHD1JR6VB1BA90 2021-11-01 2022-10-31 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 315700YHD1JR6VB1BA90 2022-10-31 315700YHD1JR6VB1BA90 2021-10-31 315700YHD1JR6VB1BA90 2020-10-31 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:IssuedCapitalMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:SharePremiumMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 tmr:LegalReserveFundMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:RevaluationSurplusMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:ReserveOfCashFlowHedgesMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:RetainedEarningsMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:EquityAttributableToOwnersOfParentMember 315700YHD1JR6VB1BA90 2020-11-01 2021-10-31 ifrs-full:NoncontrollingInterestsMember 315700YHD1JR6VB1BA90 2021-11-01 2022-10-31 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315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:IssuedCapitalMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:SharePremiumMember 315700YHD1JR6VB1BA90 2022-10-31 tmr:LegalReserveFundMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:RevaluationSurplusMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:ReserveOfCashFlowHedgesMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:RetainedEarningsMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:EquityAttributableToOwnersOfParentMember 315700YHD1JR6VB1BA90 2022-10-31 ifrs-full:NoncontrollingInterestsMember iso4217:EUR xbrli:shares iso4217:EUR xbrli:shares Annual Report 2021/22 Tatry mountain resorts, a. s. and its Subsidiaries as of October 31, 2022 Content Commentary from Chairman of the Board of Directors 4 Operations Review 6 Consolidated Financial Highlights 8 Our History 10 Company Proﬁle 12 Strategy 22 Key Performance Indicators (KPIs) 28 Market Analysis and Trends 30 Risk Factors and Risk Management 36 Financial Performance Review for the Year 44 Key Results 46 Financial performance 47 Results by Segments 47 Key Performance Indicators (KPIs) 48 Financial Operating Results 50 Group’s Position at the End of the Year 52 Financial Position 54 Outlook 55 Other ﬁnancial information 56 Corporate Social Responsibility 58 Environment and Community 60 Human Resources 63 Projects 63 Corporate Governance 64 Corporate Governance Principles 66 Board of Directors 66 Supervisory Board 67 General Meeting 71 Supervisory Board Report 72 The Company‘s Corporate Governance Code 73 Other Supplementary Data 76 Contracts with External Advisors and Related Parties 78 Proposal on Distribution of Proﬁt 79 Shares 80 Consolidated Financial Statements 84 Separate Financial Statements 178 Remuneration Report 266 Statement by the Board of Directors 272 Commentary from Chairman of the Board of Directors Igor Rattaj Dear shareholders, We have behind us unprecedented years signiﬁcantly marked by the COVID-19 coronavirus pandemic and the outbreak of a military conﬂict in neighboring Ukraine, which negatively affected world markets and caused global inﬂation and economic instability. Despite these negative external factors, consolidated revenues achieved amount of EUR 133.6 mil. and operating proﬁt before depreciation – EBITDA, amount of EUR 33.7 mil. However, due to higher operating and interest expenses, depreciation and impairment of non-current assets, we reported a net consolidated loss of EUR 11.9 mil. Although the beginning of the season was marked by anti-pandemic measures that limited full- scale operation in Slovakian and Austrian resorts. Resorts in Poland and the Czech Republic recorded extraordinary successes. The Polish resort Szczyrk experienced a successful season, lasting 114 days, the newly built “Nová Skalka” ski slope, which also offers visitors night skiing, signiﬁcantly contributed to the growth of revenues of the Czech resort - Ještěd. The Polish amusement park Legendia in Katowice experienced a successful winter and summer season, in which we achieved a record number of visitors - over 500,000 visitors during the entire ﬁnancial year. Thanks to the acquisition of Water park Bešeňová, which TMR has owned since April 2022, the total attendance in the segment of leisure parks approached 1.4 mil. visitors, which represents a 75% increase compared to 2019. We have traditionally organized our favorite events throughout the year. The most visited Tatra attraction was once again the Tatra Ice Dome at Hrebienok, which this year was constructed in the style of the Pilgrimage of St. James. A novelty in the Jasná ski resort was the return of the shepherd tradition and the traditional mountain sheep – wallachian sheep, which visitors could experience in the Priehyba location on the northern side of Chopok. In addition to various events, we have prepared number of novelties and advantageous offers for our clients, which we have offered to guests through our portal and the loyalty program GOPASS. We invested EUR 23.6 mil. last year. The most important investment was the construction of the long-awaited new cableway connecting the Biela Púť and Priehyba. Another strategically important investment and development activity in the Jasná resort was the expansion and upgrade of snowmaking system. In the High Tatras, we bought gastro business the Humno in Tatranská Lomnica, which we had rented for a long time. Investments also went to our foreign resorts in Poland, the Czech Republic and Austria. The goal of the next few years is to achieve a balanced performance at least at the level of results before the outbreak of the pandemic. Furthermore, we want to grow organically, beneﬁt from the completed investments and of course, improve the quality of services and the offer in our resorts. Igor Rattaj Chairman of the Board of Directors OPERATIONS REVIEW 8 in €'000 unless speciﬁed otherwise 2021/22 2020/21 2019/20 2018/19 2017/18 Revenues 133 621 64 697 111 197 127 592 108 249 EBITDA 33 696 7 000 35 137 35 496 34 166 EBIT 11 630 -23 831 7 387 12 723 19 245 Net Income -11 947 -45 876 -20 513 -2 288 3 095 CAPEX 23 616 10 555 14 452 45 254 53 887 No. of employees 1 359 1 193 1 332 1 456 1 402 Earnings per share (EUR) -1,694 -6,816 -3,013 -0,341 0,473 Hotel Occupancy (%) 54,5 37,4 49,4 66,3 62,7 Avg. Daily Rate per Room (EUR) 107,1 84,7 99,7 88,0 80,1 Visit Rate Mountain Resorts ('000) 2 660 1 163 2 425 2 840 2 706 Visit Rate Leisure Parks ('000) 1 416 483 655 808 907 EBITDA (%) 25,2 10,8 31,6 27,8 31,6 EBIT (%) 8,7 -36,8 6,6 10,0 17,8 Equity 33 007 45 123 91 886 110 173 113 789 Debt/Equity (%) 1 178,6 816,5 366,8 315,3 311,3 Debt/Capital (%) 92,2 89,1 78,6 75,9 75,7 Debt/EBITDA 11,5 52,6 9,6 9,8 10,4 Total Assets 574 667 556 761 561 927 533 858 521 684 Consolidated Financial Highlights Key Operating Results Revenues EBITDA EBITDA Margin thousands Revenues vs. CAPEX Revenues Capex thousands 0% 10% 20% 30% 40% 50% 60% 70% 80% 0 € 20 000 € 40 000 € 60 000 € 80 000 € 100 000 € 120 000 € 140 000 € 160 000 € 2017/18 2018/19 2019/20 2020/21 2021/22 0 € 20 000 € 40 000 € 60 000 € 80 000 € 100 000 € 120 000 € 140 000 € 160 000 € 2017/18 2018/19 2019/20 2020/21 2021/22 9 * as of 31/10/2022 TMR IN NUMBERS 12 resorts Group Revenues 133.6 mil. € Group EBITDA 33.7 mil. € Group Net Loss -11.9 mil. € 4.1 mil. guests 1.4 mil. guests 7 mountain resorts 2.7 mil. skier days FTE 1 359 3 leisure parks 2 golf resorts CAPEX 23.616 mil. € +128,7% +193,1% +147,6% +106.5% +381.4% 19 own / managed hotels 107.10 € ADR 54.5 % occupancy +26.5% +17.1 p.p. 10 Our History 1992 Establishment of SKI Jasná, a.s., the legal predecessor of TMR, by the National Property Fund of the Slovak Republic in March 1992 2003 Change of name to Jasná Nízke Tatry, a. s. in March 2003 2009 In June 2009 Shareholders of Jasná Nízke Tatry, a.s. agreed on raising of the capital to EUR 250 million and on renaming the Company Tatry mountain resorts, a.s. Consequently, a new equity issue was listed on the Bratislava Stock Exchange. In October 2009 TMR purchased Tatras Cableways (TLD), which dissolved without liquidation and merged with TMR on May 5, 2010. At the same time TMR, as its successor, continues to conduct TLD’s business activity, especially operation of mountain resorts in the High Tatras - Tatranská Lomnica and Starý Smokovec. In December 2009 TMR acquired 100% of Grandhotel Praha, a.s. (Grandhotel Praha) and 50% of Interhouse Tatry, s.r.o., which was the owner of Grandhotel Starý Smokovec at that time. 2011 In April 2011 TMR acquired Tatralandia Holiday Resort. This trademark comprises Aquapark Tatralandia, a lodging facility Holiday Village Tatralandia, an entertainment park Fun Park, and Tropical Paradise. The acquisition of Tatralandia was an important step for TMR in pursuing the strategy to create an all-year tourist destination. 2012 Dual listing of TMR shares on exchanges in Warsaw and Prague took place in October 2012 In November 2012 TMR through an associated company Melida, a.s. signed a lease contract with the Czech union of physical education for operating SKIAREÁL Špindlerův Mlýn. In November 2012 TMR founded Korona Ziemi with a Polish town of Gmin Zawoja, with the purpose of creating an entertainment- educational park. 2010 I n October 2010 TMR purchased all shares of Tatry mountain resorts services and thus became its 100% owner. TMR initiated cooperation with the resort of Štrbské Pleso in December 2010. 11 2013 On February 16, 2013 TMR acquired the other 50% in Interhouse, s.r.o. (Grandhotel Starý Smokovec). As of May 1, 2013 subsidiaries of TMR - Tatry mountain resorts services, a.s., Grandhotel Praha, a.s. and Interhouse s.r.o. - merged and seized without liquidation. Share capital of TMR was decreased from EUR 221.3 million to EUR 47.0 million on October 22, 2013 based on the approval by the Extraordinary General Meeting held on August 22, 2013. 2017 On November 30, 2017 TMR made an agreement with the Czech town of Liberec to rent the sports center Ještěd for 10 years with the option of another 10 years. TMR ofﬁcially took over the sports and ski resort Ještěd in December 2017, when it also launched its ﬁrst winter season there. 2015 In April 2015 TMR agreed to acquire a 75% share in a Polish entity that owns and since May 2015 is operating Silesian Amusement Park (Śląskie Wesołe Miasteczko). 2014 In March 2014 TMR acquired a 97% share in a Polish ski resort Szczyrkowski Ośrodek Narciarski S.A. (SON). In June 2019 TMR acquired a 100% share in an Austrian company that owns and operates the glacier ski resort Mölltaler Gletscher and its sister resort Ankogel - Mallnitz in Austria. 2018 In November 2018 TMR enters the golf segment and in the Czech Republic enters a contract to lease and operate Golf & Ski Resort Ostravice with a 20-year term. 2019 In January 2019 The Group enters a lease contract of Golf Resort Kaskáda near the Czech town of Brno for a 20-year term. TMR controls the management of the hotel with a conference center and a restaurant. 2021 In May 2021, the Group expanded its portfolio to include Muttereralm Innsbruck resort in the Tyrolean Alps. 2022 In April 2022, the Group expanded its portfolio to include a new water park Bešeňová. 12 GRUND GmbH 10% 10% 10% KD 100% Szczyrkowski ošrodek narciarski S.A. Tatry mountain resorts CR, a.s. Muttereralm Bergbahnen Errichtungs GmBH Mölltaler Gletscherbah- nen GmbH & CO KG GOPASS SE TMR Ještěd a.s. Korona Ziemi Sp. z o.o. TMR Finance CR, a.s. Mölltaler Gletscherbah- nen GmbH GOPASS, a.s. Melida, a.s. Tatry mountain resorts, a.s. EUROCOM Investment, s.r.o. Ostravice Hotel a.s. Hotel Alpina s.r.o. TMR Parks, a.s. Tatry mountain resorts AT GmbH 100% Ślaskie Wesole Miasteczko Sp. z o. o. 100% 50% WORLD EXCO, s.r.o. 100% 100% 97,6% 100% 90% 90% 100 % 100% 73,6% 100% 90% 100% International TMR services s.r.o. 100 % 25% 100% 100% 100%KL BASIC OVERVIEW OF TMR Tatry mountain resorts, a.s. with its registered seat in Liptovský Mikuláš, SK together with its subsidiaries (TMR, the Group) is the biggest provider of tourism in Slovakia with emerging activities in neighboring countries. TMR’s revenues come from operation of mountain resorts, an aquapark, and an amusement park, golf resorts, from provision of hotel and dining services, from sports stores and ancillary services in the resorts, and from real estate projects. In terms of revenue breakdown, the largest share comes from sale of ski passes and cableway tickets in the mountain resorts (39.2%) and from accommodation services in the hotels that TMR owns and/or runs (28.4%). Additional revenues come from ticket sale in the leisure parks (12.4%), and from ancillary services provided by the dining facilities on the slopes, in the golf resorts, and in the leisure parks (14.7%) and sports and souvenir stores, rentals, and ski schools (4%). In addition to the mentioned business activities TMR conducts its business activities in real estate, revenues of which are generated mainly from lease of accommodation facilities and sale of apartments (0.8%). A part of revenues also comes from the operation of leased golf resorts (0.6%). TMR runs all its operations in regions of the High and Low Tatras in Slovakia, in the Polish Beskids and Silesia, and in the Czech Krkonoše Mountains, Beskids, and Moravia, and in the Austrian Alps. Since December 2017 TMR rents and operates a Czech ski center Ještěd. As of the end of FY 2020/21 TMR also owns a 25% share in Melida a.s., which since the winter 2012/13 leases and operates the resort Špindlerův Mlýn in the Czech Republic. TMR also rents and operates Czech golf resorts – Golf & Ski Resort Ostravice and Golf Resort Kaskáda. In Poland TMR owns 97.6% in the mountain resort Szczyrk Mountain Resort (Szczyrk); and a 100% share in Legendia - Silesian Amusement Park (Śląskie Wesołe Miasteczko). Since June 2019 the Group also owns the Austrian Alpine resorts of Mölltaler Gletscher and Ankogel – Mallnitz. On May 1, 2021, theGroup expanded its portfolio for another Austrian resort, Muttereralm Innsbruck, in which it owns a 100% stake through Muttereralm Bergbahnen Errichtungs GmbH. As part of the acquisition, the Group expanded its portfolio from April 1, 2022, with the new water park Bešeňová, with which TMR had a long-term business and marketing cooperation. On november 1, 2021, TMR sold part of the GOPASS and on July 1, the Group acquired a 100% stake in the European company GOPASS SE, which will serve for the purpose of expanding on the European market. The Group founded a new company International TMR Services s.r.o., which will provide consulting services within TMR. BUSINESS SEGMENTS OF TMR TMR’s business activities are concentrated into in seven key segments – Mountains Resorts; Leisure Parks; Golf; Dining; Sports Services and Stores; Hotels; and Real Estate. Company Profile Revenue Breakdown Mountain Resorts Leisure Parks Golf Dining Sports Services & Stores Hotels Real Estate 39,2% 12,4% 0,6% 14,7% 4,0% 28,4% 0,8% The TMR Group Brno Pardubice BUDAPEST WARSZAWA KRAKOW H UA PL CZ A DE Brezno Katowice Poprad Košice Praha Bratislava WIEN Flattach Mallnitz Ostravice Liptovský Mikuláš Innsbruck Mountain Resort VYSOKÉ TATRY (The High Tatras) All-season resort offering complex services for all the types of clients in the summer and winter season Three ski areas– Tatranská Lomnica, Štrbské Pleso and Starý Smokovec Situated in the oldest national park in Slovak republic TANAP 5 months of snow guaranteed 24 km of ski trails, 17 km of snowmaking 20 cableways and lifts Max. transportation capacity 21,385 persons/hour Hotels - Grandhotel Praha Tatranská Lomnica, Grandhotel Starý Smokovec, Hotel FIS Štrbské Pleso, A Night at Lomnický Peak, Horec suites Mountain Resort JASNÁ NÍZKE TATRY (Jasná Low Tatras) The biggest winter sports resort in Central Europe Ski areas – Chopok North and Chopok South Host of World Cup Jasná 50 km of ski trails, 36.75 km of snowmaking 27 cableways and lifts Max. transportation capacity 31,784 persons/hour Hotels – Hotel Tri Studničky, Hotel Grand Jasná, Chalets Jasná de Luxe and Hotel Srdiečko, A night on Mt. Chopok, Hotel Pošta, Hotel SKI* Real Estate – lease out of hotels Liptov, Kosodrevina Lodge, lodging facility Otupné, sale of Chalets Jasná Collection Mountain Resort SZCZYRK MOUNTAIN RESORT (Szczyrk) 40 km of ski trails, 22 km with snowmaking, 5km of lit-up trails 12 cableways and lifts Max. transportation capacity: 22,000 persons/ hour Hotels – Hotel Gronie Ski&Bike Location – Silesia Voivodship, the Beskids, Poland Mountain Resort MÖLLTALER GLETSCHER An Alpine resort located on a glacier with 17.4 km of ski trails and almost 7 km of freeride terrain 9 cableways and ski lifts Max. transportation capacity of 15,610 persons/hour 90% of ski trails covered with snow made by 45 snow guns Glacier Snow Park on the Schareck trail – with terrain waves, banked curves and jumps Location – Carinthia, Austria Mountain Resort ANKOGEL MALLNITZ (Ankogel) A mountain resort with 12.8 km of ski trails and 5 km of freeride terrain 5 cableways and ski lifts Max. transportation capacity of 4,880 persons/hour 50% of ski trails covered with snow made by 40 snow guns A big complex for skiing beginners at the lower cableway station Location – Hohe Tauern, Austria Mountain Resort MUTTERERALM (Innsbruck) A mountain resort with 15 km of ski trails and 8 km of toboggan trails 5 cableways and ski lifts Max. transportation capacity of 2,100 persons/hour A popular complex for skiing families with smaller kids Location – Innsbruck, Austria Mountain Resort SKIAREAL JEŠTED A ski resort in a close proximity of the city of Liberec, within a short driving distance from Prague More than 10 km of slopes 10 ski lifts and cableways Aquapark TATRALANDIA The biggest aquapark with accommodation in Central Europe Unique indoor complex Tropical Paradise also with seawater and authentic corals A Hawaii complex with four artiﬁcial surf wave lanes 14 swimming pools (10 year-around) with thermal, sea and pure water 21 steam, water, jet spas, saunas and procedures, a wellness center 28 toboggans and waterslides (6 year-round) and 300 different attractions Liptov Arena – a multipurpose cultural- entertainment sports arena in Tatralandia Housing – Holiday Village Tatralandia 700 beds in 155 stylish bungalows and apartments in 11 theme villages Congress center, 5D cinema, Hurricane Factory wind tunnel, ZOOKONTAKT Tatralandia Real Estate – sale of apartments in Holiday Village Tatralandia Location – Liptov Region, Slovakia Water park Bešeňová The extensive complex has a rich history thanks to the rich resources of geothermal springs 23 pools and whirlpools (13 during winter) with geothermal and clear water Harmony wellness center 30-meter-high toboggan tower with 6 waterslides that are more than 1km long Hotels – Hotel Bešeňová , Galéria Thermal Bešeňová , Hotel Akvamarín Bešeňová Location – Liptov Region, SWK LEGENDIA - SILESIAN AMUSEMENT PARK (Legendia, ŚLĄSKIE WESOŁE MIASTECZKO) The largest and oldest leisure park in Poland The 40-meter high roller coaster - Lech Coaster – with 4 inversion curves Area: 26 ha 50 attractions Location – Park Śląski (Silesian Park) near Chorzów, Poland GOLF & SKI RESORT OSTRAVICE An 18-hole par 72 master golf course designed by Chris Johnson A lit cross-country skiing resort Green Inn Hotel – 36 rooms A restaurant, wellness center, congress center Location – the Beskids, CZ GOLF RESORT KASKÁDA A 27-hole master golf course designed by a British architect, Jonathan Gaunt A 6-hole academy, a 300 m lit driving range A 4 hotel - 50 rooms, 100 beds A restaurant with a deck and a view of the golf course, a congress center, a wellness center Location – Moravia, Czechia 14 MOUNTAIN RESORTS The Mountain Resorts segment includes the operation of six mountain resorts in Slovakia: Jasná Nízke Tatry – Chopok North and South, Vysoké Tatry – Tatranská Lomnica, Starý Smokovec and Štrbské Pleso, the Polish Szczyrk Mountain Resort, the Austrian Alpine resorts of Muttereralm, Mölltaler Gletscher and Ankogel Mallnitz, and the leased Ještěd Ski Resort in Czechia. The resorts currently offer over 150 km of trails with transport capacity approximately 105 thousand persons per hour. Since the winter season 2012/13 TMR also co-manages the ski resort Špindlerův Mlýn in the Czech Republic, which has been leased by Melida, a.s., in which currently TMR owns 25%. VYSOKÉ TATRY (THE HIGH TATRAS) The High Tatras as the greatest mountain range in Slovakia are also the oldest national park in our country (Tatra National Park – TANAP). Therefore, all the tourist activities are performed considering the nature conservation and rare biotopes. In the resort of the High Tatras the Company owns and operates cableways in Tatranská Lomnica and Starý Smokovec and Štrbské Pleso. Tatranská Lomnica The longest trail in Slovakia also with the highest altitude difference is located in Tatranská Lomnica. This ski trail has the highest altitude difference with possibility to ski down from 2,196 m a.s.l. on a 5,5 km long trail from Lomnické sedlo to Tatranská Lomnica. Ski trails in Tatranská Lomnica are attractive for both experts and intermediate skiers, and beginners can use blue tracks in the bottom part of the resort. Altogether there is one difﬁcult, ﬁve intermediate, and six beginner trails available for skiers. In September 2015 the ski portal Skiresort.info ranked the ski resort Tatranská Lomnica among the world’s top 14 resorts with up to 20 km of trails; and in the category “Beginners” it was ranked among the world’s top resorts with infrastructure and services suitable for ski beginners. The resort in Tatranská Lomnica offers up to 45.9 hectare of ski trails with total length of 12 km, while almost 32 ha of ski trails have technical snowmaking coverage thanks to 250 snow guns. Tatranská Lomnica together with Starý Smokovec also offers fun and entertainment after skiing. Every day there is an interesting après ski program available for skiers. Parking has been also improved to the satisfaction of skiers with a new terraced ski in – ski out parking lot for 350 cars and 10 buses. In the summer Tatranská Lomnica turns into a sought-after tourist destination for relaxation and fun for the whole family. Besides cableway trips up to the top of Lomnicky peak, attractions such as cart rides from Štart, there is the original children’s project – Tatra’s Wilderness. It presents educational - entertainment trails in Tatranská Lomnica, Lomnické sedlo and around Skalnaté pleso, accompanied by games and a mini ecopark Marmot Land at Skalnaté pleso for children under 12. The children’s indoor park Kamzíkovo is open all year round at Skalnaté pleso. Starý Smokovec Starý Smokovec resort is unlike Tatranská Lomnica Company Proﬁle 15 more about alternative leisure activities, such as snowtubing, sledging on a 2.5 km long sledging track, and funtools – skifox, snowbike, snowcoot. In the winter season, every year Hrebienok is home to the Tatra Ice Dome – an ice sculpture hidden in a dome, which is carved out in a different form every year. In the summer season there are attractions like summer tubing. Hrebienok, the ﬁnish station of a comfortable panorama funicular from Starý Smokovec is the favorite start point for hikes throughout the year. In winter months there are ski trails available for skiers with name Jakubkova lúka I and II. Štrbské Pleso The Štrbské Pleso resort is sought after by fans of quality wide red trails with best views. The best experience at this picturesque location comes on a cableway ride to Solisko at 1,840 m when one can view beautiful peaks of the High Tatras and the whole mountain ridge of the Low Tatras from Kráľova hoľa to Mt. Chopok. In the resort of Štrbské Pleso we offer our visitors up to 26 kilometers of cross-country tracks and more than 9 kilometers of trails with beginner or medium difﬁculty. There is also a wide range of ski and snowboard rentals, ski service, and ski school for kids and beginners. In the summer for instance you can take a cableway ride to Solisko, where you get panoramic views of the valley, of the romantic Štrbské pleso, Kriváň, or the Low Tatras. Passionate bikers can rent a mountain bike at Tatry Motion – a sports store underneath ski jump boards – with an option of its return in Starý Smokovec or Tatranská Lomnica. Via mountain trails you can easily get to Popradské pleso or you can take a ride to Sliezsky dom, Smokovec, Hrebienok or to Poprad via the ‘Freedom Route’. Boating on the lake has a more than 130-year old tradition. JASNÁ NÍZKE TATRY (JASNÁ LOW TATRAS) The Jasná Nízke Tatry (Jasná Low Tatras) resort is located in the mountain range of the Low Tatras, which stretches across the heart of Slovakia. The second highest peak and also one of the most visited places in the Low Tatras is Mt. Chopok, the north and south side of which is interconnected with cableways. Jasná Nízke Tatry is currently the biggest ski resort in Slovakia. Skiers have an option to try all types of trails from blue to black, suitable for beginners, families with children, as well as for advanced skiers. The modern snowmaking system with 617 snow points covers almost 37 km of trails and provides snow guarantee for at least ﬁve months a year. Fans of wild rides can enjoy 12 free ride zones, a great snow park, and Fun Zone. You get to the top of Mt. Chopok by ultra-modern cableways – the 24-person Funitel or 15-person gondolas. At night you can enjoy night skiing on a 990- meters long lit up trail in Jasná. There are 2830 cableways and lifts at Mt. Chopok with the transportation capacity of more than 32,000 persons per hour. The winter season typically lasts from the beginning of December to the end of April. In the resort of Jasná Nízke Tatry TMR also operates several dining facilities. Happy End Disco & Restaurant is well known by its great disco parties and live concerts at night. Furthermore, one can try Bernardino burger restaurant beneath Mt. Chopok, the stylish Restaurant Von Roll Luková, Snack Bar Rovná Hoľa, a panoramic A la Carte restaurant Rotunda at 2,004 m above sea level with a large sundeck and multiple après-ski bars at the start cableway stations. The highest located ski in-ski out Hotel Rotunda on the top of Mt. Chopok also serves as a boarding and disembarking station of cable cars that connect the southern and northern slope of the second highest peak of the Low Tatras. In addition to the dining facilities we also offer our visitors multiple sport services – individual or group lessons with licensed instructors at the ski school and kindergarten Maxiland. The stores offering sports wear and accessories and sports equipment rentals are run under the Tatry Motion brand. The modern ski service offers ski and snowboard service with a technologically perfect machine on the spot. Thanks to the all-year cableway operation the Jasná resort offers also in the summer a wide spectrum of sports activities – rides on mountain carts, scooters, Nordic walking, a bungee trampoline, or lake boat rides. On the north and south side of Mt. Chopok there is a family outdoor game prepared with new tasks and attractions of the Dragon Demian at Drakopark Chopok. SZCZYRK MOUNTAIN RESORT (SZCZYRK) Szczyrk Mountain Resort is located in the Polish Beskid Mountains near the town of Szczyrk. The resort offers skiing on 65 hectares of perfectly laid-out and long trails. The longest trail is 5.3 km long. Thanks to cooperation with neighboring ski areas clients can use a joint ski pass on 40 km of ski trails. The resort consists of a new10-person gondola and three 6-person chair lifts. The slopes and trails have been widened and proﬁled, with modern snowmaking system and water tank and a new multifunctional building – SZCZYRK-GONDOLA – has been added, Company Proﬁle 16 Company Proﬁle providing full service for visitors. At the beginning of 2020, the center was at an altitude of 1000 m above sea level. put into operation a new restaurant Kuﬂonka with a capacity of 450 people. MÖLLTALER GLETSCHER The Mölltaler Gletscher ski resort located in the only glacial area in Carinthia offers ski trails of all difﬁculty levels, including the most popular almost 7 km long FIS downhill course where professional skiers love to train. The season begins in mid June and ends in mid May of the following year. The snow cover reaches as high as 450 cm in high season. There are trails for beginners but also terrain for experienced freeriders. Resort attractions include the Mölltaler Gletscher Express funicular, which transports 220 passengers to the altitude of 2,234 m within 8 minutes and sur- mounts a vertical drop of 1,012 m on a more than 4.7 km long route. Non-skiers can enjoy the panoramic Ice Palace restaurant at the altitude of 2,800 m and feast their eyes on beautiful scenery of 28 peaks. The resort features restaurants, car parks, ski rentals, a snow park and much more. The interchange station (upper funicular station) will offer a ski service, a ski depot, a big complex for skiing beginners in the win- ter. Ski lessons for kids from the age of 4 years inclu- ding lunch care will be at disposal in the kid´s club. ANKOGEL MALLNITZ The Ankogel Mallnitz ski resort (20 km from the Mölltaler Gletscher resort) is located in the Hohe Tauern National Park between Carinthia and Salzburg and is ideal for enjoying some extra skiing adventures in the region on perfect terrain above the tree line. Ankogel Mallnitz offers medium-difﬁcult ski trails. A kid´s club for small skiers from the age of 3 can be found at the lower cableway station. The club has its own ski area with a magic carpet (conveyor belt) and provides kids with lunch, and there is a ﬁnal race after lessons. Clients can use a combined ski pass in both resorts – Ankogel and Mölltaler Gletscher. MUTTERERALM (INNSBRUCK) Muttereralm in the Tyrolean Alps is the latest acqui- sition in TMR‘s portfolio. The resort’s offer includes hiking, cycling and mountain biking trails during summer and skiing or sledding in winter. Modern infrastructure and adventure restaurants througho- ut the ski area make Muttereralm a popular destina- tion for the whole family. Snow is guaranteed by the snowmaking system, which snows all 15 km of slopes. SKIAREAL JEŠTĚD (JEŠTĚD) The Ještěd mountain resort has a long history of sports and has been traditionally an urban resort with a unique client target area. Its all-year operation is even more popular for its easy access from the northern Czech region. The sole resort has 10 km of ski trails interconnected with the new trail of Nová Skalka, which is the key project for the future of the resort. In the summer season, a popular attraction was the bike park as well as the summer operation of the Skalka cable car for hiking as well as cyclists. TMR has been renting the resort and operating it since 17 December 22, 2017. TMR signed a lease agreement of Ještěd for 10 years with an option of another 10 years. LEISURE PARKS AQUAPARK TATRALANDIA Aquapark Tatralandia with lodging facility Holiday Village Tatralandia is one of the largest all-year aquapark in Central Europe. It offers its customers 14 pools and 28 waterslides, out of which ten are all-year and four are summer ones, as well as Celtic sauna world and Wellness Paradise. Fun Park Tatralandia is also located within the aquapark. The year-round indoor shell-shaped facility Tropical Paradise with a sea water pool, a unique roof deck allows sunbathing and provides a snorkeling pool with authentic coral reefs and marine life. The indoor simulator, Surf Waves Tatralandia, utilizes the technology of an artiﬁcial river creating waves like in ocean. The unique Hawaii complex includes four lanes of 68 square meters. This attraction guided by experienced instructors is suitable for age groups 6 and over. In 2017 Tatrapolis – a park with metal miniatures of world-famous structures, was added in Tatralandia and it’s also possible to get to know the life of animals from a close distance in ZOOKONTAKT Tatralandia. WATER PARK BEŠEŇOVÁ Water park Bešeňová is a water park with year-round operation. The thermal swimming pool is built based on hot springs of healing waters that spring from a depth of 1,987 meters. Geothermal water has a beneﬁcial effect on the respiratory and locomotor systems. There are 23 pools and hot tubs with geothermal and clear water (13 during the winter) in the area, which makes the water park the 1st place in Slovakia. It offers visitors 13 toboggans, slides, and a wave pool in the entertainment tent. One of the biggest jewels is the unique wellness & spa. Holistically focused wellness with an emphasis on body, soul and mind care is a source of new energy for everyone. The new wellness & spa offers a connection of 4 elements of life and Liptov nature through birch trees, the Bešeňová cave with endless waterfalls and a magniﬁcent Sauna dome and a new quiet zone. LEGENDIA – SILESIAN AMUSEMENT PARK (LEGENDIA, ŚLĄSKIE WESOŁE MIASTECZKO) Legendia near the Polish town of Chorzów is the largest and oldest theme park in Poland. It was launched in 1959. It spreads on the area of 26 ha. It is located in the upper Silesian industrial district with its unique ‘green oasis’ of Silesian Park (Park Śląski). The guests will ﬁnd over 40 popular attractions, such as the Ferris wheel (Legendia Flower), large aircrafts (Dream Flight Airlines) and Tea Cups, as well as new rides, including Diamond River - a water slide from the height of 8 and 12 meters, or Lech Coaster - awarded the Best Coaster 2017 in the prestigious industry competition for the best European rollercoaster 2017. The hit of the 2018 season is Bazyliszek – the only Company Proﬁle 18 Interactive Dark Ride family attraction in Poland and at the same time one of the most modern in the world. TMR owns a 100% share of the park and has been operating it since May 2015. GOLF The golf segment is TMR’s newest segment, in line with our strategy to expand our Group’s business operations. GOLF & SKI RESORT OSTRAVICE Golf & Ski Resort Ostravice launched its operations in 2008. In Golf Digest’s survey in 2009, 2010, and 2011 the resort was awarded The Best Czech Golf Course. Along with the golf course, a lit cross-country skiing resort was created for professional and recreational cross-country skiers. The 18-hole golf course is located between two highest peaks of the Beskid Mountains – Lysá Mountain and Smrk at the foot of Mt. Žár in the village of Ostravice at the altitude of 400 meters a. s. l. GREEN INN Hotel located at the heart of the resort features 36 spacious rooms with high standard amenities, a restaurant with high-quality regional cuisine, wellness services and variable conference rooms. TMR has been leasing and operating the resort since November 2018 and the lease and management contract has been signed for 20 years GOLF RESORT KASKÁDA The luxury resort, situated 9 km outside the city of Brno, provides a 27-hole master golf course, a 6-hole academy, and a 300-meter lit driving range with a covered tee. The full-service resort is complemented by a 4* hotel with 50 rooms and apartments and 100 beds, a restaurant with a deck and a view of the golf course, a congress center, and a wellness center. TMR has been managing the resort since January 2019, whilst it rents the hotel and the restaurant. The lease contract has been signed for 20 years. DINING The dining facilities include tens of restaurants, bars, après ski bars, and fast-food joints on and off the slopes of the mountain resorts, in the leisure parks, and in the golf resorts of TMR’s portfolio. SPORTS SERVICES AND STORES Sport Services and Stores under the Tatry Motion, Szczyrk Motion, and Ještěd Motion brands include specialized stores with top brand ski and snowboard goods, ski schools, and sports equipment rentals. Tatry Motion, Szczyrk Motion and Ještěd Motion stores are located at TMR the resorts’ base levels. In the leisure parks stores sell souvenirs and specialized summer and sports merchandise. HOTELS TMR in its hotel segment currently owns or rents and operates a portfolio of renowned hotels and lodging facilities in the High and Low Tatras and in the leased golf resorts, in categories ranging up to four stars. All hotels operated by TMR offer together more than 2,800 beds. The hotels can please a wide spectrum Company Proﬁle 19 of clients from individuals and families to corporate clientele. Hotel facilities offer a suitable place for conferences and business meeting effectively covering the off-peak season. THE HIGH TATRAS Grandhotel Praha, Tatranská Lomnica 123 rooms, 239 beds It is situated in the center of Tatranská Lomnica, at the foot of Lomnický štít, in the heart of the High Tatras. Its history dates back more than 110 years since the grand opening in 1905. The wellness center Grand Mountain Spa combines local spa tradition with healing effects of the Tatra’s nature. During FY 2016/17 the hotel’s rooms underwent a renovation in the ‘Classic’ style. Grandhotel, Starý Smokovec 84 rooms, 161 beds From the point of view of history, location, or architecture this Grandhotel is justly considered one of the most prestigious hotels not only in the High Tatras, but also in Slovakia. Its unique vintage ambiance is attractive for its traditional Austrian- Hungarian cuisine and views from its spacious Art nouveau rooms. Hotel FIS, Štrbské Pleso 78 rooms, 157 beds Mountain ski in - ski out Hotel FIS is located right below the FIS slope, in the center of a sport area at Štrbské pleso. The location is its main competitive advantage. The ﬁrst truly dog-friendly hotel in Slovakia is in the elevation of 1,346 m and offers newly renovated rooms. The hotel with its own sports arena and a pro ﬁtness center also offers a natural wellness & spa designed in a mountain-meadow style. Horec suites, Tatranská Lomnica 33 rooms, 66 beds Apartment house Horec is situated right in the center of Tatranská Lomnica and is built in an atypical style, which looks luxurious in the exterior and interior and at the same time ﬁts perfectly into the Tatra environment. Thanks to the combination of modern interiors with quality traditional materials, the Horec apartments have a unique mountain atmosphere and at the same time offer guests maximum comfort. A night on Mt. Lomnický štít 2 rooms, 4 beds Just to hear is not enough. A night on top of Mt Lomnický štít is something that you need to experience. Discover the most beautiful place in Slovakia where the summits of the Tatras are touching the sky. Enjoy countless breathtaking views of every piece of the Slovak high mountains, captivating silence, and a magical atmosphere in the highest located hotel room in Central Europe. THE LOW TATRAS Hotel Tri Studničky , Demänovská Dolina 42 rooms, 98 beds The ﬁrst adult friendly hotel in Jasná at the foot of the Low Tatras, has been known for years as an oasis of peace and relaxation. Wellness with a mountain beach, experiential gastronomy, harmony and relaxation in the hotel can stop the hurried time. At a time when we do not have time to stop for a while, to perceive our surroundings, or even to perceive ourselves and the people around us, we in Tri Studničky decided to focus exclusively on the adult client. Company Proﬁle 20 Company Proﬁle Hotel Grand, Jasná 155 rooms, 311 beds This mountain hotel is situated in the center of Jasná, at 1,100 m a.s.l., right near the start station of the 8-seat cabin cableway Grand Jet. Its ski in-ski out location is exceptional, as well as the renovated interior and exterior wellness center or a multipurpose conference hall with a 350-person capacity. This kids- friendly hotel is well-suited for families with children. Hotel Pošta 32 rooms, 72 beds The ﬁrst boutique hotel in Jasná with its imaginative architecture underlined by the panorama of the mountains brings a perfect harmony with the surrounding nature. The unusual interior with a breath of avant-garde and the variety of materials used is a feast for those who are close to „otherness“. A new bar in the hotel was created with the aim of creating a place in the center of Jasná where people with the same hobbies will meet - mountain lovers, active people with attention to detail who seek and know how to appreciate quality. Chalets Jasná Collection 68 rooms, 264 beds Two locations, one collection of unique chalets. The chalets have been added to the portfolio of TMR hotels to bring the client a diverse range of accommodation with customized services in the private environment of the chalet. Chalets Jasná Collection are an ideal choice for groups of 4 or more people. The privacy of the mountain chalet and the great location right next to the best slopes in Slovakia in two locations - Jasná Záhradky and Jasná Centrum will take care of an experiential holiday for the whole family. A novelty of 2020 is the introduction of a new online delivery system, where the guests can have their food brought from the restaurant of Hotel Pošta directly to the chalet. Hotel Srdiečko 43 rooms, 84 beds The hotel with a unique mountain atmosphere with an open heart has been welcoming its guests since 1958. The hotel is located directly at the cable car station in the heart of the Low Tatras, thanks to which you can get straight from the hotel to the top of the Mount Chopok. The great ski-in / ski-out location of the hotel allows you to walk from the room directly to the ski slope or hiking trail. The hotel with the atmosphere of a chalet, excellent gastronomy and a cozy wellness world is perfect for a family holiday or stay for two. New for the ﬁnancial year 2019/20 are renovated rooms, bathrooms, and a renewed breakfast concept. A night on Mt. Chopok 3 rooms, 12 beds Unique location right on the top of the Mount Chopok. If you are a mountain lover and you are looking for adventure or longing for romance as a couple, you will ﬁnd your little paradise in this hotel. Hotel Rotunda is synonymous with a mountain atmosphere and beautiful experiences. Maximum comfort in an exclusive location and a view of the panorama of the High Tatras or the basin of Slovakia directly from the rooms of the Rotunda hotel will enchant every guest. Each of the hotel’s rooms will surprise you with its cozy and tasteful furnishings. The hotel has only a few rooms, thanks to which the Rotunda offers guests an intimate environment and a feeling of uniqueness. New for the ﬁnancial year 2019/20 is the designer A´la Carte restaurant. Holiday Village Tatralandia 101 rooms, 391 beds Just a few steps from the Aquapark Tatralandia is the 21 Company Proﬁle unique lodging resort Holiday Village Tatralandia with a wide range of private accommodation in cottages with entrances to the aquapark included in the price. Accommodation in themed, private cottages is ideal for exploring Liptov and offers many activities and accompanying services. Hotel Bešeňová 123 rooms, 246 beds TMR owns the hotel directly in the complex in the Bešeňová water park. The hotel offers a total of 123 rooms and suites, while guests have all-day access to the Bešeňová water park. Galéria Thermal Bešeňová 52 rooms, 104 beds Hotel Galeria Thermal brings to Bešeňová a unique combination of beneﬁcial geothermal water and quality services of a 4 hotel. At the Hotel Galeria Thermal Bešeňová, visitors can enjoy maximum relaxation during the event, but also a gallery of the most beautiful views of Chopok, Choč mountains or the water park area. As hotel guests, they have private access to pools with beneﬁcial thermal water directly from some rooms. Hotel Akvamarín Bešeňová 143 rooms, 286 beds TMR rents and operates Hotel Akvamarín Bešeňová, which brings a new, modern accommodation complex right in the water park and it is possible to get there comfortably through covered areas. A private outdoor pool is available for guests staying and for greater comfort a balcony or terrace, a kitchenette and air conditioning in each room, which are suitable for large families due to their spaciousness. THE CZECH REPUBLIC Green Inn Hotel, Golf & Ski Resort Ostravice 36 rooms, 72 beds TMR rents and operates Green Inn Hotel situated at the heart of Golf & Ski Resort Ostravice in the Czech Beskid Mountains. It offers fascinating views of Challenge Golf Course Ostravice and of Beskid peaks and valleys. A luxury resort that meets requirements of low-energy buildings consists of the main building – the club house with a reception desk, a restaurant, congress space and a luxury wellness center, and seven separate hotel houses. Hotel Kaskáda, Golf Resort Kaskáda 50 rooms, 100 beds TMR rents and manages the golf hotel Kaskáda, situ- ated in Golf Resort Kaskáda near the city of Brno. The hotel with a restaurant, wellness center, bowling, and congress space offers ideal comfort and privacy in cozy barrier free apartments with a view of the golf course. POLAND Hotel Gronie Ski & Bike, Szczyrk Mountain Resort 36 rooms, 86 beds A recently renovated ski-in and ski-out hotel in the vicinity of Szczyrk Mountain Resort. The hotel provides accommodation in 2 – 4-bed rooms and family apartments. There is a wellness spa, a ﬁtness center, and a conference room. REAL ESTATE The goal of this segment is to build infrastructure and buildings in the mountain regions and the summer resorts. In its realization the Company plans to capitalize on the unique location in the High and Low Tatras region (including Tatralandia). TMR’s strategy in this segment is mostly development, construction, and sale of apartments which serve as short and long-term londings. In the past ﬁnancial year, the chalets at Záhradky are also still for sale. Currently, TMR is preparing a new real estate project, Jasná Resort Central Hotel, as well as new bungalows in the Tatralandia complex. Alongside these projects the Real Estate team works on projects ensuring the necessary infrastructure is being built for the natural development of tourism in the following areas – cableways, infrastructure, trails, information signs, etc. TMR plans its real estate projects mostly on traditional, urban areas, where sport and tourism have been part of history for decades. The Company within the Real Estate segment owns and leases out hotels Liptov, Kosodrevina Lodge, and lodging facility Otupné in Jasná. Revenues from the Real Estate segment come mainly from the hotel leases, from sale of bungalows Holiday Village Tatralandia and sale of apartments Chalets Jasná Collection. 22 VISION By capitalizing on our position of a natural monopoly due to the unique position of the Tatras, to become a premier, internationally renowned tourism services provider striving to revive mountain resorts, aquaparks, theme and amusement parks in the region of Central and Eastern Europe from the investment, sports, cultural, and social point of view. MISSION STATEMENT TMR’s mission is to provide services in tourism at a constantly increasing level, in particular through business activities divided into seven key segments – Mountains Resorts; Leisure Parks; Golf; Dining; Sports Services and Stores; Hotels; and Real Estate. The Group plans to fulﬁl its mission through synergies leading to a complex satisfaction of both, its clients and shareholders. COMPETITIVE ADVANTAGE As opposed to other operators of mountain resorts and tourist services in the region of Central Eastern Europe, TMR holds a position of natural monopoly due to the unique geographical location of TMR’s key mountain resorts in the highest mountain range in the region – the Tatras and due to a long history and signiﬁcant local brands of the resorts in Poland and Czech. This advantage predetermines them to be premier tourist destinations in Central and Eastern Europe. Besides the attractive mountain environment and the resorts’ history, the following facts form the competitive advantage for TMR: Through its loyalty program GOPASS the Group is able to build and sustain a wide client base in Slovakia, Poland, Czechia, and Austria during both the winter and summer season. There are 64 million people living in TMR’s key target countries within the CEE region, and their economic power and leisure spending has been increasing from year to year. The Poprad Airport ensures easy access by air from key European cities outside the mountainous area, e.g. London, Warsaw, Riga, Tel Aviv, and by charter or private ﬂights from summer destinations, such as Turkey, Bulgaria, Greece, and Albania. To the east of the Tatras there are ski resorts with only limited comparable services. The high altitude provides a competitive advantage for TMR, comparing to other resorts in the region, since it signiﬁcantly mitigates the risk of unfavorable weather as a result of global warming. The Group is able to capitalize on intra-segmental and inter-company synergies in sales, purchase, operations, and support areas of the Group. TMR has years of experiences and know-how in operation of mountain resorts, leisure parks, and ancillary tourist services, as well as in building capital-intense infrastructure. TMR’s business model is well diversiﬁed with revenue generation from mountain resorts, leisure parks, hotels and complementary services. The size of the Group and its years of experiences and success enables an easier access to capital TMR mitigates the risk of seasonality with its summer season comparably strong to its winter season thanks to its summer cableway operations and summer activities, popularity of hotels in the mountain resorts, the summer operation of Silesian Amusement Park, and the all-year operation of Aquapark Tatralandia, water park Bešeňová and now also thanks to the almost all-year ski season at the Mölltaler glacier. BUSINESS STRATEGY The long term strategic goal of the Group is to maintain its leading role in winter and summer tourism in the region of Central and Eastern Europe and use this position to gradually enter new European markets. Leadership in the area of tourism provides TMR with the ability to set trends and standards in this industry. At the same time it leads the Group to differentiation. As a result, TMR works on offering premium services for reasonable prices in comparison with other similar resorts in Europe. A wide spectrum of services and their quality are the key for the Group’s direction. This goal is based on three pillars, which are highly interconnected: PILLAR 1: INCREASING QUALITY WITH INVESTMENTS By the end of 2022, for the last 16 years TMR had invested in its resorts and hotels over 443 million euros. As a result of these investments, the services provided by TMR in the High and Low Tatras, in Polish Szczyrk and Legendia improved signiﬁcantly. TMR’s resorts thus reached the level of alpine resorts and increased their leading position in the region. CAPEX of approximately 24 million euros in 2021/22 Strategy 23 includes among other things investments in the the construction of the Biela Púť cableway in Jasná, improvement of snowmaking system, acquisition of dining facility Humno in Tatranská Lomnica, the completion of snowmaking reservoirs Zadné vody, continuation of construction works at Centrum Jasná development project and other minor investments in Slovak resorts. In Szczyrk mountain resort, the Group invested in dining facilities, improving the safety of bike park and purchase of lands. In the Czech Republic, in the Ještěd resort, the Group invested of project - “Nová Skalka” and minor maintenance investments. Within the golf segment in the Ostravice and Kaskáda resorts, the Group focused on operational investments. In Austria, the Group has invested into new access system at the Mölltaler and Ankogel resort and into development of the existing bike park at the Muttereralm resort. In the following periods TMR plans for its resorts in the Slovak Tatras to grow organically and capitalize on the completed investments. Future CAPEX in the Slovak resorts will mainly cover maintenance investments. The Group also plans to continue in the started real estate projects in the Slovak resorts. The Central Resort Hotel is being built in Jasná. In Tatralandia, new bungalows for sale will be built and will be managed by TMR. In Poland, the Group will primarily invest in maintenance. The newest acquired Austrian resorts will also require extensive investments, which TMR is planning in a few years. New slopes, lifts as well as the strengthening of the accommodation infrastructure in almost every resort are in the process of preparation, but many of them are hindered by lengthy processes in granting permits or granting exceptions. PILLAR 2: STRATEGIC ACQUISITIONS AND EXPANSION Following the acquisition of three Austrian resorts in the last couple of years, in the medium term, TMR will focus primarily on completing and strengthening existing resorts, where it will have ample opportunities to grow, improve services and improve TMR’s results after the COVID-19 pandemic is over. Strategic expansion of the operations on the neighboring Czech market includes an indirect minority interest in Melida a.s., the operator of the Špindlerův Mlýn resort, which is included in the GOPASS loyalty program. In November of 2017 TMR made an agreement with the Czech town of Liberec for TMR to rent and operate the ski resort Ještěd. TMR plans to develop the potential of this unique city ski resort via future investments. TMR also expanded its business activities in Czech by entering a new segment – golf. Since November 2018 TMR has been renting Golf & Ski Resort Ostravice and in January 2018 it started managing Kaskáda Golf Resort Brno. The Ostravice contract has been signed for 20 years and the Kaskáda contract, based on which TMR is managing the resort’s hotel, restaurant, and a congress center, has been signed for 20 years. TMR also plans to further expand its business activities in utilization of accommodation capacities for third parties, namely new cottages in Tatralandia. PILLAR 3: CONSTANT OPERATIONS & SERVICES ENHANCEMENT The intensive growth in the number of visitors in the years before the outbreak of the COVID-19 pandemic, had been the result of an intensive customer orientation. Even in the years to come, management wants to achieve intensive growth of the number of visitors primarily by intensive pro-customer approach. Strategic steps to achieve this goal in the recent years included increasing the variety and quality of the services provided. TMR expanded the scale of attractions offered and improved the quality of ski schools, ski equipment rentals, and dining facilities on slopes. Moreover, it continuously improves the offer of après ski possibilities. The Group also tries to optimize transport possibilities to its resorts and cooperates with local business entities on the level of regional clusters. TMR prefers to cooperate rather than compete with them; it wants to build on their success and provide their customers easy access to its nearby mountain resorts and leisure parks and a variety of attractions for children, adrenalin sports for the young (e.g. bike parks), and relaxation zones. Regarding accommodation possibilities, TMR focuses primarily on four-star hotels and improvement of their wellness and dining services. Other strategic steps include focus on afﬂuent clientele, essential quality of management and staff, and a sophisticated marketing strategy. In the following period, TMR continuously improves its analysis of big data and focuses on implementation of its ﬁndings in its operations. Another key to TMR’s growth is innovation. In this regard, TMR acts as the trendsetter in tourism. The loyalty program GOPASS enables its customers to shop online or via a mobile app and to collect points in its facilities by using its services and pay bargain prices, and at the same time, GOPASS serves as TMR’s Customer Relationship Management and Direct Marketing tool. This loyalty program was awarded in 2015 at The Loyalty Awards in London, Strategy 24 Strategy where it won in categories: the Best loyalty program of the year in the travel sector (airlines, hotels, destinations); the Best loyalty program of the year in Central and Eastern Europe; and the Best Customer Relationship Management (CRM) in a loyalty program for Direct Marketing. Within this pillar TMR fully utilizes synergic effects among its segments, thus it is able to constantly optimize services it provides, as well as to keep expanding its variety of products and services, e.g. an option to use services of several mountain resorts and the aquapark with purchase of just one ticket. The quality management in the resorts is also supported by the revolutionary price policy of ﬂexi ski pass prices, which allows the resorts to regulate attendance and plan capacity. In times of lesser demand TMR offers skiing at much more attractive prices than in the past and at times of congestion, with higher prices it can generate better sales and keep visitors at a level that can offer quality skiing. In the next year TMR plans to implement the ﬂexi pricing system also in the resort of Szczyrk and the Špindlerův Mlýn Ski Resort. TMR will also test the new hotel system and plans to implement it in all the hotels in the portfolio. FINANCIAL GOALS For the past ﬁscal year, the Group set the goals of a stable growth in operating revenues and operating income after the COVID19 pandemic. The short-term goal for 2021/22 included a revenue plan in value of EUR 135 mil. and EBITDA of EUR 31.5 mil. This ﬁnancial plan was presented at the General meeting held on May 25, 2022. TMR did not meet the revenue plan as there was a negative result of the Austrian resorts during the summer season. The EBITDA indicator met the plan and even exceeded the plan by 7%. CAPEX ACQUISITIONS QUALITY Over 443 million euros over 16 years New modern cableways and infrastructure Renovated hotels Larger, mondernized resorts Investment apartments Aquapark Tatralandia Špindlerův Mlýn, CR (25%) Szczyrk Mountain resort, PL Legendia - Silesian Amusement Park Legendia ,PL Mölltaler Gletscher, AT Ankogel Mallnitz, AT Muttereralm, Innsbruck, AT Lease of the Ještěd Ski Resort, CR Water park Bešeňová Commercial and marketing cooperations Management of resorts for third parties Better expereinces for visitors as a result of synergies Trendsetter in tourism in the region GOPASS loyalty program Innovations Flexi prices Revenues EBITDA EBITDA margin mil. 0% 5% 10% 15% 20% 25% 30% 35% 0 € 20 € 40 € 60 € 80 € 100 € 120 € 140 € 160 € 2017/18 2018/19 2019/20 2020/21 2021/22 2021/22 plan Plan vs. Actual Operating Results 25 MARKETING STRATEGY MARKET SEGMENTATION The TMR Group’s client base is based on domestic visitors in Slovakia, Poland, Czechia, and Austria, as well as on visitors from neighboring and close by countries, such as Hungary, Germany, Ukraine, Russia, or Slovenia. The natural market of the Group is in the regions within 200 km radius inhabited by 7.5 million people. This radius includes cities, such as Krakow and Katowice in Poland, as well as Czech cities Ostrava, Olomouc, and Brno. From the geographical point of view there are other, further markets with limited access to mountains, such as Great Britain, Ireland, Russia (Moscow and Sankt Petersburg), Ukraine, and Baltic countries, which were important for TMR before the outbreak of the COVID-19 pandemic, and will be again, as soon as the situation stabilizes, and it will be easier to travel again. While domestic clients and the clients from the neighboring countries use road transportation (car, bus), clients from more distant locations travel by air and use regular charter connections. The Group’s market has expanded also thanks to the acquisition of the Alpine resorts of Mölltaler Gletscher and Ankogel in Austrian Carinthia, and Muttereralm close to Innsbruck, which thanks to their attractive locations are interesting not only for the GOPASS program clients, but also for visitors from Austria, Italy, and Slovenia. The Group also divided potential target groups into the following categories: afﬂuent clients mainstream low-cost clients The main marketing goals of the Group include clear brand placement on the market by segmentation of clients and focusing of marketing strategies on these speciﬁc segments that would lead to maximum synergy of all brands covered by TMR. At the same time the Group has been observing a shift of clientele structure towards afﬂuent clientele generating the highest revenues and focusing at products and services with the highest added value. COMMUNICATION OF STRONG TMR BRAND Preferred goals of the TMR Group’s marketing include building of the TMR brand awareness by constant communication of image, integrated product communication with the TMR brand, setting communication of the Group and all brands that the Group covers in order to reach maximum synergy (cobranding); and by strengthening positive and managed PR and attractive adventure tourism – through event management. In order to create awareness and build a strong company brand, a useful fact without a doubt is that TMR is a publicly traded company listed on the stock exchange in Bratislava, Prague, and Warsaw; it is the strongest player in tourism in Slovakia, or even in Central and Eastern Europe, providing full service resorts or destinations with a high level of service in the region of the High Tatras, Low Tatras, Liptov, the Polish Beskids, Silesia, the Czech Beskids, Moravia and Krkonoše Mountains in the Czech Republic, and Carinthia in Austria. MARKETING ACTIVITIES IN SLOVAKIA The Group is using a massive marketing communication in all basic types of media – Internet, television, radio and press, and also outdoor advertising in several forms – bigboards, citylights, and the like. The Company focuses on modern marketing content in various forms. The Company‘s offer also has a very intensive presentation through a not-for-sale image magazine called TATRY MAGAZÍN, which is available in accommodation facilities and tourist facilities as the only lifestyle magazine about the life in the Tatras. TMR also uses online portal, TravelCase, which posts news from TMR’s hotels and resorts. In addition to the above-mentioned advertising campaigns, TMR Marketing Department also actively participates in exhibitions and fairs, cooperates in destination management with entities operating in the region, such as the active Liptov Cluster and several district tourism organizations in the regions. Also cooperation with single district tourism organizations, the origin of which was supported by the Tourism Act, and active subsidy policy of the state in relation to the creation and execution of marketing campaigns for regions and creation of regional products supporting tourism, are important for TMR. USE OF INFORMATION TECHNOLOGY AND INNOVATIONS TMR also keeps in mind the use of innovations and continually improves its communication also via information technology. TMR communicates and informs via individual resort and hotel websites that direct the purchase process to www.gopass. sk. In Poland TMR communicates via website www. Strategy 26 szczyrkowski.pl and via www.legendia.pl. All TMR hotels communicate with their clients also via a uniﬁed website www.tmrhotels.sk. From the point of view of a securities issuer and a tourism operator, TMR communicates via its corporate website www.tmr.sk. Information about the Austrian resorts is available at www.moelltaler- gletscher.at and www.muttereralm.at. The Group uses social networks for communicating with clients on a daily basis. In the Group’s key markets (Slovakia, Poland and the Czech Republic), Facebook is the number one in social networks and, therefore, TMR puts emphasis on the development of a wide fan base. At present, the following resort proﬁles are administered (fan groups) – JASNÁ Nízke Tatry, Vysoké Tatry – The Adventure Mountains, Aquapark Tatralandia, Water park Bešeňová, Szczyrkowski Ośrodek Narciarski, Mölltaler Gletscher, Ankogel, Innsbruck Muttereralm, Legendia, Golf Resort Kaskáda, Golf & Ski Resort Ostravice, TMR hotels a Tatry Mountain Resorts, a.s. and smaller proﬁles of individual projects – Tatranská divočina, Happy End Jasná, Liptov Arena, Tatry Motion ant others. For marketing purposes, the Group also utilizes social networks Instagram, LinkedIn, or a YouTube channel. During the seasons the Group‘s Marketing Department is focused on production of quality live video transmissions and online information from individual resorts that are available on the Internet and thanks to which clients can get a better idea of actual conditions in the resorts. Information about changing snow conditions and operation of resorts is published online from each communication point, on both own and external web portals several times a day. Current information about the resorts is provided on LCD monitors in hotels, LCD screens in the resorts, or the dispatching center radio during the winter season. DIRECT MARKETING AND E-COMMERCE Through the GOPASS program, the Group uses digital tools to address and serve clients in its resorts. The program also includes active direct marketing, which connects the function of the e-shop, the loyalty program and the communication platform via emails, SMS messages and push notiﬁcations. GOPASS actively uses its web application as well as a mobile application available for both popular user platforms. The goal of GOPASS is the digitization of customer service and communication, as well as the facilitation of sales and proﬁling of offers directly to target groups of customers. As of the end of the ﬁscal year 2022, 3.035 million members in total were registered in the program GOPASS. EVENT MANAGEMENT ACTIVITIES DURING 2021/22 The 2021/22 ski season was at the beginning affected in all markets by anti-pandemic measures, which were not favorable to the organization of events with a larger number of participants. The Jasná and Štrbské pleso center opened the ski season on December 11, 2021 and in Tatranská Lomnica operations started on December 17, 2021. At the beginning of the winter season, opened again in Hrebienok the Tatra Ice Dome, the most visited Tatra attraction, during the construction of which the artists were inspired by the theme of the Saint James Way. Other proven winter events included the Hero Season Trophy at Štrbské Pleso and in Jasná, was prepared for the winner a special main prize of Rossignol skis, Chopok chutí, Tancovačka in habarka, Olympic Festival Štrbské Pleso. In March, the largest ski resort in Slovakia hosted the Freeride World Qualiﬁer Final four-star event for the ﬁfth time. The organizers gave away prize money in the amount of EUR 10,000 to the best competitors. During the summer season, took place in Hrebienok the traditional Bear Days – a family festival of entertainment and education. On the 150th anniversary of the foundation of the Štrbské Pleso, the Venice Night event was held, which in addition to the cultural and culinary experience, also included romantic boating on Štrbské Pleso. In Tatralandia, there was an animation program on the theme „fairy tale summer“ and the end of the summer season with the „Music Lives“ festival. As part of the new acquisition of the water park Bešeňová, a successful and unique gastronomic event of the 4 elements of Bešeňová took place, which combined sauna rituals with experiential gastronomy. A novelty in the Jasná ski resort was the return of the shepherd tradition and the traditional mountain sheep– wallachian sheep, which visitors could experience in the Priehyba location on the northern side of Chopok. Dozens of events and animations were held in the Legendia amusement park during the summer season, the aim of which was to attract more visitors to the park. NOVELTIES Jasná Nízke Tatry (Jasná Low Tatras) In the winter season 2021/2022, several novelties have been added to the Jasná resort. Ski slope Pretekárska changed its name to the name of the world cup winner Petra Vlhová, which resembles the original photo point, and the range of cross-country tracks Strategy 27 Strategy has expanded. Another important novelty was the renovation of the ski-in/ski-out hotel SKI Záhradky and new accommodation concept at the top of Chopok – Night in the clouds. Shuttle transport was strengthened in cooperation with the municipality of Demänovská dolina and DMO Liptov Region, and the possibility to purchase a parking place through GOPASS was introduced. A deﬁbrillator was added on the southern side of Chopok, which helps with serious heart rhythm disorders. Jasná won the title „Slovakia‘s Best Ski Resort 2021“ and defended its championship in Slovakia for the 7th time in a row. Vysoké Tatry (The High Tatras) The main novelty of the season in Tatranská Lomnica in the High Tatras, skiers could use Comfort parking - the possibility to purchase a limited number of the most favorable parking spaces through GOPASS for a fee, with the certainty of parking even at the time of peak trafﬁc. At the same time, parking areas were charged. Skiers with daily ski passes will have parking at a discount, owners of all-season ski passes Šikovná sezónka PREMIUM will park for free. Two deﬁbrillators have been added in the High Tatras, which will save human lives at Skalnate Pleso and Hrebieok. Szczyrk Mountain Resort In the 2021/22 season, Szczyrk Mountain Resort provided a new version of the Max Bear Academy - which is, group skiing courses for children and during the winter holidays, the Max Bear Sports Academy, where older children could improve their skiing technique, including skiing in goals. The center‘s offer was extended by the new K2 Skituring Academy project. An important novelty was the return of free ski buses to Szczyrk, which improved the comfort of skiers and hikers. 28 Key Performance Indicators (KPIs) The management uses operating and ﬁnancial key performance indicators (KPIs) to evaluate operating performance of the Group. The Group’s portfolio is divided into seven segments, and for this reason the management monitors performance of each segment. OPERATING PERFORMANCE INDICATORS: NUMBER OF VISITORS As for the performance of the Mountain Resorts segment, the management monitors performance of ﬁnancial indicators based on the number of visitors in terms of used skier days in the winter season, i.e. number of persons visiting a ski area for any part of day or night for the purpose of skiing, snowboarding, or other downhill slide. E.g., a 4-day ticket means four customers in the mountain resorts of TMR. The number of visitors on the cableways in the summer season and visitors in the Leisure Parks segment is measured in terms of sold and used entries. AVERAGE REVENUE PER VISITOR In the segments Mountain Resorts, Leisure Parks, Dining, and Sport Services & Stores, the key indicator is the average revenue per visitor / sold skier day for a given period from sale of ski passes, entries, services, and products. OCCUPANCY In the Hotels segment operating performance is monitored based on percentage occupancy of individual hotels of TMR’s portfolio and of the weighted average of the hotel portfolio. AVERAGE DAILY RATE Average Daily Rate (ADR) is one the key indicators to measure hotel performance. It represents average revenue from per occupied room per given period. The calculation is based on the equation where room revenues are divided by the number of rooms sold. The management monitors ADR of each hotel and of the weighted average of the hotel portfolio. FINANCIAL PERFORMANCE INDICATORS: REVENUES Operating revenues of the Group come from operating activity of the segments Mountain Resorts, Leisure Parks, Golf, Dining, and Sports Services & Stores, Hotels, and Real Estate. EBITDA To describe ﬁnancial performance of the TMR Group, management uses EBITDA (Earnings before interests, taxes, depreciation and amortization) as the key indicator, which represents income net of interest, taxes, and write-offs. EBITDA clearly indicates the Group’s ﬁnancial performance based on operating activities since it eliminates impact of ﬁnancing, as well as accounting decisions of a non-operating character. EBITDA MARGIN In order to evaluate operating proﬁtability of the TMR Group, management utilizes EBITDA margin. It equals earnings before interests, taxes, depreciation and amortization (EBITDA) divided by operating revenues. Since EBITDA excludes depreciation and amortization, EBITDA margin is able to provide the investor a clearer picture of operating proﬁtability. 29 30 The target segment of the Group are tourists from the countries of Central and Eastern Europe, especially from Slovakia, Czech Republic, Poland and Austria. The visit rate of the Group’s resorts is, to a certain degree, determined by developments in the economic situation on the markets of the countries from which the tourists arrive and in which the Group operates. The world economy has grown systematically in recent years, despite the ongoing COVID-19 pandemic. According to the International Monetary Fund (the IMF), gross domestic product grew by 6.1% worldwide in 2021, it should continue to grow, but at a slower pace at a level of around 3.2%. The slowdown in growth is caused by the war in Ukraine, which led to a rapid increase in the price of energy and interruption in their supply chain led to higher inﬂation than expected, which will also negatively affect the growth rate. 1 According to the European Bank for Reconstruction and Development (hereinafter referred to as EBRD), the economic situation in the region is central and Eastern Europe, despite growth at 5.5% in 2021, remains uncertain as it is largely subject to high uncertainty reﬂecting the risks associated with the war in Ukraine. Oil and gas prices are above historical levels, while many economies in the EBRD regions are highly dependent in their energy mix on gas and oil from Russia. In the context of these assumptions, the EBRD, like the IMF, expects a slowdown economic growth in the region of its member countries to the level of 1.1%. For the region of Central Europe and the Baltics states, the European Bank for Reconstruction and Development predicts growth of 3.2% in 2022. 2 THE SLOVAK REPUBLIC According to the Financial Policy Institute of the Slovak Ministry of Finance (IFP), in 2021 the Slovak economy will partially recover from the sharp decline of the previous year, signiﬁcantly affected by the coronavirus pandemic COVID-19, and the gross domestic product (GDP) increased by 3.1%. The recovery was mainly contributed by domestic demand. Higher government spending supported the economy and household disposable income. 3 According to IFP, the Slovak economy in 2022 it will increase by 2.1%. The main reason for the slowdown in economic growth is Russia‘s invasion of Ukraine. The military conﬂict and sanctions against Russia will signiﬁcantly limit Slovak exports to this region and will also cause slowing down of the economic growth of business partners. The war in Ukraine will contribute to further price increases energy, which is also reﬂected in the prices of consumer goods and services. Higher inﬂation will dampen domestic consumption not only in this year, but also in the years to come. Despite the lower rate of economic growth, employment will rise, however, wages will not keep up with inﬂation this year. 4 THE CZECH REPUBLIC According to the Czech National Bank, the Czech Republic’s GDP growth increased to 3.1% in 2021 and it should grow at a rate of 2%. The lower growth rate is caused by lower household consumption due to a drop in real incomes households and sentiment and with the contribution of increased interest rates. Inﬂation over the coming months will rise above 20% and double-digit inﬂation will continue in 2023. This will reﬂect the continued rise in gas prices and electricity, further acceleration of food prices and high core inﬂation. In 2023, GDP growth of 1.1% is expected and in 2024 the economy is expected to recover at a rate of 3.8%. 5 POLAND Poland‘s GDP growth increased to 5.7% in 2021. Year 2022 GDP will be negatively affected by the growth of commodity and energy prices, exacerbated by increased geopolitical uncertainty. A combination of supply shocks and strong demand pushed inﬂation into double digits, reaching 10.2% in March. The National Bank reacts to increased inﬂation by increasing the reference rate, and the Polish government introduces measures to reduce inﬂation. Government interventions will raise the public administration deﬁcit above 4% of GDP in 2022. According to the EBRD, they expect GDP growth of 4% in 2022 and 3.5% in 2023. 6 AUSTRIA According to the Organization for Economic Co- operation and Development (the OECD), Austria‘s GDP growth of 4.1% in 2021 was inﬂuenced by a faster growth in economic activity in the ﬁrst three quarters than originally expected. The OECD projects the Austrian economy to grow by 3.6% in 2022 and 1.4% in 2023, although the Russian invasion has reduced growth prospects. Household consumption is supposed to be the main engine of growth. Increased uncertainty, higher energy prices, labor shortages and supply chain disruptions are having a negative impact on business investment and export growth. Market Analysis and Trends 1 International Monetary Fund (IMF): World Economic Outlook, July 2022: Gloomy and more uncertain, published in July 2022, available at the hyperlink: https://www.imf.org/en/Publications/WEO/Issues/2022/07/26/world-economic-outlook-update-july-2022. 2 European Bank for Reconstruction and Development (EBRD) Regional Economic Prospects in EBRD Countries of Operations: May 2022, published in May 2022, available at the hyperlink: https://www.ebrd.com/what-we-do/economic-research-and-data/rep.html. 3 Financial Policy Institute of the Slovak Ministry of Finance: Macroeconomic prognosis IFP. Inﬂation is breathing down the neck of recovery, February 2 022, available at the hyperlink: https://www.mfsr.sk/ﬁles/archiv/66/Komentar_MV_feb2022.pdf. 4 Financial Policy Institute of the Slovak Ministry of Finance: Macroeconomic prognosis IFP. From the pandemic to the war in Ukraine, March 2022, available at the hyperlink: https://www.mfsr.sk/ﬁles/archiv/53/Komentar_MV_mar2022.pdf 5 Czech National Bank: Monetary Policy report – Summer 2020, published in August 2022, available at the hyperlink: https://www.cnb.cz/export/sites/cnb/cs/menova-politika/.galleries/zpravy_o_menove_politice/2022/leto_2022/download/zomp_2022_leto.pdf 6 European Bank for Reconstruction and Development (EBRD): Regional Economic Prospects in EBRD Countries of Operations: May 2022 Update, published in May 2022, available at the hyperlink: https://www.ebrd.com/what-we-do/ economic-research-and-data/rep.html. 31 According to the OECD, overall inﬂation will increase sharply to 6.7% in 2022, but will decrease slightly in 2023. 7 REGIONAL TOURISM INDUSTRY The number of international tourist arrivals measured by the methodology of the World Tourism Organiza- tion (the UNWTO) reach 65% of pre-pandemic levels by the end of 2022. An estimated 700 million tourists travelled internationally between January and Sep- tember, more than double the number recorded in the same period of 2021. Tourism performance was particularly strong in the third quarter of 2022 when an estimated 340 million international arrivals were recorded around the world, almost 50% of the nine- -month total. Europe continued to lead the rebo- und of international tourism through September, reaching 81% of pre-pandemic levels. The recovery can also be seen in outbound tourism spending from major source markets. International arrivals could re- ach 65% of pre-pandemic levels in 2022, in line with UNWTO’s initial scenarios. Despite growing challen- ges pointing to a softening of the recovery pace in the coming months, export revenues from tourism could reach USD 1.2 to 1.3 trillion in 2022, a 60-70% in- crease over 2021 8 SLOVAK TOURISM INDUSTRY Besides the majority of domestic tourists, Slovakia has historically been mostly visited by the population of the neighboring countries; with the most tourists in 2021 coming yet again from the Czech Republic (229 thousand) and Poland (59 thousand). In 2021, due to the pandemic, the number of foreign tourists decreased by 32% to 576 thousand. The number of domestic tourists for 2021 also decreased by 9% to 2.1 million. The ratio of domestic to foreign tourists is currently 80/20. 9 In total, from January to November 2022, 4.5 million visitors were accommodated in tourism establishments in Slovakia. Compared to the same period before the pandemic (January to November 2019), there was still a quarter of visitors missing. During the ﬁrst eleven months of last year, 1.5 million foreigners used accommodation services. In 2019, there were 36% more, i.e. 2.3 million. For domestic visitors, attendance decreased by 18% compared to 2019, when 3 million domestic guests used accommodation services from the beginning of 2022. Guests spent a total of 12 million nights in accommodation facilities, in 2019 it was 16.7 million. 10 EUROPEAN MOUNTAIN INDUSTRY Europe is the relevant market for TMR’s ski business, especially the CEE region. In Europe the biggest skiing destinations are alpine countries – Austria, France, Switzerland, Germany, and Italy. Worldwide, the Alps capture the greatest market share, accounting for 43% of skier visits (skier days). 11 The second most signiﬁcant is North America with 21%. Central and Eastern Europe attracts only 10% of skiers, although this region produces 13% of skiers globally. Since the Market Analysis and Trends 7 European Commission: OECD Economic Outlook: Economic Forecast Summary: June 2022 Published in June 2022, available at the hyperlink: https://www.oecd.org/economy/austria-economic-snapshot/ 8 UNWTO World Tourism Barometer and Statistical Annex, November 2022, available at the hyperlink: https://www.e-unwto.org/doi/abs/10.18111/wtobarometereng.2022.20.1.6.-2021-but-remains-far-below-pre-pandemic-levels. 9 Ministry of transport and construction of the Slovak Rep. The accommodation statistics of tourism in Slovakia in 2021, available at the hyperlink: https://www.mindop.sk/ministerstvo-1/ cestovny-ruch-7/statistika/ubytovacia-statistika/rok-2021. 10 Statistical Ofﬁce of the Slovak Republic. Development of tourism in accommodation establishments in the SR in November 2022, available at the hyperlink: bit.ly/3DbvXPi 11 The number of skier visits is measured in terms of skier days; which means one person visiting a ski area for any part of day or night for purpose of skiing, snowboarding, or other downhill slide; e.g. a four-day ticket means four skier visits. 32 Market Analysis and Trends start of the new millennium global skier destinations have been experiencing a downward trend in the number of skier visits, especially the Western European traditional skier destinations, despite the overall growing global population and a growing number of skier days globally. One of the reasons is aging population and struggle to promote skiing among the young. This introduces an opportunity for the CEE region to grow in provision of ski resorts at least to match the regional demand and even to attract a higher number of foreign skier visits. Among alpine countries, France and Austria have the most major resorts (with over 1 million skier visits) – 13 and 15, respectively each, and Austria with the highest number of skier visits per year 12 - over 50 million whereas Switzerland produces the highest rate of domestic skiers- 35%, with Germany having the highest total number of domestic skiers- 14.6 million. 13 Mountain industry in general is very capital intensive because of essential investments into cableways and other resort facilities, which represent great barriers of entry. Another essential entry criterion is e.g. location since skiing requires a mountainous area with a milder/ colder climate. As for characteristics of ski resorts, they vary in size, ownership, and infrastructure. In some alpine countries, they are usually run by a large number of small private operators who join forces also with local municipalities and market the resort or the ski region as a whole, like in Italy, Switzerland or Austria. In France, on the contrary, operation of large ski resorts especially is concentrated with a major operator. German resorts are also fragmented but considerably smaller than in other alpine countries. 14 Large alpine resorts usually offer state of the art infrastructure, have over 100 km of ski trails, transport capacity of over 50,000 persons/hour, and more than 30 ski lifts. They also keep reinvesting large amounts into resorts enhancement. The TMR resorts can be compared to medium-sized alpine ski resorts. REGIONAL MOUNTAIN INDUSTRY In the CEE region Russia has the most ski areas - 354, although only around 67 have more than ﬁve lifts and majority have limited infrastructure. Russia is followed by Poland with 182, the Czech Republic with 191 and Slovakia with around 107. Poland’s ski areas are mostly small, suitable for beginners, and Czech ski areas are located up to 1300 m above sea level. Russia had on average for the past ﬁve years the highest number of skier visits in the winter season- 7.4 million, followed by the Czech Republic with 5.8 million, Slovakia and Poland, both with estimated 5 million. As for domestic skiers, winter sports in Poland are growing in popularity, as Poland produces the highest absolute number of skiers in the region – 5 million, who make up 13% of population. This proportion grew by more than double since 2013, which presents a great growth potential on this market. Slovakia and the Czech Republic produce a much higher percentage of skiers – 18% and 22%, although there are much more Czech skiers in the absolute number – 2.2 million. Slovakia has a competitive advantage on the supply side in the region since 80% of the geographical area is situated 750m above sea level; and the area includes the highest mountain range in the region- the Tatras, with the highest peak of 2,655 m- Gerlachovský štít. 15 Apart from the impact of the pandemic, the regional mountain industry exhibits room to grow, in comparing to mature alpine resorts. Observable trends besides investing in resort infrastructure and equipment include extending the variety of services in mountain resorts, such as ski schools, ski service, and shops, as well as non-skiing activities, such as après ski bars, nightlife, restaurants, wellness, family activities and events. As for summer activities, the focus is on adrenaline sports, summer family events, and cycling, evidenced by an increase in development of resorts, cycling tours, and by increased marketing. Mountain resorts tend to keep expanding technical snowmaking. Also, mountain resort tourists tend to be attracted to package deals on lodging and lift tickets, thus this trend is expected to continue. Another trend in mountain resorts is observed in consolidating marketing activities of a mountain destination or a region and mutual cooperation of mountain resort operators. District tourism organizations in Slovakia for example join together in destination management. One can observe these trends in all the locations operated by TMR. TMR is also cooperating with other mountain resort operators in marketing efforts. No. of National Skiers Skiers as % of Population Thousands 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 Skiers by Country 12 Laurent Vanat: 2021 International Report on Snow & Mountain Tourism. April 2021, available at the hyperlink: https://www.vanat.ch/RM-world-report-2021.pdf. 13 Ibidem 14 Ibidem 15 Laurent Vanat: 2021 International Report on Snow & Mountain Tourism. April 2021, available at the hyperlink: https://www.vanat.ch/RM-world-report-2021.pdf 33 Market Analysis and Trends SLOVAK MOUNTAIN TOURISM On the Slovak mountain tourism market TMR is the clear leader in terms of the number of resorts, ski lifts, transportation capacity, km of ski trails, and lifts elevation. Mountain resorts in Slovakia are mostly operated by small private operators in cooperation with local municipalities and national parks. There are around 100 ski areas in Slovakia, and 47 major ski resorts (3, 4, and 5 quality) in Slovakia. When comparing individual resorts and their km of ski trails, TMR’s resorts Jasná Nízke Tatry (51km) and Vysoké Tatry – Tatranská Lomnica, Starý Smokovec a Štrbské pleso (24km) are the biggest ones in Slovakia, followed by Veľká Rača Oščadnica (14km), Skipark Kubínska Hoľa (14km), Vrátna free time zone (13km), and Winter Park Martinky (13km). 17 Mountain Tourism - Country Comparison 16 16 Laurent Vanat: 2021 International Report on Snow & Mountain Tourism. April 2021, available at the hyperlink: https://www.vanat.ch/RM-world-report-2021.pdf 17 skiresort.info, resort websites Country No. of Ski areas Number of major resorts (>1 mil Skier Visits) Skier visits Proportion of domestic skiers (in % population) Number of do - mestic skiers % foreign skiers Alpine countries 161 301 000 Austria 253 15 51 700 000 34,0% 2 960 000 66% France 317 13 51 009 000 13,0% 8 574 000 27% Italy 349 7 27 603 000 12,0% 7 266 000 35% Switzerland 181 6 22 274 000 35,0% 2 959 000 35% Germany 498 0 8 715 000 18,0% 14 607 000 10% United States 470 6 54 250 000 8,0% 25 017 000 6% Eastern Europe 27 174 000 Czech Republic 191 0 5 936 000 21,0% 2 236 000 30% Slovenia 44 0 1 196 000 14,0% 299 000 17% Ukraine 54 0 1 400 000 2,0% 1 114 000 5% Poland 182 0 5 000 000 13,0% 4 937 000 15% Russia 354 0 8 642 000 3,0% 4 275 000 5% Slovakia 107 0 5 000 000 18,0% 979 000 25% Km of Trails of Leading Ski Resorts in Slovakia Jasná, Nízke Tatry Vysoké Tatry Ski Park Kubínska hoľ a Vrátna Free Time Zone Winter Park Martinky Drienica - Lysá Veľká Rača Oščadnica Ski Park Ružomberok Park Snow Donovaly Ski Bachledová 51 25 14 13 13 9 14 12 11 11 34 AUSTRIAN MOUNTAIN TOURISM Austria is one of the European Alpine countries with the highest number of ski resorts with ski visits over 1 million per year also thanks to its lift interconnections between ski areas. It also operates the most ski lifts in the world, over 3,000, together with France and the U.S. It also has one of the highest portion of skiers in the population with 34%, and one of the highest number of skier days – 51.7 million (5-year average), 66% of which are foreign, the most foreign skiers in the world. The visit rate has been steadily growing despite struggles in other western markets. The Austrian ski operators have been heavily investing into development of ski infrastructure for the past 15 years. Some resorts have joint marketing efforts, which allow them a higher pricing, and the number of interconnected resorts has been increasing in the last couple of years. 18 TMR’S HOTEL MARKET TMR’s hotels are located in TMR’s mountain resorts, golf resorts, in Aquapark Tatralandia and in water park Bešeňová, and most of the clients utilize TMR hotels’ services when visiting the resorts. That’s why TMR hotels compete for clients with other lodging facilities in the given resort and its surrounding. In the winter season especially, performance of the hotels is closely linked to performance of the mountain resorts. In Aquapark Tatralandia there is only one lodging facility, thus TMR holds a monopoly here. In the mountain resorts there are other mostly private operators of resort hotels, inns, bed & breakfasts, apartments, and cottages. The two leased golf hotels in the Czech golf resorts are the only ones in the respective golf resorts, thus their location is a great competitive advantage within the area, and their visitors tend to stay here. Categories of TMR hotels range from 2-star to 4-star. In the resorts there is a greater competition in the lower category lodging than in the upscale segment. The trend in the resorts lodging sector is to cooperate closely with the mountain resort operators in order to attract clients with affordable bundled stay packages. The hotel market in TMR’s resorts is not saturated since TMR had invested a large amount of capital in recent years, and the resorts attract new investors. REGIONAL TRENDS IN AQUAPARKS In Slovakia there is around a 30 aquaparks and thermal spas. Tatralandia and water park Bešeňová ranks among the top three parks in terms of size, visit rate and services offered. The number of visitors primarily depends on the variety and quality of services offered. As for the target market, aquaparks observe an increasing visit rate and an increasing share of solvent clients who are willing to pay more for their aquapark visits and require higher quality and constantly changing customized services. In this aspect, TMR’s loyalty program, Gopass, helps. Another observable trend is the comeback of Slovak clients who now represent the majority as opposed to the past till 2009, when clients from Poland comprised the majority. Also, aquaparks observe a growing number of families with children that seek out a wide scale of activities, also as addition to water attractions. Demand for quality requires quality personnel, which puts pressure on personal costs for the aquapark operators as aquaparks are mainly a seasonal and weekend business. Solutions can be found in automation, and TMR utilizes its winter employees from the mountain resorts in the summer season of the leisure parks. The trend also includes continuing investments into parks’ development, especially all-year attractions. All-year aquaparks carry a competitive advantage as they do not depend on weather. 19 Competition in the neighboring countries is present especially closer to the Slovak border- there are ﬁve aquaparks close to Slovakia in Poland, nine in the Czech Republic, and seven in Hungary. REGIONAL TRENDS IN LEISURE PARKS The CEE region exhibits absence of leisure parks on a scale of Western Europe, where most of 300 parks are located, with annual revenues of around EUR 4.5 bn. There are 30 parks in Europe with an average visit rate of 1-2 mil. visitors. In Poland there are about 45 leisure parks of different size and theme. They may be divided into a number of groups depending on their main theme – luna parks, western theme parks, fairy tale theme parks, dinosaur adventure parks, and miniature theme parks. Majority are so- called dino parks (19) and miniature parks (13). These should be treated as a substitute rather than direct competitors to TMR’s Silesian Amusement Park. Besides Legendia - Silesian Amusement Park, there is only one other amusement park of comparable size and with a comparable number of attractions, located also in the Silesia region. Market Analysis and Trends 18 Vanat, Laurent. 2019 International report on mountain tourism. April 2019. www.vanat.ch 19 Guests are more picky. The big 3 is doing well, though. Trend. August 3, 2019. https://www.etrend.sk/trend-archiv/rok-2019/cislo-29/velkej-trojke-sa-dari-a-nielen-jej.html 35 Market Analysis and Trends REGIONAL TRENDS IN GOLF RESORTS In the Czech Republic where TMR operates two golf resorts, there are around 100 golf resorts. Golf & Ski Resort Ostravice and Golf Resort Kaskáda both belong to the top 10 Czech golf resorts. 20 In neighboring Slovakia there are over 20 golf resorts and 55 in Austria. The trends in the regional golf industry include focus on technology since online presence, functional reservation systems, or rating websites are essential for golf resort operators. Promotion of the resorts is vital, thus the resort operators organize professional tournaments and provide ancillary services. Visitors put importance on the quality of accommodation and dining services in the resorts. Another decision factor for golf players is the access to tee times. Also, golf players’ demand for golf travel keeps increasing. Half of European golf players travel for golf individually and half use travel agency services, mostly elderly players. 21 REGIONAL TRENDS ON THE REAL ESTATE MARKET The performance of the regional real estate market depends on the stability of demand, which is impacted by macro-economic development, the job market development, income growth, and access to bank ﬁnancing. The real estate market cooled down in 2022 due to higher interest rates, but also a few percent drop in people‘s real wages due to high inﬂation. 22 In the past years, the recreational real estate market in the Jasná resort had been booming, with several new projects, such as the project under construction of a 5-star hotel resort or additional hotel Central Jasná. 23 In the High Tatras, mainly in Tatranská and Veľká Lomnica several real estate projects are being prepared or already constructed, also by TMR. 24 20 nagolf.eu, forbes.cz 21 10 trends in golf travelling, what are the trends in 2018? March, 8, 2018. www.golfextra.cz/detail/3477/10-trendu-cestovani-za-golfem-co-frci-v-roce-2018 22 What changes do you expect in the real estate market? What contributes the most to its cooldown? https://www.trend.sk/trend-archiv/ponuk-pribuda-zaujemcovia-miznu-trh-nehnu- telnostami-ochladzuje 23 Another large luxury hotel is to be built in Jasná https://myliptov.sme.sk/c/22205624/v-jasnej-ma-vyrast-dalsi-velky-luxusny-hotel.html 24 Another area of recreational houses at the golf resort beneath the Tatras.10.2.2015. reality.etrend.sk/komercne-nehnutelnosti/pri-golfovom-ihrisku-pod-tatrami-dalsia-zona-rekreacnych-domov.html RISK FACTORS AND RISK MANAGEMENT 38 Main risks that the Group faces can be divided into market, ﬁnancial, and operating risks. The management has the complete responsibility for deﬁning and controlling the Group‘s risks. All these factors are either external, which means they are completely beyond the management’s control, or internal risks, which can be at least partially controlled by the management. The most signiﬁcant risks are described below: MARKET RISKS COVID-19 PANDEMIC The global pandemic relating to the spread of coronavirus has had an impact on the Group‘s operations since the end of the 2019/2020 season, and it signiﬁcantly impacted TMR‘s performance in FY 2020/2021. The beginning of the ﬁnancial year 2021/2022 was affected by the omicron variant of the coronavirus, where due to preventive measures against the spread of the virus causing COVID-19, there were restrictions on the operation of water parks, hotels, and restaurants. On 17 December 2021, the Company started the ski season, which lasted under strict epidemiological restrictions. On 25 December 2021 hotels, dining facilities and water parks were reopened for accommodated guests. On 19 January 2022 water parks were also opened for public. During the remaining period of the ﬁnancial year, no epidemiological measures were introduced that would limit Group operations. Therefore, it had a positive impact on Group results and the number of visitors. In Austria, the “Lock Down” was established in November 2021, which was partially lifted on 19 December 2021. During this period the ski resorts were closed. After lifting of epidemiological measures, the ski resorts were opened and began their operation. In Austria, relative strict rules applied to allow foreign guests to enter the country. These measures resulted in the less foreign visitors in Austrian ski resorts. In Poland and the Czech Republic, were not such strict epidemiological measures and therefore did not have a negative impact on the operation of resorts. Despite the current situation, there is some uncertainty associated with a possible new variant of the coronavirus and the development of the pandemic situation in the territory in which the Group operates and anti-epidemiological measures taken by the government, which may have an impact on the operation of the Company‘s main activities. It is not possible to predict exactly how further developments will affect the operational activities, market position, sales, ﬁnancial performance, and ﬁnancial prospects of the Group, but such an impact may be signiﬁcant and negative. BUSINESS CYCLE Current operations of the Group are focused on the Slovak, Czech, Polish, and Austrian market, although majority of the Group’s clients come from the whole CEE region, and thus the Group’s operations are mainly dependent on the level of economy of the Slovak and Czech Republic and countries of the CEE region. Majority of TMR’s revenues depend on the number of visitors to TMR’s resorts and hotels. The vacation choices of TMR’s clients also depend on the business cycle of the economy, each country’s economic growth, and the level of their discretionary income, while the last two factors are highly correlated. Development of such macroeconomic factors is an external risk for TMR. Since the majority of visitors to TMR’s resorts and hotels come from various countries, each of which has its own unique macroeconomic proﬁle, operations of TMR can be heavily affected by worsening of the economic situation on these markets. The risk of a downward business cycle is partially managed by reasonable pricing strategies and effective marketing campaigns on the relevant target markets (see Strategy). Developments in the business cycle in general may adversely affect the Group‘s operating activities, ﬁnancial performance, and ﬁnancial prospects. In addition, a signiﬁcant risk within the Central and Eastern Europe region is the military conﬂict in Ukraine, which may have an impact on the attendance of the Group‘s resorts and hotels, since the countries in which the Group has resorts and hotels are near the borders of the military conﬂict, i.e. Ukraine. The Group is affected by the conﬂict directly due to the loss of visitors from Russia and Ukraine. However, before the events of the war and the introduction of sanctions, the Group did not consider the Russian or Ukrainian market to be essential. Although the loss of visitors from these regions has a negative impact, it is a signiﬁcantly minority group of visitors. The Group is also affected by the conﬂict indirectly through Slovakia‘s economy (which is strongly export-oriented) as well as the impact on the European Union, mainly due to the related increase in inﬂation, the prices of materials and commodities (or their reduced availability) or existing risks related Risk Factors and Risk Management 39 Risk Factors and Risk Management to the interruption of oil supply or natural gas from Russia and/or a material increase in the price of oil or natural gas. TMR‘s revenues from tourism could decrease, especially if it could not keep up with inﬂation, or reﬂect the increased prices of entrances into prices for accommodation or tickets to resorts. SEASONALITY TMR’s business model is primarily seasonal, although TMR’s strategy involves building and promoting all-year vacation destinations. The busiest months are from January through March, especially in the number of skiers, and July and August in the leisure parks and the Vysoké Tatry resort. The management is continuously working on attracting visitors in the off-season, e.g. by adding snowmaking guns, running vibrant marketing campaigns, offering bundled stay packages, and by organizing events in the resorts and hotels. Besides the aquapark Tatralandia and newly acquired water park Bešeňová providing warm thermal water, the Tropical Paradise project in Aquapark Tatralandia was a major step towards minimizing the effects of seasonality in the aquapark since visitors of Tropical Paradise can experience summer temperatures in any season. By acquiring the Alpine resort located on a glacier, Mölltaler Gletscher, the skiing winter season got longer. The golf resorts operate the golf courses from the spring till the fall, although in the Ostravice resorts provides lit up cross country skiing tracks in the winter. WEATHER The number of TMR’s visitors also depends on a successful winter season, i.e. on favorable weather conditions in terms of abundance of natural snow and temperatures below zero degrees Celsius. TMR manages the risk of low snowfall with the already- mentioned snowmaking facilities. The extensive scope of coverage by technical snowmaking gives TMR an absolute advantage among competitors in Slovakia in case of shortage of natural snow. Historically, the Jasná Nízke Tatry resort has had an average of 54 cm of snow coverage during the winter season and the Vysoké Tatry resort 59 cm 1 . Base elevation (m a.s.l.) Summit elevation ( m a.s.l.) 880 1080 805 1400 1025 915 630 720 600 545 540 470 510 2004 2003 2196 2093 1480 1360 1236 1396 1550 1209 770 912 830 0 500 1000 1500 2000 2500 1 A 7-year average on the peak of the Jasná and Vysoké Tatry - Tatranská Lomnica a Štrbské Pleso resorts. Source: www.onthesnow.sk Base & Summit Elevation of Slovak Ski Resorts. 40 Risk Factors and Risk Management Drier winters may increase the cost of snowmaking. On the other hand, warmer weather may hinder the snowmaking, since freezing temperatures are needed, and it may reduce the scope of skiing area. At the same time, the resorts are located in a mountainous area with a generally colder climate. Also, in comparing with other Slovak mountain resorts, TMR’s resorts have start and terminal cableway stations at the highest altitudes. The Polish SON resort, on the other hand, has an advantage in facing north and towards northwest winds. The Austrian Mölltaler Gletscher resort is located on an Alpine glacier, which guarantees a much longer period with snow coverage. The season on the Mölltaler glacier lasts from mid June till following May with the snow coverage reaching 450 cm. Warm thermal water in Tatralandia and in Bešeňová partially offsets the cold weather effects, but Tropical Paradise in Tatralandia eliminates dependence on warm weather completely. As for the summer season in the mountain resorts and the amusement park, favorable weather in the summer months is essential for hiking tourists and visits of amusement parks. COMPETITION The Group’s results also depend on how successfully the Group deals with competition. In the segment of Mountain Resorts TMR competes for visitors on domestic oligopolistic markets in Slovakia, Poland and the Czech Republic, with the position of a leader in terms of size and the range of services. In Austria Mölltaler Gletscher is one of eight ski resorts on a glacier, and among all the Austrian resorts, as well as within Europe the TMR Group faces monopolistic competition with a large number of competitors that provide a wide supply for visitors. TMR utilizes its high-quality services, massive capital investments in resort development, reasonable prices in comparing to alpine resorts, patriotism, and locality with the goal of attracting visitors. Moreover, TMR capitalizes on its competitive advantage of natural monopoly in terms of the strategic location of its key resorts in the Tatras in the highest mountain range in the region to the East and North. In the Golf segment the resorts operated by the Group rank among the top golf resorts in Czechia. In the Leisure Parks segment TMR is also among the top players in the local market of aquaparks, although visitation of aquaparks also depends on the travel distance for the given visitor. Among theme parks Legendia Silesian Amusement Park is one of two top players in the region. The hotels from TMR’s portfolio, restaurants, sports stores and services, and real estate projects of TMR capitalize on their attractive locations directly in the TMR resorts and on synergies within the Group and provide mostly upscale quality. Partially, TMR manages this type of risk with marketing tools, by utilizing its tangible and intangible assets, such as its strategic position in the Tatras mountain range, and by a well- deﬁned corporate strategy described in the Strategy section. OCCUPANCY AND AVERAGE DAILY RATE The Group’s proﬁtability also depends on the occupancy rate of its own hotels and lodging facilities in the resorts. TMR actively works with local lodging operators in marketing the resorts in order to increase occupancy and consequently the number of resort visitors. TMR hotels’ results depend on the occupancy rate and average daily rate per room (ADR). To increase these indicators, it is essential for TMR to invest heavily into development and renovation of its lodging facilities. Besides aggressive marketing activities for peak seasons, TMR actively works to increase occupancy and ADR also during the off-season by marketing conference space to corporate clientele, offering special seasonal or weekend lodging packages in conjunction with events in the hotels or resorts, e.g. live cooking show, culinary festivals, romantic spa weekends, serving “brain food” for corporate clientele, etc. REAL ESTATE MARKET One of the operating segments of TMR is focused on real estate, as described in the Company Proﬁle section. The revenues of this segment depend on sale and/or lease of residences, lodging facilities, and commercial space in the real estate projects. Even though the current performance of the Group does not depend on the success of this segment, its growth depends on the state of the real estate market, which is an external risk factor. This industry is exhibiting an upward trend for the last couple of years (see Market Analysis and Trends). In case of realization of all the projects, TMR can mitigate the risk of low apartment sales with revenues from lease of space, facility management, and operation. Also, TMR intends to capitalize on synergies from other segments, such as marketing, procurement of inventory, human resources, etc. 41 Risk Factors and Risk Management RISK OF UNSTABLE PRICES, ESPECIALLY OF ELECTRICITY AND NATURAL GAS The Group‘s costs are affected, among other things, by the consumption of energy, natural gas, fuel and water. These are directly reﬂected in the operating costs of resorts and hotels, for example from the point of view of electricity consumption in the operation of cable cars and snowmaking equipment. The prices of electricity and natural gas in 2022 within the European Union were well above the average of previous years. The Group had previously contracted the supply of electricity for 2022 in Slovakia and Poland, but not in Austria and the Czech Republic. In Slovakia, electricity is contracted also in 2023. Price increases do not currently signiﬁcantly limit the Group‘s ability to operate its facilities. However, if the electricity prices (as well as natural gas, fuel, water, and other input resources) will increase in the upcoming years, it could signiﬁcantly negatively affect the operating activity, market position, sales, ﬁnancial performance and ﬁnancial prospects of the Group. FINANCIAL RISKS EXCHANGE RATES Volatility of exchange rates in relation to euro is an external risk that affects the Group’s revenues because majority of TMR’s foreign clients come from countries outside of Eurozone (mainly the Czech Republic and Poland). That is why their travel choices are impacted by currency movements. Appreciation of euro in respect to Polish zloty, for instance, negatively impacts the number of visitors from Poland. As a result of ownership of subsidiaries in Poland and in the Czech Republic, the Group is also volatile in respect to exchange rates changes of the local currencies to euro. Investments into the resorts in terms of technology, equipment, renovation, and procurement of inventory are settled in euros, Czech crowns, and Polish zloty. Investments settled in Polish zloty and crowns are thus exposed to volatility of exchange rates. The value of the investment in Melida a.s., which operates the Špindlerův Mlýn resort, is converted from Czech crowns into euros. The Group has a signiﬁcant open position against Czech crown in bonds issued, denominated in Czech crowns. The Group decided to hedge its currency position against ﬂuctuations in the Czech crown for this particular debt instrument using a currency swap. For more information, see Consolidated Financial Statements. INTEREST RATES Volatility of interest rates may have a direct impact on the value of the Group’s interest-earning assets and interest-bearing liabilities. The extent of this risk is equal to the amount of interest-earning assets and interest-bearing liabilities, where the interest rate at maturity or at the time of a rate change is different from the current interest rate. The period of a ﬁxed rate for a ﬁnancial instrument therefore reﬂects the risk for ﬂuctuations in interest rates. The Group’s loan portfolio during 2021/22 consisted mostly of short- and long-term bank debt with ﬁxed and variable rates based on 3-month and 12-month EURIBOR rates. The Group considers the variable interest rate to manage the interest rate risk automatically. In case of economic expansion, EURIBOR grows, but at the same time economic performance of the population should grow, and the Group should be more proﬁtable. In case of economic recession, it is the exact opposite. As EURIBOR currently has positive values, the variable rates do affect the ﬁnancial performance and cash ﬂow sensitivity. Besides bank debt, the Group has also issued bonds with payment of regular ﬁxed coupon which is in no way correlated to any variable rates. Loans granted by the Group earn interest at ﬁxed interest rates, thus the Group mitigates the risk of interest rate ﬂuctuations downward. Exposure to this risk is detailed in Consolidated Financial Statements. CREDIT RISK The Group’s primary exposure to credit risk arises through its trade receivables, lease receivables, other receivables and advances and loans provided. The amount of credit risk exposure is represented by the carrying amounts of these assets in the balance sheet if no form of guarantee is issued. The carrying amount of receivables, advances and loans provided represents the maximum accounting loss that would have to be recognized if the counterparty completely failed to perform its contractual obligations and all collaterals and guarantees would be of no value. Therefore, this value highly exceeds the expected losses included in the provision for unrecoverable receivables. Before the conclusion of major contracts, the Group’s management evaluates the credit risk related to the counterparty at its regular meetings. Provided material risks are identiﬁed, the Group withdraws from concluding the contract. The extent of the risk exposure is detailed in Consolidated Financial Statements. 42 LIQUIDITY Liquidity risk arises in the general ﬁnancing of the Group‘s activities and ﬁnancial positions. It includes the risk of being unable to ﬁnance assets at an agreed maturity and interest rate and inability to liquidate assets at a reasonable price in a reasonable time frame. Individual segments in the Group use different methods of managing liquidity risk. The Group‘s management focuses on managing and monitoring liquidity of each of its controlled companies. In order to manage liquidity, in 2009 the management changed the accounting year for the ﬁnancial year ending on October 31. In the ﬁrst half of its ﬁnancial year the Group has the winter season representing around 60% of the Group‘s income. According to the development in the ﬁrst half-year, the Group is able to affect income and expenses well in advance to keep sufﬁcient liquidity. The seasonality in the resort of Vysoké Tatry is balanced also by a strong summer season in this resort, and it provides more stable liquidity throughout the year. Payment of bond coupons adds to the liquidity risk. The Group‘s risk of insufﬁcient liquidity is currently potentially increased due to the rise of EURIBOR rate, which increases the Group’s debt service from external bank loans. The extent of the risk exposure is detailed in Consolidated Financial Statements. BONDS As of the end of the reported period TMR has bonds issued in several tranches. Currently, the capital structure in terms of the debt-to-equity ratio may cause TMR difﬁculties in obtaining other external ﬁnancing to ﬁnance future investments into its resorts or acquisitions. In case these difﬁculties in obtaining further ﬁnancing should occur, TMR’s growth rate may slow down. It is not certain whether the Group will be able to obtain external ﬁnancing, or whether external debt will be obtained under favorable conditions. Inability to receive or a delay in receiving further external debt as well as ﬁnancing terms, which differ from assumptions, may have a major negative impact on the operations, market position, sales, ﬁnancial performance and ﬁnancial outlook of the Group. For more information see Consolidated Financial Statements. OPERATING RISKS Operating risk is the risk of loss resulting from embezzlement, unauthorized activities, errors, mistakes, inefﬁciency or system failures. This risk arises from all activities of the Group and is faced by Risk Factors and Risk Management 43 Risk Factors and Risk Management all segments within the Group. Operating risk also includes legal risk. The Group‘s goal is to manage the operating risk to avoid ﬁnancial losses and protect the reputation of the Group while maintaining optimal costs and avoiding measures that would hinder initiatives and creativity. The Group‘s management has the main responsibility for implementation of controls related to the management of operating risk. This responsibility is supported by the development of standards for the management of operating risk common for the whole Group. The operational risk is managed by the system of directives, meeting minutes and control mechanisms. The Group’s management strives to eliminate all operating risks by regular checks. SAFETY Safety is one of great concern to TMR since the Group operates in types of business with varied safety risks. TMR is obliged to mitigate safety risk and guard its clients and employees in the following situations: In the course of developing, maintaining, and operating cableways, lifts, trails, swimming pools, toboggans, rollercoasters, golf courses, and other resort facilities In relation to health risks when providing dining services in the restaurants and hotels In relation to operations of the lodging facilities Any accidents and incidents during promotional and collaborative events In relation to compliance with regulations governing provision of ready-made products and services to clients IT SECURITY The Group’s business activities substantially depend on information technology (IT) – with ticket sales platforms; on lift turnstiles; cableway and snowmaking equipment; and in shops, in the Gopass loyalty program and e-shop, restaurants, and hotels. Therefore, the Group takes extraordinary measures to mitigate the risk of break-down with high quality software and hardware components and a strong IT support in order to be able to operate under contingency mode. CAPITAL INVESTMENTS The ﬁrst pillar of TMR’s corporate strategy is based on organic growth through capital investments into its resorts and hotels. Implementation of this strategy requires major capital. Each investment project is carefully analyzed under different scenarios. Despite this fact, there is risk that some of the ongoing or planned projects may be less proﬁtable than previously planned, or even at loss. Unproﬁtable investments may negatively impact the operations, market position, sales, ﬁnancial performance, and ﬁnancial outlook of TMR. ACQUISITIONS TMR plans to strengthen its position on regional markets also through new acquisitions. A risk exists that acquisitions of other entities will negatively impact future income and results of TMR, speciﬁcally in case of choosing the wrong acquisition target, unfavorable terms, or inability to receive permissions from relevant regulators (especially failure to obtain permission from the antimonopoly bureau). In case such event should happen, it may negatively impact the operations, market position, sales, ﬁnancial performance, and ﬁnancial outlook of TMR. ENVIRONMENTAL ISSUES The Group’s capital investments in protected outdoor areas may be subject to approvals of various governmental and environmental bodies. Since the Group conducts its operations mostly in mountainous areas, part of which belong to protected national parks, some capital investment projects may be subject to approval of various governmental bodies. Each new investment project in such area related to expansion of snowmaking, construction of a cableway, etc. must ﬁrst undergo the Environmental Impact Assessment (EIA), one of main instruments of the international environmental policy of sustainable development, and it must be approved by relevant bodies of environmental protection. TMR’s resorts in Slovakia are located in already urbanized areas and comply with all environmental regulations, although development of the SON resort in Poland as well as planned projects in Slovakia and Czechia still need to undergo the EIA process. FINANCIAL PERFORMANCE REVIEW FOR THE YEAR 46 Financial Performance Review for the Year KEY RESULTS Total consolidated revenues increased by 107.7% to EUR 133.621 mil. (64.697) Consolidated operating proﬁt before interest, tax, depreciation and amortization (EBITDA) amounted to EUR 33.696 mil. (7.000) TMR operated with EBITDA margin of 25.2% (10.8%) Net consolidated loss amounted to EUR -11.947 mil. (-45.876) Net consolidated earnings per share amounted to EUR -1,694 (-6,816) The number of visitors to Mountain Resorts increased to 2.660 mil. (1.163); Leisure Parks recorded 1.416 mil. (483 ths.) visitors Selected Consolidated Audited Results (IFRS) in €‘000 FY 2021/22 FY 2020/21 Sales 131 812 63 458 Other Operating Revenues 1 809 1 239 Total Revenues 133 621 64 697 Consumption of Material and Goods -19 070 -18 263 Personnel and Operating Expenses -84 681 -39 459 Other Gain/ Loss 3 826 25 EBITDA 33 696 7 000 EBITDA Margin 25,2% 10,8% Depreciation & Amortization -23 388 -21 525 Gain/ Loss on Adjustment to Fixed Asset Value -5 863 -4 824 Gain on bargain purchase 13 162 -5 238 Impairment of non-current assets -5 977 756 EBIT 11 630 -23 831 Interest Income 47 153 Interest Expense -22 915 -21 708 Gain/ Loss on Financial Operations net -2 356 -130 Gain/ Loss from Disposals of Subsidiaries -482 0 Gain/ Loss of Investments in Joint Ventures and associates accounted for using the equity -163 -1 000 Pre-tax Income -14 239 -46 516 Current Income Tax -776 -70 Deferred Income tax 3 068 710 Net Loss -11 947 -45 876 Total Comprehensive Income -12 500 -46 763 EPS (€) -1,694 -6,816 47 FINANCIAL PERFORMANCE REVENUES The Group‘s total consolidated revenues for the past ﬁnancial year increased by almost 107.7% to EUR 133.621 mil. (64.697). Thereof, sales amounted to EUR 131.812 mil. (63.458) and the rest are other operating revenues of EUR 1.809 mil. (1.239). The result was positively impacted mainly by the higher visit rate at the resorts compared to the last ﬁnancial year, which was signiﬁcantly affected by the COVID-19 pandemic during the main winter season. Revenues also includes the newly acquired water park Bešeňová, which is in Group’s portfolio since April 2022. Without considering the impact of water park Bešeňová, revenues increased by 84% yoy. EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) Another TMR’s key ﬁnancial performance indicator – EBITDA – amounted to EUR 33.696 mil. (7.000); which represents an 381% increase result compared to the previous ﬁnancial year. The increase is mainly due to reason that the Group ski resorts, leisure parks and hotels during the winter season operated with lifted restrictions. Consumption of materials increased by 4.4%; personnel and operating costs were increased by 114.6% yoy, due to increase of energy prices, which was then reﬂected in the increased prices of goods and services. TMR’s operating proﬁtability ratio (EBITDA margin) reached the level of 25.2% (10.8). DEPRECIATION AND AMORTIZATION, IMPAIRMENT LOSS The depreciation and amortization costs slightly increased to EUR 23.388 mil. (21.525) mainly due to completed investments and the acquisitions of the water park Bešeňová. Depreciation of the carrying amounts of property, plant and equipment acquired through leasing amounted to 5.863 mil. EUR. For more information on provisions for ﬁxed assets and proﬁt from the bargain purchase, see Consolidated Financial Statements, Notes 5, 15, 16, 17. FINANCIAL ACTIVITY Interest income of EUR 0.047 mil. (0.153) mainly stemmed from loans granted, earning ﬁxed interest rates. Interest expense rose to EUR 22.916 mil. (21.708); it includes mainly loan expenses and expenses of the issued bonds (see Consolidated Financial Statements, Note 12). NET INCOME The Group recognized a net consolidated loss in the amount of EUR -11.947 mil. (-45.876). Loss attributable to owners of the parent company amounted to EUR -11.412 mil. (-45.717). EPS reached EUR -1.694 (-6.816). Total comprehensive income after accounting for foreign currency translation reserve and loss on cash ﬂow hedging amounted to EUR -12.500 mil. (-46.763). The parent company reported a net proﬁt of EUR 3.287 mil. (-16.905). Financial Performance Review for the Year Key Operating Results Revenues EBITDA EBITDA Margin in €'000 FY 2021/22 FY 2020/21 Change yoy (%) FY 2021/22 FY 2020/21 Change yoy (%) FY 2021/22 FY 2020/21 Change yoy (p.p.) Mountain Resorts 52 403 18 875 177,6% 17 937 348 5054,2% 34,2% 1,8% 32,4% Leisure Parks 16 588 7 446 122,8% 5 562 2 673 108,1% 33,5% 35,9% -2,5% Golf 741 677 9,4% 173 446 -61,2% 23,3% 65,9% -42,5% Dining 19 628 9 022 117,6% 2 790 184 1418,8% 14,2% 2,0% 12,3% Sports Services & Stores 5 321 2 869 85,5% 541 -269 301,1% 10,2% -9,4% 19,4% Hotels 37 886 15 783 140,0% 3 661 540 578,1% 9,7% 3,4% 6,2% Real Estate 1 055 10 023 -89,5% 3 033 3 078 -1,5% 287,5% 30,7% 256,8% Total 133 621 64 695 106,5% 33 696 7 000 381,4% 25,2% 10,8% 14,4% RESULTS BY SEGMENTS 48 Financial Performance Review for the Year 1 The visit rate in Mountain Resorts in the summer season is measured in terms of used entry tickets to cableways and in the winter season in terms of used skier days, i.e. the number of persons that visited a mountain resort during any part of the day or night for the purpose of skiing, snowboarding, or other downhill slide. E.g., a 4-day ticket means four skier days in Mountain Resorts. 2 The Group is currently not observing the visit rate and the average revenue per visitor from entries, dining, and sports services and stores in the golf resorts. Sports Services & Stores Dining 0,00 € 1,00 € 2,00 € 3,00 € 4,00 € 5,00 € 6,00 € 2017/18 2018/19 2019/20 2020/21 2021/22 KEY PERFORMANCE INDICATORS (KPIS) The visit rate in the Mountain Resorts segment in 2021/22 increased year-over-year by 128.5% to 2.660 mil. (1.163) visitors/ skier days 1 , whilst it includes skier days from the Austrian resorts of Mölltaler Gletscher, Ankogel and Muttereralm. On the like-for-like basis the visit rate increased by 126%. This positive result reﬂects the impact of the easing pandemic measures compared to the previous ﬁnancial year, when the resorts were. Average revenue per visitor per day increased by 27.8% to EUR 16.52 (12.93). Leisure Parks reported an 193% rise in the visit rate to 1.416 mil. (483 ths). The increased number of visitors is due to ease of pandemic measures in segment and moreover it includes visitors of newly acquired water park Bešeňová, which has been part of the Group since April 2022. The average revenue per visitor also rose, by 9.1% to EUR 10.83 (9.93). The resort clients spent less in dining facilities on and off the slopes and in the leisure parks. Average dining revenues thus decreased by 9.2% to EUR 4.43 (4.88). Sports Services & Stores, which largely depend on performance of the resorts, reported average revenues per visitor down 22.6% to EUR 1.38 (1.78). 2 Average revenue per visitor Visit rate Visit rate Average revenue per visitor 0 € 2 € 4 € 6 € 8 € 10 € 12 € 14 € 16 € 18 € 0 500 000 1 000 000 1 500 000 2 000 000 2 500 000 3 000 000 2017/18 2018/19 2019/20 2020/21 2021/22 Average revenue per visitor Visit rate Visit rate Average revenue per visitor 0 € 2 € 4 € 6 € 8 € 10 € 12 € 14 € 16 € 0 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 2017/18 2018/19 2019/20 2020/21 2021/22 Mountain Resorts‘ KPIs Leisure Parks‘ KPIs Average revenue per visitor in selected segments 49 50 Financial Performance Review for the Year The weighted average occupancy of the TMR hotel portfolio increased by 17.1 percentage points to 54.2% (37.4), mainly as a result of the easing pandemic measures. The weighted average daily room rate (ADR) increased by 26.5% to EUR 107.12 (84.70). FINANCIAL OPERATING RESULTS 3 MOUNTAIN RESORTS Revenues of the largest segment, Mountain Resorts, make up 39.2% (29.2) of the Group’s total operating revenues. Revenues are mostly generated from ski pass sales in the resorts of Jasná Nízke Tatry, Vysoké Tatry, Szczyrk Mountain Resort, Ski Resort Ještěd and the Austrian resorts Mölltaler Gletsche, Ankogel and Muttereralm. Other revenues are generated from the lease of advertising and other space, marketing events in the resorts, and management advisory fees for the Špindlerův Mlýn resort. As a result of the improvement pandemic situation related to the spread of the COVID-19, the Group recorded an almost 177% increase in revenue of Mountain Resorts to EUR 52.403 mil. (18.875). The Mountain Resorts’ EBITDA increased year-over- year to EUR 17.937 mil. (0.348), reaching operating proﬁtability of 34,2% (1.8). LEISURE PARKS The Leisure Parks’ revenues are mostly generated from entry tickets to Aquapark Tatralandia and Legendia – Silesian Amusement Park and since April 2022 also includes entry tickets to water park Bešeňová make up 12.4% (11.5) of total revenues. In the ﬁnancial year 2021/2022 revenues increased by almost 123% to EUR 16.588 mil. (7.446). The increase was caused by a rise in the visit rate due in Aquapark Tatralandia and especially in Legendia, where record breaking visit rate was achieved. Higher revenues were also due to new acquisition of water park Bešeňová. EBITDA rose by 108% to EUR 5.562 mil. (2.673). Operating proﬁtability of Leisure Parks slightly decreased to 33.5% (35.9). GOLF Revenues of the newest Golf segment come from the operation of two leased Czech golf resorts of Golf & Ski Resort Ostravice and Golf Resort Kaskáda, speciﬁcally from green fees, membership and coach fees, green card fees, and from golf cart rental. The segment revenues reached the amount of EUR 741 ths. (677). The operating performance indicator, EBITDA, amounted to EUR 173 ths. (446). DINING The Dining segment revenues of the reported period are generated in the Group’s dining facilities and après ski bars in the resorts Jasná Nízke Tatry, Vysoké Tatry, Szczyrk, Ještěd, Mölltaler Gletscher, Muttereralm in both golf resorts, and all leisure parks. Last year’s revenues of the segment make up 14.7% (14) of total revenues. Total revenues reached EUR 19.628 mil. (9.024), or a 117.6% increase. The segment’s operating proﬁtability reached 14.2% (2), whereas EBITDA 3 In the FY 2018/19 the Group changed its segmentation from three key segments: Mountains & Leisure (with its subsegments Mountain Resorts, Leisure Parks, Dining, and Sports Services and Stores), Hotels, and Real Estate to seven equal segments: Mountain Resorts, Leisure Parks, Golf, Dining, Sports Services and Stores & Leisure, Hotels, and Real Estate, whilst the Golf segment was added. Occupancy (%) Average price (EUR) ADR (EUR) Occupancy (%) 0 10 20 30 40 50 60 70 0 20 40 60 80 100 120 2017/18 2018/19 2019/20 2020/21 2021/22 KPIs of Hotel Portfolio Mountain Resorts Leisure Parks Golf Dining Sports Services & Stores Hotels Real Estate 39,2% 12,4% 0,6% 14,7% 4,0% 28,4% 0,8% Revenue Breakdown 51 Financial Performance Review for the Year increased to EUR 2.790 mil. (0.184). The success of this segment to a certain extent depends directly on the success of the resorts and parks, as these are ancillary services in the resorts and leisure parks. SPORTS STORES & SERVICES Last year’s revenues generated from the sports stores, ski schools, sports equipment rentals and service in Mountain Resorts under the Tatry Motion, Szczyrk Motion and Ještěd Motion brands, revenues from the sports stores and services in the golf resorts, and revenues from the stores in the leisure parks made up a 4% (4.4) share in total revenues. The segment’s revenues grew by 85.5% to EUR 5.321 mil. (2.869). The operating performance, EBITDA, increased to EUR 0.541 mil. (-0.269) and the segment’s operating proﬁtability reached 10.2% (-9.4). HOTELS The Group’s second largest segment is Hotels, revenues of which for the reported period made up a 28.4% (24.3) share in total revenues. Due to better situation with COVID-19 compared to previous ﬁnancial year and higher occupancy, the segment reported an 140% increase in revenues to EUR 37.886 mil. (15.783). EBITDA grew to EUR 3.661 mil. (0.540) with the corresponding EBITDA margin of 9.7% (3.4). REAL ESTATE The last year’s revenues of the Real Estate segment come from the lease Hotel Liptov, Kosodrevina Lodge, and the lodging facility Otupné to third parties, as well as from sale of recreational real estate (Chalets in Jasná, cottages in Tatralandia). The segment’s revenues in the past ﬁnancial year made up 0.8% (15.5) of total revenues and they amounted to EUR 1.055 mil. (10.023). EBITDA slightly decreased to EUR 3.033 mil. (3.078). Explanations () - data in brackets refers to the corresponding value of previous period ADR - Average daily room rate EBITDA - represents the proﬁt from regularly recurring activities of the company before taxes, interest, amortization and depreciation adjusted for other income and expenses, which are listed under EBITDA, in particular proﬁt / (loss) from ﬁnancial operations representing foreign exchange gains / (losses). The EBITDA indicator adjusted in this way is used by the company‘s management to manage the performance of the company as well as its individual segments. FY - ﬁnancial year, period from 1 November to 31 October KPIs - Key Performance Indicators p.p. - percentage points mil. - millions ths. - thousands Change yoy - change year-over-year GROUP’S POSITION AT THE END OF THE YEAR 54 FINANCIAL POSITION LIQUIDITY As of the end of 2020/21 the Group operated with liquid funds in the amount of EUR 15.600 mil. (15.553) in the form of cash and cash equivalents. The increase is due to higher amount of revenues in the second half of the year. BORROWINGS The total value of the Group’s borrowings as of 31. October 2022 amounted to EUR 389.016 mil. (368.431). Out of that issued bonds were valued at EUR 266.186 mil. (260.805). During the ﬁscal year, the Group drew its bank borrowings from the J&T Banka, while the loans were used to cover the purchase price of shares of the EUROCOM Investments, s.r.o., reﬁnancing of loans in acquired companies EUROCOM Investments and World Exco and ﬁnally the construction of cableway Biela Púť and Priehyba. The level of the Group’s debt as of the period end was at 92.2% (89.1%) (total debt-to-capital ratio). Total debt-to-EBITDA ratio reached the level of 11.5 (52.6) as of 31/10/2022 (See Consolidated Financial Statements, Note 28). TOTAL ASSETS The book value of total assets increased to EUR 574.613 mil. (556.761). Value of current assets decreased to EUR 37.054 mil. (41.971) mostly due to a decrease volume of trade and other receivables. Non-current assets increased to EUR 482.872 mil. (459.657) mainly due to completed investments that were added to the ﬁxed assets registry. The value of ﬁxed assets amounted to EUR 482.872 mil. (459.657). The key completed investments transferred to ﬁxed assets included new cableway in Jasná mountain resort, acquisition of a new dining facility Humno in Tatranská Lomnica, expansion and improvement of snowmaking in Jasná, construction of the new hotel Jasná Central Resort Hotel and other minor investments. (See Consolidated Financial Statements, Notes 15-18). EQUITY The book value of shareholders’ equity amounted to EUR 33.007 mil. (45.123), whilst retained earnings and other funds totaled EUR -34.065 mil. (12.755). Minority interest amounted to EUR -646 ths. (-442). Group’s Position at the End of the Year Financial Position in €‘000 (unaudited) October 31 2021/22 2020/21 Total Assets 574 667 556 761 Non-current Assets 537 613 514 790 Fixed Assets 482 872 459 657 Other Non-current Assets 54 741 55 133 Current Assets 37 054 41 971 Liquid Assets 15 600 15 553 Equity 33 007 45 123 Liabilities 541 661 511 638 Non-current Liabillities 413 244 435 448 Current Liabilities 128 417 76 190 Total Debt 389 016 368 431 55 CAPEX In the past ﬁnancial year, the Group completed several investment projects with a total value of almost EUR 23.6 million. Signiﬁcant investments include construction of the cableway Biela Púť and Priehyba, improvement of snowmaking system, acquisition of dining facility Humno in Tatranská Lomnica, the completion of snowmaking reservoirs Zadné vody, continuation of construction works at Centrum Jasná development project and other minor investments in Slovak resorts. In Szczyrk mountain resort, the Group invested in dining facilities, improving the safety of bike park and purchase of lands. The Group in Poland has also invested in maintenance of amusement park Legendia. In Ještěd, the Group invested in project “Nová Skalka” and in minor operational investments. Within the golf segment in the Ostravice and Kaskáda resorts, the Group focused on operational investments. In Austria, the Group has invested into new access system at the Mölltaler and Ankogel resorts. In Muttereralm the Group has invested into development of the existing bike park. ACQUISITIONS TMR after long term business and marketing cooperation with water park Bešeňová, acquired through its subsidiary TMR Parks, a.s. (TMR Parks) entered into share purchase agreements, which resulted into transfer of shares of the EUROCOM Investment, s.r.o. and WORLD EXCO s.r.o. to the company TMR Parks. The purchase agreement was signed on 31 March 2022, which transferred the shares to TMR Parks, thus water park was added to the TMR portfolio. On 22 June 2022, the company International TMR services s.r.o. was founded. On 1 July 2022, the Group acquired 100% share in the company GOPASS SE, which will serve for the purpose of expanding on the European market. CASH FLOW Cash ﬂow generated from operating activities reached EUR 32.971 mil. (12.576). Cash ﬂows assigned for investment activity reached EUR -20.433 mil. (-8.617), whilst cash ﬂow for acquisition of property amounted to EUR -23.535 mil. (-10.555). The Company recorded cash ﬂows generated from ﬁnancing activities in the amount of EUR -12.491 mil. (4.433). OUTLOOK The management expects a recovery of the tourism industry after unprecedented years signiﬁcantly affected by several waves of the COVID-19 pandemic. The Group expects continuing positive effects stemming from capital investments of prior periods with impact on the next ﬁnancial year and following periods, in terms of increasing the visit rate, client spending in the resorts, and growing occupancy in the hotels, especially in the off-season. The intense activity in the Real Estate segment is expected to continue also in the following periods, which should generate additional revenues and income not only in this segment but also in hotels and ancillary services through shops and dining facilities. Besides continuing the gradual progress in the projects of modernization of all the resorts and building infrastructure, in the short term the management will keep focusing on inter-segment synergies, quality management, utilization of innovative information technologies, on increasing the quality of services Group’s Position at the End of the Year Cash Flows in €‘000 November 1 - October 31 2021/22 2020/21 Cash Flow from Operating Activities 32 971 12 577 Cash Flow from Investing Activities -20 433 -8 618 Cash Flow from Financing Activities -12 491 4 433 Net Increase in Cash and Cash Equivalents 47 8 392 56 provided and quality of human capital, and on active sales strategy also through the GOPASS program. In terms of expansion of TMR’s operations will focus on operation of lodging capacities for third parties, and the development of activities in the golf segment. In the midterm horizon TMR also plans further development of the Austrian resorts. OTHER FINANCIAL INFORMATION AFTER BALANCE SHEET PERIOD ITEMS On 1 November 2022, there was a merger of the companies EUROCOM Investment and WORLD EXCO, the legal successor of which was the company EUROCOM Investment, and at the same time there was a cross-border merger of the companies GOPASS SE and GOPASS, a.s., the legal successor of which was the company GOPASS SE with headquarter in the Czech Republic. On 3 November 2022, TMR VI bond in the value of EUR 57.448 mil. were traded. On 7 November 2022, TMR paid out the principal and coupon of the TMR F CR 4.5% / 2022 bond in the amount of CZK 1.534 bil. On 8 November 2022, the company GOPASS SE was founded, an organizational component in Slovakia. It is a foreign company of the European company GOPASS SE. The management of TMR negotiated with the bank to increase the overdraft account by an additional EUR 4 mil. On 2 February 2023, TMR paid out the coupon of TMR V bond in the amount of EUR 6.600 mil. Explanations () - data in brackets refers to the corresponding value of previous period mil. – millions ths. – thousands Total Debt-EBITDA ratio – is calculated as a sum of current and non-current loans and borrowings and other current liabilities to the amount of liabilities towards shareholders from the decrease of share capital, divided by EBITDA for the reported period EBITDA – represents the proﬁt from regularly recurring activities of the company before taxes, interest, amortization and depreciation adjusted for other income and expenses, which are listed under EBITDA, in particular proﬁt / (loss) from ﬁnancial operations representing foreign exchange gains / (losses). The EBITDA indicator adjusted in this way is used by the company‘s management to manage the performance of the company as well as its individual segments. Group’s Position at the End of the Year 57 Group’s Position at the End of the Year CORPORATE SOCIAL RESPONSIBILITY 60 ENVIRONMENT AND COMMUNITY TMR owns and operates major tourist resorts mainly in Slovakia, but also in Poland, the Czech Republic and Aus- tria. Majority of these resorts is located in the area of natio- nal parks. The Company concentrates solely on traditional, already urbanized areas, where sports and tourism have been a tradition for decades. From TMR’s point of view pro- tecting fauna and ﬂora is a very important part of ongoing investments, and of continuing development of summer and winter tourism in all the resorts of its portfolio. That is why every investment TMR makes and every action it takes is analysed in terms of impact on the environment. IMPACT OF BUSINESS ACTIVITIES ON ENVIRONMENT TMR in all its investment and operational activities cares for environment protection and minimal impact on the natural environment. The Company takes environment into consideration during the course of its business ac- tivities and tries to minimize their impact in every seg- ment. TMR’s effort is to select services and products in such a way that the impact on the environment is mini- mal. Moreover, the Company does its best to restrict re- latively the use of natural resources and optimize waste production. TMR spreads this attitude towards environ- ment internally among its employees and externally within communities by means of initiatives and events. The goal of TMR is to conduct business activities with a minimum energy and fuel consumption. With this goal in mind the Company also adapts its capital investments into new cableways. These new cableways are built with the latest energy efﬁcient technologies from top world producers, like Doppelmayr and Leitner. Green Energy For its operations the Company also utilizes „green ener- gy“ – electric energy from renewable resources, i.e. solar, water, and wind energy, for which it was granted a certi- ﬁcate from the supplier. In every segment the Company aims to utilize efﬁcient management of operations at an optimal level of energy consumption, and moreover, the Company consistently works on improving operational efﬁciency. In addition to the selection of energy efﬁcient cableways TMR also cares for the correct choice of trail- -grooming vehicles that have lower emissions and thus decrease the impact on the environment. EU Taxonomy In accordance with regulation (EU) 2020/852 of the EP and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and related delegated acts (hereafter referred to as „EU Taxonomy“ or „EU Regulation 2020/852“). Group‘s management considers following economic activities of the Group as eligible in ac- cordance with Commission Delegated Act (EU) 2021/2139: 4.9. Transmission and distribution of electricity 4.22. Production of heat/cool from geothermal energy 7.1. Construction of new buildings In accordance with EU Taxonomy, an eligible economic activity is such an activity that is described in the dele- gated acts to the EU Regulation 2020/852 regardless of the fact whether such activity meets the technical crite- ria determined within these delegated acts. Assessment of whether a certain economic activity is eligible under EU Taxonomy therefore does not necessarily means that such activity will also be considered as environmentally sustainable economic activity and that it would substan- tially contribute to one or more environmental objectives set within EU Taxonomy. Starting from the following FY 2022/2023 the Group will disclose additional information on alignment of its economic activities. It is also expected that the scope of the assessment will increase after cri- teria for additional environmental objectives are added and further relevant economic activities will be included, like sports and recreational activities, which are not part of EU Taxonomy yet and it’s a main economic activity of the Group. Considering the difference in the scope of as- sessment for the current FY22 and for the future ﬁnan - cial years the information may not be comparable. The proportion of Taxonomy- eligible and Taxonomy non- eli- gible economic activities on the consolidated turnover of the Group, its consolidated capital and operational ex- penditure for FY 2021/2022 is provided in the table below. Corporate Social Responsibility Economic activities Turnover 1 CapEx 2 OpEx 3 Taxonomy - eligible activities 1,62% 0% 0,04% Taxonomy - non-eligible activities 98,38% 100% 99,96% Total (in ths. of EUR) 131 812 23 616 99 925 1 The total net turnover for the accounting period (EUR 131,812 thousand) includes the amounts received from the sale of products or the provision of services after deduction of discounts, value added tax and other taxes directly related to the turnover. See Consolidated Financial Statements, Note 6. The net turnover for eligible activities represents the turnover from the sale of electricity for the electricity supplier and the sale of heat from geothermal energy for the hotels Diamant and Luka in water park Bešeňová. 2 CapEx for the accounting period include additions to real estate, machinery and equipment and intangible assets (EUR 23 616 ths.). See Consolidated Financial Statements, Note 15 - 17 3 OpEx include direct non-capitalized costs associated with research and development, measures in the ﬁeld of building renovation, short-term leasing or maintenance and repair and all other direct expenses associated with the day-to-day maintenance of real estate, machinery and equipment by the company or a third party externally performing the relevant activities that are necessary to ensure the continuous and efﬁcient operation of such property. OpEx for eligible activities represents costs associated with the maintenance of the cogeneration unit in water park Bešeňová. 61 PROJECTS OF 2021/22 TMR’s projects last year referred to activities of prior periods, when TMR made an active contribution to restoration of the areas, in which TMR’s business activities are performed. In spite of limitations regarding the COVID-19 measures, the Group was also proactive in preparation of educational activities focused on various age groups of the population. In Slovakia TMR has been very active in cooperation with district tourism organizations (DTOs). TMR is a member of three DTOs covering the whole region of the Company‘s operation. It includes the following DTOs: DTO High Tatras Region DTO Liptov Region DTO Horehronie Region All these organizations developed projects of common communication and/or support to the regional infrastructure aiming to improve their establishment on the tourism market. The parties involved managed to put together funds of businesses operating in tourism and local governments; and, in accordance with the Act on Tourism, the state contributed to the projects in form of grants; as a result, funds were raised for common support of the regions. Tatry Magazine All DTOs supported their common image magazine for visitors of Tatras named Tatry Magazine. The magazine provides a lifestyle communication of attractions, events, prominent people, and news in the broad Tatra region. Nature and Children Education promoting positive approach to nature is apparent in many of the Companys activities. The key projects which usually focus on tutorial and educational tasks are ‘Drakopark Chopok’, ‘Tatra Wilderness’, ‘Snow Dogs’ and ‘Bear Days’. During summer families with children discovered secrets of the mountains and Demänovská Valley, looking for traces of the Demian, the Dragon. An educational trail for children covering even larger area is presently under construction in the High Tatras. The nature trail named Tatry Wild resulted from TMR’s cooperation with the State Forests Enterprise of TANAP National Park and the Management of TANAP National Park. This project gradually expands from Tatranská Lomnica, through Hrebienok to Štrbské Pleso. The most attractive part of the project is the eco-mini park Marmot Cave at Skalnaté Pleso – an environment- friendly educational and fun park for children. Green Chopok Volunteers traditionally meet at Mt. Chopok for the Green Chopok event to clean up ski trails and surroundings from garbage and rocks after the ski season is over. Besides cleaning the trails, the fans of mountains also usually plant trees at Mt. Chopok. Around 140 volunteers and fans of mountains from 4 countries participated. Last year, the 11th year of the event took place. Planting also took place in the High Tatras region. Sports Events The Group proactively supports sport events in its resorts, either as a partner or as a sponsor. Supporting Athletes TMR supports talented pro skiers that are members of the Slovak Skiing Association and that have achieved extraordinary performance results in the past year, have represented Slovakia in international races, and have ﬁnished in top ranks in alpine disciplines. Ski pistes in Jasná have become home of traditional Wallachian sheep TMR supports good ideas and activities focused on the outdoors where it is centered. The goal of the project is to maintain the traditional breed of Wallachian sheep in the Liptov region, where it used to occur in the past, but today its occurrence is rather rare. Its main task was grazing mountain meadows at high altitudes. However, its breeding began to be abandoned due to low milk production. However, their role in the maintenance of mountain meadows and their value in preserving the shepherding tradition is high. In the last year, Wallachian sheep settled on the northern side of Chopok in location Priehyba. Visitors had the opportunity to look into the history of sheep breeding and see this rare breed and its breeding method in the beautiful environment of the Low Tatras. Corporate Social Responsibility 62 Corporate Social Responsibility For a Better Life in the Town of Vysoké Tatry In 2019 TMR launched a grant program entitled For a Better Life in the town of Vysoké Tatry. The aim of the program is to support the public beneﬁt activities of the inhabitants of Vysoké Tatry, which will contribute to improving the quality of life in the city for its inhabitants. The program aims to motivate people and organizations in the High Tatras to identify what needs to be improved, repaired or created for the beneﬁt of the local community. The added value of the submitted projects is that applicants will actively participate as volunteers in the implemented ones. In 2019 and 2020 TMR supported seventeen projects in the total amount of EUR 40 thousand. Thanks to the grant schoolchildren from the surrounding villages acquired new sports equipment, and landscaping of the sports complex and adjacent cross-country ski trails near the settlement of Tatranská Polianka has been completed. For the upcoming year a vale of EUR 20 thousand has been set aside, while the maximum support per project is EUR 5 thousand. Help in the times of war in Ukraine During the war in Ukraine, TMR provided accommo- dation and work for refugees from Ukraine. TMR in cooperation with the civic “Tatry máme radi” (We like the Tatras) has offered homes to 53 people from Ukraine in Veľká Lomnica and has been helping them integrate into the life. 63 HUMAN RESOURCES Human resources are an important factor in the Group’s success, thus the HR department continues to follow the preset course of enhancing the processes in the HR management, jobs stabilization, continuing employee education, and utilization of all modern HR tools in order to achieve quality, stability, and the Group’s growth. The annual average number of the Group employees for the ﬁnancial year 2021/22 totaled 1,359 (1,193 in 2020/21). In the reported period the Group was using services of human resource agencies in hiring short term employees. In 2021/22 707 employees were hired this way (72 in 2020/21). The signiﬁcant increase in the number of employees reﬂects the recovery of tourism after the COVID-19 pandemic. TMR strives to provide equal employment opportunity. On average, the Group employs 57% men and 43% women. In 2021/22 the Group published 622 job offers and recorded 4,850 responses. The number of the job offers published is the reﬂection of the labor market which is facing a lack of skilled labor force in the whole EU. Due to this status quo TMR puts emphasis on internal learning, requaliﬁcation of the human capital, and employees’ personal growth, thus TMR prefers internal recruitment in the hiring process. PROJECTS The key performance indicator of TMR’s employees is TMR’s clients’ satisfaction and their return to TMR’s resorts. On the other hand, it is important for the Group to monitor satisfaction of its employees and to focus on their personal and professional growth. COMMUNICATION Last year several projects were launched aimed to support and speed up employees’ integration (new and senior) as well as to support communication among all resorts, passing of information among all employees on the Group’s news, its strategy, new projects, and strengthening and adoption of corporate values. TeMeR newspaper – subtitled “Newspaper not only for Tatry mountain resorts employees” is one of the communication channels distributing up-to-date in formation about the Group’s news. Employee brochure – provides basic information on TMR, on its acquisitions, values, its vision and social program. It serves as a guide in the onboarding process and provides useful information also for long-time employees. Evaluation dialogues – are a tool to raise employee performance by setting goals and their evaluation. Setting of personal and career growth is a part of the dialogues, as well as deﬁning job learning for the following year. COOPERATION WITH SCHOOLS AND UNIVERSITIES TMR puts emphasis on building relationships with high schools and universities in a way so that the Group can create an efﬁcient source of qualiﬁed and highly professional employees. TMR continued in its dual education programme. In the school year 2021/22 there were 103 students from Hotel Academy in Liptovský Mikuláš, and from the Specialized Hotel School in Starý Smokovec, involved in the program- me. TMR has also a cooperation memorandum sig- ned with the Catholic University of Ružomberok in the form of participating in the ERAZMUS plus programs. There were approximately 57 foreign full- -time students of the university working part-time for TMR during the school year 2021/22. SOCIAL PROGRAM AND BENEFITS The well-designed social program includes many activities, the goal of which is to fully unify TMR em- ployees and to achieve comprehension and adoption of TMR goals in order to build corporate culture and create a feeling of corporate togetherness. The em- ployees have a chance to use a wide variety of em- ployee beneﬁts. Also, this way TMR wants to enable the employees and their families to try out all the ser- vices that TMR offers, and thus to boost the overall transfer of knowledge about the products and last but not least to spread positive word of mouth in the- ir networks. CORPORATE GOVERNANCE 66 CORPORATE GOVERNANCE PRINCIPLES TMR’s corporate governance is regulated by the principles and methods outlined in the Company Articles, TMR’s Code of Conduct, in the Corporate Governance Code of companies in Slovakia, in the Rules of Organization and in the set of managing acts (guidelines), which are published at the Company‘s registered ofﬁce. The principles and methods are communicated to the Company‘s employees. CORPORATE BODIES AND MANAGEMENT BOARD OF DIRECTORS The Board of Directors is a statutory body of Tatry mountain resorts, a.s. The Board of Directors regulates the Company‘s activities and decides all Company matters, unless legal regulations or the Company‘s Articles stipulate that such matters fall under the competence of the General Meeting or the Supervisory Board. Besides other documents, the Board of Directors submits the draft investment and ﬁnancial plan for approval by the Supervisory Board and is responsible for meeting the plan. Furthermore, it also submits proposals for the approval of ﬁnancial and business transactions with a value exceeding EUR 150 000 by the Supervisory Board. The Board of Directors submits the Company Articles for approval by the General Meeting. The Board of Directors convenes the General Meeting at least once a year. The power to act on behalf of the Company in all matters is always held jointly by two members of the Board of Directors. Members of the Board of Directors are elected and removed by the Supervisory Board. The term of ofﬁce of members of the Board of Directors is ﬁve years; re-election is not allowed. Additionally, the Supervisory Board shall appoint the Chairman and the Vice-Chairman of the Board of Directors from among the members of the Board of Directors. The Board of Directors does not have its own Statute or Committees. The Board of Directors holds sessions as necessary; at least once in two months. The Board of Directors holds a quorum if a session is attended by a majority of all members of the Board of Directors. A decision of the Board of Directors is adopted if all the members of the Board of Directors voted in the afﬁrmative. As of 31 October 2022, the Board of Directors comprised of three members: Igor Rattaj - chairman of the Board of Directors Jozef Hodek - member of the Board of Directors Čenek Jílek - member of the Board of Directors MEMBERS OF THE BOARD OF DIRECTORS Igor Rattaj - Chairman of the Board of Directors since 28/05/2020 Mr. Rattaj became the Chairman of the Board of Directors in May 2020. Previously, he has held the ofﬁce of the Chairman of the Supervisory Board of TMR since June 2009, when he was elected by the General Meeting as a member of the Supervisory Board and reelected by the General Meeting on 12/04/2014 and re-elected on 17/04/2019. He has extensive experience in ﬁnance. Additionally, he is a member of Supervisory Boards and an Executive in a number of companies. He worked as Director for Trading with Securities in J&T Securities. Previously, he held the position of Vice-Chairman of the Board of Directors and Director for Private Banking at “Podnikatelská banka” in Prague. He graduated from the Slovak University of Technology, Faculty of Electrical Engineering in Bratislava. Besides his role as TMR’s Chairman of the Supervisory Board, Ing. Rattaj holds positions as a member of the Board of Directors of 1. Garantovaná, a.s., a vice- chairman of the board of directors of CAREPAR, a.s., Czechia, a member of the board of directors of Park Orbis Pictus a.s., Czechia, a member of the Board of Directors at MELIDA, a.s., the Czech Republic, a member of the board of directors of NARCIUS, a.s., and a director and a management board member of HOBACOR, a.s., Czechia. He also serves as a legal representative at KPRHT 5, s. r. o., Thalia s.r.o., C4U, s.r.o, MONTIR, s.r.o. RCBT, s. r. o., ORBIS NATURA, s.r.o., Czechia, MORAVA SPORT, s.r.o., the Czech Republic, 360 real facilities s.r.o., the Czech Republic. He is also a member of the Supervisory Board of RIVERSAND a. s., Proﬁmedia. CZ a.s., and SOLIVARY akciová spoločnosť Prešov in liquidation. He is a chairman of the management board of TMR Ještěd a.s. (till 31.01.2018 Tatry mountain resorts CR, a.s.). He is also a management board member of Nadace J&T. Since 29.05.2018 he has been a member of the supervisory board of isifa a.s. Czech Republic, since 04.09.2018 he has been the managing director of HURRICANE FACTORY PRAHA s.r.o, Czech Republic. Since 16.02.2018 he has been a member of Corporate Governance 67 the Board of Directors of Tatry Mountain Resorts CR, a.s. since 08.10.2018 has been a managing director of CARMEN INVEST s.r.o. and since 20.12.2017 has been a member of the Supervisory Board of CryptoData a.s. Since 21.06.2017 he has been the Chairman of the Board of Directors of GARFIN HOLDING, a. s and since 01.08.2018 he has been the Chairman of the Board of Directors of Huricane Factory a.s. Since 11/04/2019 he has been a board of directors member of Algo Financial Technologies a.s., a partner in EU GEN s.r.o., since 10/12/2019 he has been a supervisory board member of RENTAL LIVE a.s., since 30/11/2018 he has been a legal representative of Muchalogy s.r.o., and since 21/06/2019 he has been a statutory director and a board member of DEVEREAL a.s. Number of shares held as of 31 October 2022: 1,973,197 (C.I. CAPITAL INDUSTRIES LIMITED, 100%) Jozef Hodek - member of the Board of Directors and CFO of the Company since 29/06/2009 Mr. Hodek was ﬁrst elected as a member of the Board of Directors in June 2009. On 27/05/2014 he was reelected, effective as of 30/06/2014. On the Supervisory Board meeting held on 11/06/2019 he was reelected a member of the Board, effective 01/07/2019. He joined the Company as the Chief Financial Ofﬁcer in 2007; later he was engaged in the ﬁnancial consolidation of the companies which now are members of TMR. From 2008 to 2009, he held the position of Chief Financial Ofﬁcer of Tatry mountain resort services, a.s., which merged with TMR. Currently, he serves as the Company’s CFO. He was engaged in TMR efﬁciency improvement processes, the issue of new shares and listing on the Bratislava Stock Exchange. Previously, in 2006 to 2007, he worked in the audit department of Pricewaterhouse Cooper Slovakia. He graduated from the University of Economics, Faculty of Business Informatics in Bratislava. He is also a supervisory board member at the Polish company Szczyrkowski Ośrodek Narciarski S.A., at Korona Ziemi Sp. z o.o., and at Śląskie Wesołe Miasteczko Sp. z o.o..Since 05/05/2017 he has been a member of the management board of TMR Ještěd a.s. (till 31/01/2018 Tatry mountain resorts CR, a.s.) and since 30/09/2017 he has been a member of the supervisory board of Tatry mountain resorts PL, a.s. Since 16/02/2018 he has been a member of the supervisory board of Tatry mountain resorts CR, a.s., the Czech Republic and since 14/09/2018 he has been a statutory director and the director of the Board of TMR Finance CR, a.s., Czech Republic. Since 09/07/2018 he has been a supervisory board member of GARFIN HOLDING, a.s. Number of shares held as of 31 October 2022: 431 Čeněk Jílek - member of the Board of Directors since 04/06/2020 Čenek Jílek has been a member of the Company‘s Board of Directors since June 2020. Mr. Jílek previously held the position of Director of the Špindlerův Mlýn resort, operated by Melida a.s., . Earlier he served three years as a sales manager of the Tatry Motion retail stores, which belong to TMR. He has also gained his experiences in tourism during seven years as a sales manager in the luxury hotel segment in Canary Islands. He received his MBA degree from Bircham International University. Mr. Jílek serves as chairman of the board of directors of the Czech company MELIDA, a.s., he is vice-chairman of the board of directors of SKOL MAX Ski School, a. s., Czechia, a member of the board of directors of HAMBRAND a.s., a supervisory board member of CAREPAR, a.s., Czechia, a statutory director and a management board member of TMR Ještěd a.s. (till 31.01.2018 Tatry mountain resorts CR, a.s.), and a partner and legal representative of Refugio, s.r.o. Since 16.02.2018 he has been the statutory director of Tatry mountain resorts CR, a.s. , Czech Republic and since 14.09.2018 he has been a member of the Board of Directors of TMR Finance CR, a.s., Czech Republic. Since 07.09.2022 he has been a member of the Board of Directors of TMR Parks, a.s. Number of shares held as of 31 October 2022: 0 SUPERVISORY BOARD The Supervisory Board is the Company‘s supreme monitoring body. It supervises the exercise of the Board of Directors’ competences and performance of the Company‘s business activities. The Supervisory Board, inter alia, approves draft ﬁnancial plans submitted by the Board of Directors, signiﬁcant investments and other material, ﬁnancial and business transactions for the relevant ﬁnancial year, reports to the General Meeting regarding results of its monitoring activities. The Supervisory Board is comprised of nine members. The term of ofﬁce is ﬁve years, and re-election is not allowed. Corporate Governance 68 Members of the Supervisory Board are elected and removed by the General Meeting. If, at the moment of an election, the Company employs more than 50 employees on full-time employment, two thirds of the members of the Supervisory Board are elected and removed by the General Meeting and one third is elected and removed by the Company‘s employees. The Supervisory Board elects the Chairman and Vice-Chairman of the Supervisory Board from among its members. From 19.04.2018 the Supervisory Board performs the activities of the Audit Committee under Act No. 423/2015 Coll. on Statutory Audit and under the Amendments to Act No. 431/2002 Coll. on accounting. As of 31 October 2022, the Supervisory Board was comprised of nine members: Bohuš Hlavatý - member of the Supervisory Board Pavol Mikušiak – member of the Supervisory Board Roman Kudláček – member of the Supervisory Board Andrej Devečka – member of the Supervisory Board Miroslav Roth – independent member of the Supervisory Board, elected by TMR employees Mgr. Marek Schwarz - independent member of the Supervisory Board, elected by TMR employees Ivan Oško - independent member of the Supervisory Board, elected by TMR employees Changes during the year: On May 25, 2022, the General Meeting re-elected Roman Kudláček as the member of the Supervisory Board. MEMBERS OF THE SUPERVISORY BOARD Bohuš Hlavatý - Chairman of the Supervisory Board since 30/04/2020 Ing. Hlavatý was elected Chairman of the Supervisory Board of TMR by the General Meeting on April 29, 2020. Ing. Hlavatý previously worked as the Company’s Chairman of the Board of Directors and CEO. Under his leadership, TMR underwent a successful revitalization and started making use of synergies with its subsidiaries. He managed the successful issue of TMR shares on the Bratislava Stock Exchange. Since 2006 he has held a number of senior managerial positions in hotel and tourism sectors in the High and Low Tatras. In 2006 - 2008 he held the position of CEO of JASNÁ Nízke Tatry (predecessor of TMR) and CEO of Tatranské lanové dráhy (Tatra Cableways). Previously, he held top managerial positions at Slovak, Polish and Czech FMCG companies: Vodní sklo Brno (Vice-Chairman of the Executive Board 2003 – 2006), Wyborova SA (Pernod Ricard Poland) (Sales Director 2001 – 2003), Seagram Poland (Sales Director 1999 – 2001), Seagram Slovakia (Sales Director 1995 – 1999), and BOBI Slovakia (since 1997 Kimberley Clark) (Director 1994 – 1995). Since November 2006 Ing. Hlavatý has been a partner and a legal representative in BAKK s.r.o. He is also a member of the supervisory board of the Polish company Korona Ziemi Sp. z o.o., Poland, a member of the supervisory boards of Szczyrkowski Ośrodek Narciarski S.A., Poland, and Śląskie Wesołe Miasteczko Sp. z o.o. Poland. Number of shares held as of 31 October 2022: 710 František Hodorovský - member of the Supervisory Board since 18/01/2011, re-elected as the Deputy Chairman of the Board since 01/07/2021 In January 2011, Mr Hodorovský was ﬁrst elected by the General Meeting as a member of the Supervisory Board and, at the same time, he was elected by the Supervisory Board as Vice- Chairman of the Supervisory Board, as the owner of Tatralandia, which was acquired by the Company. The Annual General Meeting reelected František Hodorovský a member of the Supervisory Board, effective as of 28/04/2016. The Supervisory Board at its meeting on 28/04/2016 appointed František Hodorovský its vice-chairman as of 28/04/2016. Since 1996, he has held various positions as a legal representative, partner and shareholder in various companies operating in the tourism industry. He graduated from the University of Economics in Bratislava, Faculty of Business Management. Besides his role as TMR’s member of the Supervisory Board, Ing. Hodorovský serves as a legal representative in the following companies: DITERGO, s.r.o., ELAFINA, s.r.o., FOREST HILL COMPANY, s. r. o., MINERVASIS, s.r.o., SLOVKARPATIA DANUBE, s.r.o., SLOVKARPATIA, s.r.o., ENNEL, s.r.o. and TLD, s. r. o.; as a partner in E-is-W, s.r.o. and DITERGO, s.r.o. Number of shares held as of 31 October 2022: 1,030,919 (FOREST HILL COMPANY, s.r.o., 100%) Adam Tomis - member of the Supervisory Board since 12/04/2014 Mr. Tomis was elected a Supervisory Board member by the General Meeting on 12/04/2014 and Corporate Governance 69 reelected at the General Meeting on 17/04/2019. Currently, he serves as a project manager responsible for non-banking investments of the J&T Group. During 2012-2013 he worked in a consulting ﬁrm McKinsey&Company on projects in banking and telecommunications. Before, he had served for eight years at the investment ﬁrm Benson Oak Capital and for one year at the independent air travel agency Travel Service. Mr. Tomis earned his college degree at the Charles University in Prague, the Institute of Economic Studies, majoring in Finance, ﬁnancial markets, and banking. Beside his role of TMR’s Supervisory Board member, Adam Tomis serves as a member of the board of directors in the following companies: - Equity Holding, a.s., (Czech Republic); - J&T CAPITAL PARTNERS, a.s., (Czech Republic); - J&T ENERGY HOLDING, a.s., (Czech Republic); and - J&T EQUITY PARTNERS, a.s. (Czech Republic). Moreover, Adam Tomis serves as a member of the supervisory board in the following companies: - Westminster JV a.s. (Czech Republic); - EP Global Commerce a.s., (Czech Republic); - E-Commerce and Media Investments, a.s. (Czech Republic); - CZECH MEDIA INVEST a.s. (Czech Republic); and - J&T ENERGY FINANCING CZK VI, a.s. (Czech Republic). Since 27/04/2022, Adam Tomis serves as the chairman of the supervisory board of J&T INVESTIČNÍ SPOLEČNOST, a.s. Number of shares held as of 31 October 2022: 0 Pavol Mikušiak - member of the Supervisory Board since 27/4/2013 Ing. Mikušiak was elected a member of the Supervisory Board in April 2013 by the General Meeting and reelected in April 2018. He is a member of corporate bodies of several Slovak companies. Since 1996 he serves as business director of CBA Verex, a.s. Previously he worked as foreign trade director at Verex, s.r.o. (1992 – 1996) and as a scientiﬁc researcher at Research Institute in Liptovský Mikuláš (1987 – 1992). He graduated from the Technical University in Košice, the Faculty of information technologies and programming. Currently, besides his role as TMR’s member of the Supervisory Board, Ing. Mikušiak serves as a Chairman of the Supervisory Board at LEVEL, a.s. (from 06/08/2018), a.s. and OSKO, a.s., At the same time, he holds a position of chairman of the Board of Directors at CBA SK, a.s. and CBA VEREX, a.s., . He is a vice-chairman of the Board of Directors at VEREX HOLDING, a.s. and VEREX-ELTO, a.s.; and a member of the board at VEREX ŽILINA, a.s. and NARCIUS, a.s. He is a legal representative of ELTO REALITY, s.r.o., VEREX REALITY s.r.o., PeLiM, práčovne a čistiarne, s.r.o. and MPL Invest, s.r.o. Number of shares held as of 31 October 2021: 3 000 (Verex Holding, a.s., 25%) Roman Kudláček - member of the Supervisory Board since 21/4/2012 In April 2012, Mr Kudláček was elected by the General Meeting as a member of the Supervisory Board, and then reelected in April 2017. He has extensive experience in machinery and engineering. Since 2000 he has held the position of Chairman of the Board of Directors in K&M, a.s. From 2001 to 2008, he worked as an executive of Liptosol, s.r.o. in Liptovský Mikuláš. Previously he held the position of Chairman of the Board of Directors at the machinery manufacturer LIPTOVSKÉ STROJÁRNE plus, a.s. (1997 – 1999). From 1993 to 1999 he was an Executive of RBL, s.r.o. During the prior two years he was engaged in retail business activities. Besides his membership on the Supervisory Board of TMR, Mr Kudláček is a legal representative at NORDBELL s.r.o., C4U, s.r.o. and a member of the Supervisory Board at EUROCOM Investment, s.r.o. a WORLD EXCO s.r.o. Number of shares held as of 31 October 2022: 0 Andrej Devečka - member of the Board of Directors since 29/04/2020 Mr. Devečka was a member of the Board of Directors until the end of April 2020. Since 1991 he has been an owner, businessman, co-owner, executive and member of the Supervisory Board in a number of companies. Previously, he held the position of Senior Manager in Tesla Liptovský Hrádok, a technology machinery company. He graduated from the University of Technology in Liptovsky Mikuláš, with a specialization in microelectronics and laser technology. Corporate Governance 70 Besides serving on the Board of Directors of TMR Ing. Devečka serves as a legal representative at HOLLYWOOD C.E.S., s.r.o. and C4U, s.r.o. Since 30/09/2017 he has been a supervisory board member of TMR Parks, a.s. Number of shares held as of 32 October 2022: 0 Miroslav Roth - independent member of the Supervisory Board since 30/6/2012 Mr. Roth was reelected as a member of the Supervisory Board by employees of the Company in June 2021. He works for the Company as an electrical networks specialist in the resort Vysoké Tatry. He had previously held this position from 1985 in Tatranské lanové dráhy, a.s. Number of shares held as of 31 October 2022: 0 Mgr. Marek Schwarz - independent member of the Supervisory Board since 30/6/2021 Mgr. Schwarz was elected a member of the Supervisory Board in June 2021 by the Company‘s employees. He works at TMR as the director of the human resources department. Number of shares held as of 31 October 2022: 0 Ivan Oško - independent member of the Supervisory Board since 30/6/2021 Mr. Oško was elected a member of the Supervisory Board in June 2021 by the Company‘s employees. At TMR, he works as the head of the cable car operations in Jasná. In addition, he is also the chairman of Union of Trade and Tourism Workers. Number of shares held as of 31 October 2022: 0 GENERAL MANAGER OF THE COMPANY The General Manager manages the activities of the Company in accordance with the decisions of the Board of Directors, the General Meeting, and performs the tasks arising from the internal regulations. In accordance with the approved organizational structure of the Company, the General Manager reports directly to the Board of Directors. CFO (Chief Financial Ofﬁcer), COO (Chief Operations Ofﬁcer) and CCO (Chief Commercial Ofﬁcer, Director of Sales and Marketing) report directly to the CEO As of October 31, 2022, the company did not hold the position of CEO. REMUNERATION OF THE BOARD MEMBERS OF THE PUBLICLY TRADED COMPANIES The company, as a publicly traded entity, is obliged pursuant to Art. § 201a of the Commercial Code to draw up remuneration rules and at the same time is obliged to pay remuneration to members of the bodies in accordance with the approved remuneration rules. On April 29, 2020, the Ordinary General Meeting approved the „Rules of Remuneration of the Bodies of a Public Joint Stock Company“ (hereinafter referred to as the „Remuneration Rules“). The Remuneration Rules regulate the basic remuneration framework and the methods of providing compensation to members of the Company‘s bodies. For the purposes of the Remuneration Rules in accordance with Art. § 201a par. 2 of the Commercial Code means the Company‘s bodies refer to the following: - member of the Board of Directors of the Company - member of the Supervisory Board of the Company - person acting at the highest level of management of the Company, if this position exists in the Company, provided they are not members of the Board of Directors or the Supervisory Board. In accordance with the approved Remuneration Rules, the members of the Board of Directors are provided with the Total Remuneration of a member of the Board of Directors, which consists of: - a ﬁxed component in accordance with point 2.2 of the Remuneration Rules - a variable component in accordance with point 2.3 of the Remuneration Rules - surcharges and other beneﬁts of a member of the Board of Directors In accordance with the Remuneration Rules, the members of the Supervisory Board are provided with the Total Remuneration of a member of the Supervisory Board, which consists of: - a ﬁxed component in accordance with point 3.2 of the Remuneration Rules - a variable component in accordance with point 3.3 Corporate Governance 71 of the Remuneration Rules - surcharges and other beneﬁts of a member of the Board of Directors In accordance with §201e of the Commercial Code, the Board of Directors will prepare a “Remuneration Report” and at the same time submit it once a year to the General Meeting for discussion as part of the Annual Report. The Remuneration Report for the Financial Year 2021/2022 is published in an appendix to this Annual Report. The total amount of remuneration paid and granted to the representatives of the Board of Directors, Supervisory Board members and the top management 2021/2022 was EUR 1.925 mil. GENERAL MEETING The General Meeting is the Company‘s supreme body. Its competence includes mainly the following: Amendments to the Articles; Decisions on an increase/decrease in the Company‘s registered capital; instructing the Board of Directors to increase the share capital in accordance with Article 210 of the Commercial Code and decisions to issue preferred or convertible bonds; Decisions on termination of the Company and/or change in the legal form; Election and removal of members of the Supervisory Board, except for members of the Supervisory Board elected and removed in accordance with Article 200 of the Commercial Code by employees in accordance with applicable law; Approval of annual individual ﬁnancial statements and extraordinary individual ﬁnancial statements, decisions regarding the distribution of proﬁt or settlement of loss, and decisions on remuneration ; Decisions regarding the termination of trading the Company‘s shares on the stock exchange and decision on the fact that the Company ceases to be a publicly traded company; Decisions on transformation of registered shares into share certiﬁcates and vice versa Decisions regarding the approval of a contract on transfer of business or a part thereof; Approval of the Remuneration Rules of the members of the company‘s bodies and their changes; Approval of contracts for the performance of the function of members of the Supervisory Board; Deciding other issues falling under the competence of the General Meeting in accordance with the Articles and under existing law. The competence of the General Meeting is deﬁned by Act 513/1991 Coll. of the Commercial Code, as amended, and the Company‘s Articles. The General Meeting is comprised of all shareholders, members of the Board of Directors, and members of the Supervisory Board present at the session and/or third parties invited by the Company‘s body (bodies) or shareholders who convened the meeting. Each shareholder is authorized to attend the General Meeting, vote, ask for information and explanations regarding corporate matters and/or entities controlled by the Company, if relevant to the agenda of the General Meeting, and ﬁle proposals. Shareholders can exercise their rights at the General Meeting through authorized representatives who shall prove their authorization by a written power of attorney deﬁning the scope of the authorization. Exercise of the shareholders’ voting rights is not limited in the Articles. The number of votes held by each shareholder is deﬁned by the proportion between the nominal value of the shares held by the shareholder and the amount of registered capital, whilst every EUR 7 of the shares’ nominal value means one voting right. DECISION-MAKING PROCEDURE OF THE GENERAL MEETING The General Meeting decides by majority vote held by the present shareholders. In matters related to amendments of the Articles, an increase or decrease in the registered capital, instructing the Board of Directors to increase the registered capital, the issuance of preference bonds or exchangeable bonds, the termination of the Company or change in the legal format a 2/3 majority of votes of the present shareholders is required and a notarized record shall be prepared on the results of the voting. A 2/3 majority of votes of the present shareholders is also necessary for approval of the General Meeting’s decision on the termination of trading the Company‘s shares on the stock exchange and for the election and removal of members of the Supervisory Board, as well as for the General Meeting’s decision that the Company ceases to be a public joint-stock company and becomes a private joint-stock company. For amendments to the Articles in terms of establishing the option of correspondence voting and for amendments to the Articles in terms of establishing and deﬁning the requirements for attending the General Meeting and for shareholders’ voting through electronic equipment, afﬁrmative votes of 3/5 majority of all votes are required. Minutes of the General Meetings are freely available at the Company‘s website: www.tmr.sk. Corporate Governance 72 In the period from 1 November 2021 to 31 October 2022, one session of the General Meeting was convened. It took place on May 25, 2022. ANNUAL GENERAL MEETING At the Annual General Meeting held on 25 May 2022, the shareholders adopted the following key resolutions: 1. Approval of the annual individual ﬁnancial statements as of 31 October 2021 2. Approval of the Board of Directors‘ proposal to reimburse the loss incurred in the ﬁnancial year 2020/2021 in the amount of EUR 16,904,929.23, by transferring the entire loss to the account retained earnings from the previous periods. 3. Approval of the Board of Directors‘ proposal to reimburse the loss incurred in the ﬁnancial year 2019/2020 in the amount of EUR 18,429,747.71, by transferring the entire loss to the account retained earnings from the previous periods. 4. Discussion of the report of the company‘s board of directors on the results of business activities, the state of the company‘s assets and ﬁnancial management, the business plan and ﬁnancial budget, the annual report and the report of the supervisory board. 5. Approval of the auditor - KPMG Slovensko spol. s.r.o. to audit the ﬁnancial statements for the year ending 31 October 2022 6. Election of the member of the Supervisory Board – Ing. Roman Kudláček and approval of his contract. DESCRIPTION OF SHAREHOLDERS’ RIGHTS Legal regulations and Articles of Association hereof regulate the rights and the obligations of the shareholder. Both legal and natural persons may become a shareholder of the Company. The shareholder may not exercise the rights of the shareholder which would affect the rights and professional interests of other shareholders. The company must treat all shareholders on equal terms. The shareholder shall have the right to participate on the management of the Company, on its proﬁts and on its liquidation balance upon the cancellation of the Company with liquidation. The right to participate on the management of the Company shall be exercised by the shareholder by participation at the General Meeting and by execution of the rights related to this participation, whereas the shareholders shall be bounded with the organizational measures applicable to the proceedings of General Meeting. At the General Meeting any shareholder may vote, ask for information and explanations concerning the matters of the Company or the matters of parties controlled thereby, which are related to the agenda of the General Meeting, make proposals, and request to have their suggested topics to be included in the agenda of the General Meeting in accordance with relevant regulations. The date relevant for the exercise of the rights according to previous sentence shall be the day indicated in the notice of General Meeting in accordance with section 180, subsection 2 of the Commercial Code. The shareholder or shareholders holding shares, of which the nominal value equals not less than 5% of the share capital, are entitled to request for convocation of an extraordinary General Meeting by including speciﬁcation of their reason. The shareholder shall be entitled to share the proﬁts generated by the Company (dividend), which were allocated by the General Meeting for their distribution. The shareholder shall not be under the obligation to refund to the Company the dividends obtained in good faith. Following the winding up of the Company with the liquidation the shareholders shall be entitled to share liquidation balance in the amount stipulated by the law. At the Company headquarters the shareholder is entitled to view Company documents that are ﬁled in a document archive or in a ﬁnancial statement register pursuant to a speciﬁc law, and the shareholder is entitled to request copies of these documents or request to have them mailed at a speciﬁed address on the shareholder’s expense and risk. Further details on the shareholders’ rights are described in the Company’s Articles of Association at www.tmr.sk/ investor-relations/corporate-governance. SUPERVISORY BOARD REPORT In the ﬁnancial year 2021/2022, the Company‘s Supervisory Board carried out the Company‘s monitoring activities until 30 June 2021 with a total of nine members. In the period from 1 November 2021 to 31 October 2022, the Supervisory Board convened six (6) meetings of the Supervisory Board: On 24/11/2021 nine members of the Supervisory Board were present. On 15/02/2022 nine members of the Supervisory Board were present. On 18/04/2022 eight members of the Supervisory Board were present. On 25/05/2022 eight members of the Supervisory Board were present. On 30/08/2022 eight members of the Supervisory Board were present. Corporate Governance 73 On 08/09/2022 eight members of the Supervisory Board were present. During the ﬁnancial year ending 31/10/2022 as part of its control function, the Supervisory Board focused on controlling the Board of Directors’ fulﬁllment of its duties assigned by the General Meeting, at monitoring the Board of Directors activity in terms of effective management of the Company, achievement of strategic goals in given conditions and determining the Company’s growth plans, the operating and ﬁnancial activity, the Company’s assets, liabilities and receivables, correct bookkeeping, fulﬁllment of the business plan, ﬁnancial budget, investment plan and compliance with the Company’s Articles of Association, Code of Conduct and general legally binding regulations. The Supervisory Board approved the ﬁnancial plans submitted by the Board of Directors, major investments and other material ﬁnancial and business transactions for the relevant ﬁnancial year and submitted the results of its monitoring activities to the General Meeting. As part of their role, the Supervisory Board members have electronic access to production systems, through which they can get a daily report on the Company’s ﬁnancial performance. The Supervisory Board meetings were always attended also by the chairman of the Board of Directors (and CEO) and by CFO who is also a member of the Board of Directors. They informed the Supervisory Board members in detail on the Company performance including ﬁnance (CAPEX, Cash Flow, debt service). As part of the performance of the activities of the Audit Committee, the Supervisory Board engaged in cooperation with an external auditor – KPMG Slovensko spol. s.r.o. They discussed the overall approach to the audit of the company as well as the TMR group (as part of the preparation of the Company‘s consolidated ﬁnancial statements as of October 31, 2022). At the same time, the Supervisory Board set a deadline for the external auditor to submit an afﬁdavit of independence and adopted the Declaration of Independence from KPMG. THE COMPANY‘S CORPORATE GOVERNANCE CODE The Company is fully aware of the importance of compliance with the Corporate Governance principles. On 3 November 2010, the Company and its statutory bodies adopted the Corporate Governance Code in Slovakia. Moreover, on 8 October 2012 the Company declared adherence to the Corporate Governance Code principles for companies listed on the Warsaw Stock Exchange. Information on adherence to the codes is available on the Company‘s website www. tmr.sk/investor-relations/corporate-governance. As for the Corporate Governance Code for companies in Slovakia 2016 , the Company‘s Corporate Governance fails to comply with this Code in the following items: I.A.5. Effective shareholder participation in decisions on the nomination, election and remuneration of board members should be facilitated. The remuneration of board members and key executives should be disclosed, the total value of compensation arrangements made and how remuneration and company performance are linked. Partly met. Information on the remuneration of the board members and the management is disclosed in the Annual Report. The Company discloses the general remuneration policy for the members of the Supervisory Board and the Board of Directors, and only the sum of the remuneration of the Supervisory Board, the Board of Directors, and the Top Management. I.C.4.vi. Effective shareholder participation in decisions on the nomination, election and remuneration of board members should be facilitated. Any signiﬁcant change in the remuneration schemes should be approved by shareholders. Partly met. The General Meeting approves the Remuneration Rules for the Supervisory Board and the role contracts of the Supervisory Board members. The Company acts in accordance with the Commercial Code and the Articles. When approving internal regulations the Company acts in accordance with the competencies of the relevant statutory bodies, with the Articles of Association and relevant law. I.C.5.iii. Non-discriminatory voting of shareholders in absentia should be enabled: Where proxies are held by the board or management for company pension funds, the directions for voting should be disclosed. Not met. The Company does not disclose directions for voting. I.C.6. Ability to vote electronically by non-discrimina- tory means (if the company enables such voting). Not met. So far the Company does not enable Corporate Governance 74 electronic voting at General Meetings. In order to implement the attendance at General Meetings and voting at General Meeting by electronic means, the Articles of Association need to be changed and approved by the 3/5 majority of all the shareholder votes. I.E.1.iii. Non-discriminatory relations with shareholders and transparency of capital structures. Changes in economic and voting rights should be subject to approval by a qualiﬁed majority of the relevant group of shareholders. Partly met. These changes are subject to changes in the Articles of Association, which require the 2/3 majority of the present shareholder votes; the notary meeting minutes need to be prepared. A change in the Articles of Association related to the implementation of possible proxy voting and/or electronic voting is subject to approval by the 3/5 majority of all the shareholder votes. I.E.2. The capital structure and takeover arrangements should be disclosed. Partly met. The Company discloses such information provided that relevant legal regulations require and/or enable such disclosure. IV.A.4.ii. Information on the company’s remuneration: information on the remuneration policy in the upcoming ﬁnancial year or, where appropriate, consecutive years and information on the implementation of the policy in the previous ﬁnancial year. Partly met. The Company discloses the general remuneration policy for the members of the Supervisory Board and the Board of Directors, and only the sum of the remuneration of the Supervisory Board, the Board of Directors, and the Top Management. IV.A.5.ii. Information about board members, executive managers, especially: Information on the qualiﬁcation requirements and the selection process. Partly met. The Company discloses the process of electing members of the Supervisory Board. V.D.4. Remuneration with the longer-term interests of the company and its shareholders. Partly met. The level of basic remuneration is set for each member of the Board of Directors separately based on the decision of the Supervisory Board upon each member’s nomination. Extraordinary bonuses of the Board of Directors are subject to the fulﬁllment of the EBITDA plan in the previous ﬁnancial year. Remuneration of the Top management is set by and subject to approval by the Board of Directors depending on the performance of the operating segments and resorts of the Company. V.E.1. Boards should consider assigning a sufﬁcient number of non-executive board members where there is a potential for conﬂicts of interest. The board should consider establishing speciﬁc committees to consider questions where there is a potential for conﬂicts of interest. These committees should require a minimum number of non- executive members, or be composed entirely of members of the supervisory board. Partly met. The Supervisory Board is composed of only non-executive members and is responsible for controlling. In case of a conﬂict of interest, the Company acts in accordance with its Code of Conduct and relevant persons are excluded from the decision-making process. The Company does not have such speciﬁc committees established. V.E.2.i. Existence, composition and the role of committees. The nomination committee. Not met. Currently, the Company does not have a nomination committee. Members of the Board of Directors are nominated by the Supervisory Board. V.E.2.ii. Existence, composition and the role of committees. The remuneration committee. Not met. Currently, the Company does not have a remuneration committee. The variable part of the Board of Directors’ remuneration is determined by the Remuneration Rules and is subject to performance achieved by the Company. The Board of Directors’ Remuneration Rules are subject to approval by the Supervisory Board. V.E.4. Regular self-assessment of the company boards, including assessment of correct backgrounds and competences. Not met. Assessment of the activity of the Board of Directors is done by the Supervisory Board. The Supervisory Board’s report has not included self- assessment so far. Corporate Governance 75 As to the Best Practices for GPW Listed Companies 2016 required by the Warsaw Stock Exchange, the Company‘s corporate governance does not accord with the Best Practices in the following issues: I.Z.1.3. A company should operate a corporate website and publish on it, in a legible form and in a separate section: a chart showing the division of duties and responsibilities among members of the management board drawn up according to principle II.Z.1; Partially met. Currently, the Company website does not present such chart. However, the website lists members of the Board of Directors with description of their roles, and their short CV. I.Z.1.15. A company should operate a corporate website and publish on it, in a legible form and in a separate section: information about the company’s diversity policy applicable to the company’s governing bodies and key managers; the description should cover the following elements of the diversity policy: gender, education, age, professional experience, and specify the goals of the diversity policy and its implementation in the reporting period; where the company has not drafted and implemented a diversity policy, it should publish the explanation of its decision on its website; Not met. Even though the Company strives to enable equal employment opportunity and employs 57% men and 43% women, it has not yet prepared and implemented a diversity policy for its statutory bodies and top management, thus such policy is not published on the Company website either. Main criteria for selecting candidates for key positions and statutory bodies are competency and fulﬁllment of requirements for a given role; not factors such as sex or age. I.Z.1.20. A company should operate a corporate website and publish on it, in a legible form and in a separate section: an audio or video recording of a General Meeting; Not met. Currently, the Company does not publish audio or video recordings from its General Meetings as the beneﬁt of these recordings is not justiﬁed in comparing to high costs associated with them and they do not ﬁt within the budget for the General Meeting. II.Z.1. The internal division of responsibilities for individual areas of the company’s activity among management board members should be clear and transparent, and a chart describing that division should be available on the company’s website. Partly met. The Company presents its internal division of responsibilities among members of the Board of Directors on its website in wording. II.Z.3. At least two members of the supervisory board should meet the criteria of being independent referred to in principle II.Z.4. Not met. None of the Supervisory Board members meets the criteria of independence referred to in principle II.Z.4. Even though the Company considers two members of the Supervisory Board, elected by the Company employees, as independent, since they hold non-managerial roles in the Company, according to the current Best Practices for GPW Listed Companies 2016, they cannot be considered independent. II.Z.10.1. In addition to its responsibilities laid down in the legislation, the supervisory board should prepare and present to the ordinary general meeting once per year an assessment of the company’s standing including an assessment of the internal control, risk management and compliance systems and the internal audit function; such assessment should cover all signiﬁcant controls, in particular ﬁnancial reporting and operational controls; Partly met. The Supervisory Board presents to the Annual General Meeting a report prepared according to the legislation and the Company’s Articles of Association. II.Z.10.2. a report on the activity of the supervisory board containing at least the following information: - full names of the members of the supervisory board and its committees; - supervisory board members’ fulﬁlment of the independence criteria; - number of meetings of the supervisory board and its committees in the reporting period; - self-assessment of the supervisory board; Partly met. The Supervisory Board’s report has not so far included a description on supervisory board members’ fulﬁlment of the independence criteria, since the Company automatically considers members, elected by the Company employees and Corporate Governance 76 who are not shareholders, as independent. IV.Z.2. If justiﬁed by the structure of shareholders, companies should ensure publicly available real- time broadcasts of general meetings. Not met. The Company has not so far broadcasted its General Meetings publicly, since potential beneﬁt of the General Meeting being broadcasted does not outweigh costs associated with its organizing. The Company does not exclude the possibility of broadcasting its General Meetings in the future, although such decision is subject to the approval of shareholders at the General Meeting by amendment of the Articles of Association. IV.Z.3: Presence of representatives of the media should be allowed at general meetings. Presence of third parties is usually allowed based on the proposal by the Board of Directors at Annual General Meetings. Also at the last Annual General Meetings a proposal was presented by the Board of Directors to allow presence of third parties at the General Meeting. This proposal was adopted by the shareholders and third parties were allowed to attend the General Meeting. The Company does not exclude a possibility that it will allow attendance of third parties at all General Meetings, although such decision would have to be preceded by the approval of the shareholders at the General Meeting in the form of change in Articles of Association. VI.Z.4. In this activity report, the company should report on the remuneration policy including at least the following: 1) general information about the company’s remuneration system; 2) information about the conditions and amounts of remuneration of each management board member broken down by ﬁxed and variable remuneration components, including the key parameters of setting the variable remuneration components and the terms of payment of severance allowances and other amounts due on termination of employment, contract or other similar legal relationship, separately for the company and each member of its group; 3) information about non-ﬁnancial remuneration components due to each management board member and key manager; 4) signiﬁcant amendments of the remuneration policy in the last ﬁnancial year or information about their absence; 5) assessment of the implementation of the remuneration policy in terms of achievement of its goals, in particular long-term shareholder value creation and the company’s stability. Partly met. The Company publishes its general remuneration rules for the Board of Directors and Supervisory Board and the total sum of remuneration of the Board of Directors, Top Management and Supervisory Board. The Company has not entered into any agreements with any members of bodies or employees under which the company would be obliged to provide such members or employees with any compensation if their ofﬁce or employment terminates by resignation, notice served by the employee, removal, notice served by the employer without giving a reason or if their ofﬁce or employment terminates as a result of an acquisition offer. The Company does not disclose information about non-ﬁnancial remuneration, as it has not been material so far, nor assessment of the implementation of the remuneration policy in terms of achievement of its goals, in particular long-term shareholder value creation and the company’s stability. OTHER SUPPLEMENTARY DATA Tatry mountain resorts, a.s. is the issuer of 6,707,198 shares admitted to trading on the listed parallel market of the Bratislava Stock Exchange, on the main market of the Prague Stock Exchange, and on the main market of the Warsaw Stock Exchange (WSE) with the following structure: ISIN: SK11220010287 Security type and form: ordinary bearer shares Nominal share value: 7.00 EUR Number of shares outstanding: 6,707,198 % share in share capital: 100% Limitation on transferability of shares: none The Company, a.s. during the FY 2013/14 issued two tranches of bonds in the total of EUR 180 mil.: Bonds TMR I 4.50%/ 2018 ISIN: SK4120009606 Volume: 70 000 000 EUR Market: The Bratislava Stock Exchange Nominal Value: 1 000 EUR Coupon Rate: ﬁxed rate 4.50% p.a. Coupon Payment: semi-annual always on 17-06 and 17-12 Maturity Date: 17 December 2018 Issue Date: 17-12-2013 Corporate Governance 77 Bonds TMR I 4.50%/ 2018 were senior, secured by a pledge over certain immovable assets owned by the Company. TMR I 4.50% bonds were fully repaid on December 17, 2018. During the ﬁnancial year 2017/18 the Company issued another tranche of bonds: Bonds TMR II 6.0%/ 2021 ISIN: SK4120009614 Volume: 110 000 000 EUR Market: The Bratislava Stock Exchange Nominal Value: 1 000 EUR Coupon Rate: ﬁxed rate 6.00% p.a. Coupon Payment: annual always on 05-02 Maturity Date: 5 February 2021 Issue Date: 05-02-2014 Bonds TMR II 6.0%/ 2021 are junior, subordinated. TMR II 6.0% bonds were fully repaid on February 5, 2021. Bonds TMR III 4.40%/ 2024 ISIN: SK4120014598 Volume: 90 000 000 EUR Market: The Bratislava Stock Exchange Nominal Value: 1 000 EUR Coupon Rate: ﬁxed rate 4.40% p.a. Coupon Payment: semi-annual always on 10-04 and 10-04 Maturity Date: 10 October 2024 Issue Date: 10 October 2018 Bonds TMR III 4.40%/ 2024 are senior bods, secured by a pledge over certain assets owned by the Company. During the FY 2018/19 the Group issued another bonds issue through its subsidiary, TMR Finance CR, a.s.: Bonds TMR F CR 4.50% / 2022 ISIN: CZ0003520116 Volume: 1 500 000 000 CZK Market: The Prague Stock Exchange Nominal Value: CZK 30 000 Coupon Rate: ﬁxed rate 4.50% p.a. Coupon Payment: semi-annual always on 07-05 and 07-11 Maturity Date: 7 November 2022 Issue Date: 7 November 2018 Bonds TMR F CR 4.50% / 2022 constitute direct, general, unconditional, and non-subordinated obligations of the Issuer, secured by a guarantor statement of Tatry mountain resorts, a.s. (the Guarantor). Furthermore, the Bond obligations will be secured by a lien in favor of the Security Agent, Patria Corporate Finance, a.s., for: (i) certain immovable assets owned by the Guarantor in the Slovak Republic; (ii) certain movable assets owned by the Guarantor and its indirect 100% subsidiary Śląskie Wesołe Miasteczko Sp. Zoo. in the Slovak Republic and the Republic of Poland, (iii) a 75% share in the capital of Śląskie Wesołe Miasteczko Sp. Zoo. owned by Tatry Mountain Resorts PL, a.s., which is a 100% direct subsidiary of the Guarantor and (iv) the Guarantor s receivables from the LTV account. For more information see the Security prospectus available at https://tmr-ﬁnance.cz/zakonne-zverejneni.php. During the ﬁnancial year 2020/2021, the Company issued bonds: Bonds TMR V 6.00%/ 2026 ISIN: SK4000018255 Volume: up to 150 000 000 EUR Market: The Bratislava Stock Exchange Nominal Value: 1 000 EUR Coupon Rate: ﬁxed rate 6.00% p.a. Coupon Payment: annual always on 02-02 Maturity Date: 2 February 2026 Issue Date: 2 February 2021 TMR V 6.0%/ 2026 are junior, subordinated bonds. For more information regarding the issued bonds see the Company website: https://tmr.sk/investor- relations/bonds/. During the ﬁnancial year 2021/2022, the Company issued bonds: Bonds TMR VI 5.40%/ 2027 ISIN: SK4000021713 Volume: up to 65 000 000 EUR Market: The Bratislava Stock Exchange Nominal Value: 1 000 EUR Coupon Rate: ﬁxed rate 5.40% p.a. Coupon Payment: semi-annual always on 28-04 and 28-10 Maturity Date: 28 October 2028 Issue Date: 28 October 2022 TMR VI 5.4%/ 2027 are senior bods, secured by a pledge over certain assets owned by the Company. For more information regarding the issued bonds see the Company website: https://tmr.sk/investor- relations/bonds/. As of 31/10/2022 the Company has not issued any employee stock or preferred shares. The Company, based on the decision of the General Meeting, may issue bonds, convertible into Company shares (convertible bonds), or bonds with the senior subscription rights to Company shares (preferred bonds), provided that the General Meeting at the same Corporate Governance 78 time decides on the conditional raising of share capital. In case of the buy-back of own Company shares with the purpose of their transfer to Company employees, the Article 161a Par. 2 point a) of the Commercial Code shall not be applied. In this case the purchased shares shall be transferred to the Company employees within 12 (twelve) months from their acquisition by the Company. In case of the buy-back of own Company shares with the purpose of preventing an eminent major damage to the Company, the Article 161a Par. 2 point a) of the Commercial Code shall not be applied. The Board of Directors is obliged to inform the next General Meeting about the circumstances according to the Article 161a Par. 4 of the Commercial Code. The voting rights attached to Company shares have no limitations. The holders of securities issued by the Company do not have differing controlling rights. As of 31/10/2022 the Company has no knowledge of any shareholder agreements that might lead to limitations on transferability of the securities and to limitations on voting rights. The Company incurred no research and development costs in FY 2021/22. TMR does not have any branch ofﬁce abroad. The Group uses ﬁnancial derivative instruments to hedge cash ﬂows against currency risk. Since the Group issued bonds in EUR equivalent of 58.7 million, the Group has opened its position in Czech crowns. The Group has decided to manage the currency risk of changes in the exchange rate of the Czech crown on this particular instrument using a hedging instrument - a currency swap. The Group does not have any other risks hedged through hedge accounting other than the currency risk arising from the instrument as these risks are managed in a different way. For more information, see Consolidated Financial Statements, Note 29. The cash ﬂows and liquidity ratios are monitored in regular intervals. The Company ensures internal controls through regular monitoring of the ﬁnancial plan and overall ﬁnancial position. Management of market risks, business and ﬁnancial activities is described in the Risk Factors and Risk Management section and in the Consolidated Financial Statements, Note 36. The Company has not entered into any agreements which would become effective, changed or terminated as a result of change in control, or as a result of an acquisition offer. The Company has not entered into any agreements with any members of bodies or employees under which the company would be obliged to provide such members or employees with any compensation if their ofﬁce or employment terminates by resignation, notice served by the employee, removal, notice served by the employer without giving a reason or if their ofﬁce or employment terminates as a result of an acquisition offer. During FY 2021/22 the Company prepared Separate Financial Statements in accordance with International Financial Reporting Standards (IFRS). The Company is not subject to any special regulations, which would require disclosure of additional information in terms of Article 34 Par. 2 a) of the Slovak Act No. 429/2002 Coll. in connection with Article 20 Par. 1 g) of the Slovak Act No. 431/2002 Coll. CONTRACTS WITH EXTERNAL ADVISORS AND RELATED PARTIES LEASE OF THE ŠPINDLERŮV MLÝN RESORT Melida, a.s., a company associated with TMR, signed a lease contract on 6 November 2012 as the lessee with the company SKIAREÁL Špindlerův mlýn, a.s., as the lessor. The subject of the contract was the lease of the Špindlerův Mlýn resort in the Czech Republic. As of the date of this report TMR held a 25% interest in Melida, a.s. Based on the lease contract, Melida, a.s. will be operating the ski resort Špindlerův Mlýn in the Krkonoše Mountains for 20 years for the lease fee in the amount of CZK 43.8 mil. per year. Besides the sole operation of Špindlerův Mlýn, Melida committed to provide further development of the resort by expanding trails, renewing technological equipment, and by improving skiers’ experience in any other way with investments in the minimum amount of CZK 800 mil. during the whole lease term. TMR acts in the lease contract as a by-party that provides a guarantee for Melida, a.s. by guaranteeing Melida’s liabilities resulting from the lease contract and by providing it a zero-interest loan. Corporate Governance 79 CONTRACTS WITH MELIDA, A.S. TMR provides Melida, a.s. with consulting services in management and analysis of cableways, dining facilities, ski schools, rentals, shops, in marketing, bookkeeping, and project ﬁnancing. Also TMR provides Melida, a.s. with consulting services on the project of building infrastructure in the Špindlerův Mlýn ski resort. TMR made an agreement with Melida to temporarily lend it employees of TMR in order to boost the winter season and to realize some investments. TMR provided Melida with an interest- bearing loan in 2013 and an interest non-bearing loan in 2014. FINANCIAL AUDIT As of the date of this Annual Report, KPMG Slovensko spol. s.r.o., seated at Dvořákovo nábrežie 10, 811 02 Bratislava, is responsible for the audit of separate and consolidated ﬁnancial statements. KPMG Slovensko spol. s.r.o. has been approved to perform the audit of the Company’s Separate Financial Statements as of 31 October 2022 and Consolidated Financial Statements as of 31 October 2022 based on the decision of the General Meeting held on 25 May 2022. ADVISORS As of the date of this Annual Report, the Company had a contract signed with Ernst & Young seated at Žižkova 9, Bratislava 811 02, on the provision of advisory services in preparation of ﬁnancial statements. PROPOSAL ON DISTRIBUTION OF PROFIT For the year ended 31 October 2022, the Company achieved net proﬁt of EUR 3.287 mil. according to Individual Financial Statements. The Board of Directors proposes the following distribution of the proﬁt: 1. EUR 329 ths. will be allocated to the reserve fund. 2. EUR 16 ths. will be allocated to the social fund, based on the Collective Agreement. 3. The balance in the amount of EUR 2,942 mil. will be transferred to the retained earnings account. Corporate Governance SHARES 82 SHAREHOLDER CLUB TMR and individual shareholders have come together in partnership based on trust in order to move successfully forward, create loyalty with special offers in the region’s most popular resorts, and to increase the number of registered shareholders. For this reason Shareholder Club was established at the beginning of 2010. Shareholders who own at least 500 shares have the right to beneﬁts that help them to get to know the Group and its activities better through special deals as part of the GOPASS program. You can ﬁnd more information on https:// tmr.sk/en/shareholder-club. Shares * BSSE - the Bratislava Stock Exchange WSE - the Warsaw Stock Exchange PSE - the Prague Stock Exchange Closing Price BCPB (EUR) WSE (PLN) BCPP (CZK) 31.10.2022 24,00 130,00 610,00 31.10.2021 32,00 180,00 995,00 22 € 24 € 26 € 28 € 30 € 32 € 34 € 2.11.21 2.12.21 2.1.22 2.2.22 2.3.22 2.4.22 2.5.22 2.6.22 2.7.22 2.8.22 2.9.22 2.10.22 TMR Stock Performance on the BSSE 83 Shares Company / Name No. of Shares Interest in Share Capital Voting Rights % in EUR thousands % C.I. CAPITAL INDUSTRIES LIMITED 1 973 197 13 812 29,4% 29,4% Retail Shareholders <5% 1 505 930 10 542 22,5% 22,5% FOREST HILL COMPANY, s.r.o. 1 030 919 7 216 15,4% 15,4% RMSM1 LIMITED 992 666 6 949 14,8% 14,8% STOCKLAC LIMITED 800 000 5 600 11,9% 11,9% NEEVAS INVESTMENTS LIMITED 404 486 2 831 6,0% 6,0% Total 6 707 198 46 950 100,0% 100,0% C.I. CAPITAL INDUSTRIES LIMITED Retail Shareholders <5% FOREST HILL COMPANY, s.r.o. STOCKLAC LIMITED NEEVAS INVESTMENTS LIMITED RMSM1 LIMITED 29,4% 22,5% 15,4% 11,9% 6,0% 14,8% Shareholder Structure as of 31.10.2022 SHAREHOLDER STRUCTURE To the best of the Company’s knowledge the following entities held the following direct or indirect interest in the share capital and the Company voting rights as of 31/10/2022: CONSOLIDATED FINANCIAL STATEMENTS 86 Consolidated Financial Statements Tatry mountain resorts, a.s., Subsidiaries, Joint Ventures and Associates Consolidated Financial Statements for the Period from 1 November 2021 to 31 October 2022 prepared in accordance with the International Financial Reporting Standards ("IFRS") as adopted by the European Union 87 Consolidated Financial Statements Consolidated Statement of Profit and Loss and Other Comprehensive Income in TEUR Note 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Sales 6 131 812 63 458 Other operating revenue 7 1 809 1 239 Total revenue 133 621 64 697 Material and goods consumption 8 -19 070 -18 263 Purchased services 9 -39 679 -16 289 Personnel expenses 10 -43 244 -22 126 Other operating expenses 11 -1 758 -1 044 Gain / (loss) on sale of assets 15 3 341 2 397 Gain / (loss) on revaluation of investment property 18 -906 - Release / (Creation) of value adjustments 20,22,24,26 1 391 -2 372 Profit / (loss) before interest, taxes, depreciation and amortization (EBITDA) 33 696 7 000 Depreciation and amortization 15,17 -23 388 -21 525 Depreciation of right-of-use of leased assets 16 -5 863 -5 238 Gain on bargain purchase 5 13 162 756 Impairment of non-current assets 15,17 -5 977 -4 824 Profit / (loss) before interest, taxes (EBIT) 11 630 -23 831 Interest income calculated using effective interest rate 12 47 153 Financing cost 12 -22 915 -21 708 Net profit / (loss) on financial operations 13 -2 356 -130 Share of profit or (loss) from disposal of subsidiaries 5 -482 - Share of profit or (loss) of investments in joint ventures and associates accounted for using equity method 5 -163 -1 000 Profit / (loss) before tax -14 239 -46 516 Current income tax 14 -776 -70 Deferred income tax 14 3 068 710 Profit / (loss) -11 947 -45 876 Attributable to: - Holders of interest in the parent company's equity -11 361 -45 717 - Non-controlling interest -586 -159 Other components of the comprehensive income Other comprehensive income that may be reclassified to profit or (loss) in subsequent periods (net of tax): Net gain/(loss) on cash flow hedges 14 -1 103 -1 949 Foreign currency translation reserve 27 550 1 062 Total comprehensive income / (expense) -12 500 -46 763 88 Consolidated Financial Statements Consolidated Statement of Profit and Loss and Other Comprehensive Income (continued) Total comprehensive income / (expense) -12 500 -46 763 Attributable to: - Holders of interest in the parent company's equity -11 912 -46 599 - Non-controlling interest -588 -164 Earnings per share (in EUR) 27 -1,694 -6,816 Number of shares 6 707 198 6 707 198 EBITDA represents a profit from recurring activities of the Group before taxes, interest, amortisation and depreciation, adjusted for other income and expenses, which are listed under EBITDA, in particular profit / (loss) from financial operations representing foreign exchange gains / (losses). The EBITDA indicator adjusted in this way is used by the Group's management to manage the Group's performance as well as individual CGUs (cash-generating units). The Notes on pages 87 to 168 constitute an integral part of the Consolidated Financial Statements. An overview of the statement of profit and loss by particular segments is in Note 4 – Information about operating segments. 89 Consolidated Financial Statements Consolidated Statement of Financial Position in TEUR Note 31.10.2022 31.10.2021 Assets Goodwill and intangible assets 17 35 605 35 851 Property, plant and equipment 15 404 962 380 408 Right-of-use of leased assets 16 70 499 70 932 Investment property 18 7 411 8 317 Investment in an associate and a joint venture 5 13 552 13 750 Loans provided 21 894 979 Other receivables 23 508 646 Deferred tax asset 19 4 182 3 907 Total non-current assets 537 613 514 790 Inventory 20 4 507 4 094 Trade receivables 22 4 872 6 796 Loans provided 21 1 215 1 118 Other receivables 23 4 172 7 117 Financial investments 25 42 40 Cash and cash equivalents 26 15 600 15 553 Other assets 24 6 646 7 253 Total current assets 37 054 41 971 Assets total 574 667 556 761 Equity 27 Share capital 46 950 46 950 Share premium 30 430 30 430 Profit / (loss) for the period -11 361 -45 717 Retained earnings and other funds -34 065 12 755 Foreign currency translation reserve 1 699 1 147 Total equity attributable to holders of interest in the parent company's equity 33 653 45 565 Non-controlling interest -646 -442 Total equity 33 007 45 123 Liabilities Loans and borrowings 28 112 679 78 994 Lease liabilities 29 58 489 57 407 Trade payables 30 3 630 2 458 Provisions 33 141 20 Other non-current liabilities 32 13 079 14 778 Bonds issued 34 198 496 254 428 Deferred tax liability 19 26 730 27 363 Total non-current liabilities 413 244 435 448 Loans and borrowings 28 10 151 28 632 Lease liabilities 29 8 609 8 747 Trade payables 30 14 874 12 306 Provisions 33 1 860 2 304 Bonds issued 34 67 690 6 377 Other current liabilities 32 25 232 17 824 Total current liabilities 128 416 76 190 Total liabilities 541 660 511 638 Total equity and liabilities 574 667 556 761 The Notes on pages 87 to 168 constitute an integral part of the Consolidated Financial Statements. 90 Consolidated Statement of Changes in Equity in TEUR Capital Share premium Legal reserve fund Fair value revaluation reserve Hedging revaluation reserve Foreign currency translation reserve Retained earnings Equity attributable to holders of interest in the parent company’s equity Non- controlling interest Total Balance as at 1 November 2021 46 950 30 430 7 021 184 -1 499 1 147 -38 668 45 565 -442 45 123 Profit / (loss) for the period - - - - - - -11 361 -11 361 -586 -11 947 Other components of comprehensive income, after tax - items with possible subsequent reclassification to profit/(loss): Cash Flow hedge - - - - -1 103 - - -1 103 - -1 103 Foreign currency translation reserve - - - - - 552 - 552 -2 550 Total comprehensive income for the period - - - - -1 103 552 -11 361 -11 912 -588 -12 500 Transactions with owners posted directly into equity Effect of disposal of a subsidiary - - - - - - - - 384 384 Total transactions during the year - - - - - - - - 384 384 Balance as at 31 October 2022 46 950 30 430 7 021 184 -2 602 1 699 -50 029 33 653 -646 33 007 Consolidated Financial Statements 91 C onsolidated Statement of Changes in Equity (continued) in TEUR Capital Share premium Legal reserve fund Fair value revaluation reserve Hedging revaluation reserve Foreign currency translation reserve Retained earnings Equity attributable to holders of interest in the parent company’s equity Non- controlling interest Total Balance as at 1 November 2020 46 950 30 430 7 021 184 450 80 7 049 92 164 -278 91 886 Profit / (loss) for the period - - - - - - -45 717 -45 717 -159 -45 876 Other components of comprehensive income, after tax - items with possible subsequent reclassification to profit/(loss): Cash Flow hedge - - - - -1 949 - - -1 949 - -1 949 Foreign currency translation reserve - - - - - 1 067 - 1 067 -5 1 062 Total comprehensive income for the period - - - - -1 949 1 067 -45 717 -46 599 -164 -46 763 Transactions with owners posted directly into equity Total transactions during the year - - - - - - - - - - Balance as at 31 October 2021 46 950 30 430 7 021 184 -1 499 1 147 -38 668 45 565 -442 45 123 Consolidated Financial Statements 92 Consolidated Cash Flow Statement in TEUR Note 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 OPERATING ACTIVITIES Loss -11 947 -45 876 Adjustments related to: Gain on disposal of PPE and intangible assets 15 -3 341 -2 397 Depreciation and amortisation 15,17 23 388 21 525 Depreciation of right-of-use of leased assets 16 5 863 5 238 (Reversal) / creation of value adjustments to receivables 22 -1 391 2 372 Net (gain) / loss on financial instruments (non-cash) 25 2 356 130 Impairment of non-current assets 15 5 977 4 824 Loss from disposal of subsidiaries 5 482 - (Profit) / loss on revaluation of investment property 18 906 - Net interest (income)/ expenses 12 22 869 21 555 Gain on bargain purchase 5 -13 162 -756 Share of (profit) or loss of investments in joint ventures and associates accounted for using equity method 5 163 1 000 Change in provisions 33 -366 291 Income tax 14 -2 292 -640 Change in trade receivables, other receivables and other assets 22,23,24 -2 703 -2 195 Change in inventories 20 -397 4 816 Change in trade payables and other liabilities 30, 32 5 809 1 201 Cash flow from operating activities before income tax 32 214 11 088 Income tax paid 757 1 489 Cash flow from operating activities 32 971 12 577 INVESTING ACTIVITIES Acquisition of property, plant and equipment and intangible assets 15,16 -23 535 -10 555 Proceeds from disposal of PPE and intangible assets 15 7 495 4 957 Net cash income from the purchase of subsidiaries 5 -6 833 -2 848 Proceeds from the sale of shares in subsidiaries 5 2 346 - Loans provided 21 -246 -263 Repayment of loans provided 21 331 51 Interest received 12 9 40 Cash flow from investing activities -20 433 -8 618 FINANCING ACTIVITIES Repayment of lease liabilities 29 -7 596 -7 047 Repayment of received loans and borrowings 28 -22 552 -1 830 Loans and borrowings received 28 34 112 29 046 Bonds issued 34 1 518 109 635 Repayment of bonds - -110 000 Interest paid 12 -17 973 -15 371 Cash flow from financing activities -12 491 4 433 Net increase of cash and cash equivalents 47 8 392 Cash and cash equivalents at the beginning of the year 26 15 553 7 161 Consolidated Financial Statements 93 Notes to the Consolidated Financial Statements Content 1. Information about the Company ................................................................................................................................. 94 2. Significant Accounting Policies ................................................................................................................................. 96 3. Significant Accounting Estimates and Assumptions ................................................................................................ 112 4. Information about Operating Segments .................................................................................................................... 117 5. Increase, Decrease and Sale of Shares in Companies ............................................................................................... 120 6. Sales ......................................................................................................................................................................... 126 7. Other Operating Revenues ....................................................................................................................................... 126 8. Consumption of Material and Goods ....................................................................................................................... 127 9. Purchased Services ................................................................................................................................................... 127 10. Personnel Expenses .................................................................................................................................................. 128 11. Other Operating Expenses ........................................................................................................................................ 129 12. Finance Income and Expenses .................................................................................................................................. 130 13. Net Profit / (Loss) from Financial Operations .......................................................................................................... 131 14. Current and Deferred Income Tax ............................................................................................................................ 131 15. Property, Plant and Equipment ................................................................................................................................. 134 16. Right-of-use Leased Assets ...................................................................................................................................... 137 17. Goodwill and Intangible Assets ................................................................................................................................ 138 18. Investment Property ................................................................................................................................................. 139 19. Deferred Tax Asset, Deferred Tax Liability ............................................................................................................. 140 20. Inventories ................................................................................................................................................................ 141 21. Loans Provided ......................................................................................................................................................... 141 22. Trade Receivables .................................................................................................................................................... 142 23. Other Receivables .................................................................................................................................................... 143 24. Other Assets ............................................................................................................................................................. 144 25. Financial Investments ............................................................................................................................................... 144 26. Cash and Cash Equivalents ...................................................................................................................................... 145 27. Equity ....................................................................................................................................................................... 145 28. Loans and Borrowings .............................................................................................................................................. 148 29. Lease Liabilities ....................................................................................................................................................... 150 30. Trade Payables ......................................................................................................................................................... 151 31. Hedge Accounting .................................................................................................................................................... 151 32. Other Liabilities ........................................................................................................................................................ 154 33. Provisions ................................................................................................................................................................. 156 34. Bonds Issued ............................................................................................................................................................ 156 35. Fair Value Information ............................................................................................................................................. 158 36. Changes in Liabilities Arising from Financial Activities ......................................................................................... 159 37. Information about Risk Management ....................................................................................................................... 159 38. Related Parties .......................................................................................................................................................... 165 39. Subsequent Events .................................................................................................................................................... 166 40. Capital Commitments and Capital Management ...................................................................................................... 166 41. Contingent Assets and Contingent Liabilities .......................................................................................................... 167 42. Companies within the Group .................................................................................................................................... 167 Consolidated Financial Statements 94 1. Information about the Company Tatry mountain resorts, a.s. (the "Parent Company" or the "Company") is a joint stock company with its registered office and place of business in Demänovská Dolina 72, 031 01 Liptovský Mikuláš. The Company was established on 20 March 1992 and incorporated on 1 April 1992. The Company’s identification number is 31 560 636 and its tax identification number is 2020428036. The Company is not a fully liable partner in other accounting entities. The Company's shares have been reg istered on the Bratislava Stock Exchange since 19 November 1993, on the Warsaw Stock Exchange (WSE) since 15 October 2012 and on the Prague Stock Exchange (BCCP) since 22 October 2012. On 22 August 2013, an extraordinary General Meeting was held, which decided on a reduction in the share capital of the Company Tatry mountain r esorts, a.s. from EUR 221,338 thousand to EUR 46,950 thousand, i.e. by EUR 174,388 thousand. Subsequently, during the financial year 2014, the Company made two bond issues in the total nominal value of EUR 180,000 thousand, which have been admitted to trading on the Bratislava Stock Exchange since 19 February 2014. On 17 December 2013, the Company issued the first issue o f TMR I bonds with a total nominal value of EUR 70,000 thousand, due in 2018. On 5 February 2014, the Company issued the second issue of TMR II bonds with a total nominal value of EUR 110,000 thousand, due in 2021.On 10 October 2018, the company issued the third bond issue TMR III in the nominal value of EUR 90,000 thousand, with maturity in 2024. On 7 November 2018, the company TMR Finance CR, a.s. issued the fourth bond issue TMR F. CR in the nominal value of CZK 1,500,000 thousand, with maturity in 2022 . On 2 February 2021, the Company issued the fourth bond issue TMR V bonds in the total nominal value of EUR 110,000 thousand, with a maturity date in 2026. On 28 October 2022, the Company issued the sixth bond issue TMR VI bonds in the total nominal value of EUR 59,000 thousand, with a maturity date in 2027. See Note 34 – Bonds Issued. The structure of the Company's shareholders is described in part 27 - Equity. The consolidated financial statements of the Group for the period ending 31 October 2022 compr ise the statements of the parent company, its subsidiaries, joint ventures and associates (together referred to as the “Group”). The principal activities of the Group include cable and ski lift operations, restaurant and dining services, the operation of ski and snowboard schools, purchase and sale of goods, hotel management, operation of an amusement park and golf resorts. On 1 November 2020, there was a merger of the Parent Company with 1. Tatranská, akciová spoločnosť (“1. Tatranská”). As a t 1 May 2021, the Group expanded its portfolio by adding the subsidiary Muttereralm Bergbahnen Errichtungs GmbH (100% share). On 4 June 2021, GOPASS, a.s. was founded with registered capital of EUR 25 thousand. The Parent Company became its sole shareholde r. On 29 October 2021, the Parent Company sold Aquapark Tatralandia and Holiday Village Tatralandia assets to its subsidiary TMR Parks, a.s. (former name: Tatry mountain resorts PL, a.s. ), but the Parent Company continues to operate them. On 31 March 2022, the Group acquired a 100% share and control in WORLD EXCO s.r.o. The acquired company operates a congress center in Bešeňová. On 31 March 2022, the Group also acquired a 100% share and control in EUROCOM Investment, s.r.o. The acquired company operates th e Bešeňová water park, Hotel Galeria Thermal and Hotel Bešeňová. On 22 June 2022, for the purpose of providing services within the TMR Group, International TMR services s.r.o. was founded, 100% owned by the Company. On 1 July 2022, the C ompany acquired a 100% share in the European company GOPASS SE, which will serve the purpose of expanding in the European market. On 30 September 2022, the Group sold its 51% stake in Tikar d.o.o.. The average number of Group employees and information about used the services of employment agencies for short- term personnel leasing are described in part 10 – Personnel expenses. Consolidated Financial Statements 95 The Group ’s bodies are: Board of Directors: Ing. Igor Rattaj, the Chairman (since 30.4.2020) Ing. Jozef Hodek, the Member (since 30.6.2009) Čeněk Jílek, the Member (since 29.4.2020) Supervisory Board: Ing. Bohuš Hlavatý (since 30.4.2020) Ing. František Hodorovský (since 18.1.2011) Roman Kudláček (since 21.4.2012) Ing. Andrej Devečka (since 29.4.2020) Ing. Pavol Mikušiak (since 27.4.2013) Adam Tomis (since 12.4.2014) Mgr. Marek Schwarz (od 30.6.2021) Ivan Oško (since 30.06.2021) Miroslav Roth (since 30.6.2012 to 3.6.2021 and since 30.6.2021) Consolidated Financial Statements 96 2. Significant Accounting Policies (a) Statement of compliance The Consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the EU and in accordance with Act No. 431/2002 Coll. of the National Council of the Slovak Republic on Accounting (“Act on Accounting”). The Consolidated financial statements have been prepared for the period from 1 November 2021 to 31 October 2022. The financial statements were approved by the Board of Directors on 28 February 2023. (b) Basis of preparation The Consolidated financial statements have been prepared based on the historical cost principle, while the investment property and financial instruments measured at fair value were revalued to their fair value through profit or loss. The Group's Consolidated financial statements have been prepared on a going-concern basis (for more details see also Note 39 – Subsequent events). The Group's management expects that the Group has sufficient resources to continue as a going concern for at least another 12 months and that the preparation of the financial statements, assuming the continuity of its operations, is appropriate. Between 1 November 2021 and mid-January 2022, the Group was exposed to the impacts of measures aimed at mitigating the consequences and the course of the COVID-19 pandemic. In Slovakia, measures were introduced at the end of November 2021 that restricted the operation of water parks, hotels and restaurants. On 17 December 2021, the Group started the ski season, which lasted until May 8, 2022, under tightened anti-epidemiological measures. A further easing of measures came from 25 December 2021, when the services of hotels, restaurants and water parks became available to accommodated guests. Since 19 January 2022, water parks have also been opened to the public. During the remaining period of the winter season, introduced measures were not limiting the operation of the Group. The measures were gradually relaxed, which had a positive impact on the Group's results in Slovakia and the attendance of its resorts, and during the summer season the establishments could operate without restrictions. Austria declared its lockdown in November 2021, which was partially lifted on 19 December 2021. The Group’s ski resorts remained closed during this period. After the relaxation of measures, resorts were opened and began to provide their services in ski resorts. In Austria, during the winter season, there were quite strict rules for allowing foreign tourists to enter the country. Once the measures have been relaxed, the Group's resorts in Austria operate without significant restrictions. In Poland, the restrictions put in place did not have a negative impact on the operation of resorts and services provided therein. Therefore, the operation was not significantly affected, and the winter season was opened and operated in standard regime. In the Czech Republic, restrictions were introduced, which, like in Poland, did not have a negative impact on the operation of the resorts and services provided therein. Therefore, the winter season was opened and operated in standard regime. Given the current situation, the Group does not expect major impacts of anti-pandemic measures on its business in all countries. The Group ’s assumptions are based on the current situation in Europe, where measures have been relaxed in most countries, resulting in positive impacts on the business and social life of residents. This trend is confirmed by the interim results of the 2022/2023 winter season in all Group ’s resorts. A significant risk within the Central and Eastern European region is the military conflict in Ukraine, which may have an impact on visits to the Group's resorts and hotels, as the resorts and hotels are close to the borders of the military conflict, i.e. Ukraine. The Group is affected by the conflict directly due to the loss of visitors from Russia and partially from Ukraine as well. However, even before the war events and the imposition of sanctions, the Group did not consider the Russian or Ukrainian market to be essential. While the loss of visitors from these regions has a negative impact, it is a minor group of visitors in Slovakia and at the same time foreign clients are complemented by new markets such as the countries of the Baltic region, Romania and Hungary. Consolidated Financial Statements 97 The Group's costs are influenced, among other things, by the consumption of energy, natural gas, fuel and water. These are directly reflected in the operating costs of resorts and hotels, for example in terms of electricity consumption in the operation of cableways and snowmaking facilities. Electricity and natural gas prices in 2022 within the European Union were well above the average of previous years. The Group had a pre-contracted electricity supply for 2022 in Slovakia and Poland. In Slovakia, it also has contracted electricity for the winter season 2023. Thus, price increases do not currently significantly limit the Group's ability to operate its facilities. Thanks to the active management of commodity prices and systematic investments in snowmaking, the Group was able to open the season on the planned date as at 3 December 2022 in Jasná, as at 15 December 2022 in Ješted , as at 16 December 2022 in Szczyrk and as at 17 December 2022 in the High Tatras and in the Austrian resort of Mutt ereralm. Due to bad weather in October and November, Mölltaler Gletscher was opened with a delay. In relation to the Group ’s financing, there were the following changes made during the year: On 28 October 2022, the Group issued TMR VI bonds in a total value of up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and maturity in 2027. On 28 October 2022, bonds worth EUR 1,552 thousand were traded. On 3 November 2022, bonds of the TMR VI issue worth EUR 57,448 thousand were traded. On 7 November 2022, TMR Finance CR paid out TMR IV bonds in the Czech Republic to creditors. The management of the Group modeled a scenario of liquidity development for a period of 12 months from the date of the financial statements. The assumptions used in the model take into account the prices of electricity contracted by the Group, and management assumes gas prices to be higher than the current spot prices on the exchange. The Group also proceeded to optimize the operations and at the same time received an increase in the overdraft from J&T Banka by EUR 4,000 thousand. The baseline scenario, as well as more pessimistic scenario which calculates with overall decrease in revenues of the Group by 5% for whole projected period since February 2023 until the fiscal year end, includes the impact of the reduction of capital expenditures or its financing by bank loans as well as availability of the overdraft is in the total amount of EUR 6,000 thousand which can be drawn by the Group for the purpose of operational cash flow management. The Group's management assessed the impacts of the war in Ukraine and the energy crisis on the Group's operations and concluded that there was no material uncertainty about the Group's continuing operations (going concern). The consolidated financial statements have been prepared in EUR thousands. The accounting methods were consistently applied by the companies in the Group in accordance with the previous accounting period. The preparation of financial statements in compliance with the International Financial Reporting Standards as adopted by the EU requires the application of various judgements, assumptions and estimates which affect the reported amounts of assets, liabilities, income and expenses. However, actual results will likely differ from these estimates. Significant accounting estimates and judgements which were made by management, and which bear a significant risk of material adjustment in the next accounting period are discussed in Note 3 – Significant accounting estimates and assumptions. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and also in future periods if the revision affects both current and future periods. (c) Adoption of new standards and interpretations The accounting principles used are consistent with the accounting principles and methods used when preparing the individual financial statements for the financial year ended 31 October 2022. Consolidated Financial Statements 98 In the course of the accounting period starting on 1 November 2021 the Group implemented the following new IFRS standards, amendments to standards and IFRIC interpretations. The application of these standards had no impact on the financial statements of the Group. • Amendments to IFRS 3 Business Combinations - modification of references to the conceptual framework • Amendments to IAS 16 Property, Plant and Equipment - management of the by-product produced during commissioning • IAS 37 Provisions, Contingent Liabilities and Contingent Assets - detailed costs included in the calculation of onerous contracts • Annual Improvements 2018-2020 bring minor changes to IFRS 1 First Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and illustrative examples accompanying IFRS 16 Leases. (d) International financial reporting standards that were issued but not yet effective The Group did not apply any International Financial Reporting Standards as adopted by the European Union before the date they become effective. In case that the transition arrangements allow entities to choose between prospective or retrospective approach, the Group decided to apply these standards prospectively. As at 31 October 2022, the following International Financial Reporting Standards, amendments to standards and interpretations as adopted by the European Union were issued but not yet effective, and have not been applied by the Group in preparing these financial statements: • Amendments to IFRS 17 Insurance contracts - Initial application of IFRS 17 and IFRS 9 - Comparative information • Amendments to IAS 12 Income taxes – Deferred tax relating to assets and liabilities arising from a single transaction • Amendments to IAS 1 Presentation of financial statements and report on the practice of IFRS 2 - Disclosure of accounting principles • Amendments to IAS 8 Accounting principles, Changes in accounting estimates and errors - Definition of accounting estimates • IFRS 17 Insurance contracts The Group anticipates that the issuance of new but not yet effective International Standards will not affect the financial statements. (e) Leases The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i. Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: Consolidated Financial Statements 99 • Buildings and land 30 years • Individual movables and sets of movables ▪ Works of art 20 years ▪ Billboards and advertising space 10 years ▪ Snow groomers 8 years ▪ Others 5 years If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies related to impairment of non-financial assets in note 2(l) Impairment of non-financial assets. ii. Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs. The Group does not apply the practical expedient in IFRS 16.15. Every contract is examined to determine whether it contains a non-lease components in addition to lease components. Non-lease components are separated from the lease components, and only the lease components are accounted for in accordance with the provisions of IFRS 16. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. When revaluing lease liability due to a lease modification, residual value of the right-of-use asset is adjusted for the revaluation difference. Right- of-use asset is further depreciated from this adjusted value. The Group’s lease liabilities are included in Lease liabilities (see Note 29). iii. Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). The Group also applies the lease of low-value assets recognition exemption to leases of items of low value - below EUR 1,000. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term. Group as a lessor Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating Consolidated Financial Statements 100 and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. In the case of leases, in which the Group transfers substantially all the risks and rewards of ownership of the asset, are classified as finance leases. The leased asset is derecognised and the Group recognizes a financial asset measured at amortized cost, representing the present value of the lease payments, adjusted as in lease liabilities. In case that the Group leases right-of-use assets, which it further sublets as a lessor to other lessees, the Group evaluates the lease provided to the lessee on whether it is an operating or financial sublease. The only different criterion compared to leasing own assets is the assessment of the sublease against the right-of-use and not the original underlying asset. After assessing whether it is a financial or operating lease, it is subsequently reported in terms of accounting policies for the Group as a lessor. (f) Financial instruments i. Initial recognition and measurement of financial asset Financial assets upon initial recognition are classified in one of three categories as financial assets subsequently measured at amortized cost, fair value through other comprehensive income (OCI) and fair value through profit or loss. The classification of financial assets at initial recognition depe nds on the financial asset’s contractual cash flow characteristics and the Group ’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient (ie. the Group measures life-time credit losses). The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group ’s bus iness model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. ii. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at amortised cost (debt instruments) • Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) • Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) • Financial assets at fair value through profit or loss iii. Financial assets at amortised cost (debt instruments) The Group measures financial assets at amortised cost if both of the following conditions are met: • The financial asset is held within a business model with the objective to hold financial 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 Consolidated Financial Statements 101 Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group ’s financial assets at amortised cost includes Trade receivables, Other receivables and Loans provided. iv. Financial assets at fair value through OCI without recycling of cumulative gains and losses upon derecognition (equity instruments) The Group decided to measure equity instruments at fair value through OCI if both of the following conditions are met: • The equity instrument is an instrument in neither an instrument in Associate, nor Subsidiary • The equity instrument is not held for trading v. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when: • The rights to receive cash flows from the asset have expired, or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass - through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset vi. Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a method, that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. For financial assets, where simplified approach is not used – Loans provided, significant increase in credit risk since initial recognition is assessed on an individual basis. The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Consolidated Financial Statements 102 Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Group uses derivative financial instruments, such as foreign currency swaps to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. For the purpose of hedge accounting, hedges are classified as: • Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability The Group does not use any other form of hedges. At the beginning of the hedging relationship will be formally defined and documented hedging relationship and objective and strategy of an entity's risk management to ensure implementation. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Company will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: • There is ‘an economic relationship’ between the hedged item and the hedging instrument. • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship. • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item. Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below: Cash flow hedges That part of the gain or loss on the hedging instrument that is determined as effective hedging (i.e. that part that is offset by a change in the cash flow hedge provision) is recognized in other comprehensive income (OCI) until any remaining gain or loss on the hedging instrument (or any gain or loss required to offset a change in a cash flow hedge provision) represents a hedge ineffectiveness recognized in profit or loss. The separate component of equity related to the hedged item (cash flow hedge reserve) is adjusted to the lower of the following values (in absolute terms): i) the cumulative gain or loss on the hedging instrument since the inception of the hedge and ii) the cumulative change in the fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged expected future cash flows) since the inception of the hedge. The Group uses swap currency contracts as hedges of its exposure to foreign currency risk in loans taken out in foreign currencies. Consolidated Financial Statements 103 If the hedged expected transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or if the hedged expected transaction with a non-financial asset or non-financial liability becomes a liability to which fair value hedge accounting applies, the entity removes that amount from the cash flow hedge provision. and include it directly in the initial cost or other carrying amount of the asset or liability. It does not constitute a reclassification adjustment (see IAS 1) and therefore does not affect the other components of the comprehensive income. For other cash flow hedges, the amount is reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows have an impact on profit or loss. When an entity ceases to account for a cash flow hedge, the amount that has accumulated in the cash flow hedge reserve remains in the cash flow hedge reserve until future cash flows are expected, otherwise the amount is immediately reclassified from the cash flow hedge reserve to profit or loss. management as a reclassification adjustment. (g) Basis for consolidation i. Subsidiaries Subsidiaries are those enterprises that are controlled by the Group. The control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an enterprise, so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The consolidated financial statements include the Group's interests in other entities based on the Group's power to control such entities regardless of whether the control is actually exercised or not. The financial statements of subsidiaries are included in the consolidated financial statements from the day of origin of the control until the day of cessation of the control. ii. Associates Associates are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when a company holds between 20 and 50 percent of the voting rights of another entity. Investment in associate is recognised initially at cost. The consolidated financial statements include the Group's interest in the reported profits and losses of associates according to the equity method from the date of origin of significant influence until the date of cessation of the substantial influence. The investment is initially recognized at acquisition cost. When the Group's share of the losses exceeds the carrying amount of the associate, the carrying amount of that company is reduced to zero and the recognition of future losses is discontinued, except when the Group has incurred any liabilities in respect of the associate. iii. Joint ventures A joint venture is a joint arrangement where two or more participants carry out an economic activity that is subject to joint control, through which the Group has a right to the net assets of the arrangement but not a right to assets and obligation for liabilities related to that arrangement. Joint control is the contractually agreed sharing of control of an arrangement. Joint ventures are carried at cost. The financial statements include the Group’s share of the total recognised gains and losses of joint ventures on an equity method basis, from the date that joint control commences until the date that joint control ceases. The cost of jointly controlled (associated) ventures is derived from the amount of spent cash or cash equivalents or is recognised at fair value of contributed assets and liabilities to acquire the enterprise at the moment of acquisition. Costs related to acquisition (transaction costs) are included in the cost of the investment. As at the reporting date, the management reconsiders whether any events occurred which could cause impairment of jointly controlled (associated) ventures. Potential impairment of financial investments below their cost is recognised through a value adjustment. Value adjustments are derived from the value of future cash flows discounted to present value. Consolidated Financial Statements 104 iv. Scope of consolidation The list of all companies included in the consolidation is provided in Note 42 – Companies within the Group. v. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. vi. Acquisition method of accounting Acquisitions of subsidiaries are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer. Acquisition-related costs are recognised directly in profit or loss. The acquiree's identifiable assets acquired and the liabilities assumed that meet the recognition criteria under IFRS 3 are recognised at their fair value at the acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Otherwise, the difference is reassessed and any excess remaining (gain on bargain purchase) after the reassessment is recognised directly in profit and loss. The non-controlling interest is measured as a proportionate share of identifiable assets of the acquiree’s identifiable assets. vii. Unification of accounting principles The accounting principles and procedures applied by the consolidated companies in their financial statements were unified in the consolidation and comply with the principles applied by the Parent company. (h) Foreign currency Foreign currency transactions Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates (the functional currency). The consolidated financial statements are presented in thousands of euros, which is t he Group's presentation currency and Parent Company’s functional currency. Transactions in foreign currencies are translated into euros at the foreign exchange rate valid at the date immediately preceding the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into euros at the financial statements date at the exchange rate of the European Central Bank valid at that day. Foreign exchange differences arising from such translations are recognised through profit or loss. Non-monetary assets and liabilities denominated in foreign currencies, which are measured at cost, are translated into euros using the exchange rate valid at the date immediately preceding the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into euros at the foreign exchange rates valid at the dates the fair values are determined. Foreign currency translation reserve includes all foreign exchange differences that arise from the transfer of financial statements of foreign entities within the consolidation group. Conversion of foreign operations Consolidated Financial Statements 105 The results and financial position of a foreign operation are translated into the presentation currency so that the foreign operation can be included in the financial statements of the reporting entity upon full consolidation. The results and financial position are translated into another presentation currency, where: a) assets and liabilities for each presented statement of financial position (i.e. including comparable data) are translated at the closing rate valid on the date on which this statement of financial position was prepared. (b) revenue and expenses for each statement of comprehensive income (i.e. including comparable information) shall be translated at the average exchange rate for the period. c) all resulting exchange differences are recognized in other comprehensive income. (i) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and in banks, short-term highly liquid investments with original maturities of three months or less and short-term highly liquid investments readily convertible for known amounts of cash. (j) Inventories Inventories are measured at the lower of acquisition cost (purchased inventory), respectively in own costs (incurred by own activity), and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Purchased inventories are measured at cost, which includes the purchase price and other directly attributable expenses incurred in acquiring the inventories and bringing them to their existing location and condition. Own costs include direct costs and indirect costs associated with acquiring inventories by own activity. The Group uses a weighted average cost method for valuation of its inventories. (k) Offsetting Financial assets and liabilities are offset and their net amount is reported in the balance sheet when the Group has a legally enforceable right to set off the recognised amounts and the transactions are intended to be settled on a net basis. (l) Impairment of non-financial assets The carrying amounts of the Group's assets, other than inventories (refer to the accounting policy under letter j), investment property (refer to the accounting policy under letter o), financial assets (refer to the accounting policy under letter f), and deferred tax assets (refer to the accounting policy under letter s) are reviewed at each financial statements date to determine whether there is objective indication of impairment of the asset. If any such indication exists, the asset's recoverable amount is estimated. Intangible assets that have an indefinite useful life are not subject to amortisation but are tested annually for impairment as part of the cash-generating unit to which they belong. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. If assets available for sale caused a decrease in fair value recognized directly in equity and if objective reasons exist that prove that there was a decrease in the fair value of the assets, the cumulated loss recognized in equity shall be reported in the profit and loss statement even if the relevant asset had not been derecognized from the financial position. The recoverable amount of other assets is the greater of their value in use less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Consolidated Financial Statements 106 In the case of goodwill, an impairment loss cannot be decreased subsequently. In respect of other assets, an impairment loss is reversed or decreased when there is an indication that the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount. An impairment loss can only be reversed or decreased to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (m) Property, plant and equipment i. Owned assets Single items of property, plant and equipment are measured at cost less accumulated depreciation (see below) and impairment losses (refer to the accounting policy under letter o). Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and costs of dismantling and removing the items and restoring the site where it was located. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as Consolidated items (major components) of property, plant and equipment. ii. Subsequent expenditures Subsequent expenditure is capitalised if it is probable that the future economic benefits embodied in the part of property, plant and equipment will flow to the Group and the relevant cost can be measured reliably. All other expenditures including the costs of day-to-day servicing of property, plant and equipment are recognised in profit or loss in the period to which they relate. iii. Depreciation Except as specified below, depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of individual items of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows: • Buildings 30 - 45 years • Cableways and ski lifts ▪ Fixed structures and other objects 20 – 40 years ▪ Technology and accessories 4 - 12 years • Individual movables and sets of movables ▪ Geothermal borehole 40 years ▪ Slides 25 years ▪ Equipment 5 - 12 years ▪ Fixtures and fittings and others 5 - 10 years Depreciation methods, useful lives, as well as residual values, are reassessed annually as at the financial statement’s date. Each significant part of property, plant and equipment (component) with cost significant in relation to the total cost of the relevant item is depreciated separately. iv. Capitalized borrowing costs Borrowing costs attributable to the asset that necessarily takes a substantial period of time to get ready for its use or sale are capitalised by the Group as part of the cost of the asset. Consolidated Financial Statements 107 (n) Intangible assets i. Goodwill and intangible assets acquired in a business combination Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed. Goodwill on acquisition of subsidiaries is included under intangible assets. Goodwill on acquisition of associates is included in the investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Bargain purchase (negative goodwill) arising on an acquisition is reassessed and any excess remainder of the negative goodwill after the reassessment is recognised in profit or loss. Intangible assets acquired in a business combination are recognised at fair value on the acquisition date if the intangible asset is separable or arises from contractual or other legal rights. Intangible assets with an indefinite useful life are not subject to amortisation and are recorded at cost net of impairment loss. Intangible assets with a definite useful life are amortized over the useful life and are stated at cost net of accumulated amortisation and impairment losses. ii. Software and other intangible assets Software and other intangible assets acquired by the Group are stated at cost less accumulated amortisation (see below) and impairment losses (refer to the accounting policy under letter l). Useful life of these assets is reassessed regularly. iii. Amortisation Amortisation is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date the asset is available for use. The estimated useful lives are as follows: • Software 2 – 5 years • Valuable rights each item uses an individual depreciation plan, based on the estimated useful lives if these assets, valuable rights also include trademarks which represent non-depreciated assets. The Group uses 2, 6, 7, 8, 10, 12 and 50-year useful lives for its valuable rights (o) Investment property Investment property represents assets that are held by the Group to generate rental income or to realise a long-term increase in value, or for both of these purposes. Investment property is stated at fair value, which is determined by an independent registered expert or by the management. Fair value is based on current prices of similar assets on an active market under the same location and the same conditions, or where such conditions are not available, by applying the generally applicable valuation models such as the yield method. Any gain or loss arising from a change in fair value is recognised in profit or loss. Assets that are constructed or developed for their future use as investment property are measured at fair value if the fair value can be determined reliably. Details on the valuation of investment property are specified in Note 3(b) – Significant accounting estimates and assumptions, Valuation of investment property. Rental income from investment property is accounted for as described in the accounting policy under letter (e) Leases – Group as a lessee. (p) Government grants Government grants are recognised where there is a reasonable assurance that the grant will be received, and all attached conditions will be complied with. Consolidated Financial Statements 108 When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset. When the Group receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments. (q) Provisions A provision is recognised in the balance sheet when the Group has a present legal, contractual, or non-contractual obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Long-term provisions the reduction of which to their present value would have a material impact on the financial statements are discounted to their present value. i. Long-term employee benefits Liability of the Group resulting from long-term employee benefits other than pension plans represents the estimated amount of future benefits that employees have earned in return for their service in the current and prior periods. The liability is calculated using the projected unit credit method, discounted to its present value. A discount rate used to calculate the present value of liability is derived from the yield curve of high-quality bonds with maturities close to the conditions of the Group’s liabilities as at the date of the financial statements preparation. ii. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are recognised as expenses at the time of provision of the service by the employees. A payable is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or contractual obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (r) Interest income and expense Interest income and expense is recognised in profit or loss in the period to which it relates using the effective interest rate basis. All expenses on loans and borrowings are recognised in profit or loss, with the exception of capitalised borrowing costs; refer to the accounting policy under letter (m), part ( iv ). (s) Income tax Income tax on the profit for the current accounting period comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the current accounting period, using tax rates valid as at the date of the financial statement’s preparation, and any adjustments to tax payable in respect of previous accounting periods. The amount of deferred tax is based on the expected method of realization or settlement of the carrying amount of assets and liabilities using tax rates valid as at the date of the financial statement’s preparation or enacted to this date. Deferred tax is accounted for using the balance sheet method and calculated from all temporary differences between the carrying amounts of assets and liabilities determined for financial reporting purposes and the amounts used for taxation purposes. The following tem porary differences weren’t taken into account: the initial recognition of assets or liabilities which affect neither accounting nor taxable profit, and the differences relating to investments in subsidiaries to the extent that it is probable that they will not be reversed in the foreseeable future. No deferred taxes are recognised on the initial recognition of goodwill. The amount of deferred tax is based on the expected way of realisation or settlement of the carrying amount of assets and liabilities, usin g the tax rates valid or approved as at the date of the financial statement’s preparation. Consolidated Financial Statements 109 Income tax is recognised directly in profit or loss, except for the part that relates to items recognised directly in equity, in which case the income tax is recognised in equity. Deferred tax asset and liability are offset if there is a legally enforceable right to offset the payable tax liability and asset, and they relate to the same tax authority and the taxable entity. A deferred tax asset is only recognised up to the amount of probable future taxable profits against which the unused tax losses and credits can be offset. Deferred tax assets are reduced by the amount for which it is probable that the related tax benefit will not be realised. (t) Trade and other payables Trade and other payables are stated at amortised cost (see point (y) Financial liabilities). (u) Revenues from services rendered The Group recognises eight types of basic revenues from services rendered: • Revenues from cableways and ski lifts (hereinafter also referred to as “Mountain Resorts”) • Revenues from leisure parks • Revenues from sports services and stores • Revenues from hotel services (hereinafter also referred to as “Hotels”) • Revenues from restaurant facilities (hereinafter also referred to as “Dining”) • Revenues from real estate projects (mainly from investment property, hereinafter also referred to as “Real Estate”) • Revenues from golf resorts (hereinafter also referred to as “Golf s ”) • Other revenues The Group recognizes revenues in a scope in which economic benefits are likely to flow to the Group, and these revenues can be easily valued. Revenues are recognized at fair value. Revenues are accrued depending on in which period the services were rendered, excluding revenues from leisure parks, golf resorts, hotel services and restaurant facilities, which are recognised in profit or loss after the service has been rendered. Revenues from services rendered do not include value added tax. They are also net of discounts and rebates (rebates, bonuses, discounts, credit notes and the like). Since 2012 the Group has been running a loyalty program for its clients – Gopass, which enables its clients to earn points for purchase of products and services in its resorts and to redeem these points as discounts from future purchases. The amount of unredeemed points are recognized as a decrease in sales against revenue time difference, as they are related to promised discounts from future purchases of clients. The Group monitors the value of unredeemed points and revalues it on a regular basis for its recognition in the financial statements. The loyalty program has been operated by the subsidiary GOPASS a.s. since 1 November 2021. Other services include in particular the services provided in relation to accommodation, such as the rental of premises including hotels disclosed as investments property, parking, wellness, massage, sale of souvenirs, etc. Revenues from rental are recognised over the duration of the rental, with accruals. Revenues from real estate projects are recognised following the transfer of rights and obligations and related risks onto buyer, which occurs mostly at the day of transfer of the ownership rights. The sale of real estate is reported in the Group's revenues on the date of signing the acceptance protocol, or by registration at the cadastre on the basis of the decision to allow the deposit of title, whichever occurs first. Revenues from the sale of souvenirs and other goods shall be recognised following the transfer of significant risks and benefits from the particular goods. Other revenues from services provided shall be recognised following the provision thereof. Consolidated Financial Statements 110 (v) Dividends Dividends are recognised in the statement of changes in equity and also as liabilities in the period in which they are approved. (w) Non-current assets and disposal groups held for sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group held for sale) are re-measured in accordance with the International Financial Reporting Standards as adopted by the EU. Thereafter, upon initial classification as held for sale, the assets and disposal group held for sale are recognised at the lower of their carrying amount or fair value less cost to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except for inventories, financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initial recognition as held for sale are recognised in profit or loss even if the revaluation reserve was created. The same applies to gains and losses on subsequent measurements. Gains are not recognised in excess of any cumulative impairment loss. Property, plant and equipment and intangible assets classified as held for sale are no longer depreciated or amortised. In case that, after the asset assignment into the group of assets held for sale, value is realized mainly through use rather than sale thereof, the assets shall be accounted back and depreciation or amortization for property, plant and equipment and intangible assets shall be recognised in the period when such change of assets arose. (x) Reporting by segments Operating segments are parts of the Group that are able to generate income and expenses with available financial information, which is regularly reviewed by the chief operating decision makers in order to allocate resources to the segments and to assess their performance. The management monitors 8 main segments, namely mountain resorts, leisure parks, hotels, dining, sports services and stores, real estate, golfs and other. (y) Financial liabilities The Group recognises financial liabilities as other financial liabilities. The Group does not recognise any financial liabilities valued at fair value through profit or loss. In the Group’s Consolidated statement of financial position, other financial liabilities are recogni zed as received loans and borrowings, bonds issued, trade payables and other liabilities. Financial liabilities are recognised by the Group on the trade date. Upon initial recognition, financial liabilities are measured at fair value including transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortized cost. Upon measurement at amortized cost the difference between the cost and the face value is recognised through profit or loss during existence of the asset or liability using the effective interest rate method. Financial liabilities are derecognised when the Group's obligation specified in the contract expires, is settled or cancelled. (z) Fair value estimates The following notes summarise the main methods and assumptions used in estimating the fair values of financial assets and liabilities referred to in Note 35 – Fair value information: Consolidated Financial Statements 111 i. Loans granted Fair value is calculated based on discounted expected future principal and interest cash flows. Expected future cash flows are estimated considering credit risk and any indication of impairment. The estimated fair values of loans reflect changes in credit status since the loans were made and changes in interest rates in the case of fixed rate loans. ii. Loans and borrowings For loans and borrowings with no defined maturities, fair value is taken to be the amount payable on demand as at the date of preparation of the consolidated financial statement. The estimated fair value of fixed-maturity loans and borrowings is based on discounted cash flows using rates currently offered for loans and borrowings of similar remaining maturities. iii. Trade receivables/payables, other receivables and other assets/liabilities Short-term receivables without the interest rate are valued at the original invoice amount if the impact of discounting is insignificant. For receivables with a remaining life of less than one year, the nominal amount is deemed to reflect the fair value. Fair value is determined at initial recognition and for disclosure purposes at the end of the accounting period. iv. Trade payables, and other financial liabilities Trade payables and other financial liabilities are initially measured at fair value. The carrying amount of trade payables and other financial liabilities is approximately equal to their fair value. v. Cash and cash equivalents For cash and cash equivalents, it is assumed that their nominal value is also fair value. vi. Other financial assets/liabilities Other assets/liabilities are mainly claims on partner companies, which the Group uses for the proprietary sale of tickets to customers to its resorts, receivable/ liability from derivative operations - currency SWAP, remaining liability to shareholders from a reduction in share capital in 2013. Other financial assets/liabilities are discounted for the determination of fair value if the impact of discounting is material. Consolidated Financial Statements 112 3. Significant Accounting Estimates and Assumptions The preparation of the financial statements according to the International Financial Reporting Standards as adopted by the EU requires the application of certain significant accounting estimates. It also requires that the management, in the application process of the Group accounting principles, should use its judgement. These accounting estimates will, therefore, rarely conform to the actual results. Information about assumptions and estimation uncertainties as at 31 October 2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is described below. The estimates and assumptions are continually reviewed. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and also in future periods if the revision affects both current and future periods. (a) Business combinations and purchase price allocation The acquiree’s or part of business's identifiable assets, liabilities and contingent liabilities are recognised and measured at their fair value on the date of acquisition. The allocation of the total cost among the net assets acquired for financial reporting purposes is performed with the support of professional advisors or the Group's management. The valuation is based on historical and prospective information available as of the date of the business combination. Any prospective information that may impact the fair value of the acquired assets is based on management’s assumptions of the future development of competitive and economic environments. The results of the valuation analyses are also used for determining the amortisation and depreciation periods of the values allocated to specific intangible and tangible fixed assets. An overview of business combinations and purchase price allocation of current and previous period is in Note 5 – Increase and decrease of interests in companies. (b) Valuation of investment property Investments property is measured at fair value. The fair value of investment property is determined either by a management evaluation or independent expert (see Note 2 - Significant Accounting Principles); in both of the cases the valuation is based on current market values and conditions. The fair market value is the estimated value, for which the property could be exchanged, on the valuation day, between knowledgeable, willing parties being a prospective seller and a prospective buyer, in an arm’s length transaction, with each party acting well informed, cautiously and without compulsion. In the absence of current market prices, net estimated cash flow generated from the leasing of property and gains from capitalisation which reflect the risk specific for the market and also cash flow from the property shall be taken into account. The valuation reflects (where relevant) the type of lessees who use the property or are responsible for the fulfilment of lease liabilities or the type of prospective users, if the property is left non-rented, the general market perception of lessee solvency, the distribution of responsibilities related to maintenance and insurance of property between the Company and the lessees, and the remaining life of property. An overview of investments in property of current and previous period is in Note 18 – Investment property. (c) Goodwill and impairment test As at the date of the financial statements, the Group assesses whether the goodwill has not been impaired. If the indicator of possible impairment is not detected, the Group is, in accordance with IAS 36, testing goodwill recognised in business combinations during the current accounting period and goodwill recognised in prior accounting periods for possible impairment annually on 31 October, i.e. as at the date of preparation of the annual consolidated financial statements. On the day of acquisition, the acquired goodwill is assigned to individual cash-generating units (CGU) for which it is expected to benefit from synergies arising in business combinations. Potential impairment of goodwill is determined by comparing the recoverable amount of CGU and its book value. The recoverable amount is determined by the value in use. This value was derived from the business plan prepared by the management. The key prerequisite which was also the most sensitive factor in determining the recoverable amount, was Consolidated Financial Statements 113 expected revenues assessed by the management, profitability (EBITDA) and cost of capital used as the discount factor for future net cash flows. Expected revenues as well as the profit margin ratio are based on historical revenue and EBITDA, adjusted for the effects of anti-pandemic measures and adjusted by management's expectations for future developments - changes in customer target groups, strengthened marketing and increase in the quality of services rendered. Projecting of cash flows applied in determining the value in use covers a basic term period with subsequent extrapolation for the next period. The Company used a 25-year projection due to the need of reflecting recently made investments in order to reach a standardised level of cash flows for determination of terminal value. Based on such standard level of cash flows, the terminal value was calculated with expected nominal growth of cash flows by inflation. Discount rates applied in the projecting of cash flows were calculated as weighted average cost of capital without taking into account the effect of the corporate income tax. Following table summarizes assumptions, result and sensitivity of impairment of goodwill in CGU High Tatras: In TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Calculation assumptions Horizon for cash flow projection 25 years 25 years Nominal increase of cash flows 3.8 % 3 % Discount rate used during cash flow projection 9.50 % 8.15 % Result and sensitivity Impairment for the period - - Impairment as at the end of the period - - Decrease of EBITDA by 5 % – impact on value in use -8 413 -7 374 Decrease of EBITDA by 5 % – resulting impairment - -5 495 Increase of discount rate by 0,5 % – impact on value in use -10 118 -9 173 Increase of discount rate by 0,5 % – resulting impairment - -7 259 Marginal decrease of EBITDA -9.09 % -1.3 % Marginal value of discount rate 10.29 % 8.25 % In 2022 and 2021, goodwill was tested within CGU Vysoké Tatry, and the test did not show any reason for asset impairment. (d) Impairment test of non-financial assets other than goodwill As at the date of the financial statements, the Group assesses whether the non-monetary assets have not been impaired. IAS 36 requires the testing of asset impairment in cases where external or internal indicators would point possible asset impairment. The Group carries on 7 principal activities: running of mountain resorts, leisure parks, restaurant services, sports services and shops, ac commodation services and real estate projects, in three Slovak locations: in Jasná (Low Tatras), in the High Tatras and in Liptovský Mikuláš and through its subsidiaries in the Republic of Poland, the Czech Republic and Austria. Each of the locations was assessed by the management as an individual cash-generating unit (CGU). The Group monitors the performance and creates independent budgets for individual cash-generating units. The Group assets were allocated to individual cash-generating units according to the material competence, whereas all assets, i.e. besides the hotels, golf centres, catering establishments, leisure parks and sports services and shops also ski lifts and cable cars are included in individual cash-generating units. Consolidated Financial Statements 114 Consolidated Financial Statements As at 31 October 2022, after assessment by the Group's management the indicators of a possible impairment of the Group's assets were identified in connection with current unstable economic situation affected by the increase of energy prices and inflation that were caused by the ongoing military conflict in Ukraine, as well as by the coronavirus global pandemic affecting the Group in the previous accounting period, see Note 2(b) for more information. The Group carried out testing for impairment of assets for CGU which were most affected by the anti-pandemic measures, did not achieve planned sales and after lifting the restrictions, the number of their visitors did not return to pre-pandemic times or historically did not show the required performance. The impairment test was performed for locations Low Tatras, Tatralandia, resort Szczyrkowski Ośrodek Narciarski („SON“ or „Szczyrk“), Silesian amusement park („SWM“ or „Legendia“), resort Ještěd, resort Mölltaler/Ankogel and resort Muttereralm, and also for the High Tatras location, since it has assigned goodwill as stated in Note 3(c). For the locations Low Tatras, Tatralandia , SON, Ještěd and Mölltaler/Ankogel no impairment of assets was calculated. For SWM and Muttereralm resorts, impairment of assets is reflected in the Group's consolidated statements by accounting for impairment of Property, plant and equipment belonging to CGU SWM and Muttereralm. Projecting of cash flows applied in determining the value in use covers a basic term period with subsequent extrapolation for the next period. The Group used a 25-year projection due to the need of reflecting recently made investments in order to reach a standardised level of cash flows for determination of terminal value. Based on such standard level of cash flows, the terminal value was calculated with expected nominal growth of cash flows by inflation. Discount rates applied in the projecting of cash flows were calculated as weighted average cost of capital without taking into account the effect of the corporate income tax. Following table summarizes assumptions, result and sensitivity of impairment calculation for CGU tested for impairment as at 31 October 2022: In TEUR Nízke Tatry Tatra- landia SON SWM Je štěd Mölltaler /Ankogel Muttere ralm Calculation assumptions Horizon for cash flow projection 25 years 25 years 25 years 25 years 25 years 25 years 25 years Nominal increase of cash flows 3.8 % 4 % 4 % 4.4 % 2.5 % 3.5 % 3.5 % Discount rate used during cash flow projection 9.50 % 10.20 % 11.90 % 11.80 % 10.50 % 9.20 % 9.20 % Result and sensitivity Impairment for the period - - - -5 240 - - -737 Impairment as at the end of the period - - - -20 781 - - -737 Return value - in case of impairment identification - - - 24 169 - - 7 615 Decrease of EBITDA by 5 % – impact on value in use -9 235 -2 539 -3 418 -1 441 -617 -959 -488 Decrease of EBITDA by 5 % – resulting impairment -5 795 - -1 034 -6 681 - - -1 225 Increase of discount rate by 0,5 % – impact on value in use -11 017 -2 449 -3 405 -1 298 -625 -770 -419 Increase of discount rate by 0,5 % – resulting impairment -7 578 - -1 021 -6 538 - - -1 156 Marginal decrease of EBITDA -1.87 % -13.09 % -3.49 % - -33.55 % -15.61 % - Marginal value of discount rate 9.65 % 11.75 % 12.25 % - 15.38 % 11.60 % - 115 Consolidated Financial Statements As at 31 October 2021, after assessment by the Group's management, an indicator of a possible impairment of the Group's assets in connection with the spread of the coronavirus and the subsequent declaration of a global pandemic was identified, see Note 2(b) for more information. The Group carried out testing for impairment of assets for CGU which were most affected by the anti-pandemic measures, did not achieve planned sales and after lifting the restrictions, the number of their visitors did not return to pre-pandemic times or historically did not show the required performance. The impairment test was performed for locations Low Tatras, Tatralandia, resort Szczyrkowski Ośrodek Narciarski („SON“ or „Szczyrk“), Silesian amusement park („SWM“ or „Legendia“), resort Ještěd, resort Mölltaler/Ankogel, and also for the High Tatras location, since it has assigned goodwill as stated in Note 3(c). For the locations Low Tatras, Tatralandia , SON, Ještěd and Mölltaler/Ankogel no impairment of assets was calculated. For SWM resort, impairment of assets was reflected in the Group's consolidated statements by accounting for impairment of Property, plant and equipment belonging to CGU SWM. Projecting of cash flows applied in determining the value in use covers a basic term period with subsequent extrapolation for the next period. The Company used a 25-year projection due to the need of reflecting recently made investments in order to reach a standardised level of cash flows for determination of terminal value. Based on such standard level of cash flows, the terminal value was calculated with expected nominal growth of cash flows by inflation. Discount rates applied in the projecting of cash flows were calculated as weighted average cost of capital without taking into account the effect of the corporate income tax. Following table summarizes assumptions, result and sensitivity of impairment calculation for CGU tested for impairment as at 31 October 2021: In TEUR Nízke Tatry Tatra- landia SON SWM Je štěd Mölltaler /Ankogel Calculation assumptions Horizon for cash flow projection 25 years 25 years 25 years 25 years 25 years 25 years Nominal increase of cash flows 3 % 3 % 3.5 % 3.5 % 3.5 % 2.5 % Discount rate used during cash flow projection 8.15 % 8.15 % 9.05 % 9.05 % 8.76 % 7.90 % Result and sensitivity Impairment for the period - - - -4 660 - - Impairment as at the end of the period - - - -15 541 - - Return value - in case of impairment identification - - - 31 244 - - Decrease of EBITDA by 5 % – impact on value in use -8 873 -2 963 -3 341 -1 922 -695 -979 Decrease of EBITDA by 5 % – resulting impairment -5 782 -2 527 -1 518 -6 582 - - Increase of discount rate by 0,5 % – impact on value in use -10 842 -3 515 -4 276 -2 320 -893 -936 Increase of discount rate by 0,5 % – resulting impairment -7 751 -3 080 -2 453 -6 980 - - Marginal decrease of EBITDA -1.75 % -0.74 % -2.75 % - -7.98 % -6.20 % Marginal value of discount rate 8.29 % 8.21 % 9.26 % - 9.40 % 8.56 % 116 (a) Financial instruments at fair value The fair value of financial instruments is determined based on: Level 1: quoted market prices (not adjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included in Level 1 that are comparable for the asset or liability, either directly (i.e. as prices of similar instruments) or indirectly (i.e. derived from such prices) Level 3: inputs for the asset and liability, which are not determined on the basis of data from comparable markets (unobservable inputs) When the quoted market price is not available, the fair value of the instrument is estimated using valuation techniques. When using the valuation models, the management applies estimates and assumptions which are consistent with information available on estimates and assumptions that market participants would use when pricing the relevant financial instrument. in TEUR 31.10.2022 31.10.2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Loans provided 21 - - 2 109 2 109 - - 2 097 2 097 Other assets - Hedging derivative transactions - foreign exchange SWAP 24 - 254 - 254 - - - - Total - 254 2 109 2 363 - - 2 097 2 097 in TEUR 31.10.2022 31.10.2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities Bonds issued 34 - 266 186 - 266 186 - 260 805 - 260 805 Other liabilities - Hedging derivative transactions - foreign exchange SWAP 32 - - - - - 1 277 - 1 277 Total - 266 186 - 266 186 - 262 082 - 262 082 The table does not present financial instruments for which the carrying amount is considered to be an approximation of fair value and which are within Level 2. The above financial instruments are stated at their carrying amounts. Consolidated Financial Statements 117 Consolidated Financial Statements 4. Information about Operating Segments Information about operating segments – Consolidated statement of profit and loss Mountain Resorts Leisure Parks Hotels Dining Sports Services and Stores Real Estate Golf Main segments - TOTAL Other TOTAL in TEUR 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m Sales 50 932 17 862 16 554 7 440 37 709 15 665 19 501 8 951 5 321 2 867 1 055 10 004 740 669 131 812 63 458 - - 131 812 63 458 Other operating revenues 1 470 1 013 34 6 177 118 127 73 - 2 - 18 1 9 1 809 1 239 - - 1 809 1 239 Material and goods consumption -2 689 -2 085 -832 -323 -7 396 -3 313 -5 921 -2 711 -1 631 -1 642 -565 -8 170 -36 -19 -19 070 -18 263 - - -19 070 -18 263 Purchased services -16 484 -7 322 -5 280 -2 009 -12 749 -4 514 -3 371 -1 803 -870 -333 -637 -273 -288 -35 -39 679 -16 289 - - -39 679 -16 289 Personnel expenses -15 120 -7 796 -3 498 -1 787 -14 047 -7 111 -7 546 -4 099 -2 264 -1 110 -542 -57 -227 -166 -43 244 -22 126 - - -43 244 -22 126 Other operating expenses -738 -560 -289 -98 -434 -226 -186 -90 -70 -32 -14 -22 -27 -16 -1 758 -1 044 - - -1 758 -1 044 Gain on sale of assets 70 -193 -1 406 - 35 - - - 4 - 4 638 2 590 - - 3 341 2 397 - - 3 341 2 397 Gain / (loss) on revaluation of investment property - - - - - - - - - - -906 - - - -906 - - - -906 - Release / (creation) of value adjustments 31 39 4 -187 3 -6 -1 - - - -7 -1 012 - 5 30 -1 161 1 361 -1 211 1 391 -2 372 Depreciation and amortization -12 285 -10 781 -3 919 -3 603 -4 066 -4 179 -1 795 -1 914 -934 -576 -211 -303 -28 -14 -23 238 -21 370 -150 -155 -23 388 -21 525 Depreciation and amortization (IFRS 16) -3 944 -3 796 -866 -828 -612 -209 -148 -30 -48 -129 - - -246 -246 -5 864 -5 238 - - -5 864 -5 238 Gain on bargain purchase - 756 6 387 - 6 775 - - - - - - - - - 13 162 756 - - 13 162 756 Impairment of fixed assets -737 - -5 240 -4 824 - - - - - - - - - - -5 977 -4 824 - - -5 977 -4 824 Interest income - - - - - - - - - - - - - - - - 47 153 47 153 Financing cost -10 182 -9 096 -1 203 -1 814 -5 687 -5 033 -3 273 -3 492 -1 139 -1 007 -1 431 -1 266 - - -22 915 -21 708 - - -22 915 -21 708 Net profit / (loss) on financial operations - - - - - - - - - - - - - - - - -2 356 -130 -2 356 -130 Share of profit or (loss) from disposal of subsidiaries - - - - - - - - - - - - - - - - -482 - -482 - Share of the profit / (loss) of investments in JV accounted for using the equity method - - - - - - - - - - - - - - - - -163 -1 000 -163 -1 000 Profit/(loss) of the segment before tax -9 676 -21 959 446 -8 027 -292 -8 808 -2 613 -5 115 -1 631 -1 960 1 380 1 509 -111 187 -12 497 -44 173 -1 743 -2 343 -14 239 -46 516 Income tax - current -776 -70 Income tax - deferred 3 068 710 Consolidated Profit/ (Loss) -11 947 -45 876 Information about operating segments – Consolidated statement of financial position Mountain Resorts Leisure Parks Hotels Dining Sports Services and Stores Real Estate Golf Main segments - TOTAL Other TOTAL in TEUR 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 Goodwill 23 770 23 770 - - 3 390 3 390 - - - - - - - - 27 160 27 160 - - 27 160 27 160 Intangible assets 3 777 4 040 3 392 3 570 812 1 055 286 14 104 11 69 1 5 - 8 445 8 691 - - 8 445 8 691 Property, plant and equipment 248 519 228 588 56 104 57 360 71 990 66 007 17 669 19 533 2 456 2 657 5 829 3 707 158 81 402 725 377 933 2 237 2 475 404 962 380 408 Right-of-use of leased assets 44 952 46 645 12 585 13 703 5 096 3 156 1 761 921 715 867 - - 5 390 5 640 70 499 70 932 - - 70 499 70 932 Investment property - - - - - - - - - - 7 411 8 317 - - 7 411 8 317 - - 7 411 8 317 Inventory 1 141 1 739 249 6 845 552 166 304 1 371 987 575 506 160 - 4 507 4 094 - - 4 507 4 094 Trade receivables 3 595 3 184 635 442 322 2 463 36 277 17 182 133 155 134 93 4 872 6 796 - - 4 872 6 796 Investment in an associate and a joint venture 11 578 11 657 - - - - - - - - - - 1 974 2 093 13 552 13 750 - - 13 552 13 750 Other receivables 3 519 1 147 498 6 441 - 80 - - - - 484 - 179 95 4 680 7 763 - - 4 680 7 763 Financial investments 6 7 - - - - - - - - - - - - 6 7 36 33 42 40 Other assets 3 443 3 069 680 857 2 095 2 958 25 45 117 115 - - 286 209 6 646 7 253 - - 6 646 7 253 Loans provided - - - - - - - - - - - - - - - - 2 109 2 097 2 109 2 097 Cash and cash equivalents 5 941 9 485 4 619 1 996 3 012 2 791 1 078 891 422 140 344 - 129 250 15 545 15 553 55 - 15 600 15 553 Deferred tax receivable - - - - - - - - - - - - - - - - 4 182 3 907 4 182 3 907 Assets total 350 241 333 331 78 762 84 375 87 562 82 452 21 021 21 985 5 202 4 959 14 845 12 686 8 415 8 461 566 048 548 249 8 619 8 512 574 667 556 761 Loans and borrowings long- term 79 869 65 021 20 260 2 000 9 155 8 973 2 263 2 000 1 132 1 000 - - - - 112 679 78 994 - - 112 679 78 994 Lease liabilities 40 521 42 153 13 051 13 840 4 964 2 460 1 766 897 753 679 - - 6 043 6 125 67 098 66 154 - - 67 098 66 154 Other long-term liabilities 13 079 14 778 - - - - - - - - - - - - 13 079 14 778 - - 13 079 14 778 Loans and borrowings short- term 8 561 28 147 1 234 68 287 417 46 - 23 - - - - - 10 151 28 632 - - 10 151 28 632 Trade payables 8 500 8 513 2 589 382 1 517 1 825 939 1 007 419 330 1 869 231 210 199 16 043 12 487 2 461 2 277 18 504 14 764 Other current liabilities 10 500 10 143 2 849 2 180 4 726 2 215 939 1 348 372 529 4 776 - 146 132 24 308 16 547 924 1 277 25 232 17 824 Provisions 1 231 1 920 288 81 220 139 120 76 51 32 57 36 34 40 2 001 2 324 - - 2 001 2 324 Bonds issued - - - - - - - - - - - - - - - - 266 186 260 805 266 186 260 805 Deferred tax liability - - - - - - - - - - - - - - - - 26 730 27 363 26 730 27 363 Total liabilities 162 261 170 675 40 271 18 551 20 869 16 029 6 073 5 328 2 750 2 570 6 702 267 6 433 6 496 245 359 219 916 296 301 291 722 541 660 511 638 Information about operating segments – Consolidated statement of profit and loss In 2022, the Group generates 75% (2021: 75%) of its revenues in the Slovak Republic, 13% in Poland (2021: 14%), 5% in the Czech Republic (2021: 5%) and 7% in Austria (2021: 6%). The Group reports the operating segment information that have been adjusted for intersegment transactions. Intersegment eliminations are included in the amounts reported for individual periods. No Group’s client has exceeded the limit of 10% share in total revenues. Interest expense is divided based on managerial key . Information about operating segments – Consolidated statement of financial position As at 31 October 2022 the Group recognised the value of plant, property and equipment in the Slovak Republic of EUR 299,987 thousand (as at 31 October 2021: EUR 263,031 thousand), EUR 66,537 thousand in Poland (as at 31 October 2021: EUR 78,817 thousand), EUR 31,173 thousand. in Austria (as at 31 October 2021: EUR 32,432 thousand) and EUR 7,264 thousand. in the Czech Republic (as at 31 October 2021: EUR 6,128 thousand). The total value of the deferred tax liability from the subsidiaries and in Austria is EUR 4,404 thousand (2021: 4,503 thousand), in Slovakia is EUR 19,031 thousand (as at 31 October 2021: EUR 15,661 thousand), in Czech Republic is EUR 944 thousand (as at 31 October 2021: EUR 977 thousand) and in Poland is EUR 2,352 thousand (as at 31 October 2021: EUR 6,223 thousand). Inter-segment eliminations are included in the amounts reported for individual periods. Inter-segment prices are determined on the basis of market rates for similar services and financing. Bonds Issued in the Other category were not used to finance specific projects. 118 Consolidated Financial Statements 5. Increase, Decrease and Sale of Shares in Companies (a) Subsidiaries On 1 July 2022, the Company acquired a 100% share in the European company GOPASS SE with a place of business in the Czech Republic and a share capital of CZK 2,924 thousand, which will serve the purpose of expanding in the European market. This company was established solely for the purpose of further sale to the Group and before acquisition of 100% share by the Parent Company it did not carry out any business activity. By its purchase the Group acquired only receivable from unpaid share capital in the amount of CZK 2,924 thousand (equivalent to EUR 118 thousand), which was not paid as at the date of acquisition. The consideration transferred in the amount of CZK 2,924 was settled in cash. On 22 June 2022, for the purpose of providing services within the TMR Group, International TMR services s.r.o. was founded in the Czech Republic with a share capital of CZK 200 thousand, 100% owned by the Company. The table below provides an overview of subsidiaries acquired in 2022: in TEUR Date of acquisition (acquisition of control) Acquisition price Increase/ (Decrease) of cash Share of Group after acquisition % Acquisition of subsidiaries GOPASS SE 1.7.2022 118 -118 100% WORLD EXCO s.r.o. 31.3.2022 20 105 100% EUROCOM Investment, s.r.o. 31.3.2022 16 389 3 083 100% On 31 March 2022, the Group acquired a 100% share and control in company WORLD EXCO s.r.o. The acquired company operates a congress center in Bešeňová. The total value of the acquired assets in WORLD EXCO s.r.o. was reassessed to the fair value of EUR 3,096 thousand and the total value of liabilities to EUR 1,526 thousand as at the acquisition date. The transaction resulted in a bargain purchase gain of EUR 1,550 thousand. The consideration transferred of EUR 20 thousand was fully paid and settled in cash. Additions due to the acquisition of companies in 2022, related to WORLD EXCO s.r.o., had the following effect on the Group’s assets and liabilities (information related to acquisition of assets is described in Note 3 (a) – Business combinations and purchase price allocation): in TEUR WORLD EXCO s.r.o. Property, plant and equipment 2 898 Cash and cash equivalents 105 Other assets 93 Deferred tax liability -200 Loans and borrowings -361 Trade payables -7 Provisions -10 Other current liabilities -948 Net identified assets and liabilities 1 570 Consideration transferred -20 Gain from bargain purchase 1 550 Consideration paid, cash settlement -20 Cash acquired 105 Net cash income / (expenditure) 85 119 Consolidated Financial Statements From the acquisition date the company WORLD EXCO s.r.o. contributed EUR 209 thousand to consolidated revenues and a profit of EUR 1,612 thousand to the total consolidated comprehensive result (including the bargain purchase gain of EUR 1,550 thousand). If the acquisition had been made at the beginning of the period presented, the revenues of WORLD EXCO s.r.o. would have contributed EUR 397 thousand to consolidated revenues and a profit of EUR 1,947 thousand to the total consolidated comprehensive result. On 31 March 2022, the Group also acquired a 100% share and control in EUROCOM Investment, s.r.o. The acquired company operates the Bešeňová water park, Hotel Galeria Thermal and Hotel Bešeňová. The total value of the acquired assets in EUROCOM Investment, s.r.o. was reassessed to the fair value of EUR 46,474 thousand and the total value of liabilities to EUR 18,473 thousand as at the acquisition date. The transaction resulted in a bargain purchase gain of EUR 11,612 thousand. The Group identified previously unrecognized lease-related liabilities and assets, measured at the present value of future lease payments in accordance with the accounting policies applied by the Group for IFRS 16. The consideration transferred of EUR 16,389 thousand was partially set-off with the advance payment of EUR 6,388 thousand and the rest of the consideration transferred of EUR 10,001 thousand was paid and settled in cash. Additions due to the acquisition of companies in 2022, related to EUROCOM Investment, s.r.o. had the following effect on the Group’s assets and liabilities (information relate d to acquisition of assets is described in Note 3 (a) - Business combinations and purchase price allocation): in TEUR EUROCOM Investment, s.r.o. Intangible assets 628 Property, plant and equipment 31 487 Right-of-use of leased assets 1 121 Deferred tax asset 135 Inventories 16 Trade receivables 388 Loans provided 7 802 Other receivables 213 Cash and cash equivalents 3 083 Other assets 1 601 Deferred tax liability -2 264 Loans and borrowings -11 360 Lease liabilities -1 121 Trade payables -1 455 Provisions -33 Other current liabilities -2 240 Net identified assets and liabilities 28 001 Consideration transferred -16 389 Gain from bargain purchase 11 612 Consideration paid, cash settlement -10 001 Cash acquired 3 083 Net cash income / (expenditure) -6 918 From the acquisition date the company EUROCOM Investment, s.r.o. contributed EUR 10,081 thousand to consolidated revenues and a profit of EUR 12,293 thousand to the total consolidated comprehensive result (including the bargain purchase gain of EUR 11,612 thousand). If the acquisition had been made at the beginning of the period presented, 120 the revenues of EUROCOM Investment, s.r.o. would have contributed EUR 14,175 thousand to consolidated revenues and a profit of EUR 12,609 thousand to the total consolidated comprehensive result. On 4 June 2021, GOPASS, a. s. was founded with registered capital of EUR 25 thousand. The Parent Company became its sole shareholder. The table below provides an overview of subsidiaries acquired in 2021: in TEUR Date of acquisition (acquisition of control) Acquisition price Increase/ (Decrease) of cash Share of Group after acquisition % Acquisition of subsidiaries Muttereralm Bergbahnen Errichtungs GmbH 1.5.2021 4 127 402 100% On 1 May 2021, the Parent Company acquired a 100% stake in Muttereralm Bergbahnen Errichtungs GmbH, amounting to EUR 4,127 thousand. The acquired company operates a ski resort in Austria. The total value of the acquired assets for Muttereralm Bergbahnen Errichtungs GmbH was reassessed to the fair value of EUR 10,260 thousand and the total value of liabilities to EUR 5,377 thousand as at the acquisition date. The transaction resulted in a bargain purchase gain of EUR 756 thousand. The Group identified previously unrecognized lease-related liabilities and assets, measured at the present value of future lease payments in accordance with the accounting policies applied by the Group for IFRS 16. From the acquisition date, Muttereralm Bergbahnen Errichtungs GmbH contributed EUR 1,460 thousand to consolidated revenues and a profit of EUR 348 thousand to the total consolidated comprehensive result (including the bargain purchase gain of EUR 756 thousand). If the acquisition had been made at the beginning of the period presented, the revenues of Muttereralm Bergbahnen Errichtungs GmbH would have contributed EUR 2,710 thousand to consolidated revenues and a loss of EUR 500 thousand to the total consolidated comprehensive result. Consolidated Financial Statements 121 Additions due to the acquisition of companies in 2021, related to Muttereralm Bergbahnen Errichtungs GmbH, had the following effect on the Group’s assets and liabilities (information related to acquisition of assets is described in Note 3 (a)): in TEUR Muttereralm Bergbahnen Errichtungs GmbH Property, plant and equipment 5 260 Right-of-use of leased assets 3 312 Deferred tax asset 761 Inventories 319 Trade receivables 110 Other receivables 87 Cash and cash equivalents 402 Other assets 9 Lease liabilities -3 312 Trade payables -650 Provisions -1 071 Other current liabilities -344 Net identified assets and liabilities 4 883 Consideration transferred -4 127 Gain from bargain purchase 756 Consideration paid, cash settlement -3 250 Cash acquired 402 Net cash income / (expenditure) -2 848 Of the consideration transferred totaling EUR 4,127 thousand, EUR 3,250 thousand represents the paid purchase price and EUR 877 thousand is a contingent portion of the purchased price conditional on the seller fulfilling contractual obligations and recognized under other liabilities. Consolidated Financial Statements 122 The table below provides an overview of sold shares in subsidiaries in 2022: in TEUR Date of disposal (loss of control) Sale price Increase of cash flow Share of Group before disposal % Disposal of subsidiaries TIKAR d.o.o. 30.9.2022 2 350 2 347 51% Disposals due to the sale of subsidiary Tikar d.o.o. in 2022 had the following effect on the Group’s assets and liabilities: in TEUR TIKAR d.o.o. Intangible assets -161 Trade receivables -1 892 Cash and cash equivalents -3 Other assets -609 Loans and borrowings -2 015 Trade payables 5 Other current liabilities 2 229 Net identified assets and liabilities -2 446 Non-controlling interest -384 Foreign currency translation reserve -2 Consideration received 2 350 Loss from disposal of subsidiary -482 Consideration received, cash settlement 2 350 Cash disposal -3 Net cash income / (expenditure) 2 347 Consolidated Financial Statements 123 (b) Associates and joint ventures The Group did not enter into any transactions related to associates and joint ventures between 1 November 2021 and 31 October 2022. For further information about financial investments see Note 25 – Financial investments. The table below provides an overview of selected financial information for the period from 1 November 2021 to 31 October 2022 for associates and joint ventures and the book value of the Group’s share in these companies: in TEUR MELIDA, a.s. (25% share) OSTRAVICE HOTEL a.s. (50% share) Net profit / (loss) for the year -613 -16 Assets 75 172 5 465 Liabilities -29 634 -1 129 Equity 45 538 4 336 in TEUR Share of equity as at 1 November 11 677 2 073 Share of the profit / (loss) -155 -8 Dividends received during the year - - Foreign exchange difference -138 103 Share of equity as at 31 October 2022 11 384 2 168 The table below provides an overview of selected financial information for the period from 1 November 2020 to 31 October 2021 for associates and joint ventures and the book value of the Group’s share in these companies: in TEUR MELIDA, a.s. (25% share) OSTRAVICE HOTEL a.s. (50% share) Net profit / (loss) for the year -3 967 -16 Assets 71 970 4 869 Liabilities -25 261 -725 Equity 46 709 4 144 in TEUR Share of equity as at 1 November/ at the acquisition date 11 904 1 961 Share of the profit / (loss) -992 -8 Dividends received during the year - - Foreign exchange difference 765 120 Share of equity as at 31 October 2021 11 677 2 073 Consolidated Financial Statements 124 6. Sales in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Mountain Resorts 50 932 17 862 Hotels 37 709 15 665 Restaurant facilities 19 501 8 951 Leisure Parks 16 554 7 440 Real Estate Projects 1 055 10 004 Sports Services and Stores 5 321 2 867 Golf 740 669 Total 131 812 63 458 7. Other Operating Revenues in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Claims paid by insurance company 375 501 Other operating revenue 1 434 738 Total 1 809 1 239 Other operating revenues during financial year 2022 are mainly revenues from own electricity generation from the cogeneration unit in the amount of EUR 483 thousand, revenues from the subsidy received to cover the operating costs of the bike park in the amount of EUR 400 thousand and deferred income from ski passes in the amount of EUR 195 thousand. This item also includes revenues related to the allowance for the provision of practical teaching in the dual education system, in the amount EUR of 62 thousand, and the allowance for the provision of accommodation to refugees in the context of the war in Ukraine, in the amount of EUR 32 thousand. Consolidated Financial Statements 125 8. Consumption of Material and Goods in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Material in hotels and restaurant facilities -8 916 -3 874 Chalets sold -529 -8 032 Goods -3 169 -2 570 Fuels -1 215 -519 Material for repair and maintenance -997 -839 Material and goods – other -4 244 -2 429 Total -19 070 -18 263 9. Purchased Services in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Energy consumption -16 273 -5 783 Advertisement expenses -2 348 -1 903 Rental costs (cost of premises) and others -4 029 -1 080 Other administrative expenses -3 130 -2 312 Communication expenses -2 334 -1 616 Repairs and maintenance expenses -4 093 -2 413 Legal advice expenses -2 441 -1 441 Services related to owned premises -727 -375 Transport, accommodation, travel expenses -364 -284 Training expenses -131 -67 Other purchased services -5 242 -2 513 State aid related to rental costs 501 2 458 State aid related to other costs 932 1 040 Total -39 679 -16 289 Electricity and natural gas prices in 2022 within the European Union were well above the average of the previous years, causing a significant increase in energy consumption. Other purchased services during financial year 2022 represent various expenses of the Group related to its operation, such as washing and cleaning costs in the amount of EUR 1,364 thousand, as well as costs related to the provision of music and animation for clients in the amount of EUR 532 thousand and the cost of guard and security services in the amount of EUR 284 thousand. Other purchased services represent also the accounting, audit and other expenses related to administrative operation of the Group. The Group uses services of KPMG Slovensko spol. s r.o. auditing company for the auditing of separate and consolidated financial statements. Between 1 November 2021 and 31 October 2022, the expense of these items represented EUR 178 thousand (for the period ended on 31 October 2021: EUR 165 thousand) for auditing of year-end financial statements and EUR 69 thousand (for the period ended on 31 October 2021: EUR 40 thousand) for other assurance services. For the period ending 31 October 2022 the Group also used the audit services of KPMG Audyt Sp. z o.o. sp.k. to verify the separate financial statement and group reporting packages for the company Szczyrkowski Ośrodek Narciarski, S.A. and the company Ślaskie Wesole Miasteczko Sp. z o.o.. The cost of these items in the period from 1 November 2021 to 31 October 2021 amounted to EUR 53 thousand (for the period ending on 31 October 2021: EUR 46 thousand). Consolidated Financial Statements 126 10. Personnel Expenses in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Wages and salaries -25 450 -18 123 Personnel leasing -6 735 -2 950 Social security (compulsory) -9 499 -6 751 Remuneration of members of key management and Supervisory Board -1 925 -836 Other social expenses -18 -15 State aid related to wages and salaries 383 6 549 Total -43 244 -22 126 The average number of Group employees during the period from 1 November 2021 to 31 October 2022 was 1,359, out of which 20 were management (from 1 November 2020 to 31 October 2021, it was 1,193 employees, out of which 21 were management). During the year, the Group used the services of employment agencies for short-term personnel leasing. From 1 November 2021 to 31 October 2022, it was 707 employees (from 1 November 2020 to 31 October 2021: 72 employees). The table below provides an overview of the Group's key management remuneration for the period from 1 November 2021 to 31 October 2022: in TEUR Remuneration of members of key management Basic remuneration Extraordinary bonuses Variable component of renumeration Total Board of Directors 192 - 941 1 133 Board of Supervisors 79 - - 79 Top management 416 297 - 713 Audit Committee - - - - Total 687 297 941 1 925 The table below provides an overview of the Group's key management remuneration for the period from 1 November 2020 to 31 October 2021: in TEUR Remuneration of members of key management Base remuneration Extraordinary bonuses Variable component of renumeration Total Board of Directors 192 - - 192 Board of Supervisors 74 - - 74 Top management 350 220 - 570 Audit Committee - - - - Total 616 220 - 836 Consolidated Financial Statements 127 Based on organization structure of the Group effective 1 November 2019, the top management consists of positions CEO, CFO, COO and CCO. The Board of Directors determines the remuneration of the top management. For year ended 31 October 2022, base remuneration for top management amounted to EUR 416 thousand (in the period between 1 November 2020 and 31 October 2021: EUR 350 thousand). The extraordinary remuneration for the members of the top management amounted to EUR 297 thousand (from 1 November 2020 to 31 October 2021: EUR 220 thousand) in salary for the month of March 2022, based on the decision of the Board of Directors in view of the financial results achieved by the Group for the winter season 2021/2022. The Board of Directors of the Parent Company has decided to decide on the payment of additional remuneration to members of the top management only in the month of March 2023, based on the results of the financial year ending on 31 October 2022 and the results of the Group achieved in the winter season 2022/2023. Members of the Board of Directors, in accordance with the Rules of Remuneration of Company Bodies of the Parent Company dated 29 April 2020 (hereinafter referred to as the "Rules of Remuneration "), are granted remuneration for the performance of the duties of a member of the Board of Directors of the Parent Company, which consists of a fixed component of remuneration and a variable component of remuneration. The amount of the fixed component of the remuneration is agreed with the member of the Board of Directors in accordance with the Remuneration Rules in the contract for the performance of the duties of a member of the Board of Directors, which has been approved by the Supervisory Board of the Parent Company. For the year ended 31 October 2022 fixed remuneration components was paid out in the amount of EUR 192 thousand (from 1 November 2020 to 31 October 2021: EUR 192 thousand). The variable remuneration component shall be paid to the Members of the Board of Directors after the criteria defined in the Remuneration Rules have been met, the main criterion being the achievement of EBITDA, at the earliest payout date specified in the Group for the payment of salaries to employees after the publication of the Group's consolidated statutory financial statements for the financial year for which the remuneration is paid. The total amount of the claimable variable component of the renumeration in the value of EUR 941 thousand represents a provision for the variable remuneration component of the members of the Board of Directors for the period from 1 November 2021 to 31 October 2022. The year- on-year increase occurred due to the fulfillment of the criteria set for the award of the variable remuneration component (fulfillment of the EBITDA plan). The members of the Supervisory Board are paid fixed components of remuneration in accordance with the Rules on remuneration of members of the Supervisory Board and concluded contracts for the performance of their duties, the variable components of remuneration shall not be paid to the members of the Supervisory Board. For the year ending 31 October 2022, basic remuneration totaled 79 thousand (in the period between 1 November 2020 and 31 October 2021: EUR 74 thousand). 11. Other Operating Expenses in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Insurance (property, automobiles, travel cost) -793 -723 Fees and commissions -658 -177 Shortages and losses -112 -72 Other operating cost -195 -72 Total -1 758 -1 044 Consolidated Financial Statements 128 12. Finance Income and Expenses in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Interest income calculated using effective interest rate 47 153 Financing cost -22 915 -21 708 Total -22 868 -21 555 For the period from 1 November 2021 to 31 October 2022, the interest income calculated using the effective interest rate of EUR 47 thousand (from 1 November 2020 to 31 October 2021 in the amount of EUR 153 thousand) is mainly from the fixed-rate loans provided. See Note 21 – Loans provided. The table below shows the composition of financing cost: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Interest expense related to loans and borrowings and leasing -6 085 -5 334 Interest expense from bonds issued -14 526 -14 183 Interest expense from leasing -3 096 -2 859 Income associated with hedging derivative transaction SWAP 792 668 Financing cost total -22 915 -21 708 For information about received loans and borrowings see Note 28 – Loans and Borrowings. For information about bonds issued see Note 34 – Bonds Issued. For information about leases see Note 29 – Lease Liabilities. In the period from 1 November 2021 to 31 October 2022, the Group capitalised the interest expenses into the assets in the amount of EUR 243 thousand (from 1 November 2020 to 31 October 2021, the Group capitalised interest expenses into the assets in amount of EUR 483 thousand). Interest rate used for interest expense capitalisation was 7.44% in the period from 1 November 2021 to 31 October 2022 (from 1 November 2020 to 31 October 2021 6.22%). Consolidated Financial Statements 129 13. Net Profit / (loss) on financial operations in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Cost of administration of financial instruments -593 -418 Other, net -1 763 288 Total -2 356 -130 In the period from 1 November 2021 to 31 October 2022, the Group reported a loss on financial operations of EUR 2,356 thousand (from 1 November 2020 to 31 October 2021 a loss of EUR 130 thousand). The loss on financial operations in the current period was primarily caused by weakening of the Polish zloty, which resulted in the revaluation of loans received in euros in Polish companies. 14. Current and Deferred Income Tax Deferred income taxes are calculated using statutory tax rates which are expected in the period in which a receivable is realized, or a liability is settled. In order to calculate deferred tax from temporary differences incurred in the Slovak Republic, the Group used a 21% rate for the year 2022, resulting from the corporate income tax rate applicable on the date of preparation of the financial statements. To calculate deferred tax from temporary differences incurred in Poland and Czech, the Group used a 19% tax rate. The Group used a 25% tax rate in Austria as per the income tax rate of legal entities effective as at the date the financial statements were prepared on. (As at 31 October 2021 the Group used a rate of 12% to calculate deferred tax on temporary differences arising in the Republic of Croatia.) The individual tax rates used to calculate deferred taxes on temporary differences have not changed in any of the countries in which the Group operates compared to the previous accounting period. Income tax reported through other comprehensive income: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Current tax: Tax of current accounting period -775 -67 Withholding tax on interest -1 -3 -776 -70 Deferred tax: Posting and release of temporary differences 3 068 710 Change of tax rate - - Total income tax 2 292 640 Consolidated Financial Statements 130 Reconciliation of the effective tax rate in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 % % Profit / (loss) before taxes -14 239 -46 516 Tax rate 21% -2 990 21% -9 768 Tax non-deductible expenses -8% 1 086 -1% 622 Income not subject to tax 18% -2 539 3% -1 349 Current tax: withholding tax on interest 0% 1 0% -60 Tax losses claimed during the period 4% -552 2% -729 Deferred tax asset not recognized -19% 2 740 -22% 10 394 Impact of Polish, Czech, Austrian, and Croatian tax rate 0% -38 -1% 250 Total 16% -2 292 1% -640 Income tax reported through other comprehensive income: 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 in TEUR Before taxes Tax After taxes Before taxes Tax After taxes Other comprehensive income that may be reclassified to profit / (loss) in subsequent periods (net of tax): Net gain/(loss) on cash flow hedges -1 396 -293 -1 103 -2 467 -518 -1 949 Other comprehensive income -1 396 -293 -1 103 -2 467 -518 -1 949 Consolidated Financial Statements 131 Movements of deferred tax liability (net) during 2022 and 2021 2022 in TEUR Balance as at 1 November 2021 Reported in profit and loss statement Reported in other comprehensive income Effect of foreign exchange difference Acquired through business combination Balance as at 31 October 2022 Property, plant and equipment, and intangible assets -25 465 1 837 - -91 -2 464 -26 183 Investment property -785 190 - - - -595 Losses on impairment of trade receivables and other assets 512 -259 - -1 7 259 Cash Flow hedge 398 - 293 - - 691 Provisions and liabilities 587 1 037 - -31 128 1 721 Leases (IFRS 16) -181 421 - - - 240 Tax losses 753 -283 - -1 - 469 Other temporary differences 725 149 - -1 - 873 Total, net -23 456 3 091 293 -124 -2 329 -22 525 2021 in TEUR Balance as at 1 November 2020 Reported in profit and loss statement Reported in other comprehensive income Effect of foreign exchange difference Acquired through business combination Balance as at 31 October 2021 Property, plant and equipment, and intangible assets -29 067 2 620 - 221 761 -25 465 Investment property -1 137 352 - - - -785 Losses on impairment of trade receivables and other assets 64 447 - 1 - 512 Cash Flow hedge -120 - 518 - - 398 Provisions and liabilities 2 510 -2 073 - 150 - 587 Leases (IFRS 16) -79 -102 - - - -181 Tax losses 1 538 -826 - 41 - 753 Other temporary differences 434 291 - - - 725 Total, net -25 857 710 518 412 761 -23 456 Consolidated Financial Statements 132 15. Property, Plant and Equipment in TEUR Land and buildings Individual movable assets and sets of movable assets Assets under construction Total Cost Opening balance as at 1.11.2020 351 027 167 816 19 929 538 772 Additions 1 689 1 161 6 971 9 821 Additions due to business combinations 1 723 3 478 59 5 261 Disposals -10 181 -6 139 -364 -16 684 Transfer from/to Investment property 1 111 - - 1 111 Transfer from an Asset with a right of use - 1 678 - 1 678 Transfer from/to Assets held for sale - -5 - -5 Transfers within assets 8 078 6 291 -14 369 - Foreign exchange difference 273 263 186 722 Balance as at 31.10.2021 353 720 174 544 12 412 540 676 Opening balance as at 1.11.2021 353 720 174 544 12 412 540 676 Additions 2 023 1 482 19 674 23 179 Additions due to business combinations 33 487 898 - 34 385 Disposals -5 874 -1 149 -298 -7 321 Transfer from Right-of-use of leased assets - 350 - 350 Transfers within assets 1 240 601 -1 841 - Foreign exchange difference -1 066 319 -213 -960 Balance as at 31.10.2022 383 530 177 045 29 734 590 309 Accumulated depreciation and losses from impairment of assets Opening balance as at 1.11.2020 -78 206 -69 183 - -147 388 Depreciation of current accounting period -9 734 -11 009 - -20 743 Decreases 7 977 6 121 - 14 097 Impairment of assets -4 293 -531 - -4 824 Transfer from/to Investments in real property - 173 - 173 Transfer from/to Assets held for sale - 5 - 5 Transfer from an Asset with a right of use - -896 - -896 Transfer from/to Goodwill and intangible assets -18 - - -18 Transfers within assets -191 191 - - Foreign exchange difference -339 -335 - -674 Balance as at 31.10.2021 -84 805 -75 464 - -160 269 Opening balance as at 1.11.2021 -84 805 -75 464 - -160 269 Depreciation of current accounting period -12 452 -9 806 - -22 258 Decreases 2 077 1 091 - 3 168 Impairment of assets -5 398 -579 - -5 977 Transfer from Right-of-use of leased assets - -172 - -172 Foreign exchange difference 349 -188 - 161 Balance as at 31.10.2022 -100 229 -85 118 - -185 347 Carrying value As at 1.11.2020 272 821 98 634 19 929 391 384 As at 31.10.2021 268 916 99 080 12 412 380 408 As at 1.11.2021 268 916 99 080 12 412 380 408 As at 31.10.2022 283 301 91 927 29 734 404 962 Consolidated Financial Statements 133 In the period from 1 November 2021 to 31 October 2022, the Group carried out investments amounting to EUR 23,179 thousand. From the total value the Group invested EUR 20,286 thousand in Slovakia. The Group invested EUR 10,446 thousand in the construction of the Biela Púť – Priehyba - cableway, EUR 3,689 thousand in the continuation of the construction of the Centrum Jasná complex and completely strengthened snowmaking worth EUR 1,903 thousand. The Group also acquired the gastronomic facility, named Humno, in Tatranská Lomnica worth EUR 780 thousand, invested EUR 402 thousand in the completion of water reservoir, named Zadné vody , EUR 317 thousand in the reconstruction of spiral chute in the Aquapark Tatralandia, EUR 195 thousand in the expansion of the capacity of the Bistro Bešeňová gastronomic facility and also made other minor investments. In the Republic of Poland, the Group invested EUR 637 thousand in the period from 1 November 2021 to 31 October 2022, of which in the Szczyrk resort the Group made investments in the gastronomic facilities and improving the safety of the bike park worth EUR 153 thousand, invested EUR 113 thousand in the purchase of land and also made other minor investments. In Legendia resort in Chorzów, the Group made various operational investments worth EUR 155 thousand. In the Czech Republic, the Group invested a total of EUR 1,343 thousand. In the Ještěd resort, the Group invested an amount of EUR 773 thousand in the completion of the investment project "Nová Skalka" and financed various small operational investments in the amount of EUR 388 thousand. Within the golf segment in the resorts of Ostravice and Kaskáda, the Group invested EUR 182 thousand in several small investments. In Austria, the Group invested a total of EUR 913 thousand of which EUR 561 in Muttereralm resort and EUR 352 thousand in Mölltaler and Ankogel resorts. At the Muttereralm resort, the Group invested EUR 323 thousand in the development of an existing bike park and also made other smaller investments. In Mölltaler and Ankogel resorts, the Group invested EUR 119 thousand in a new access system and also made other minor investments. In the period from 1 November 2020 to 31 October 2021, the Group made investments in total amount of EUR 9,821 thousand. Of this value, the Group invested EUR 4,307 thousand in Slovakia. The Group invested EUR 1,400 thousand in the construction of Biela Púť - Priehyba cableway, acquired an indoor swimming pool of EUR 540 thousand located in the FIS Hotel area at Štrbské pleso, invested EUR 398 thous and to complete the water reservoir, named Zadné vody, EUR 325 thousand to continue the construction of the Centrum Jasná complex, EUR 266 thousand to renovate the Chivas bar in Hotel Pošta, and made other minor investments. As at 30 April 2021, the Group terminated the investment property lease and relaunched the operation of Hotel SKI in the Jasná resort. Accordingly, Hotel SKI was transferred from the Investment property category to the Property, plant and equipment category, in the amount of EUR 1,111 thousand. The Group also reclassified right-of-use assets in the net book value of EUR 782 thousand due to termination of financial leases during the period from 1 November 2020 to 31 October 2021. In the Republic of Poland, the Group invested EUR 2,087 thousand in the period from 1 November 2020 to 31 October 2021, out of which EUR 361 thousand was invested in the Szczyrk resort to improve the artificial snow, amount of EUR 64 thousand to increase the security of Hotel Gronie, EUR 40 thousand for landscaping and widening of the slopes, and the Group also made other smaller investments in this resort. In the period from 1 November 2020 to 31 October 2021, the Group invested EUR 77 at the Legendia Center in Chorzów into various small investments. The Group also invested EUR 959 thousand in the purchase of land in village of Zawoja, on which the buildings of the subsidiary Korona Ziemi stand, which were previously rented by Korona Ziemi. In the Czech Republic, in the Ještěd resort, the Group invested EUR 2,398 thousand, of which EUR 1,967 thousand in the “Nová Skalka” investment project, which consists of a ski slope, artificial snow machinery and the construction of artificial lighting. The Group invested EUR 358 thousand in construction of a new catering facility and made other small inves tments. Within the golf segment in the Ostravice and Kaskáda resorts, the Group invested EUR 65 thousand in small investment projects. In Austria, the Group invested a total of EUR 964 thousand, including EUR 405 thousand at the Mölltaler and Ankogel resorts for new avalanche barriers to increase the safety of clients, EUR 135 thousand for the purchase of new snow guns Consolidated Financial Statements 134 and EUR 130 thousand for the purchase of a new snow groomer. At the Muttereralm resort, it invested EUR 101 thousand in minor investment projects. The Group also made other small investments in Slovakia, the Republic of Poland, Austria and the Czech Republic. Unused assets and fully depreciated used assets As at 31 October 2022 and 2021, the Group reported no unused assets. As at 31 October 2022 the Group used fully depreciated assets in the acquisition cost of EUR 29,846 thousand (2021: EUR 20,977 thousand). Impairment loss For the period ending as at 31 October 2022, for the location of SWM (CGU) in the Republic of Poland, the impairment test showed the need for impairment of fixed assets in a total amount of EUR 5,397 thousand (31 October 2021: EUR 4,824 thousand), of which EUR 5,180 thousand (31 October 2021: EUR 4,293 thousand) related to land and buildings, a value of EUR 60 thousand (31 October 2021: EUR 531 thousand) to individual movable assets and sets of movable assets and a value of EUR 0 thousand (31 October 2021: EUR 0 thousand) to software. For the period ending on 31 October 2022, for the location of Muttereralm (CGU) in Austria, the impairment test showed the need for impairment of fixed assets for a total amount of EUR 737 thousand, of which EUR 217 thousand related to land and buildings, the value of EUR 520 thousand to i ndividual movable assets and sets of movable assets . Information on the assets impairment testing is described in Note 3 (d). Insurance of assets in TEUR 31.10.2022 31.10.2021 Natural disaster and vandalism 772 245 661 878 General machinery risks 59 056 54 204 Liability for damage 52 963 39 615 Security As at 31 October 2022, Property, plant and equipment in the amount of EUR 372,711 thousand were used to secure bank loans (as at 31 October 2021: in the amount of EUR 313,615 thousand). Capitalized borrowing costs As at 31 October 2022, the Group capitalized interest on loans into assets in the amount of EUR 243 thousand (as at 31 October 2021: the Group capitalized interest on loans into assets in the amount of EUR 483 thousand). Consolidated Financial Statements 135 16. Right-of-use Leased Assets Movements in the carrying amounts of property, plant and equipment acquired through leasing were as follows: in TEUR Land and buildings Individual movable assets and sets of movable assets Total Cost Opening balance as at 1.11.2020 68 831 8 869 77 700 Additions 667 2 031 2 698 Additions due to business combinations 2 959 353 3 312 Transfer to Property, plant and equipment - -1 678 -1 678 Disposals -207 -321 -528 Modifications 1 487 -103 1 384 Foreign exchange difference 379 12 391 Balance as at 31.10.2021 / 01.11.2021 74 116 9 163 83 279 Additions 1 818 955 2 773 Additions due to business combinations 1 121 - 1 121 Transfer to Property, plant and equipment - -350 -350 Disposals -907 -871 -1 778 Modifications 1 606 174 1 780 Foreign exchange difference -57 3 -54 Balance as at 31.10.2022 77 697 9 075 86 772 Accumulated depreciation Opening balance as at 1.11.2020 -5 522 -2 868 -8 390 Depreciation of current accounting period -3 654 -1 594 -5 248 Transfer to Property, plant and equipment - 896 896 Decreases 89 321 410 Modifications - 10 10 Foreign exchange difference -23 -2 -25 Balance as at 31.10.2021 / 01.11.2021 -9 110 -3 237 -12 347 Depreciation of current accounting period -4 197 -1 666 -5 863 Transfer to Property, plant and equipment - 172 172 Decreases 907 876 1 783 Modifications 2 -23 -21 Foreign exchange difference 4 -1 3 Balance as at 31.10.2022 -12 394 -3 879 -16 273 Carrying value As at 31.10.2021 65 006 5 926 70 932 As at 31.10.2022 65 303 5 196 70 499 Consolidated Financial Statements 136 17. Goodwill and Intangible Assets in TEUR Goodwill Valuable rights Software Acquired intangible assets Total Cost Opening balance as at 1.11.2020 32 323 6 810 3 990 707 43 830 Additions - 57 584 93 734 Disposals - - -156 - -156 Transfers within assets - 14 651 -665 - Foreign exchange difference 1 49 12 - 62 Balance as at 31.10.2021 32 324 6 930 5 080 135 44 470 Opening balance as at 1.11.2021 32 324 6 930 5 080 135 44 470 Additions - 19 396 22 437 Additions due to business combinations - 595 33 - 628 Disposals - - - -24 -24 Disposals due to disposal of subsidiaries -161 - - - -161 Transfers within assets - - 110 -110 - Foreign exchange difference -22 43 -3 - 18 Balance as at 31.10.2022 32 141 7 587 5 616 23 45 367 Accumulated depreciation and losses from impairment of assets Opening balance as at 1.11.2020 -4 390 -1 039 -2 774 - -8 203 Depreciation of current accounting period - -205 -576 - -782 Decreases - 27 156 - 183 Transfers within assets - -15 15 - - Foreign exchange difference 92 99 -8 - 183 Balance as at 31.10.2021 -4 298 -1 134 -3 187 - -8 618 Opening balance as at 1.11.2021 -4 298 -1 134 -3 187 - -8 618 Depreciation of current accounting period - -572 -558 - -1 130 Foreign exchange difference 22 -38 3 - -13 Balance as at 31.10.2022 -4 276 -1 744 -3 742 - -9 762 Carrying value As at 1.11.2020 27 933 5 771 1 216 707 35 627 As at 31.10.2021 28 026 5 796 1 893 135 35 851 As at 1.11.2021 28 026 5 796 1 893 135 35 851 As at 31.10.2022 27 865 5 843 1 874 23 35 605 Valuable rights are represented mainly by customer relationships and trademarks related to Aquapark Tatralandia. Consolidated Financial Statements 137 18. Investment Property in TEUR 31.10.2022 31.10.2021 Acquisition price Opening balance as at 1.11.2021 / 1.11.2020 8 317 9 428 Transfer from/to Property, Plant and Equipment - -1 111 Revaluation at fair value -906 - Balance as at 31.10.2022 / 31.10.2021 7 411 8 317 As at 31 October 2022, the investment property covers two hotels (Liptov, Kosodrevina), the accommodation facility Otupné, Chata Solisko and Vila Zámoček with the aggregate book value of EUR 1,789 thousand (as at 31 October 2021: EUR 2,695 thousand), which are leased out to third parties that operate them. Furthermore, the investment property includes forest areas and land obtained by acquisition in 2009 in the book value of EUR 5,622 thousand (as at 31 October 2021: EUR 5,622 thousand). Chata Solisko and Vila Zámoček in the amount of EUR 833 thousand (as at 31 October 2021: EUR 1,065 thousand) were acquired by merger of Parent Company with company 1. Tatransk á in 2020. As at 30 April 2021, the lease of Hotel SKI to a third party was terminated and accordingly, the Group reclassified Hotel SKI from the Investment property category to the Property, plant and equipment category, in the amount of EUR 1,111 thousand. As of 31 October 2022, the Group's management has revised the value of investment property downwards by EUR 906 thousand on the basis of current market and contractual conditions (as of 31 October 2021: the Group's management concluded that the assumptions that would lead to a change in the value of these investments have not changed significantly). The value of the leased properties was determined by management's estimate. The estimate of management's fair value is based on discounting future cash flows arising from currently concluded leases after taking into account non-recoverable costs of 4-10% in each of the objects at yield of 6-10%, assuming a continuation of leases at current prices. During the current period the lease contract of the Hotel Kosodrevina was reviewed and decreased compared to the previous period. Other assumptions also changed during the current period presented, resulting in revaluation of investment property and decrease in their fair value. The value of the land was determined by the management using market prices, and the final value is based on an estimate of market price per square meter, depending on the type of land and market transactions for similar lots of land. The price per m2 for forest land is in a range between EUR 0.60 – EUR 1.10, the price for land with built-up areas and courtyards ranges from EUR 60 to EUR 110 per m2. Prices per m2 for individual types of land did not change during the presented or comparable period. If the fair value of that part of investment property that was determined based on management's estimates differed by 10%, the carrying amount of investment property would be EUR 741 thousand higher or lower compared to the amount reported as at 31 October 2022 (as at 31 October 2021: EUR 832 thousand). In the period between 1 November 2021 and 31 October 2022, income from investment property accounted for EUR 138 thousand and direct operating cost related to investment property was EUR 39 thousand (between 1 November 2020 and 31 October 2021: income from investment property accounted for EUR 140 thousand, and direct operating cost related to investment property was EUR 38 thousand). Security As at 31 October 2022, a part of investment property in the amount of EUR 1,257 thousand were used as the security for bank loans (as at 31 October 2021: in the amount of EUR 1,325 thousand). Consolidated Financial Statements 138 19. Deferred Tax Asset, Deferred Tax Liability Deferred tax asset (liability) have been recognised for these items: in TEUR Receivables Liabilities Total 31.10.2022 31.10.2021 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Temporary differences related to: Property, plant and equipment, and intangible assets 5 669 4 293 -31 852 -29 758 -26 183 -25 465 Investment property - - -595 -785 -595 -785 Losses from impairment of trade receivables and other assets 4 830 6 996 -4 571 -6 484 259 512 Cash Flow hedge 691 398 - - 691 398 Provisions and liabilities 3 253 2 109 -1 532 -1 522 1 721 587 Leases (IFRS 16) 350 - -110 -181 240 -181 Tax losses 469 753 - - 469 753 Other temporary differences 873 725 - - 873 725 Offsetting -11 953 -11 367 11 953 11 367 - - Total 4 182 3 907 -26 707 -27 363 -22 525 -23 456 Deferred tax asset was not recognized for these items (tax base): in TEUR 31.10.2022 31.10.2021 Property, plant and equipment, and intangible assets -23 311 -22 339 Losses on impairment of trade receivables and other assets -120 -237 Provisions and liabilities -22 965 -21 118 Tax losses - -47 269 Total -46 396 -90 963 Tax losses, to which deferred tax asset was not recognized as of 31 October 2021, were utilized, or expired during the current accounting period. Deferred tax asset from carry-forward losses is recognized only up to the amount up to which it can be utilized against future tax profits. The expected last periods for utilization of tax losses are as follows: in TEUR 2023 2024 2025 after 2025 Tax losses 1 343 891 - - Based on the legislative change in Slovakia, the tax loss can be deducted from the tax base for 2022 as follows: • for 2018 – in the amount of ¼ , if it has not been applied under the Corona Act from the tax base 2019, • for 2019 – in the amount of ¼ , • for 2020 – in any amount, but not more than 50% of the tax base of the current year, • for 2021 – in any amount, but not more than 50% of the tax base of the current year. Consolidated Financial Statements 139 In Poland the maximum deadline for utilization of tax losses incurred is 5 years. The Group may apply evenly maximum 50% of tax losses per year. If the entity ’ s tax loss does not exceed PLN 5 000 000, the entity may claim up to 100% of the loss for the next 5 consecutive years. In the Czech Republic, the maximum deadline for utilization of tax losses is 5 subsequently following years, starting after the year in which the tax loss incurred. In Austria, the legislation does not limit the use of incurred tax losses. 20. Inventories in TEUR 31.10.2022 31.10.2021 Goods 1 973 1 950 Material 1 959 1 638 Chalets and apartments developed for sale 575 506 Total 4 507 4 094 Chalets and apartments for sale in the amount of EUR 575 thousand are recreational objects in the cottage settlement Bobrovečky 1, the construction of which has been carried out by the Parent Company and subsequently are intended to be sold to third parties. The revenue from the sale of recreational objects will be reported in 2023 or later. These are 16 recreational objects in the cottage settlement Bobrovečky 1, Liptovská Ondrášová. In the period from 1 November 2021 to 31 October 2022, inventories amounted to EUR 11,260 thousand (from 1 November 2020 to October 2021: EUR 6 164 thousand) were recognised as an expense during the year and included in the income statement. The Group did not create a valuation allowance for inventories in the reporting and comparative period. Security As of 31 October 2022, inventories of EUR 4,507 thousand were used to secure bank loans (as of 31 October 2021: EUR 4,094 thousand). 21. Loans Provided in TEUR 31.10.2022 31.10.2021 Short-term 2 268 2 141 Long-term 894 979 Total 3 162 3 120 Impairment allowance -1 053 -1 023 Total with allowance 2 109 2 097 As at 31 October 2022 in accordance with the rules of IFRS 9, the value of impairment allowance for short-term loans was EUR 1,053 thousand (as at 31 October 2021: EUR 1,023 thousand). Consolidated Financial Statements 140 Table below summarizes short-term loans as at 31 st October 2022 and 31 October 2021. As at 31 st October 2022 the weighted arithmetic average of interest rates on short-term loans was 5.79% p.a. (as at 31 October 2021: 5.85% p.a.). in TEUR 31.10.2022 31.10.2021 Debtor Interest rate type Loan value Loan value Thalia s.r.o. 5% p.a. 1 033 990 SON Partner 7% p.a. 963 948 OSTRAVICE HOTEL a.s. 4% p.a. 138 0 P.M.I.R a.s. 5% p.a. 132 126 Others 4% p.a. 2 71 Others 5% p.a. - 6 Total short-term loans 2 268 2 141 Table below summarizes long-term loans as at 31 October 2022 and 31 October 2021. As at 31 October 2022 the weighted arithmetic average of interest rates on long-term loans was 0.00% p.a. (as at 31 December 2021: 0.52% p.a.). in TEUR 31.10.2022 31.10.2021 Debtor Interest rate type Loan value Loan value Melida, a.s. - 894 852 OSTRAVICE HOTEL a.s. 4% p.a. - 127 Total long-term loans 894 979 22. Trade Receivables in TEUR 31.10.2022 31.10.2021 Trade receivables 5 291 7 102 Impairment allowance to receivables -419 -306 Total 4 872 6 796 Short-term 4 872 6 796 Long-term - - Total 4 872 6 796 As at 31 October 2022, carrying amount of trade receivables amount to EUR 4,872 thousand and comprises of current operating receivables (as at 31 October 2021: EUR 6,796 thousand). Consolidated Financial Statements 141 The ageing structure of receivables is as follows: in TEUR 31.10.2022 31.10.2021 Gross Impairment allowance Net Gross Impairment allowance Net Within due period 4 258 -59 4 199 5 875 -62 5 813 Overdue within 30 days 203 -3 200 737 -20 717 Overdue from 30 days to 180 days 196 -36 160 305 -26 279 Overdue from 180 days to 365 days 314 -102 212 16 -11 5 Overdue over 365 days 320 -219 101 169 -187 -18 Total 5 291 -419 4 872 7 102 -306 6 796 As at 31 October 2022 and 31 October 2021, the amount of the impairment allowance consisted of value adjustments to current operating receivables. The development of the value adjustment during the accounting period is shown in the overview below: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 306 177 Creation of impairment allowance 165 205 Additions due to business combinations 33 - Use -29 -45 Reversal of impairment allowance -56 -31 Balance as at 31.10.2022 / 31.10.2021 419 306 Security As at 31 October 2022, receivables of EUR 4,872 thousand were used to secure bank loans (as at 31 October 2021: EUR 6,796 thousand). 23. Other Receivables in TEUR 31.10.2022 31.10.2021 Advance payments made 4 680 7 763 Total 4 680 7 763 Short-term 4 172 7 117 Long-term 508 646 Total 4 680 7 763 The advance payments made as at 31 October 2022 amount to a total of EUR 4,680 thousand (as at 31 October 2021: EUR 7,763 thousand). The amount of EUR 3,587 thousand is mainly related to unfinished investment activity (as at 31 October 2021: EUR 462 thousand). As at 31 October 2021 advance payments made also included the amount of EUR 5,000 thousand, which represented the advance payment for acquisition of the company EUROCOM Investment s.r.o., which operates aquapark Bešeňová . For more information, see Note 5 – Increase, decrease and sale of shares in companies. Consolidated Financial Statements 142 24. Other Assets in TEUR 31.10.2022 31.10.2021 Prepaid expenses and accrued income 2 280 1 555 Other tax assets 831 1 691 Other Assets 3 297 3 874 Finance sublease receivables - 149 Derivative operations - currency SWAP 254 - Impairment allowance -16 -16 Total 6 646 7 253 Short-term 6 646 7 253 Long-term - - Total 6 646 7 253 As at 31 October 2022, the Group records a receivable against the company Penzión Energetik s.r.o. based on the assignment contract and set off of receivables in amount of EUR 1,994 thousand (as at 31 October 2021: EUR 1,994 thousand). As at 31 October 2021, other assets included a receivable in the amount of EUR 1,402 thousand for subsidies from the state budget for tourism in a situation caused by the COVID-19 for the period from November 2020 to May 2021. This receivable was paid during the financial year. For more information on government grants, see Note 32 - Other liabilities. As at 31 October 2022, derivative operations - currency SWAP represents the fair value of the derivative of EUR 254 thousand recognised under Note 24 - Other assets (as at 31 October 2021: recognised under Note 32 - Other liabilities of EUR 1,277 thousand). For more information, see Note 31 – Hedge Accounting. As at 31 October 2022, in accordance with the rules of IFRS 9, the impairment allowance for other assets amounted to EUR 16 thousand (as at 31 October 2021: EUR 16 thousand). 25. Financial Investments in TEUR 31.10.2022 31.10.2021 Financial instruments measured at fair value through profit or loss 42 40 Total 42 40 Financial investments represent an investment of a cash contribution to Tatranské dopravné družstvo, which is engaged in brokerage activities in the area of services in the amount of EUR 36 thousand (31 October 2021: EUR 35 thousand) and an investment in SON Partner Sp. Z o. o. in the amount of EUR 6 thousand (as at 31 October 2021: EUR 5 thousand). Consolidated Financial Statements 143 26. Cash and Cash Equivalents in TEUR 31.10.2022 31.10.2021 Cash 240 170 Stamps and vouchers 35 - Current accounts with banks 15 327 15 387 Impairment allowance -2 -4 Total 15 600 15 553 As at 31 October 2022, the value of impairment allowance to cash and cash equivalents under IFRS 9 was EUR 2 thousand (as at 31 October 2021: EUR 4 thousand). Security The Group may freely dispose of the bank accounts. 27. Equity Share capital and share premium The share capital approved, subscribed and fully paid as at 31 October 2022 and 31 October 2021 comprised of 6,707,198 ordinary shares in nominal value of EUR 7 per share as at 31 October 2022 and 31 October 2021. The emission of shares is marked by ISIN: SK1120010287. On 25 May 2022, an ordinary general assembly of Tatry mountain resorts, a.s. was held. The general assembly decided, among other things, on the distribution of loss Tatry mountain resorts, a.s. generated in the period between 1 November 2020 and 31 October 2021 according to the separate financial statements compiled for that accounting period, in the amount of EUR 16,905 thousand as follows: - Transfer to losses from previous periods of EUR 16,905 thousand and subsequent netting with profit from previous periods. Shareholders have a right to the payment of dividends, and the value of share vote in the Company’s general assembly is determined as a ratio of the value of one share and the total value of share capital. The following table presents the Company’s shareho lders and the number of shares, ownership interest and voting rights. Consolidated Financial Statements 144 31 October 2022 Number Ownership Ownership Voting of shares interest interest rights in TEUR % % C.I. CAPITAL INDUSTRIES LIMITED 1 973 197 13 812 29.4% 29.4% FOREST HILL COMPANY, s.r.o. 1 030 919 7 216 15.4% 15.4% NEEVAS INVESTMENTS LIMITED 992 666 6 949 14.8% 14.8% STOCKLAC LIMITED 800 000 5 600 11.9% 11.9% RMSM1 LIMITED 404 486 2 831 6.0% 6.0% Minority shareholders 1 505 930 10 542 22.5% 22.5% Total 6 707 198 46 950 100% 100% 31 October 2021 Number Ownership Ownership Voting of shares interest interest rights in TEUR % % C.I. CAPITAL INDUSTRIES LIMITED 1 973 197 13 813 29.4% 29.4% FOREST HILL COMPANY, s.r.o. 1 030 919 7 216 15.4% 15.4% STOCKLAC LIMITED 909 173 6 364 13.6% 13.6% NIKROC INVESTMENTS LIMITED 909 731 6 368 13.6% 13.6% RMSM1 LIMITED 677 666 4 744 10.1% 10.1% Minority shareholders 1 206 512 8 445 18.0% 18.0% Total 6 707 198 46 950 100% 100% Profit / (loss) per share 31.10.2022 31.10.2021 Profit / (loss) for the period in TEUR -11 361 -45 717 Weighted average number of ordinary shares 6 707 198 6 707 198 Profit / (loss) per share in EUR -1.694 -6.816 L egal reserve fund The legal reserve fund amounts to EUR 7,021 thousand (as at 31 October 2021: EUR 7,021 thousand). According to the Slovak legislation, a legal reserve fund shall be mandatorily created on an annual basis, in the minimum amount of 10% of the company's net profit and minimum of 20% of the subscribed share capital (on a cumulative basis). The legal reserve fund may be used only for the settlement of the company's losses, and it cannot be used for payment of dividends. The calculation of the legal reserve fund is made in compliance with the Slovak legal regulations. The obligation to create a legal reserve fund is determined by the partnership agreement, while the Company is obliged to create a legal reserve fund only when profit is made. The legal reserve fund of the subsidiaries totals EUR 0 thousand due to losses of prior periods. According to the Polish law the fund is mandatorily created on an annual basis; in the minimum amount of 8% of the company's net profit and up to 33% of the subscribed share capital (on a cumulative basis). The statutory reserve fund does not have to be formed according to the Czech legislation, its creation is purely voluntary, unless otherwise stated in the statutes or in the company's partnership agreement. According to Austrian legislation, the legal reserve fund is created depending on the size and type of company. Its creation is purely voluntary, this obligation is not stipulated by the obligations in the currently valid partnership agreement. Consolidated Financial Statements 145 Profit (loss) distribution For the fiscal year ended on 31 October 2022, the Parent Company’s management proposes the distribution of total profit of the Parent Company in the amount of EUR 3,287 thousand as follows: - Allocation to the legal reserve fund of EUR 329 thousand - Allocation to the social fund on the basis of a collective agreement in the amount of EUR 16 thousand - Balance of EUR 2,942 thousand transfer to retained earnings of previous periods Change in the foreign currency translation reserve The foreign currency translation reserve includes all foreign exchange differences resulting from conversion of the financial statements of foreign companies Szczyrkowski Ośrodek Narciarski, S.A., Ślaskie Wesole Miasteczko Sp. z o. o. Korona Ziemi sp.z o.o in Poland, from translation of financial statements of TMR Ještěd, a.s. and TMR Finance CR, a.s., Tatry mountain resorts CR, a.s., International TMR services s.r.o. and GOPASS SE in Czech Republic to euros. As of 31 October 2021, the foreign currency translation reserve included all exchange differences resulting from conversion of the financial statements of the aforementioned foreign subsidiaries and, in addition, from translation of financial statements of TIKAR d.o.o. in the Republic of Croatia to euros. Non-controlling interest Non-controlling interests represent the interests of minority shareholders in subsidiaries: in TEUR 31.10.2022 31.10.2021 Szczyrkowski Ośrodek Narciarski, S.A (SON) (3%) -499 -381 Korona Ziemi sp.z o.o. (26%) -147 232 TIKAR d.o.o. (49%) - -293 Total -646 -442 in TEUR SON Korona Ziemi sp.z o.o. Assets 18 541 1 136 Liabilities -35 191 -1 628 Goodwill attributable to the Group - -72 Net assets, net of goodwill -16 650 -564 Percentage of non-controlling interest 3% 26% Book value of non-controlling interest -499 -147 Revenues 10 584 4 Profit (loss) -3 940 -1 442 Other comprehensive income - - Total comprehensive income -3 940 -1 442 Percentage of non-controlling interest 3% 26% Profit/(loss) attributable to the non-controlling interest -118 -375 Other comprehensive income attributable to the non-controlling interest - - Net increase (decrease) of cash and cash equivalents 122 -31 Consolidated Financial Statements 146 28. Loans and Borrowings in TEUR 31.10.2022 31.10.2021 Loans and borrowings received 122 830 107 626 Total 122 830 107 626 Short-term 10 151 28 632 Long-term 112 679 78 994 Total 122 830 107 626 Received loans and borrowings as at 31 October 2022 and 31 October 2021 are shown in the following overview: Creditor Interest rate type Maturity date Unpaid amount as at 31.10.2022 in TEUR J&T BANKA, a.s. 3M EURIBOR + 4.75% p.a. 31.12.2029 38 116 J&T BANKA, a.s. 12M EURIBOR + 5% p.a. 31.3.2033 33 411 J&T BANKA, a.s. 3M EURIBOR + 4.75% p.a. 31.12.2026 21 494 J&T BANKA, a.s. 3M EURIBOR + 5.25% p.a. 31.12.2026 20 116 J&T BANKA, a.s. 3M EURIBOR + 4.75% p.a. 31.12.2026 9 418 Dr. Nodari Giorgadze - 30.6.2017 190 Raiffeisen - Leasing s.r.o. 7,49% p.a. 15.7.2027 85 Total 122 830 Creditor Interest rate type Maturity date Unpaid amount as at 31.10.2021 in TEUR J&T Banka a.s. 12M EURIBOR + 5% p.a. 31.03.2032 36 523 J&T Banka a.s. 12M EURIBOR + 4.5% p.a. 31.1.2024 20 668 365.bank a.s. 12M EURIBOR + 4.657% p.a. 31.12.2028 19 141 EUROCOM Investment s.r.o. 4% p.a. 30.4.2022 7 929 365.bank a.s. 12M EURIBOR + 4.571% p.a. 30.6.2022 7 055 365.bank a.s. - kontokorent 3M EURIBOR + 3.818% p.a. 27.5.2022 4 959 365.bank a.s. 12M EURIBOR + 4.684% p.a. 31.12.2028 4 670 365.bank a.s. 12M EURIBOR + 4.686% p.a. 30.6.2032 4 223 365.bank a.s. 12M EURIBOR + 4.982% p.a. 31.12.2024 1 680 Kärntner Sparkasse AG - kontokorent 3M EURIBOR + 1.250% p.a. less than 1 year 777 Total 107 626 Consolidated Financial Statements 147 The weighted average of interest rates for loans and borrowings received as at 31 October 2022 was 4.89% (as at 1 October 2021: 4.65%). Interest is payable on a monthly and quarterly basis. For more information, see Note 12 – Finance income and expenses. The obligation arising from the loan received from Giorgadze Nodari in the amount of EUR 190 thousand was acquired by the purchase of company WORLD EXCO s.r.o. into the Group on 31 March 2022. As at 15 July 2022, the Group drew funds from a loan from Raiffeisen - Leasing s.r.o that were used to purchase new motor vehicle in the Czech republic. As at 31 October 2022 the loan amounted to EUR 85 thousand. As at 30 March 2022, the Group drew funds from a syndicated loan from J&T Banka and thus refinanced its existing loans from J&T Banka and 365.bank, the value of which was EUR 62,396 thousand as at 31 October 2021 (excluding the existing loan from J&T Bank as at 31 October 2021 in the amount of EUR 36,523 thousand). The total outstanding amount of the new loan to J&T Bank as of 31 October 2022 is EUR 89,144 thousand. The funds provided served primarily as a loan to a subsidiary TMR Parks, a.s. to cover the purchase price for the transfer of EUROCOM Investment, s.r.o. shareholding of EUR 10,000 thousand, the refinancing of loans in the acquired companies EUROCOM Investment, s.r.o. and WORLD EXCO s.r.o. in the amount of EUR 11,651 thousand and the construction of the Biela púť - Priehyba cableway, while the amount drawn at the end of the financial year as at 31 October 2022 amounted to EUR 9,372 thousand out of the total loan value of EU 12,300 thousand. In May 2019, the Group drew funds from J&T Banka a.s. in the amount of EUR 37,000 thousand, which was increased to EUR 40,000 thousand in September 2020, and the total amount of outstanding loan balance as at the reporting date of EUR 33,411 thousand. As at 31 October 2022, the Group has committed to meet the total consolidated EBITDA, which may not be less than EUR 29,000 thousand, and the covenant LTV ratio, which may not be higher than 60%. However, failure to meet the LTV ratio does not affect the maturity of the debt only on the amount of security. The Group evaluated fulfillment of covenants as at 31 October 2022. The covenants which evaluation is due within the dates of issuing the consolidated financial statements were met. Fulfillment of other covenants will be evaluated later. In the period from 1 November 2020 to 31 October 2021, the Group drew new loans from Poštová banka, a.s. and J&T Banka in the amount of EUR 1,620 thousand and EUR 20,000 thousand, respectively. The loan from Poštová banka, a.s. was used to finance the co nstruction of the Zadné vody reservoir, with an outstanding balance as at the reporting date of EUR 1,680 thousand. The loan from J&T Banka was used to cover operating costs, with an outstanding balance as at the reporting date of EUR 20,668 thousand. On 7 October 2019, the Group signed a short-term loan agreement with EUROCOM Investment, s.r.o. up to the amount of EUR 3,000 thousand, which was on 1 December 2019 on the basis of Amendment no. 1 to the loan agreement increased to the amount of EUR 4,000 thousand. As at 31 October 2021 the total amount of the outstanding loan balance was in the amount of EUR 7,929 thousand. On 31 March 2022, EUROCOM Investment, s.r.o. became part of the Group. For more information, see Note 5 – Increase, decrease and sale of shares in companies. Security In order to guarantee bank loans, the following assets were used: lands, technology and service buildings of mountain lift equipment: ski lifts, chair cableways, terrestrial cableways, hanging cableways, cabin cableways, transformers, operating buildings and structur es: Tri Studničky Hotel, Srdiečko Hotel, Kosodrevina Hotel, Liptov Hotel, SKI Hotel, Hotel Grand Jasná a former telecommunication building, bungalows as well as tangible asset of Polish ski resort Szczyrk. All movable assets of the Jasná , High Tatras and aquapark Bešeňová as well as trade receivables are pledged as well. As at 31 October 2022, property, plant and equipment, investments in real estate, inventories and receivables of EUR 383,347 thousand were used to secure bank loans and bonds (as at 31 October 2021: in the amount of EUR 325,830 thousand). Consolidated Financial Statements 148 29. Lease Liabilities in TEUR Opening balance as at 1.11.2020 62 688 Additions 2 550 Additions due to business combinations 3 312 Modifications 1 411 Accretion of interest 2 859 Payments -7 047 Foreign exchange difference 381 Balance as at 31.10.2021 / 1.11.20201 66 154 Short-term 8 748 Long-term 57 406 Balance as of 1.11.2020 66 154 Additions 2 771 Additions due to business combinations 1 121 Modifications 1 605 Accretion of interest 3 096 Payments -7 596 Foreign exchange difference -53 Balance as at 31.10.2022 67 098 Short-term 8 609 Long-term 58 489 Total 67 098 The maturity of lease liabilities is as follows: in TEUR 31.10.2022 31.10.2021 Less than 1 year 8 609 8 747 1 - 5 years 17 359 12 975 Above 5 years 41 130 44 431 Total 67 098 66 154 Consolidated Financial Statements 149 30. Trade Payables in TEUR 31.10.2022 31.10.2021 Trade payables 15 005 13 545 Unbilled deliveries 3 499 1 219 Total 18 504 14 764 Short-term 14 874 12 306 Long-term 3 630 2 458 Total 18 504 14 764 As at 31 October 2022, long-term liabilities in the amount of EUR 3,630 thousand (as at 31 October 2021: EUR 2,458 thousand) represent retention fees in the amount of EUR 1,344 thousand against contractors for the construction of the Centrum Jasná complex , the Biela Púť – Priehyba cableway, the construction of the 2nd stage of snowmaking in Szczyrk and the retention fee resulting from investment projects aimed at improving attractions in the Legendia resort and other long-term liabilities in the amount of EUR 2,286 thousand. As at 31 October 2022, overdue liabilities amounted to EUR 1,780 thousand (as at 31 October 2021: 1,811 thousand). Overdue liabilities as at 31 October 2022 represent primarily unpaid retention fees due to signed construction contracts with suppliers for their performed and realised construction of individual buildings, in some cases repayment schedules are agreed with suppliers. 31. Hedge Accounting The Group applies only cash-flow hedges and hedges only against foreign currency risk. Since the Group has taken out a loan from its Czech subsidiary, the currency gap has widened. The Group decided to manage the foreign currency risk against the Czech Crown on this particular instrument by hedging against changes in foreign currency exchange rates. The Group has decided not to hedge any other risks arising from this particular instrument besides the foreign currency risk, as they are managed otherwise. Please refer to section financial risks for further information. The hedged item is a long-term bullet-payment loan denominated in CZK, with fixed repayment schedule. Hedging instrument is a Foreign currency swap, swapping the CZK repayments on the loan exposure for repayments in EUR, retaining the fixed nature of interest rates in both currencies. There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and swap contracts match the terms of the bond (i.e., notional amount and repayment schedules). The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange swap contracts are identical to the hedged risk components. As the critical terms of the foreign exchange and swap contracts match the terms of the bond (i.e., notional amount and repayment schedules), the Group expects the hedging relationship to be effective to a high degree. The hedge ineffectiveness can arise, when the Group stops paying the bond or eventually repays greater portion than intended by repayment schedule. The Group plans to repay the bond in line with the repayment schedule. The profile of the nominal amount of the hedging instrument – hedging instrument has a fixed maturity of November 2022 for the whole of 57.9 mil EUR. Forward rate used in the contract is 25.870 CZK / 1 EUR. Consolidated Financial Statements 150 Consolidated Financial Statements In current period from 1 November 2021 to 31 October 2022, the impact of hedging instrument and hedged instrument on statement of financial position is: In ‘000 EUR Notional amount Carrying amount Line item in statement of financial position Changes in FV used for measuring ineff. Foreign exchange swap 57 943 254 Other assets 1 532 In ‘000 EUR Change in fair value used for measuring ineffectiveness. Cash flow hedge reserve Cost of hedging reserve Foreign exchange swap -1 532 -2 602 0 In current period, the effect of cash flow hedge on statement of financial performance is: In ‘000 EUR Total hedging gain/(loss) recognised in OCI Ineffectiveness recognised in profit or loss Line item in the statement of profit or loss Cost of hedging recognised in OCI Amount reclassified from OCI to profit or loss Line item in the statement of profit or loss Foreign exchange swap -1 103 0 - 0 379 Interest income calculated using the effective interest rate and Interest expense 2 865 Profit / (loss) from financial operations, net 151 Consolidated Financial Statements In previous period from 1 November 2020 to 31 October 2021, the impact of hedging instrument and hedged instrument on statement of financial position was: In ‘000 EUR Notional amount Carrying amount Line item in statement of financial position Changes in FV used for measuring ineff. Foreign exchange swap 57 943 -1 277 Other liabilities 920 In ‘000 EUR Change in fair value used for measuring ineffectiveness. Cash flow hedge reserve Cost of hedging reserve Foreign exchange swap -920 -1 499 0 In previous period, the effect of cash flow hedge on statement of financial performance was: In ‘000 EUR Total hedging gain/(loss) recognised in OCI Ineffectiveness recognised in profit or loss Line item in the statement of profit or loss Cost of hedging recognised in OCI Amount reclassified from OCI to profit or loss Line item in the statement of profit or loss Foreign exchange swap -1 949 0 - 0 317 Interest income calculated using the effective interest rate and Interest expense 3 315 Profit / (loss) from financial operations, net 152 Consolidated Financial Statements 32. Other Liabilities in TEUR 31.10.2022 31.10.2021 Liabilities towards employees 3 540 1 785 Advances received 8 076 2 137 Deferred revenues 10 893 7 540 Liabilities to shareholders from reduction in share capital 213 213 Other liabilities to the former shareholders (Mölltaler Group) 10 106 12 606 Contingent consideration 983 910 Hedging derivative transactions - foreign exchange SWAP - 1 277 Other 4 500 6 134 Total 38 311 32 602 Short-term 25 232 17 824 Long-term 13 079 14 778 Total 38 311 32 602 As at 31 October 2022, the liabilities towards employees represent mainly a provision for bonuses for the fiscal year between 1 November 2021 and 31 October 2022 in the amount of EUR 1,814 thousand (as at 31 October 2021: EUR 541 thousand) and wage liabilities to employees in the amount of EUR 1,552 thousand (as at 31 October 2021: EUR 1,216 thousand). As at 31 October 2022, advance payments received comprise mainly of advance payments received for hotel stays in the amount of EUR 3,237 thousand (as at 31 October 2021: EUR 1,205 thousand) and advance payment received related to construction of the water structure Pumping station and substation – Otupné, which the Company realises, in the amount of EUR 3,000 thousand. The total amount of advance payments received also includes purchased, but not yet spent, Gopass credits of Group clients in the amount of EUR 1,307 thousand and advance payments for purchase of Chalets and in the amount of EUR 265 thousand (as at 31 October 2021: EUR 328 thousand). As at 31 October 2022, the deferred revenues include mainly the amount of EUR 5,203 thousand for accrual of ski passes sold (as at 31 October 2021: EUR 3,670 thousand) with an amount of EUR 3,601 thousand coming from the “Šikovná sezónka“ ski passes sold and EUR 1,602 thousand from other ski passes sold . The subsidy amount of EUR 453 thousand for construction of the cableway Furkotka in ski resort Štrbské pleso (as at 31 October 2020: EUR 4 64 thousand) and the amount of EUR 74 thousand represents a subsidy for the Hotel Tri Studničky (as at 31 October 2020: EUR 76 thousand). The provision for discounts on purchases was as at 31 October 2022 in total amount of EUR 582 thousand (as at 31 October 2020: EUR 586 thousand). As at 31 October 2022, the deferred revenue relating to government grants amounted to EUR 2,697 thousand (as at 31 October 2021: EUR 1,361 thousand). Details of movement of government grants are presented in the table: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 1 361 1 735 Increase from subsidiary acquisition 1 159 97 Received during the year 2 450 9 698 Released to the statement of profit and loss and other comprehensive income -2 273 -10 169 Balance as at 31.10.2022 / 31.10.2021 2 697 1 361 153 Consolidated Financial Statements During the financial year 2022 state aid related to COVID-19 was received in the amount of EUR 1,814 thousand. This is short-term state aid that has been recognized in the statement of comprehensive income as income during the period in which the related costs to be reimbursed are recorded. For more details see Note 9 - Purchased services and Note 10 - Personnel expenses. During the financial year 2021 state aid related to COVID-19 was received in the amount of EUR 8,374 thousand. This is short-term state aid that has been recognized in the statement of comprehensive income as income during the period in which the related costs to be reimbursed are recorded. For more details see Note 9 - Purchased Services and Note 10 - Personnel Expenses Details of government grants recognised in the statement of other comprehensive income are presented in the table: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 State aid related to rental costs 501 661 State aid related to wages and salaries 382 6 094 State aid related to other costs 1 390 3 292 Total 2 273 10 047 As at 31 October 2022, the liabilities to shareholders from the reduction in share capital amount to EUR 213 thousand (as at 31 October 2021: EUR 213 thousand) and comprise mainly the remaining liability from the capital reduction in 2013 totaling EUR 174,388 thousand. As at 31 October 2022, the other liabilities to the former shareholders represent EUR 10,106 thousand (as at 31 October 2021: EUR 12,606 thousand) and contain mainly the outstanding balance to the former shareholders related to the loan provided to the Austrian company Mölltaler Gletscherbahnen GmbH & Co KG before the acquisition by the Group. As at 31 October 2022, the contingent part of the purchase price of EUR 983 thousand (as at 31 October 2021: EUR 910 thousand) represents part of the purchase price for the subsidiary Muttereralm Bergbahnen Errichtungs GmbH (see Note 5 – Increase, decrease and sale of shares in companies), which is subject to compliance by the seller with the contractual conditions. As at 31 October 2022, the amount of other liabilities contains also social security liabilities of EUR 2,424 thousand (as at 31 October 2021: EUR 2,055 thousand), further comprise the amount of EUR 1,215 thousand resulting from the acquisition of TMR Ješted, a.s. in accordance with standard IFRS 3 (as at 31 October 2021: EUR 1,182 thousand), on the basis of a signed rent agreement ("business rent") for 10 years with an option for the next 10 years and liabilities from value added tax in the amount of EUR 930 thousand (as at 31 October 2021: EUR 1,867 thousand). The formation and utilization of social fund during the accounting period is shown in the following overview: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 -3 18 Increase from subsidiary acquisition 3 - Creation of social fund against expenses 93 58 Drawing -78 -79 Balance as at 31.10.2022 / 31.10.2021 15 -3 As at 31 October 2022, derivative operations - currency SWAP represents the fair value of the derivative of EUR 254 thousand recognised under Note 24 - Other assets (as at 31 October 2021: recognised under Note 32 - Other liabilities of EUR 1 277 thousand). For more information, see Note 31 - Hedge Accounting. 154 Consolidated Financial Statements 33. Provisions in TEUR Unused vacations Other Total Opening balance as at k 1.11.2021 986 1 338 2 324 Creation of provisions during the year 1 072 241 1 313 Increase from subsidiary acquisition 33 - 33 Reversal of provisions during the year - -963 -963 Use of provisions during the year -703 -2 -705 Foreign exchange difference - -1 -1 Balance as at 31.10.2022 1 388 613 2 001 31.10.2022 31.10.2021 Short-term 1 860 2 304 Long-term 141 20 Total 2 001 2 324 34. Bonds Issued On 10 October 2018, the Group issued the third bond issue in the total value of EUR 90,000 thousand. On 7 November 2018, the Group issued the fourth bond issue TMR F. CR in the total value of CZK 1,500,000 thousand. In February 2021, the Group issued new TMR V bonds in the total value of up to EUR 150 million, at an interest rate of 6% p.a. and with a maturity date in 2026. On 28 October 2022, the Group issued TMR VI bonds up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and maturity in 2027. On 28 October 2022, EUR 1,552 thousand worth of bonds were traded. 155 Consolidated Financial Statements Details on particular bonds are presented in the table below. in TEUR ISIN Date of issue Maturity date Curre ncy of the issue Face value of the issue in the initial currency in '000 Interest rate p.a. in % Effective interest rate p.a. in % Carrying value as at 31.10.2022 Carrying value as at 31.10.2021 Name TMR III 4.40%/2024 SK41200 14598 10.10.2018 10.10.2024 EUR 90 000 4,4 4,9 89 229 88 825 TMR F. CR 4.5%/2022 CZ00035 20116 7.11.2018 7.11.2022 CZK 1 500 000 4,5 5,1 62 582 59 368 TMR V 6.00%/2026 SK40000 18255 2.2.2021 2.2.2026 EUR 110 000 6,0 6,7 113 091 112 612 TMR VI 5.40%/2027 SK40000 21713 28.10.2022 28.10.2027 EUR 59 000 5,4 5,9 1 284 - Total 266 186 260 805 Short-term 67 690 6 377 Long-term 198 496 254 428 Total 266 186 260 805 All four bonds represent a book-entry security in bearer form, and their issue was approved by the National Bank of Slovakia or the Czech National Bank in case of TMR F. CR. Covenants - issue of TMR III - The Parent Company has committed that, until all of its monetary obligations under the Bonds have been met, the Net Senior Debt to Modified EBITDA (Leverage) ratio will not exceed 8. The Company has also committed to the LTV ratio, this indicator may not be higher than 70%. However, failure to meet the LTV ratio does not affect the maturity of the debt only the amount of security. On 7 November 2018, the Group issued TMR F. CR bonds in the nominal value of CZK 1,500,000 thouand. The cash funds received was consequently provided to other companies within the Group in the form of loans. Covenants – i ssue of TMR F. CR - The company TMR Finance CR has committed that, until all of its monetary obligations under the Bonds have been met, the Net Senior Debt to Modified EBITDA (Leverage) ratio will not exceed 8. The company TMR Finance CR has also committed to the LTV ratio, this indicator may not be higher than 70%. However, failure to meet the LTV ratio does not affect the maturity of the debt only the amount of security. Covenants – Issue of TMR V does not include conditions causing its immediate repayment. At the same time, the Parent Company is entitled under certain conditions to postpone payment of interest. Covenants – Issue of TMR VI - The Group has committed that, until all of its monetary obligations under the Bonds have been satisfied, the LTV ratio may not be higher than 70%. However, failure to meet the LTV indicator does not affect the maturity of the debt only the amount of security. The Group evaluated fulfillment of covenants as at 31 October 2022. The covenants which evaluation is due within the dates of issuing the consolidated financial statements were met. Fulfillment of other covenants will be evaluated later. All of the four issues are associated with regular payment of the coupon , financed from the Group ’s own resources. 156 Consolidated Financial Statements Out of the total value of liability of EUR 266,186 thousand (as at 31 October 2021: EUR 260,805 thousand), a short-term portion amounts to EUR 67,690 thousand which represents a liability from coupon due in the period of 12 months after 31 October 2022 including the liability from issue of TMR F. CR due on 7 November 2022 (as at 31 October 2021: EUR 6,377 thousand liability from the coupon due in the period of 12 months after 31 October 2021) Security A right of lien for the issued TMR III bonds on the property, movable assets and part of receivables, in total amount of EUR 97,578 thousand (as at 31 October 2021: EUR 103,254 thousand). It is property that is not used as a security for other Group liabilities. A right of lien for the issued TMR F. CR bonds on the Group’s the property, movable assets and part of receivables, in total amount of EUR 57,351 thousand (as at 31 October 2021: EUR 66,566 thousand). It is property which is not used as a security for other Group liabilities. 35. Fair Value Information The following overview contains information about the carrying amount and fair value of the Group’s financial assets and liabilities, that are not accounted for in fair value: in TEUR Carrying value Fair value 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Financial assets Loans provided 21 2 109 2 097 1 725 1 816 Total 2 109 2 097 1 725 1 816 in TEUR Carrying value Fair value 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Financial liabilities Bonds issued 34 266 186 260 805 264 362 260 954 Total 266 186 260 805 264 362 260 954 The table does not present financial instruments for which the carrying amount is considered to be an approximation of fair value. 157 Consolidated Financial Statements 36. Changes in Liabilities Arising from Financial Activities in TEUR 1 November 2021 Additions / Drawings Payment Interest Additions due to business combinations Other 31 October 2022 Loans and borrowings 107 626 34 112 -27 268 6 085 3 748 -1 473 122 830 Lease liabilities 66 154 4 376 -7 596 3 096 1 121 -53 67 098 Bonds issued 260 805 1 518 -13 257 14 526 - 2 594 266 186 Total liabilities from financing activities 434 585 40 006 -48 121 23 707 4 869 1 068 456 114 In case of bonds issued, the category Other represents the impact of foreign currency loan hedge (see also Note 31 – Hedge accounting) and fee to the administrator for issuing bonds (see also Note 34 - Bonds issued). in TEUR 1 November 2021 Additions / Drawings Payment Interest Additions due to business combinations Other 31 October 2021 Loans and borrowings 78 067 29 046 -4 069 4 666 - -84 107 626 Lease liabilities 62 688 7 273 -7 047 2 859 - 381 66 154 Bonds issued 258 973 109 635 -123 131 14 183 - 1 145 260 805 Total liabilities from financing activities 399 728 145 954 -134 247 21 708 - 1 442 434 585 37. Information about Risk Management This section provides details about the risks the Group is exposed to and about the method of management thereof. The Group is exposed to risk in the following areas: - Credit risk - Liquidity risk - Market risk - Operational risk The management is fully responsible for the establishment and supervision of the Group’s ris k management. Credit risk The Group’s primary exposure to credit risk arises through its trade receivables, lease receivables, other receivables and advances and loans provided. The amount of credit risk exposure is represented by the carrying amounts of these assets in the balance sheet if no form of guarantee is issued. The carrying amount of receivables, advances and loans provided represents the maximum accounting loss that would have to be recognised if the counterparty completely failed to perform its contractual obligations and all collaterals and guarantees would be of no value. Therefore, this value highly exceeds the expected losses included in the provision for unrecoverable receivables. Before the conclusion of major contracts, the Group’s manage ment evaluates the credit risk related to the counterparty at its regular meetings. Provided material risks are identified, the Group withdraws from concluding the contract. 158 Consolidated Financial Statements Loans provided The Group assigns a level of credit risk to the loans provided on the basis of data that is expected to predict credit risk (including but not limited to external ratings, financial statements, management accounts and cash flow projections and available counterparty press releases), potential days past due and applying experienced credit judgment. The grades of credit risk are defined by qualitative and quantitative factors that indicate the risk of default and are consistent with external credit rating definitions from credit rating agencies such as Moody's and Standard & Poors. The probability of default is then assigned based on historical data collected by these agencies. The loss given default (LGD) parameters generally reflect an expected rate of return of 40%, except when a borrowing is reduced by a loan. Probability of default (PD) Loss given default (LGD) Carrying value Expected credit loss (ECL) 1.99% - 7.38% 40% 2 109 - 1 053 Sensitivity analysis If the borrower's credit quality was changed, the probability of default (PD) would also change. If the PD increased by 10%, the ECL would increase by EUR 105 thousand. If the PD decreased by 10%, the ECL would decrease by EUR 105 thousand. The Group also takes into account the differences between the economic conditions during the period in which the historical data were collected, the current conditions and the Group's view on the economic conditions over the expected life of the loan. As at 31 October 2022, the Group was exposed to the following credit risk: in TEUR Legal entities Banks Other financial institutions Other Total Financial assets Loans Provided 2 107 - - 2 2 109 Other receivables - - - - - Trade receivables 4 872 - - - 4 872 Cash and Cash Equivalents - 15 325 - 275 15 600 Other Assets 4 641 254 225 8 5 128 Total 11 620 15 579 225 285 27 709 As of 31 October 2021, the Group was exposed to the following credit risk: in TEUR Legal entities Banks Other financial institutions Other Total Financial assets Loans Provided 2 026 - - 71 2 097 Other receivables 45 - - - 45 Trade receivables 4 904 - - - 4 904 Cash and Cash Equivalents - 15 383 - 170 15 553 Other Assets 3 039 - 45 1 404 4 488 Total 10 014 15 383 45 1 645 27 087 159 Consolidated Financial Statements Liquidity risk Liquidity risk arises in the general financing of the Group‘ s activities and financial positions. It includes the risk of being unable to finance assets at an agreed maturity and interest rate and inability to realize assets at a reasonable price in a reasonable time frame. Individual companies in the Group use dif ferent methods of managing liquidity risk. Group‘s Management focuses on managing and monitoring the liquidity of each Group controlled by the Group. In order to manage liquidity, the management changed its accounting period to a financial year ending 31 October. In the first half of its accounting period the Group has the winter season representing 60% of the Group‘s income. Based on the development in the first half of the year, the Group is able, in good time, to affect the income and expenditures to maintain sufficient liquidity. In the Group, seasonality is compensated also by a strong summer season, providing for a more stable liquidity through the entire year. For impact analysis and information on events related to the crisis in Ukraine and the energy crisis after the end of the accounting period is described in Note 2 (b) - Basis of preparation. The following table includes an analysis of financial assets and liabilities of the Group classified by the remaining maturity. This analysis represents the most prudent alternative of the remaining maturities including the interest, based on contracted terms. Therefore, the earliest repayment possible is reported for liabilities and the latest repayment possible is reported for assets. Assets and liabilities without a defined maturity are reported together in the "not specified" category. As of 31 October 2022, the Group had financial assets and liabilities with the following remaining maturities: in TEUR Carrying value Future cash flow Up to 3 months 3 months up to 1 year 1 year up to 5 years Above 5 years Without specification Financial assets Loans provided 2 109 3 162 1 095 1 173 - 894 - Other receivables - - - - - - - Trade receivables 4 872 5 291 5 291 - - - - Cash and cash equivalents 15 600 15 602 15 602 - - - - Other Assets 5 128 5 136 5 046 90 - - - Total 27 709 29 191 27 034 1 263 - 894 - Financial liabilities Loans and borrowings -122 830 -153 518 -6 257 -12 241 -98 572 -36 178 - Lease liabilities -67 098 -123 362 -2 213 -11 180 -37 773 -72 196 - Bonds issued -266 186 -298 872 -62 581 -10 644 -225 647 - - Trade payables -14 909 -14 909 -14 883 -26 - - - Other liabilities -15 813 -15 813 -660 -2 592 -10 822 -1 739 - Total -486 836 -606 474 -86 864 -36 683 -372 814 -110 113 - As at 31 October 2022, loans granted for up to 1 year amount to EUR 2,268 thousand (as at 31 October 2021: EUR 2,141 thousand), a majority of which is payable on demand or by the end of October 2023. The Group does not assume that these loans will be paid off within a year, and plans to draw these financial resources according to its needs in order to finance its investment activity and acquisitions. The loan granted is expected to be paid off within 3 years. For securing sufficient liquidity shortly after the end of the accounting period the Group has increased an overdraft from J&T Bank and the bonds from TMR VI issue were traded as described in Note 2 (b) - Basis of preparation. 160 As at 31 October 2021, the Group had financial assets and liabilities with the following remaining maturities: in TEUR Carrying value Future cash flow Up to 3 months 3 months up to 1 year 1 year up to 5 years Above 5 years Without specification Financial assets Loans provided 2 097 3 120 2 064 77 127 852 - Other receivables 45 45 45 - - - - Trade receivables 4 904 4 905 4 905 - - - - Cash and cash equivalents 15 553 15 558 15 558 - - - - Other Assets 4 488 5 907 5 636 56 215 - - Total 27 087 29 535 28 208 133 342 852 - Financial liabilities Loans and borrowings -107 626 -116 133 -5 788 -24 586 -38 893 -14 978 - Lease liabilities -66 154 -96 755 -2 784 -8 351 -21 011 -64 610 - Bonds issued -260 805 -304 565 -1 313 -11 873 -291 379 - - Trade payables -14 489 -14 489 -12 048 -9 -2 277 -155 - Other liabilities -24 209 -25 951 -2 387 -2 500 -12 271 - - Total -473 283 -557 893 -24 320 -47 319 -365 831 -88 536 - The carrying amount of Other receivables includes the advances provided where they are not expected to be settled in cash, but by means of a transfer of shares. Foreign exchange risk Because of the acquisition of subsidiaries in Poland and Czech Republic, the Group is primarily exposed to foreign exchange risk of Polish zloty and Czech crown versus euro. The Management regularly monitors whether the difference between receivables and payables in the foreign currency is not too big. Due to the disposal of a subsidiary in Croatia during the year (see Note 5 – Increase, decrease and sale of shares in companies), the Group is not anymore exposed to the risk of changes in the exchange rate of the Croatian kuna against the euro. In both the reporting and comparative period, the Group's activities carried out in the Croatian kuna were of little importance. Since the Group has issued bonds, denominated in CZK in amount of EUR 58.7 million, the currency gap has widened, and the Group decided to manage the foreign currency risk against the Czech Crown on this particular instrument by hedging against changes in foreign currency exchange rates. For more information, see Note 31 – Hedge Accounting. Consolidated Financial Statements 161 As at 31 October 2022 and 31 October 2021, the Group reported below mentioned items of financial assets and liabilities denominated in foreign currencies: 2022 2021 in TEUR PLN CZK PLN CZK HRK Financial assets Loans provided - - - - - Other receivables - - - -1 - Trade receivables 547 129 131 106 - Cash and cash equivalents 585 256 1 816 796 3 Other assets - - - 1 - Total 1 132 385 1 947 902 3 Financial liabilities Loans and borrowings - - -36 523 - - Lease liabilities -17 890 -7 226 -18 437 -6 726 - Bonds issued - -62 582 - -59 368 - Trade liabilities -469 -2 829 -263 -3 307 - Other liabilities - - - - - Total -18 359 -72 637 -55 223 -69 401 - Other assets and liabilities of the Group are denominated in euros. There is a secondary risk that the weakening of the Czech crown or Polish zloty against the euro would lead to a reduction in the number of visitors to Slovakia from these countries. The Group’s management is not able to quantify value of this risk for sure. Sensitivity analysis Appreciation of euro by 5% versus Polish zloty and Czech crown would have the following impact on financial assets and financial liabilities of the Group: Effect on the portfolio in TEUR 2022 2021 PLN 820 2537 CZK 3 441 3 262 Depreciation of euro by 5% versus Polish zloty and Czech crown would have an identically high but opposite impact on financial assets and financial liabilities in comparison with strengthening of the euro. Consolidated Financial Statements 162 Interest rate risk The Group’s operations are subject to the risk of interest rate fluctuations. The volume of this risk equals the sum of interest-earning assets and interest-bearing liabilities for which the interest rate differs at maturity or re-pricing compared to current interest rates. The period for which the interest rate of a financial instrument is fixed therefore indicates to what extent the Group is exposed to interest rate risk. The overview below provides information about the extent of the Group’s interest rate exposure based on the contractual maturity date of its financial instruments. As at 31 October 2022 and 31 October 2021, the Group has the following interest-earning assets and interest-bearing liabilities: in TEUR 31.10.2022 31.10.2021 Fixed interest rate Assets 27 648 27 087 Payables -364 281 -373 587 Variable interest rate Assets 61 - Payables -122 555 -99 696 Sensitivity analysis for instruments with variable interest rate A change of 100 basis points in interest rates would have the following effect on profit or loss and cash flow sensitivity: in TEUR Profit (Loss) 100 bb growth 100 bb decline 31 October 2022 Instruments with variable interest rate 1 225 -1 225 Effect 1 225 -1 225 in TEUR Profit (Loss) 100 bb growth 100 bb decline 31 October 2021 Instruments with variable interest rate 997 - Effect 997 - Interest-bearing liabilities of the Group bear variable interest rates based on EURIBOR. The Group considers a variable interest rate to be a self-management of the interest rate risk. EURIBOR grows under economic expansion, but also the economic performance of the population grows, and the Group has higher revenues and earnings. It is quite the opposite under economic recession. In the previous period, when EURIBOR had negative value, the variable interest component of the total interest rate did not affect the economic result and cash flow sensitivity, as according to the loan agreements the value of EURIBOR is then taken at the level of 0%. In the current period, EURIBOR has positive values and therefore a decrease of 100 basis points in interest rates would have an impact on the economic result and cash flow sensitivity. Consolidated Financial Statements 163 Operational risk Operational risk is the risk of loss arising from embezzlement, unauthorized activities, error, omission, inefficiency or system failure. This risk arises in the case of all of the Group’s activities and all companies within the Group are exposed to such risk. Operational risk includes also the risk of lawsuit. The Group’s objective is to manage the operational risk so as to prevent financial losses and damage to Group’s reputation within the effectiveness of costs spent to achieve this objective, while avoiding measures hindering initiative and creativity. The primary responsibility for the implementation of controls to address operational risk is assigned to the Group’s management. This responsibility is supported by preparation of standards for management of operational risk applicable for the whole Group. Operational risk is managed by a system of directives, minutes from meetings and control mechanisms. The Group has a controlling department established, which attempts to eliminate all operational risks through regular inspections. The Group is also exposed to risk of adverse weather-related conditions. The resort attendance is dependent on the volume and period of snow. Unfavorable conditions adversely affect the number of skiers and the Group’s revenues and profit or loss. Warm weather may disproportionately increase the cost of snowmaking and reduce the area for skiing. Historically, the region of the Low Tatras had an average of 54 cm of snow during the winter season and the High Tatras region had 59 cm of snow. The start of the winter season and the snow conditions affect the perception of the whole season by skiers. The Group is unable to reliably predict the snow conditions at the beginning of the winter season. Thanks to the system of snowmaking, the snow conditions during the winter are stable each year. 38. Related Parties Identification of related parties As shown in the following overview, the Group has a related-party relationship with its shareholders who have significant influence in the Group and other parties; as at 31 October 2022 and 31 October 2021 or during the period from 1 November 2021 to 31 October 2022 and 1 November 2020 to 31 October 2021: (1) Companies with joint control or significant influence over the entity and its subsidiaries or associates, (2) Joint ventures in which the Group is a partner, (3) Associates, (4) Members of the Group's top management or shareholders of the Group and companies in which top management has control or significant influence (see also Note 10 – Personnel expenses) Information about remuneration of key management is provided in Note 10 – Personnel expenses. All related party transactions, including transactions with Key management, were made on the basis of market conditions that are common in such transactions between unrelated parties or that are expected in such transactions. None of the related parties was privileged in any kind of transactions. As at 31 October 2022, the Group has receivables in the amount of EUR 25 thousand (2021: EUR 31 thousand) and liabilities in the amount of EUR 1 003 thousand (2021: EUR 111 thousand) from Members of the Key Management. In the period from 1 November 2021 to 31 October 2022, the Group reported revenues of EUR 43 thousand (2021: EUR 242 thousand) and expenses of EUR 6,006 thousand (2021: EUR 3,492 thousand) to Members of the Key Management. Consolidated Financial Statements 164 39. Subsequent Events On 1 November 2022, the companies EUROCOM Investment, s.r.o. and WORLD EXCO, s.r.o. were merged, the legal successor of which became EUROCOM Investment s.r.o.. On 1 November 2022, there was a cross-border merger of GOPASS SE and GOPASS, a.s., the legal successor of which was GOPASS SE, based in the Czech Republic. On 3 November 2022, bonds of the TMR VI issue worth EUR 57,448 thousand were traded. On 7 November 2022, bonds issued by TMR IV in the Czech Republic, worth CZK 1,500,000 thousand, were paid to creditors. On November 8, 2022, GOPASS SE, an organizational unit in Slovakia, was founded. It is an enterprise of a foreign entity of the European company GOPASS SE. In December 2022, the management negotiated an increase of the ove rdraft by an additional EUR 4,000 thousand for the purposes of operations management of financial needs. On 2 February 2023, the Company paid out a coupon from the TMR V bond in the amount of EUR 6,600 thousand. Information on events related to the crisis in Ukraine and the energy crisis after the end of the accounting period is described in Note 2 (b) – Basis of Preparation. 40. Capital Commitments and Capital Management In the course of 2014, the Group made two bond issues in the total nominal value of EUR 180,000 thousand, which have been admitted to trading on the Bratislava Stock Exchange since 19 February 2014. On 10 October 2018, the Group issued the third issue of TMR III bonds at a total nominal value of EUR 90,000 thousand; will be due in 2024. On 7 November 2018, the Group issued the fourth bond issue TMR F. CR in the nominal value of CZK 1,500,000 thousand, with maturity in 2022. During February 2021, the Company issued TMR V bonds with a total nominal value of EUR 110,000 thousand. Interest income from this bond will be paid for each annual period in arrears, always on the 2 February, with the first occurrence on 2 February 2022. The maturity of TMR V bond is on 2 February 2026. On 28 October 2022, the Group issued TMR VI bonds with a total value of up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and a maturity in 2027. On 28 October 2022, bonds worth EUR 1,552 thousand were traded. Interest income from this bond will be paid for each income period on a semi- annual basis in arrears, always on 28 April and 28 October of each year, the first time on 28 April 2023. The maturity of TMR VI bond is on 28 October 2027. Further information on issued bonds and related covenants is provided in Note 34 – Bonds Issued. The Group's management deals with capital management in order to secure a sufficient amount of funds for the planned investments in the period for which the investments were planned, if necessary in cooperation with bank loans. No external requirements for capital management are linked either to the Group or to its subsidiaries. Over the course of the period between 1 November 2021 and 31 October 2022, no changes occurred in the Group ’s management approach to capital management. Consolidated Financial Statements 165 41. Contingent Assets and Contingent Liabilities With respect to that many areas of Slovak law on taxation have not been sufficiently ascertained in practice, there is uncertainty in how tax offices will apply them. It is not possible to quantify the level of this uncertainty and it will only cease to exist when legal precedents or official interpretations of the relevant bodies are available. The Group is a party to several legal disputes. The maximum amount of compensation in all legal disputes can amount up to EUR 436 thousand plus related charges and fees. 42. Companies within the Group The list of companies in the Group as at 31 October 2022 and 31 October 2021 is included in the following overview: 31.10.2022 31.10.2021 Country Method Consol. % Control Consol. % Control Parent company Tatry mountain resorts, a.s. Slovakia full 100 100 Subsidiaries Szczyrkowski Ośrodek Narciarski, S.A. Poland full 97 direct 97 direct Ślaskie Wesole Miasteczko Sp. z o. o. Poland full 100 indirect 100 indirect TMR Parks, a.s. Slovakia full 100 direct 100 direct TMR Ještěd a.s. Czech Republic full 100 direct 100 direct Tatry mountain resorts CR, a.s. Czech Republic full 100 direct 100 direct TMR Finance CR, a.s. Czech Republic full 100 direct 100 direct Tatry Mountain Resorts AT GmbH Austria full 100 direct 100 direct Mölltaler Gletscherbahnen GmbH & Co KG Austria full 100 direct 100 direct Mölltaler Gletscherbahnen GmbH Austria full 100 direct 100 direct Grundstücksverwertungs -GmbH Flattach Austria full 100 indirect 100 indirect Korona Ziemi sp.z o.o. Poland full 74 direct 74 direct TIKAR d.o.o. Croatia full - - 51 direct Muttereralm Bergbahnen Errichtungs GmbH Austria full 100 direct 100 direct GOPASS, a.s. Slovakia full 100 direct 100 direct WORLD EXCO s.r.o. Slovakia full 100 indirect - - EUROCOM Investment, s.r.o. Slovakia full 100 indirect - - International TMR services, s.r.o. Czech Republic full 100 direct - - GOPASS SE Czech Republic full 100 direct - - Joint ventures OSTRAVICE HOTEL a.s. Czech Republic equity method 50 indirect 50 indirect Associate MELIDA a.s. (Note 5(b)) Czech Republic equity method 25 direct 25 direct Consolidated Financial Statements 166 In March 2014, the Group acquired a 97% stake in the Polish mountain resort of Szczyrkowski Ośrodek Narciarski S.A. (SON). In April 2015, the Group agreed to acquire a 75% stake in a Polish company that owns and operates the Silesian Amusement Park (Śląskie Wesołe Miasteczko Sp. Z o.o.). In 2017, the subsidiary TMR Parks, a.s. was established, which bought the entire 75% stake in SWM from the Parent Company and subsequently bought the remaining 25% stake from the original owner and thus became the sole owner. In December 2017, the Group, through its subsidiary TMR Ještěd a.s. officially took over the operation of the Ještěd sports complex in the city of Liberec. In November 2018, the Group entered the golf segment and leases and operates Golf & Ski Resort Ostravice in the Czech Republic. The subject of activity of OSTRAVICE HOTEL a.s. is the rental of real estate, apartments and non- residential premises. In January 2019, the Group leased Golf Resort Kaskáda near Brno, Czech Republic, for a period of 20 years, managing the operation of a hotel with a congress center and restaurant. The company Tatry mountain resorts CR, a.s. was founded in 2018 and is used for future acquisitions in the Czech Republic. In 2018, the company TMR Finance CR, a.s. whose main activity is the provision of funds obtained by issuing bonds to related companies in the Group in the form of loans, borrowings or other forms of financing. In 2019, through the subsidiary Tatry Mountain Resorts AT GmbH, the Group acquired shares in the subsidiaries Mölltaler Gletscherbahnen GmbH & Co. KG, Mölltaler Gletscherbahnen GmbH and Grundstücksverwertungs -GmbH Flattach. These subsidiaries operate the Mölltaler Gletscher and Ankogel ski resorts in Austria. In May 2020, the Group acquired a 100% stake in 1. Tatranská, a joint - stock company that operates the Štrbské Pleso ski resort in the High Tatras in Slovakia, operates a hospitality business and operates a ski school. The Group thus acquired a controlling interest in Korona Ziemi sp. z o.o, which operates an amusement park in Poland, and TIKAR d.o.o, which is auctioning a hotel in Croatia. On 1 May 2021, the Parent Company acquired 100% share in the company Muttereralm Bergbahnen Errichtungs GmbH. The company operates a ski resort in Austria. On 4 June 2021, GOPASS, a.s. was founded. The Parent company became its sole shareholder. On 29 October, 2021, the Parent Company sold the assets of Aquapark Tatralandia and Holiday Village Tatralandia to a subsidiary of TMR Parks, a.s. (original name: Tatry mountain resorts PL), but the Parent Company continues to operate them. On 31 March 2022, the Group acquired a 100% stake and control in the company WORLD EXCO, s.r.o. The acquired company operates a congress center in Bešeňová. On 31 March 2022, the Group also acquired a 100% stake and control in EUROCOM Investment, s.r.o. The acquired company operates the Bešeňová water park, Hotel Galeria Thermal and Hotel Bešeňová. On 22 June 2022, the company International TMR services s.r.o. was founded in the Czech Republic for the purpose of providing services within the TMR Group, 100% owned by the Parent Company. On 1 July 2022, the Group acquired a 100% stake in the European company GOPASS SE, based in the Czech Republic, which will serve the purpose of expanding in the European market. ............................................................................................................................................................................................. Igor Rattaj Jozef Hodek Marián Klas Marián Vojtko Chairman Member Finance Person responsible for of the Board of Directors of the Board of Directors Director bookkeeping Consolidated Financial Statements 167 Consolidated Financial Statements 168 Translation of the Independent Auditors' Report originally prepared in Slovak language Independent Auditors' Report To the Shareholders, Supervisory Board and Board of Directors of Tatry mountain resorts, a.s. Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Tatry mountain resorts, a.s. (the “Company”) and its subsidiaries (the “Group”), which comprise: • the consolidated statement of financial position as at 31 October 2022; and, for the period then ended: • the consolidated statement of profit or loss and other comprehensive income; • the consolidated statement of changes in equity; • the consolidated statement of cash flows; and • notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 October 2022, and of its consolidated financial performance and its consolidated cash flows for the period then ended in accordance with International Financial Reporting Standards as adopted by the European Union. KPMG Slovensko spol. s r. o. Dvořákovo nábrežie 10 811 02 Bratislava Slovakia Tel + Web www.kpmg.sk 421 (0)2 59 98 41 11 IČO/Registration number: 31 348 238 Evidenčné číslo licencie audítora: 96 Licence number of statutory auditor: 96 Obchodný register Okresného súdu Bratislava I, oddiel Sro, vložka č. 4864/B Commercial register of district court Bratislava I, section Sro, ﬁle No. 4864/B KPMG Slovensko spol. s r.o., slovenská spoločnosť s ručením obmedzeným a členská spoločnosť globálnej organizácie KPMG nezávislých členských spoločností pridružených ku KPMG International Limited, súkromnej anglickej spoločnosti s obmedzeným ručením. Všetky práva vyhradené. KPMG Slovensko spol. s r.o., a Slovak limited liability company and a member ﬁrm of the KPMG global organization of independent member ﬁrms aﬃliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Independent Auditor‘s Report Consolidated Financial Statements 169 Independent Auditor‘s Report Consolidated Financial Statements 170 The preparation of these forecasts incorporated a number of assumptions and significant judgment under a number of scenarios, including access to additional financing. As part of the assessment, the Group also considered a number of actions aimed at alleviating the potential disruption to its business and liquidity position, such access to additional financing and deferment of unnecessary expenditures. The management concluded that the range of possible outcomes considered at arriving at this judgment does not give rise to material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. Note 2b) further explains how the judgment was formed. The COVID-19 pandemic followed by volatile economic environment, ongoing war in Ukraine and increasing energy prices are an unprecedented challenge for the economy globally, and at the date of the consolidated financial statements their effects are subject to significant levels of uncertainty. The Group’s use of the going concern basis of accounting is a key audit matter due to the associated extent of uncertainty, and consequently, high level of judgment required in evaluating the management’s plans for future actions and their financial impact. - Challenging the key assumptions used in the determination of the forecast financial information under various scenarios. This primarily included challenging the assumed capital expenditure and sales forecast based on our understanding of the Group’s activities and by reference to publicly available industry/market reports; - Performing an analysis of the going concern conclusion’s sensitivity to changes in the aforementioned key assumptions adopted in the going concern assessment, and considering whether there were any indicators of management bias in the assessment; • Assessing the availability of banking and other financing facilities and arrangements, by inspecting underlying documentation, such as draft banking facility agreements and singed contract amendments before and after the reporting period end, and assessing the impact of any covenants and other restrictive terms therein; • Considering whether any additional relevant facts or information have become available since the date on which the Group made its assessment; • Evaluating the appropriateness of Group’s disclosures in respect of the going concern assessment, subsequent events and any related uncertainties in the consolidated financial statements against the requirements of the financial reporting standards. Independent Auditor‘s Report Consolidated Financial Statements 171 Impairment of property, plant and equipment and intangible assets Carrying amount of property, plant and equipment and intangible assets as at 31 October 2022: EUR 440,567 thousand (31 October 2021: EUR 416,259); Impairment allowance of property, plant and equipment and intangible assets as at 31 October 2022: EUR 20,781 thousand (31 October 2021: EUR 15,541 thousand) Refer to Notes 2l), 2m) and 2n) (Summary of significant accounting policies), Note 3c) (Goodwill and impairment testing, Note 3d) (Assets impairment testing), Note 15 (Property, plant and equipment) and Note 17 (Goodwill and intangible assets) of the consolidated financial statements. Key audit matter Our response As described in Note 3d) of the consolidated financial statements, in the current year, the Group identified impairment indicators in respect of its property, plant and equipment and intangible assets, including ones related to business disruption and loss incurred during last two years as a result of the COVID-19 pandemic, ongoing war in Ukraine and increasing energy prices. In the wake of the above factors, as at 31 October 2022, the Group tested property, plant and equipment and intangible assets for impairment, as part of the impairment test performed for the cash generating unit („CGU”) ski resort Vysoke Tatry of parent company Tatry mountain resorts, a.s., CGU ski resort Nizke Tatry of parent company Tatry mountain resorts, a.s., CGU aquapark Tatralandia of Slovak daughter company Tatry mountain resorts PL, a.s., CGU ski resort Szczyrk of Polish daughter company Szczyrkowski Osrodek Narciarski S.A., CGU amusement park Legendia of Polish daughter company Ślaskie Wesole Miasteczko Sp. z o. o., CGU ski resort Mölltaler Gletscher & Ankogel Mallnitz in Austrian daughter companies Mölltaler Gletscherbahnen GmbH and Mölltaler Gletscherbahnen GmbH & Co KG, CGU ski resort Jested in Czech daughter company TMR Ještěd a.s. and CGU ski resort Muttereralm Innsbruck in Austrian daughter company Muttereralm Bergbahnen Errichtungs GmbH. The Group determined recoverable amounts for above mentioned CGU’s based on the higher of their fair value less costs of disposal and their value in use estimated under the discounted cash flow method. Our audit procedures in the area included, among others: • Evaluating against the requirements of the relevant financial reporting standards the Group’s accounting policy for identification of impairment, and measurement and recognition of any impairment losses in respect of property, plant and equipment and intangible assets; • Evaluating design and implementation of internal controls relating to the identification of impairment indicators and to the process of impairment testing; • Evaluating the quality of the Group’s forecasting by comparing historical projections with actual outcomes; • Assessing the appropriateness of asset grouping into CGUs, based on our understanding of the Group’s operations and business units; • Inquiring of the management of the Group regarding the impact of the volatile economic environment, ongoing war in Ukraine and increasing energy prices and its results in the current year and going forward. • Assisted by our own valuation specialists, challenging the reasonableness of the Group’s key assumptions and judgments used in estimating the recoverable amount, including: - Assessing the Group’s discounted cash flow model against the relevant financial reporting standards and market practice, Consolidated Financial Statements Independent Auditor‘s Report 172 Consolidated Financial Statements Determination of the recoverable amount requires making a number of assumptions and judgments, in particular those relating to grouping of assets into CGUs, discount rates used and future cash flows, with key assumptions made about prices for services provided, costs, and expected levels of sales, output and operating costs. Due to the above factors, coupled with the significantly higher estimation uncertainty stemming from the volatile economic environment, ongoing war in Ukraine and increasing energy prices, assessment of property, plant and equipment and intangible assets for impairment required our significant judgment and increased attention in the course of our audit. As a consequence, we consider the area to be our key audit matter. - - Challenging reasonableness of the key macroeconomic assumptions used, such as those in respect of discount rates by reference to publicly available external sources, and - Using our knowledge of the Group, its past performance, business, and our industry experience, and also our understanding of the effects of the ongoing war in Ukraine and increasing energy prices, assessing reasonableness of the assumptions relating to future prices of services provided, as well as those in respect of expected sales, output and operating costs, by reference to publicly available reports, market reports and the Group’s internal documents; - Assessing susceptibility of the impairment model and the resulting impairment conclusion to management bias, by challenging the Group’s analysis of the model’s sensitivity to changes in key underlying assumptions; • Evaluating the appropriateness and completeness of impairment-related disclosures in the consolidated financial statements against the requirements of the financial reporting standards. Independent Auditor‘s Report 173 Consolidated Financial Statements Responsibilities of the Statutory Body and Those Charged with Governance for the Consolidated Financial Statements The statutory body is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the statutory body determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the statutory body is responsible for assessing the Group'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 statutory body either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditors' Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated 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 Group's internal control; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the statutory body; • Conclude on the appropriateness of the statutory body’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 Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern; • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. Independent Auditor‘s Report 174 Consolidated Financial Statements 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 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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. Report on Other Legal and Regulatory Requirements Reporting on other information in the Annual Report The statutory body is responsible for the other information. The other information comprises the information included in the Annual Report prepared in accordance with the Act No. 431/2002 Coll. on Accounting as amended (“the Act on Accounting”) but does not include the consolidated financial statements and our auditors’ report thereon. Our opinion on the consolidated financial statements does not cover the other information in the Annual Report. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the Annual Report that we have obtained prior to the date of the auditors’ report on the audit of the consolidated financial statements, and, in doing so, consider whether the other information is materially inconsistent with the audited consolidated financial statements or our knowledge obtained in the audit of the consolidated financial statements, 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. With respect to the Annual Report, we are required by the Act on Accounting to express an opinion on whether the other information given in the Annual Report is consistent with the consolidated financial statements prepared for the same financial year, and whether it contains information required by the Act on Accounting. Based on the work undertaken in the course of the audit of the consolidated financial statements, in our opinion, in all material respects: • the other information given in the Annual Report for the year ended 31 October 2022 is consistent with the consolidated financial statements prepared for the same financial year; and • the Annual Report contains information required by the Act on Accounting. In addition to this, in light of the knowledge of the Company and its environment obtained in the course of the audit of the consolidated financial statements, we are required by the Act on Accounting to report if we have identified material misstatements in the other information in the Annual Report. We have nothing to report in this respect. Independent Auditor‘s Report 175 Consolidated Financial Statements Reporting on other information related to European Single Electronic Format Independent assurance report on the compliance of the presentation of the consolidated financial statements with the requirements of the European Single Electronic Format (“ESEF”) We have been engaged by the Company to conduct a reasonable assurance engagement to verify the compliance of the presentation of the consolidated financial statements of the Group for the year ended 31 October 2022 included in the Annual Financial Report (the “Presentation of the Consolidated Financial Statements”) with the requirements of the ESEF Regulation. Description of subject matter and applicable criteria The Presentation of the Consolidated Financial Statements has been applied by the management to comply with the requirements of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The applicable requirements regarding the Presentation of the Consolidated Financial Statements are contained in the ESEF Regulation. The requirements described in the preceding paragraph with respect to the Presentation of the Consolidated Financial Statements constitute, in our view, appropriate criteria to form a reasonable assurance conclusion. Responsibility of the management and those charged with governance The management is responsible for the Presentation of the Consolidated Financial Statements that complies with the requirements of the ESEF Regulation. This responsibility includes: • preparation of the consolidated financial statements in XHTML format; • selection and application of appropriate markups in iXBRL using ESEF taxonomy; and • designing, implementing and maintaining internal controls relevant for the preparation of the Presentation of the Consolidated Financial Statements which is free from material non-compliance with the requirements of the ESEF Regulation. Those charged with governance are responsible for overseeing the Group’s financial reporting process, which also includes the preparation of the consolidated financial statements that also comply with the requirements of the ESEF Regulation. Our responsibility Our responsibility is to express a reasonable assurance conclusion whether the Presentation of the Consolidated Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. Independent Auditor‘s Report 176 Consolidated Financial Statements We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits and Reviews of Historical Financial Information, (the “ISAE 3000(R)”), issued by the International Auditing and Assurance Standards Board (the “IAASB”). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Presentation of the Consolidated Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. The nature, timing, and extent of procedures performed depend on the auditor’s judgment. Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance with ISAE 3000(R) always detects material non-compliance. Our quality control and independence requirements We apply the provisions of International Standard on Quality Control 1 (issued by the IAASB) and, accordingly, maintain a comprehensive system of quality control, including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We comply with independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Summary of the work performed Our planned and performed procedures were aimed at obtaining reasonable assurance that the Presentation of the Consolidated Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. Our procedures included in particular: • obtaining an understanding of the internal control system and processes relevant to the application of the electronic reporting format of the consolidated financial statements, including the preparation of the XHTML format and marking up the consolidated financial statements; • verification whether the XHTML format was properly applied; • evaluating the completeness of marking up the consolidated financial statements using the XBRL markup language according to the requirements of the implementation of the electronic format, as described in the ESEF Regulation; • evaluating the appropriateness of the Group’s' use of XBRL markups selected from the ESEF taxonomy and the creation of extension markups where no suitable element in the ESEF core taxonomy has been identified; and • evaluating the appropriateness of the anchoring of the extension elements to the ESEF core taxonomy. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Conclusion In our opinion, based on the procedures performed, the Presentation of the Consolidated Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. Independent Auditor‘s Report 177 Consolidated Financial Statements Additional requirements on the content of the auditors’ report according to Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities Appointment and approval of an auditor We have been appointed as a statutory auditor by the statutory body of Tatry mountain resorts, a.s. on 22 April 2022 on the basis of approval by the General Meeting of Tatry mountain resorts, a.s. held on 25 May 2022. The period of our total uninterrupted engagement, including previous renewals (extensions of the period for which we were originally appointed) and reappointments as statutory auditors, is 14 years. Consistency with the additional report to the audit committee Our audit opinion as expressed in this report is consistent with the additional report to the supervisory board of the Company, which was issued on 28 February 2023. Non-audit services No prohibited non-audit services referred to in Article 5 (1) of Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities were provided and we remained independent of the Group in conducting the audit. In addition to the statutory audit services and services disclosed in the consolidated Annual Report or the consolidated financial statements of the Group, we did not provide any other services to the Group. Audit firm: Responsible auditor: KPMG Slovensko spol. s r.o. Ing. Martin Kršjak License SKAU No. 96 License UDVA No. 990 Bratislava, 6 March 2023 This is a translation of the original Slovak Auditors’ Report into English language. The consolidated financial statements have not been translated. For a full understanding of the information stated in the Auditors’ Report, the Report should be read in conjunction with the full set of the consolidated financial statements prepared in Slovak. Independent Auditor‘s Report SEPARATE FINANCIAL STATEMENTS 180 Separate Financial Statements Tatry mountain resorts, a.s. Separate Financial Statement for the Period from 1 November 2021 to 31 October 2022 prepared in accordance with the International Financial Reporting Standards (“IFRS”) Standards (“IFRS”) as adopted by the EU 181 Separate statement of profit and loss and other comprehensive income in TEUR Note 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Sales 6 90 483 48 191 Other operating revenue 7 1 384 248 Total revenue 91 867 48 439 Material and goods consumption 8 -15 132 -16 056 Purchased services 9 -25 439 -13 393 Personnel expenses 10 -29 816 -15 920 Other operating expenses 11 -879 -539 Gain / (loss) on sale of assets 5 319 11 712 Gain / (loss) on revaluation of investment property 18 -906 - Release/(Creation) of value adjustments 23,24,27,29 10 470 -6 960 Profit before interest, taxes, depreciation and amortization (EBITDA) 35 484 7 283 Depreciation and amortization 15,17 -12 971 -14 910 Depreciation of right-of-use of leased assets 16 -4 344 -3 496 Profit / (loss) before interest, taxes (EBIT) 18 169 -11 123 Interest income calculated using effective interest rate 12 7 965 6 746 Financing cost 12 -20 051 -17 741 Net profit / (loss) on financial operations 13 -715 -5 Net profit / (loss) on disposal of subsidiaries 5 -721 - Profit / (loss) before tax 4 647 -22 123 Current income tax 14 -1 -3 Deferred income tax 14 -1 359 5 221 Profit / (loss) 3 287 -16 905 Other comprehensive income Other comprehensive income that may be reclassified to profit or (loss) in subsequent periods (net of tax): Net gain/(loss) on cash flow hedges 34 -1 103 -1 949 Total comprehensive income 2 184 -18 854 Profit / (loss) per share (in EUR) 30 0,490 -2,520 Number of shares 6 707 198 6 707 198 EBITDA represents a profit from recurring Company activities before taxes, interest, amortization and depreciation, adjusted to otfher income and expenses, which are listed under EBITDA, in particular profit / (loss ) from financial operations representing foreign exchange gains / (losses). The EBITDA indicator adjusted in this way is used by the Company's management to manage the Company's performance as well as individual CGUs (cash-generating units). Separate Financial Statements 182 Separate Financial Statements Separate Statement of Financial Position in TEUR Note 31.10.2022 31.10.2021 Assets Goodwill and intangible assets 17 32 328 33 933 Property, plant and equipment 15 242 311 237 766 Right-of-use of leased assets 16 59 256 36 928 Investment property 18 7 411 8 317 Investments in an associate and a joint venture 19 7 118 7 118 Loans provided 23 23 351 11 137 Other receivables 25 128 308 Investments in subsidiaries 20 15 074 11 574 Total non-current assets 386 977 347 081 Inventory 22 2 629 2 662 Trade receivables 24 2 424 3 198 Assets held for sale 26 - 948 Loans provided 23 159 877 81 539 Other receivables 25 3 923 6 819 Financial investments 28 36 36 Cash and cash equivalents 29 5 332 10 194 Other assets 27 4 317 46 139 Total current assets 178 538 151 535 Assets total 565 515 498 616 Equity 30 Share capital 46 950 46 950 Share premium 30 430 30 430 Profit / (loss) for the period 3 287 -16 905 Retained earnings and other funds 10 252 28 260 Total equity 90 919 88 735 Liabilities Loans and borrowings 31 87 272 106 561 Lease liabilities 32 51 901 29 551 Trade payables 33 1 169 181 Provisions 36 133 20 Other non-current liabilities 35 884 819 Bonds issued 37 198 496 196 330 Deferred tax liability 21 16 203 15 137 Total non-current liabilities 356 058 348 599 Loans and borrowings 31 78 317 25 847 Lease liabilities 32 7 760 7 669 Trade payables 33 9 049 8 847 Provisions 36 754 540 Bonds issued 37 5 108 5 108 Other current liabilities 35 17 550 12 411 Liabilities directly associated with the Assets held for sale 26 - 860 Total current liabilities 118 538 61 282 Total liabilities 474 596 409 881 Total equity and liabilities 565 515 498 616 183 Separate Financial Statements Separate Statement of Changes in Equity in TEUR Share capital Share premium Legal reserve fund Fair value revaluation reserve Hedging revaluation reserve Retained earnings Total Balance as at 1 November 2021 46 950 30 430 7 018 180 -1 499 5 656 88 735 Profit / (loss) for the period - - - - - 3 287 3 287 Other components of comprehensive income, after tax - items with possible subsequent reclassification to profit/(loss): Cash Flow hedge - - - - -1 103 - -1 103 Total comprehensive income for the period - - - - -1 103 3 287 2 184 Transactions with owners posted directly into equity Increases from company merger - - - - - - - Total transactions during the year - - - - - - - Balance as at 31 October 2022 46 950 30 430 7 018 180 -2 602 8 943 90 919 184 Separate Financial Statements Separate Statement of Changes in Equity (continued ) in TEUR Share capital Share premium Legal reserve fund Fair value revaluation reserve Hedging revaluation reserve Retained earnings Total Balance as at 1 November 2020 46 950 30 430 7 018 180 450 23 057 108 085 Profit / (loss) for the period - - - - - -16 905 -16 905 Other components of comprehensive income, after tax - items with possible subsequent reclassification to profit/(loss): Cash Flow hedge - - - - -1 949 - -1 949 Total comprehensive income for the period - - - - -1 949 -16 905 -18 854 Transactions with owners posted directly into equity Increases from company merger - - - - - -496 -496 Total transactions during the year - - - - - -496 -496 Balance as at 31 October 2021 46 950 30 430 7 018 180 -1 499 5 656 88 735 185 Separate Financial Statements Separate Cash Flow Statement in TEUR Note 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 OPERATING ACTIVITIES Profit / (loss) 3 287 -16 905 Adjustments related to: Profit from the sale of land, buildings and equipment and intangible assets -5 319 -11 712 Depreciation and amortization 15,17 12 971 14 910 Depreciation of right-of-use of leased assets 16 4 344 3 496 (Reversal) / creation of value adjustments to receivables 23,24,27 -10 467 6 958 (Profit)/ loss from financial operations 13 715 5 Loss from disposal of subsidiaries 5 721 - Loss on revaluation of investment property 6 906 - Net interest expense / (income) 12 12 086 10 995 Change in provisions 327 157 Income tax 14 1 360 -5 218 Change in trade receivables, other receivables and other assets -2 023 -687 Change in inventories 33 4 809 Change in trade liabilities and other liabilities 6 115 1 245 Cash flow from operating activity before income tax 25 056 8 053 Income tax paid 167 469 Cash flow from operating activity 25 223 8 522 INVESTING ACTIVITIES Acquisition of land, buildings and equipment and intangible assets 15,17 -19 800 -4 966 Proceeds from sale of property, plant and equipment and intangible assets 7 850 4 704 Cost of acquisition of subsidiaries 5 -17 -2 953 Company merger - 105 Income from the sale of shares in subsidiaries 5 2 350 - Loans provided -33 070 -10 695 Repayment of loans provided 5 166 1 911 Interest received 22 693 Cash flow from investing activity -37 499 -11 201 FINANCING ACTIVITIES Repayment of lease liabilities -7 012 -4 671 Repayment of received loans and borrowings -7 352 -1 830 Loans and borrowings received 37 023 28 977 Bonds issued 37 1 518 109 635 Repayment of bonds - -110 000 Interest paid -16 766 -13 606 Cash flow from financing activity 7 411 8 505 Net increase/ (decrease) of cash and cash equivalents -4 865 5 826 Influence of impairment allowance to cash and cash equivalents 29 3 -2 Cash and cash equivalents at the beginning of the year 29 10 194 4 370 Cash and cash equivalents at the end of the year 29 5 332 10 194 186 Separate Financial Statements Content Information about the Company ............................................................................................................................... 187 Significant Accounting Policies ............................................................................................................................... 189 Significant Accounting Estimates and Assumptions ................................................................................................ 203 Information about Operating Segments .................................................................................................................... 207 Increase and Decrease of Shares in Companies ....................................................................................................... 209 Sales ......................................................................................................................................................................... 210 Other Operating Revenue ......................................................................................................................................... 210 Consumption of Material and Goods ....................................................................................................................... 210 Purchased Services ................................................................................................................................................... 211 Personnel Expenses .................................................................................................................................................. 211 Other Operating Expense ......................................................................................................................................... 213 Finance Income and Expense ................................................................................................................................... 213 Net Profit / (Loss) from Financial Operations .......................................................................................................... 214 Current and Deferred Income Tax ............................................................................................................................ 214 Property, Plant and Equipment ................................................................................................................................. 217 Right-of-use of Leased Assets .................................................................................................................................. 219 Goodwill and Intangible Assets ................................................................................................................................ 220 Investment Property ................................................................................................................................................. 221 Investment in an Associate and a Joint Venture ....................................................................................................... 222 Investments in Subsidiaries ...................................................................................................................................... 222 Deferred Tax Asset, Deferred Tax Liability ............................................................................................................. 224 Inventory .................................................................................................................................................................. 225 Loans Provided ......................................................................................................................................................... 226 Trade Receivables .................................................................................................................................................... 227 Other Receivables .................................................................................................................................................... 228 Assets held for sale and liabilities directly associated .............................................................................................. 228 Other Assets ............................................................................................................................................................. 229 Financial Investments ............................................................................................................................................... 230 Cash and Cash Equivalents ...................................................................................................................................... 230 Equity ....................................................................................................................................................................... 230 Loans and Borrowings .............................................................................................................................................. 232 Lease Liabilities ....................................................................................................................................................... 234 Trade Liabilities ....................................................................................................................................................... 235 Hedge Accounting .................................................................................................................................................... 235 Other Liabilities ........................................................................................................................................................ 238 Provisions ................................................................................................................................................................. 240 Bonds Issued ............................................................................................................................................................ 240 Information about the Fair Value ............................................................................................................................. 242 Changes in Liabilities Arising from Financial Activities ......................................................................................... 242 Information on Risk Management ............................................................................................................................ 243 Related Parties .......................................................................................................................................................... 249 Subsequent Events .................................................................................................................................................... 251 Capital Commitments and Capital Management ...................................................................................................... 251 Contingent Assets and Contingent Liabilities .......................................................................................................... 252 187 Separate Financial Statements Information about the Company Tatry mountain resorts a.s. (hereinafter referred to as the “Company”) is a joint stock company with the registered office an d place of business in Demänovská Dolina 72, Liptovský Mikuláš 031 01. The company was established on 20 March 1992 and was registered in the Commercial Register on 1 April 1992. The Company identification number is 31 560 636 and the Company tax identification number is 2020428036. The Company is not a member having unlimited liability in other accounting entities. Starting from 19 November 1993, the Company shares are registered on the Bratislava Stock Exchange; starting from 15 October 2012, on the Warsaw Stock Exchange (WSE), and starting from 22 October 2012, on the Prague Stock Exchange (BCCP). On 22 August 2013, an extraordinary general meeting was held, which decided on a reduction in the share capital of the Company Tatry mountain resorts, a.s. from EUR 221,338 thousand to EUR 46,950 thousand, i.e. by EUR 174,388 thousand. Then during 2014, the Company issued two bond issues in the total nominal value of EUR 180,000 thousand, which, starting from 19 February 2014, are admitted to trading on the Bratislava Stock Exchange. On 17 December 2013, the Company issued the first issue of TMR I bonds with a total nominal value of EUR 70,000 thousand, due in 2018. On 5 February 2014, the Company issued the second issue of TMR II bonds with a total nominal value of EUR 110,000 thousand, due in 2021. On 10 October 2018, the Company issued the third bond issue TMR III in the nominal value of EUR 90,000 thousand, with maturity in 2024. On 2 February 2021, the Company issued the fourth bond issue TMR V bonds in the total nominal value of EUR 110,000 thousand, with a maturity date in 2026. On 28 October 2022, the Company issued the fifth bond issue TMR VI bonds in the total nominal value of EUR 59,000 thousand, with a maturity date in 2027. See Note 37 – Bonds Issued. The Company has the accounting period and fiscal year from 1 November to 31 October, as the Company activity is influenced by seasonal fluctuations. The Shareholders’ structure of the Company is described in Note 30 - Equity The principal activities of the Company comprise the operation of cable ways and ski lifts, restaurant and catering services, the operation of a ski and snowboard school, the purchase and sale of goods, hotel business. Since 29 March 2011 the Company has been operating the Tatralandia Aquapark and thus expanded its portfolio of services. During 2014 and 2015 the Company acquired interests in subsidiaries in Poland that operate the Szczyrk ski resort and an amusement park in Chorzow. During the years 2017 and 2018 the Company expanded its portfolio by subsidiary companies in the Czech Republic and Austria. The company in the Czech Republic operates ski center Ještěd near Liberec since December 2017. In 2019 the Company acquired interests in Austrian companies operating the ski resorts Mölltaler Gletscher and Ankogel in Austria. In October 2019 the Company became a direct shareholder (9.5% share) in MELIDA a.s., then in December 2019 acquired additional 15.5 % share (in total the Company has 25% share). MELIDA a.s. operates the ski resort Špindlerův Mlýn in the Czech Republic. During the accounting period ended 31 October 2020, the Company acquired shares in the Slovak company 1. Tatranská, akciová spoločnosť, which operates the ski resort Štrbské pleso in High Tatras, provides hospitality services and operates a ski school. On 1 November 2020, the Company merged with 1. Tatranská, akciová spoločnosť (“1. Tatranská”). As at 1 May 2021, the Company expanded its portfolio by adding the subsidiary Muttereralm Bergbahnen Errichtungs GmbH (90% share). On 4 June 2021, GOPASS, a.s. was established, in which the Company became the sole shareholder. GOPASS, a.s. will be used for expansion into Alpine ski resorts which are planned to be incorporated into its platform. On 29 October 2021, the Company sold Aquapark Tatralandia and Holiday Village Tatralandia assets to its subsidiary TMR Parks, a.s. (former name: Tatry mountain resorts PL), but the Company continues to operate them. On 22 June 2022, International TMR services s.r.o. was established for the purpose of providing services within the TMR Group, of which the Company became 100% owner. On 1 July 2022, the Company acquired 100% of the shares in the European company GOPASS SE, which will be used for the purpose of expansion in the European market. 188 Separate Financial Statements Company bodies are: The Board of Directors Ing. Igor Rattaj, the Chairman (since 30.4.2020) Ing. Jozef Hodek, the Member (since 30.6.2009) Čeněk Jílek, the Member (since 29.4.2020) The Supervisory Board: Ing. Bohuš Hlavatý (since 30.4.2020) Ing. František Hodorovský (since 18.1.2011) Roman Kudláček (since 21.4.2012) Ing. Andrej Devečka (since 2 9.4.2020) Ing. Pavol Mikušiak (since 27.4.2013) Adam Tomis (since 12.4.2014) Mgr. Marek Schwarz (since 30.6.2021) Ivan Oško (since 30.6.2021) Miroslav Roth (since 30.6.2012 until 3.6.2021 and since 30.6.2021) 189 Separate Financial Statements Significant Accounting Policies (a) Statement of compliance The separate financial statements for the period from 1 November 2021 to 31 October 2022 have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the EU and in accordance with Art 17a), par. 3 of Act No. 431/2002 Coll. of the National Council of the Slovak Republic on Acco unting (“Act on Accounting”). Since the Company has share in subsidiaries, IFRS and the Act on Accounting require the preparation of consolidated financial statement. The Company has not consolidated its subsidiaries in this separate financial statement. The investments in subsidiaries are recognized at cost (net of impairment losses, if any) and dividend returns are recognized at the moment when the Company became entitled to receiving dividends from those companies. The Company applies similar treatment to associates. The Company prepares consolidated financial statements that shall be published by the end of February 2023 and that shall be available at the Company headquarters. The financial statements were approved by the Board of Directors on 28 February 2023. (b) Basis of preparation The separate financial statements have been prepared based on the historical cost principle, while the investment property and financial instruments measured at fair value were revalued to their fair value through profit or loss. The Company's separate financial statements have been prepared on a going-concern basis. The Company's management expects that the Company has sufficient resources to continue as a going concern for at least another 12 months and that the preparation of the financial statements, assuming the continuity of its operations, is appropriate. Between 1 November 2021 and mid-January 2022, the Company was exposed to the impacts of measures aimed at mitigating the consequences and the course of the COVID-19 pandemic. In Slovakia, measures were introduced at the end of November 2021 that restricted the operation of water parks, hotels and restaurants. On 17 December 2021, the Company started the ski season, which lasted until May 8, 2022, under tightened anti-epidemiological measures. A further easing of measures came from 25 December 2021, when the services of hotels, restaurants and water parks became available to accommodated guests. Since 19 January 2022, water parks have also been opened to the public. During the remaining period of the winter season, introduced measures were not limiting the operation of the Company. The measures were gradually relaxed, which had a positive impact on the Company's results and the attendance of its resorts, and during the summer season the establishments could operate without restrictions. A significant risk within the Central and Eastern European region is the military conflict in Ukraine, which may have an impact on visits to the Company's resorts and hotels, as the resorts and hotels are close to the borders of the military conflict, i.e. Ukraine. The Company is affected by the conflict directly due to the loss of visitors from Russia and partially from Ukraine as well. However, even before the war events and the imposition of sanctions, the Company did not consider the Russian or Ukrainian market to be essential. While the loss of visitors from these regions has a negative impact, it is a minor group of visitors in Slovakia and at the same time foreign clients are complemented by new markets such as the countries of the Baltic region, Romania and Hungary. The costs of the Company are influenced, among other things, by the consumption of energy, natural gas, fuel, and water. These are directly reflected in the operating costs of resorts and hotels, for example in terms of electricity consumption in the operation of cableways and snowmaking facilities. Electricity and natural gas prices in 2022 within the European Union were well above the average of the previous years. The Company had a pre-contracted supply of electricity for 2022 in Slovakia and has contracted electricity for 2023 as well. Thus, price increases do not currently significantly limit the Company's ability to operate its facilities. Due to the active management of commodity prices and systematic investments in snowmaking, the Company was able to open the season on the scheduled date of 3 December 2022 in Jasná and 17 December 2022 in the High Tatras. 190 Separate Financial Statements In relation to the Company’s financing, there were the following changes made during the year: On 28 October 2022, the Company issued TMR VI bonds in a total value of up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and maturity in 2027. On 28 October 2022, bonds worth EUR 1,552 thousand were traded. On 3 November 2022, bonds of the TMR VI issue worth EUR 57,448 thousand were traded. Subsequently, on 4 November 2022, a loan granted by a subsidiary of TMR Finance CR in the amount of CZK 1 533 750 thousand was repaid. On 7 November 2022, TMR Finance CR paid out TMR IV bonds in the Czech Republic to creditors. The management of the Company modeled a scenario of liquidity development for a period of 12 months from the date of the financial statements. The assumptions used in the model take into account the prices of electricity contracted by the Company, and management assumes gas prices to be higher than the current spot prices on the exchange. The Company also proceeded to optimize the operations and at the same time received an increase in the overdraft from J&T Banka by EUR 4,000 thousand. The baseline scenario, as well as more pessimistic scenario which calculates with overall decrease in revenues of the Company by 5% for whole projected period since February 2023 until the fiscal year end, includes the impact of the reduction of capital expenditures or its financing by bank loans as well as availability of the overdraft is in the total amount of EUR 6,000 thousand which can be drawn by the Company for the purpose of operational cash flow management. The Company's management assessed the impacts of the war in Ukraine and the energy crisis on the Company's operations and concluded that there was no material uncertainty about the Company's continuing operations (going concern). The separate financial statements have been prepared in EUR thousands. The preparation of financial statements in compliance with the International Financial Reporting Standards as adopted by the EU requires the application of various judgements, assumptions and estimates which affect the reported amounts of assets, liabilities, income and expenses. However, actual results will likely differ from these estimates. Significant accounting estimates and judgements which were made by management, and which bear a significant risk of material adjustment in the next accounting period are discussed in Note 3 – Significant Accounting Estimates and Assumptions. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and also in future periods if the revision affects both current and future periods. (c) Adoption of new standards and interpretations In the course of the accounting period starting on 1 November 2021, the Company implemented following new IFRS standards, amendments to standards and IFRIC interpretations. The application of these standards had no impact on the financial statements of the Company. • Amendments to IFRS 3 Business Combinations - modification of references to the conceptual framework • Amendments to IAS 16 Property, Plant and Equipment - management of the by-product produced during commissioning • IAS 37 Provisions, Contingent Liabilities and Contingent Assets - detailed costs included in the calculation of onerous contracts • Annual Improvements 2018-2020 bring minor changes to IFRS 1 First Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and illustrative examples accompanying IFRS 16 Leases. (d) International financial reporting standards that were issued but not yet effective The Company did not apply any International Financial Reporting Standards as adopted by the European Union before the date they become effective. In case that the transition arrangements allow entities to choose between prospective or retrospective approach, the Company decided to apply these standards prospectively. 191 Separate Financial Statements As at 31 October 2022, the following International Financial Reporting Standards, amendments to standards and interpretations were issued but not yet effective, and have not been applied by the Company in preparing these financial statements: • Amendments to IFRS 17 Insurance contracts - Initial application of IFRS 17 and IFRS 9 - Comparative information • Amendments to IAS 12 Income taxes – Deferred tax relating to assets and liabilities arising from a single transaction • Amendments to IAS 1 Presentation of financial statements and report on the practice of IFRS 2 - Disclosure of accounting principles • Amendments to IAS 8 Accounting principles, Changes in accounting estimates and errors - Definition of accounting estimates • IFRS 17 Insurance contracts The Company anticipates that the issuance of new but not yet effective International Standards will not affect the financial statements. (e) Leases The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Company as a lessee The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i. Right-of-use assets The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows: • Buildings and land 30 years • Individual movables and sets of movables ▪ Works of art 20 years ▪ Billboards and advertising space 10 years ▪ Snow groomers 8 years ▪ Others 5 years If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies for impairment of non-financial assets in Note 2(l) Impairment of non-financial assets. ii. Lease liabilities At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts 192 Separate Financial Statements expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. The Company does not apply the practical expedient in IFRS 16.15. Every contract is examined to determine whether it contains a non-lease components in addition to lease components. Non-lease components are separated from the lease components, and only the lease components are accounted for in accordance with the provisions of IFRS 16. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. When revaluing lease liability due to a lease modification, residual value of the right-of-use asset is adjusted for the revaluation difference. Right- of-use asset is further depreciated from this adjusted value. The Company’s lease liabilities are included in Lease liabilities (see Note 32) . iii. Short-term leases and leases of low-value assets The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). The Company also applies the lease of low-value assets recognition exemption to leases of items of low value - below EUR 1,000. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight- line basis over the lease term. Company as a lessor Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Arising rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned. In the case of leases, in which the Company transfers substantially all the risks and rewards of ownership of the asset, are classified as finance leases. The leased asset is derecognized and the Company recognizes a financial asset measured at amortized cost, representing the present value of the lease payments, adjusted as in lease liabilities. In case that the Company leases right-of-use assets, which it further sublets as a lessor to other lessees, the Company evaluates the lease provided to the lessee on whether it is an operating or financial sublease. The only different criterion compared to leasing own assets is the assessment of the sublease against the right-of-use and not the original underlying asset. After assessing whether it is a financial or operating lease, it is subsequently reported in terms of accounting policies for the Company as a lessor. (f) Financial instruments i. Initial recognition and measurement of financial asset Financial assets upon initial recognition are classified in one of three categories as financial assets subsequently measured at amortized cost, fair value through other comprehensive income (OCI) and fair value through profit or loss. 193 Separate Financial Statements The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient (ie. the Company measures life-time credit losses). The Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that a re ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. ii. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: Financial assets at amortised cost (debt instruments) Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) Financial assets at fair value through profit or loss iii. Financial assets at amortised cost (debt instruments) The Company measures financial assets at amortised cost if both of the following conditions are met: The financial asset is held within a business model with the objective to hold financial 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 Financial assets at amortised cost are subsequently measured using the effective interest rate method (EIR) and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognized, modified or impaired. The Company’s financial assets at amortised cost includes Trade receivables, Other receivables and Loans provided. iv. Financial assets at fair value through OCI without recycling of cumulative gains and losses upon derecognition (equity instruments) The Company elected to measure equity instruments at fair value through OCI if both of the following conditions are met: The equity instrument is an instrument in neither an instrument in Associate, nor Subsidiary The equity instrument is not held for trading 194 Separate Financial Statements v. Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when: The rights to receive cash flows from the asset have expired, or The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass - through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset vi. Impairment of financial assets The Company recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a method, that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. For financial assets, where simplified approach is not used – Loans provided, significant increase in credit risk since initial recognition is assessed on an individual basis. The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Company uses derivative financial instruments, such as foreign currency swaps to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. For the purpose of hedge accounting, hedges are classified as: Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability The Company does not use any other form of hedges. 195 Separate Financial Statements At the beginning of the hedging relationship will be formally defined and documented hedging relationship and objective and strategy of an entity's risk management to ensure implementation. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Company will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: • There is ‘an economic relationship’ between the hedged item and the hedging instrument. • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship. • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company actually hedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item. Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below: Cash flow hedges That part of the gain or loss on the hedging instrument that is determined as effective hedging (i.e. that part that is offset by a change in the cash flow hedge provision) is recognized in other comprehensive income (OCI) until any remaining gain or loss on the hedging instrument (or any gain or loss required to offset a change in a cash flow hedge provision) represents a hedge ineffectiveness recognized in profit or loss. The separate component of equity related to the hedged item (cash flow hedge reserve) is adjusted to the lower of the following values (in absolute terms): (i) the cumulative gain or loss on the hedging instrument since the inception of the hedge and (ii) the cumulative change in the fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged expected future cash flows) since the inception of the hedge. The Company uses swap currency contracts as hedges of its exposure to foreign currency risk in loans taken out in foreign currencies. If the hedged expected transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or if the hedged expected transaction with a non-financial asset or non-financial liability becomes a liability to which fair value hedge accounting applies, the entity removes that amount from the cash flow hedge provision, and include it directly in the initial cost or other carrying amount of the asset or liability. It does not constitute a reclassification adjustment (see IAS 1) and therefore does not affect the other components of the comprehensive income. For other cash flow hedges, the amount is reclassified from the cash flow hedge reserve to profit or loss as a reclassification adjustment in the same period or periods during which the hedged expected future cash flows have an impact on profit or loss. When an entity ceases to account for a cash flow hedge, the amount that has accumulated in the cash flow hedge reserve remains in the cash flow hedge reserve until future cash flows are expected, otherwise the amount is immediately reclassified from the cash flow hedge reserve to profit or loss management as a reclassification adjustment. 196 Separate Financial Statements (g) Financial investments i. Subsidiaries Subsidiaries are all enterprises that are controlled by the Company. The control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise, so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Investments in subsidiaries are measured at cost. ii. Associates Associates are those enterprises in which the Company has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when a company holds between 20 and 50 percent of the voting rights of another entity. Investments in associates are recognized at cost. The cost of financial investments is derived from the amount of spent cash or cash equivalents or is recognized at fair value of contributed assets and liabilities to acquire the enterprise at the moment of acquisition. Costs related to acquisition (transaction costs) are included in the cost of the investment. As at the reporting date, the management reconsiders whether any events occurred which could cause impairment of financial investments. Potential impairment of financial investments below their cost is recognized through a value adjustment. Value adjustments are derived from the value of future cash flows discounted to present value. (h) Foreign currency Foreign currency transactions Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the Company operates (the functional currency). The separate financial statements are presented in thousands of euros, which is the Company's functional and presentation currency. Transactions in foreign currencies are translated into euros at the foreign exchange rate valid at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into euros at the financial statements date at the exchange rate of the European Central Bank valid at that day. Foreign exchange differences arising from such translations are recognized through profit or loss. Non-monetary assets and liabilities denominated in foreign currencies, which are measured at cost, are translated into euros using the exchange rate valid at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into euros at the foreign exchange rates valid at the dates the fair values are determined. (i) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and in banks, short-term highly liquid investments with original maturities of three months or less and short-term highly liquid investments readily convertible for known amounts of cash. (j) Inventories Inventories are measured at the lower of acquisition cost (purchased inventory), respectively in own costs (incurred by own activity), and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. Purchased inventories are measured at cost, which includes the purchase price and other directly attributable expenses incurred in acquiring the inventories and bringing them to their existing location and condition. Own costs include direct costs and indirect costs associated with acquiring inventories by own activity. The Company uses a weighted average cost method for valuation of its inventories. 197 Separate Financial Statements (k) Offsetting Financial assets and liabilities are offset and their net amount is reported in the balance sheet when the Company has a legally enforceable right to set off the recognized amounts and the transactions are intended to be settled on a net basis. (l) Impairment of non-financial assets The carrying amounts of the Company's assets, other than inventories (refer to the accounting policy under letter j), investment property (refer to the accounting policy under letter o), financial assets (refer to the accounting policy under letter f), and deferred tax assets (refer to the accounting policy under letter s) are reviewed at each financial statements date to determine whether there is objective indication of impairment of the asset. If any such indication exists, the asset's recoverable amount is estimated. Intangible assets that have an indefinite useful life are not subject to amortisation, but are tested annually for impairment as part of the cash-generating unit to which they belong. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in profit or loss. If assets available for sale caused a decrease in fair value recognized directly in equity and if objective reasons exist that prove that there was a decrease in the fair value of the assets, the cumulated loss recognized in equity shall be reported in the profit and loss statement even if the relevant asset had not been derecognized from the statement of financial position. The recoverable amount of other assets is the greater of their value in use less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In the case of goodwill, an impairment loss cannot be decreased subsequently. In respect of other assets, an impairment loss is reversed or decreased when there is an indication that the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount. An impairment loss can only be reversed or decreased to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized. (m) Property, plant and equipment i. Owned assets Single items of property, plant and equipment are measured at cost less accumulated depreciation (see below) and impairment losses (refer to the accounting policy under letter l). Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and costs of dismantling and removing the items and restoring the site where it was located. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items (major components) of property, plant and equipment. ii. Subsequent expenditures Subsequent expenditure is capitalised if it is probable that the future economic benefits embodied in the part of property, plant and equipment will flow to the Company and the relevant cost can be measured reliably. All other expenditures including the costs of day-to-day servicing of property, plant and equipment are recognized in profit or loss in the period to which they relate. 198 Separate Financial Statements iii. Depreciation Except as specified below, depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of individual items of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows: • Buildings 30 - 45 years • Cableways and ski lifts ▪ Fixed structures and other objects 20 – 40 years ▪ Technology and accessories 4 - 12 years • Individual movables and sets of movables ▪ Geothermal borehole 40 years ▪ Slides 25 years ▪ Equipment 5 - 12 years ▪ Fixtures and fittings and others 5 - 10 years Depreciation methods, useful lives, as well as residual values, are reassessed annually as at the financial statement’s date. Each significant part of property, plant and equipment (component) with cost significant in relation to the total cost of the relevant item is depreciated separately. iv. Capitalized borrowing costs Borrowing costs attributable to the asset that necessarily takes a substantial period of time to get ready for its use or sale are capitalised by the Company as part of the cost of the asset. (n) Intangible assets i. Goodwill and intangible assets acquired in a business combination Goodwill recognized as a result of the Company merging with its subsidiaries is measured as the excess of the sum of the consideration transferred, or the amount of the investments, over the net of the actual amounts of the identifiable assets acquired and the liabilities assumed. Goodwill on acquisition of subsidiaries and associates is included in the investments in subsidiaries and associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. ii. Software and other intangible assets Software and other intangible assets acquired by the Company are stated at cost less accumulated amortisation (see below) and impairment losses (refer to the accounting policy under letter l). Useful life of these assets is reassessed regularly. iii. Amortisation Amortisation is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date the asset is available for use. The estimated useful lives are as follows: • Software 4 – 5 years • Valuable rights each item uses an individual depreciation plan, based on the estimate useful lives if these assets, valuable rights also include trademarks which represent non-depreciated assets. The Company uses 6, 7, 8, 12 and 50-year useful lives for its valuable rights. (o) Investment property Investment property represents assets that are held by the Company to generate rental income or to realise a long-term increase in value, or for both of these purposes. 199 Separate Financial Statements Investment property is stated at fair value, which is determined by an independent registered expert or by the management. Fair value is based on current prices of similar assets on an active market under the same location and the same conditions, or where such conditions are not available, by applying the generally applicable valuation models such as the yield method. Any gain or loss arising from a change in fair value is recognized in profit or loss. Assets that are constructed or developed for their future use as investment property are measured at fair value if the fair value can be determined reliably. Details on the valuation of investment property are specified in Note 3(a) – Significant Accounting Estimates and Assumptions, Valuation of investment property. Rental income from investment property is accounted for as described in the accounting policy under letter (u). (p) Government grants Government grants are recognized where there is a reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset. When the Company receives grants of non-monetary assets, the asset and the grant are recorded at nominal amounts and released to profit or loss over the expected useful life of the asset, based on the pattern of consumption of the benefits of the underlying asset by equal annual instalments. (q) Provisions A provision is recognized in the balance sheet when the Company has a present legal, contractual, or non-contractual obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Long-term provisions the reduction of which to their present value would have a material impact on the financial statements are discounted to their present value. i. Long-term employee benefits Liability of the Company resulting from long-term employee benefits other than pension plans represents the estimated amount of future benefits that employees have earned in return for their service in the current and prior periods. The liability is calculated using the projected unit credit method, discounted to its present value. A discount rate used to calculate the present value of liability is derived from the yield curve of high-quality bonds with maturities close to the conditions of the Company’s liabilities as at the date of the financial statements p reparation. ii. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are recognized as expenses at the time of provision of the service by the employees. A payable is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or contractual obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (r) Interest income and expense Interest income and expense is recognized in profit or loss in the period to which it relates using the effective interest rate basis. All expenses on loans and borrowings are recognized in profit or loss, with the exception of capitalised borrowing costs; refer to the accounting policy under Note 2 (m), part (iv) . 200 (s) Income tax Income tax on the profit for the current accounting period comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the current accounting period, using tax rates valid as at the date of the financial statement’s preparation, and any adjustments to tax payable in respect of previous accounting periods. The amount of deferred tax is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax is accounted for using the balance sheet method and calculated from all temporary differences between the carrying amounts of assets and liabilities determined for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences weren’t taken into account: the initial recognition of assets or liabilities which affect neither accounting nor taxable profit, and the differences relating to investments in subsidiaries to the extent that it is probable that they will not be reversed in the foreseeable future. No deferred taxes are recognised on the initial recognition of goodwill. The amount of deferred tax is based on the expected way of realisation or settlement of the carrying amount of assets and liabilities, using the tax rates valid or approved as at the date of the financial statement’s preparation. Income tax is recognised directly in profit or loss, except for the part that relates to items recognised directly in equity, in which case the income tax is recognised in equity. Deferred tax asset and liability are offset if there is a legally enforceable right to offset the payable tax liability and asset, and they relate to the same tax authority and the taxable entity. A deferred tax asset is only recognised up to the amount of probable future taxable profits against which the unused tax losses and credits can be offset. Deferred tax assets are reduced by the amount for which it is probable that the related tax benefit will not be realised. (t) Trade and other payables Trade and other payables are stated at amortised cost (see Note (y) Financial liabilities). (u) Revenues from services rendered The Company recognises six types of basic revenues from services rendered: Revenues from cableways and ski lifts (hereinafte r also referred to as “Mountain Resorts”) Revenues from leisure parks Revenues from sports services and stores Revenues from hotel services (hereinafter also referred to as “Hotels”) Revenues from restaurant facilities (hereinafter also referred to as “Dining”) Revenues from real estate projects (mainly from investment property, hereinafter also referred to as “Real Estate”) Other revenues The Company recognises the revenues to the extent, in which it is probable that the economic benefits will flow to the Company and these revenues can be reliably evaluated. The revenues are recognised at fair value. Revenues are accrued depending on in which period the services were rendered, excluding revenues from the aqua park, hotel services and restaurant facilities, which are recognised in profit or loss after the service has been rendered. Revenues from services rendered do not include value added tax. They are also net of discounts and rebates (rebates, bonuses, discounts, credit notes and the like). Since 2012 the Company has been running a loyalty program for its clients – Gopass which enables its clients to earn points for purchase of products and services in its resorts and to redeem these points as discounts from future purchases. The amount of unredeemed points are recognized as a decrease in sales against revenue time difference, as they are related Separate Financial Statements 201 to promised discounts from future purchases of clients. The Company monitors the value of unredeemed points and revalues it on a regular basis for its recognition in the financial statements. The loyalty program has been operated by the subsidiary GOPASS a.s. since 1 November 2021. Other services include in particular the services provided in relation to accommodation, such as the rental of premises including hotels disclosed as investments property, parking, wellness, massage, sale of souvenirs, etc. Revenues from rental are recognised over the duration of the rental, with accruals. Revenues from investment property projects are recognised following the transfer of rights and obligations and related risks on to buyer, which occurs at the day of transfering the ownership rights. The sale of investment property is reported in the Company's revenues on the date of signing the acceptance protocol, or by registration at the cadastre on the basis of the decision to allow the deposit of title, whichever occurs first. Revenues from the sale of souvenirs and other goods shall be recognised following the transfer of significant risks and benefits from the particular goods. Other revenues from services provided shall be recognised following the provision thereof. (v) Dividends Dividends are recognised in the statement of changes in equity and also as liabilities in the period in which they are approved. (w) Non-current assets and disposal groups held for sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group held for sale) are re-measured in accordance with the International Financial Reporting Standards as adopted by the EU. Thereafter, upon initial classification as held for sale, the assets and disposal group held for sale are recognised at the lower of their carrying amount or fair value less cost to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except for inventories, financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Company's accounting policies. Impairment losses on initial recognition as held for sale are recognised in profit or loss even if the revaluation reserve was created. The same applies to gains and losses on subsequent measurements. Gains are not recognised in excess of any cumulative impairment loss. Property, plant and equipment and intangible assets classified as held for sale are no longer depreciated or amortised. In case that, after the asset assignment into the group of assets held for sale, value is realized mainly through use rather than sale thereof, the assets shall be accounted back and depreciation or amortization for property, plant and equipment and intangible assets shall be recognised in the period when such change of assets arose. (x) Reporting by segments Operating segments are parts of the Company that are able to generate income and expenses with available financial information, which is regularly reviewed by the chief operating decision makers in order to allocate resources to the segments and to assess their performance. The management monitors 7 main segments, namely mountain resorts, leisure parks, hotels, dining, sports services and stores, real estate and other. (y) Financial liabilities The Company recognises financial liabilities as other financial liabilities. The Company does not recognise any financial liabilities valued at fair value through profit or loss. Separate Financial Statements 202 Separate Financial Statements In the Company’s separate statement of financial position, other financial liabilities are recogni zed as received loans and borrowings, bonds issued, trade payables and other liabilities. Financial liabilities are recognised by the Company on the trade date. Upon initial recognition, financial liabilities are measured at fair value including transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortized cost. Upon measurement at amortized cost the difference between the cost and the face value is recognised through profit or loss during existence of the asset or liability using the effective interest rate method. Financial liabilities are derecognised when the Company's obligation specified in the contract expires, is settled or cancelled. (z) Fair value estimates The following notes summarise the main methods and assumptions used in estimating the fair values of financial assets and liabilities referred to in Note 38 – Fair value information: i. Loans granted Fair value is calculated based on discounted expected future principal and interest cash flows. Expected future cash flows are estimated considering credit risk and any indication of impairment. The estimated fair values of loans reflect changes in credit status since the loans were made and changes in interest rates in the case of fixed rate loans. ii. Loans and borrowings For loans and borrowings with no defined maturities, fair value is taken to be the amount payable on demand as at the date of preparation of the consolidated financial statement. The estimated fair value of fixed-maturity loans and borrowings is based on discounted cash flows using rates currently offered for loans and borrowings of similar remaining maturities. iii. Trade receivables and other financial assets Short-term receivables without the interest rate are valued at the original invoice amount if the impact of discounting is insignificant. For receivables with a remaining life of less than one year, the nominal amount is deemed to reflect the fair value. Fair value is determined at initial recognition and for disclosure purposes at the end of the accounting period. iv. Trade payables, and other financial liabilities Trade payables and other financial liabilities are initially measured at fair value. The carrying amount of trade payables and other financial liabilities is approximately equal to their fair value. v. Cash and cash equivalents For cash and cash equivalents, it is assumed that their nominal value is also fair value. vi. Other financial assets/liabilities Other assets/liabilities are mainly claims on partner companies, which the Company uses for the proprietary sale of tickets to customers to its resorts, receivable/ liability from derivative operations - currency SWAP, remaining liability to shareholders from a reduction in share capital in 2013. Other financial assets/liabilities are discounted for the determination of fair value if the impact of discounting is material. 203 Separate Financial Statements Significant Accounting Estimates and Assumptions The compilation of the financial statements according to the International Financial Reporting Standards as adopted by the EU requires the application of certain significant accounting estimates. It also requires that the management, in the application process of the Company accounting principles, should use its judgement. Therefore, the accounting estimates will be rarely identical with actual figures. Information about assumptions and estimation uncertainties at 31 October 2022 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is described below. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and also in future periods if the revision affects both current and future periods. (a) Valuation of Investments in Property Investments in property are measured at fair value. The fair value of investments in property is determined either by a management evaluation or independent expert (see the Significant Accounting Principles, Note 2); in both of the cases the valuation is based on current market values and conditions. The fair market value is the estimated value, for which the property could be exchanged, on the valuation day, between knowledgeable, willing parties being a prospective seller and a prospective buyer, in an ar m’s length transaction, with each party acting well informed, cautiously and without compulsion. In the absence of current market prices, net estimated cash flow generated from the leasing of property and gains from capitalisation which reflect the risk specific for the market and also cash flow from the property shall be taken into account. The valuation reflects (where relevant) the type of lessees who use the property or are responsible for the fulfilment of lease liabilities or the type of prospective users, if the property is left non-rented, the general market perception of lessee solvency, the distribution of responsibilities related to maintenance and insurance of property between the Company and the lessees, and the remaining life of property. An overview of investments in property of current and previous period is in Note 18 – Investment Property. (b) Goodwill and Impairment Test As at the date of the financial statements, the Company is required to assess whether there is any indication that its goodwill is impaired. If there is no indication that goodwill may be impaired, the Company shall, according to IAS 36, test reported goodwill for possible impairment on a yearly basis as at 31 October, i.e. as at the date of compilation of the annual separate financial statements. On the day of recognition, the acquired goodwill is allocated to individual cash-generating units (CGU) that are expected to benefit from the synergies of the business combinations. Potential decrease of the goodwill value is determined by comparing the recoverable amount of CGU and its book value. The recoverable amount is determined by the value in use. The value in use was derived from a business plan prepared by the management. The key prerequisite which was also the most sensitive factor in determining the recoverable amount was expected revenues assessed by the management, the profit margin ratio (EBITDA) and the cost of capital used as the discount factor for future net cash flows. Expected revenues as well as the profit margin ratio are based on historical revenue and EBITDA, adjusted for the effects of anti-pandemic measures and adjusted by management's expectations for future developments - changes in customer target groups, strengthened marketing and increase in the quality of services rendered. Projecting of cash flows applied in determining the value in use covers a basic term period with subsequent extrapolation for the next period. The Company used a 25-year projection due to the need of reflecting recently made investments in order to reach a standardised level of cash flows for determination of terminal value. Based on such standard level of cash flows, the terminal value was calculated with expected nominal growth of cash flows by inflation. Discount rates applied in the projecting of cash flows were calculated as weighted average cost of capital (without taking into account the effect of the corporate income tax). 204 Following table summarizes assumptions, result and sensitivity of impairment of goodwill in CGU High Tatras: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Calculation assumptions Horizon for cash flow projection 25 years 25 years Nominal increase of cash flows 3.8 % 3 % Discount rate used during cash flow projection 9.50 % 8.15 % Result and sensitivity Impairment for the period - - Impairment as at the end of the period - - Decrease of EBITDA by 5 % – impact on value in use -8 413 -7 374 Decrease of EBITDA by 5 % – resulting impairment - -5 495 Increase of discount rate by 0,5 % – impact on value in use -10 118 -9 173 Increase of discount rate by 0,5 % – resulting impairment - -7 259 Marginal decrease of EBITDA -9.09 % -1.3 % Marginal value of discount rate 10.29 % 8.25 % In 2022 and 2021, goodwill was tested within CGU High Tatras, and the test did not show any reason for asset impairment. (c) Impairment test of non-financial assets other than goodwill IAS 36 requires the testing of asset impairment in cases where external or internal indicators would point out to possible asset impairment. The Company carries on 6 principal activities: running of mountain resorts, leisure park - aquapark, restaurant services, sports services and stores, accommodation services and real estate projects, namely in three locations: Jasná (the Low Tatras), in the High Tatras, and in Liptovský Mikuláš and via its subsidiaries in Slovakia, Poland, Czech Republic and Austria. Each of the locations was assessed by the management as an individual cash-generating unit (CGU). The Company monitors performance and creates separate budgets for each cash-generating unit. The Company's assets were allocated according to their material affiliation to the individual cash-generating units, while the individual CGU units include all assets located there, i.e. in addition to the lifts and cable cars, also hotels, restaurants and sports services and shops. As at 31 October 2022 and 31 October 2021, after assessment by the Company's management the indicators of a possible impairment of the Company's assets were identified in connection with current unstable economic situation affected by the increase of energy prices and inflation that were caused by the ongoing military conflict in Ukraine, as well as by the coronavirus global pandemic affecting the Company in the previous accounting period , see Note 2 (b) for more information. The Company carried out testing for impairment of assets for CGU which were most affected by the anti- pandemic measures, did not achieve planned sales and after lifting the restrictions, the number of their visitors did not return to pre-pandemic times or historically did not show the required performance. The impairment test was performed for locations Low Tatras, Tatralandia, resort Szczyrkowski Ośrodek Narciarski („SON“ or „Szczyrk“), Silesian amusement park („SWM“ or „Legendia“), resort Ještěd , resort Mölltaler/Ankogel and resort Muttereralm, and also for the High Tatras location, since it has assigned goodwill as stated in Note 3(b). For the locations Low Tatras, Tatralandia, SON, Ještěd and Mölltaler/Ankogel no im pairment of assets was calculated. In location SWM the impairment was reflected in the Company's separate financial statements by accounting for the expected loss from the credit exposure to this subsidiary, for further information refer to Note 3(d). In location Muttereralm no loss from the credit exposure to this subsidiary is expected in the Company's separate financial statements. Separate Financial Statements 205 Projecting of cash flows applied in determining the value in use covers a basic term period with subsequent extrapolation for the next period. The Company used a 25-year projection due to the need of reflecting recently made investments in order to reach a standardised level of cash flows for determination of terminal value. Based on such standard level of cash flows, the terminal value was calculated with expected nominal growth of cash flows by inflation. Discount rates applied in the projecting of cash flows were calculated as weighted average cost of capital without taking into account the effect of the corporate income tax. Following table summarizes assumptions, result and sensitivity of impairment of assets in CGU Low Tatras: in TEUR 1.11.2021 - 31.10.2022 Calculation assumptions Horizon for cash flow projection 25 years Nominal increase of cash flows 3.8 % Discount rate used during cash flow projection 9.50 % Result and sensitivity Impairment for the period - Impairment as at the end of the period - Decrease of EBITDA by 5 % – impact on value in use -9 235 Decrease of EBITDA by 5 % – resulting impairment -5 795 Increase of discount rate by 0.5 % – impact on value in use -11 017 Increase of discount rate by 0.5 % – resulting impairment -7 578 Marginal decrease of EBITDA -1.87 % Marginal value of discount rate 9.65 % (d) Impairment testing of financial assets The Company performs impairment testing of financial assets in accordance with IFRS 9 and reports an impairment allowance for expected credit losses (ECL) as described in Note 2(b). As at 31 October 2019, a significant increase in credit risk was identified in the credit exposure to the subsidiary SWM and the Company proceeded to reclassify this credit relationship to Stage 2. During the period from 31 October 2019 to 31 October 2021, the Company booked a specific allowance for expected credit losses during the total remaining life of the loans to SWM in the total amount of EUR 27,522 thousand. As at 31 October 2022, the Company prepared a projection of expected cash flows taking into the account current results of CGU SWM, which was discounted with an effective interest rate of 7% as a result of which the value of specific allowance was reduced by the amount of EUR 11,406 thousand. If as at 31 October 2022 the projected EBITDA of CGU SWM which is part of the projected cash flows, was lower by 5% compared to the management´s estimate, the value of the specifi c allowance would be reduced by the amount of EUR 7,509 thousand. Separate Financial Statements 206 Separate Financial Statements (e) Financial instruments at fair value The fair value of financial instruments is determined based on: Level 1: quoted market prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted market prices included within Level 1, which are comparable for the asset or liability, either directly (as prices of comparable instruments) or indirectly (derived from prices) Level 3: inputs for the asset and liability, which are not determined on the basis of data from comparable markets (unobservable inputs) When the quoted m arket price is not available, the fair value of the instrument is estimated using valuation techniques. When using valuation models, the management applies estimates and assumptions which are consistent with information available on estimates and assumptio ns that market participants would use when pricing the relevant financial instrument. in TEUR Note 31.10.2022 31.10.2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Loans provided 23 - - 183 228 183 228 - - 92 676 92 676 Other assets - Hedging derivative transactions - foreign exchange SWAP 27 - 254 - 254 - - - - Total - 254 183 228 183 482 - - 92 676 92 676 in TEUR 31.10.2022 31.10.2021 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities Bonds issued 37 - 203 604 - 203 604 - 201 438 - 201 438 Other liabilities - Hedging derivative transactions - foreign exchange SWAP 35 - - - - - 1 277 - 1 277 Total - 203 604 - 203 604 - 202 715 - 202 715 The table does not present financial instruments for which the carrying amount is considered to be an approximation of fair value. The above financial instruments are stated at their carrying amounts. 207 Separate Financial Statements Information about Operating Segments Information about Operating Segments - Separate Profit and Loss Statement Mountain Resorts Leisure Parks Hotels Dining Sports Services and Stores Real Estate Main Segments TOTAL Other TOTAL in TEUR 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m 12 m Sales 34 473 12 898 6 700 3 298 31 106 14 404 13 747 6 019 3 677 1 838 780 9 734 90 483 48 191 - - 90 483 48 191 Other operating revenue 37 75 8 1 173 118 100 54 - - - - 318 248 1 066 - 1 384 248 Material and goods consumption -1 882 -1 412 -440 -204 -6 999 -3 209 -4 103 -1 912 -1 148 -1 200 -560 -8 119 -15 132 -16 056 - - -15 132 -16 056 Purchased services -10 097 -6 254 -1 501 -944 -9 412 -4 425 -2 274 -1 220 -594 -271 -597 -279 -24 475 -13 393 -964 - -25 439 -13 393 Personnel expenses -9 362 -4 485 -1 792 -1 231 -11 688 -6 526 -4 895 -2 780 -1 573 -844 -506 -54 -29 816 -15 920 - - -29 816 -15 920 Other operating expenses -387 -221 -81 -32 -245 -184 -106 -57 -44 -27 -16 -18 -879 -539 - - -879 -539 Gain / (loss) on sale of assets 45 -92 597 - 35 - - - 4 - 4 638 2 590 5 319 2 498 - 9 214 5 319 11 712 Gain / (loss) on revaluation of investment property - - - - - - - - - - -906 - -906 - - - -906 - Release / (creation) of value adjustments - - - - 3 -6 -1 - - - -7 -962 -5 -968 10 475 -5 992 10 470 -6 960 Depreciation and amortization -8 040 -8 170 -128 -1 284 -3 047 -3 577 -951 -1 212 -636 -407 -169 -260 -12 971 -14 910 - - -12 971 -14 910 Depreciation and amortization (IFRS 16) -2 720 -2 745 -816 -386 -612 -209 -148 -28 -48 -128 - - -4 344 -3 496 - - -4 344 -3 496 Interest income - - - - - - - - - - - - - - 7 965 6 746 7 965 6 746 Financing cost -7 718 -6 829 -1 203 -1 064 -5 687 -5 032 -2 873 -2 542 -1 139 -1 007 -1 431 -1 267 -20 051 -17 741 - - -20 051 -17 741 Net profit / (loss) on financial operations - - - - - - - - - - - - - - -715 -5 -715 -5 Share of profit or (loss) from disposal of subsidiaries - - - - - - - - - - - - - - -721 - -721 - Profit / (loss) of the segment before taxes -5 651 -17 235 1 344 -1 846 -6 373 -8 646 -1 504 -3 678 -1 501 -2 046 1 226 1 365 -12 459 -32 086 17 106 9 963 4 647 -22 123 Income tax - current -1 -3 Income tax - deferred -1 359 5 221 Profit/ (Loss) 3 287 -16 905 The Company generates all of its revenues on the territory of the Slovak Republic. Intersegment eliminations are included in the amounts reported for each period. The Company reports the operating segment information that have been adjusted for intersegment transactions. The threshold of 10% of the share in total revenues was not exceeded by any client of the Company. Cost interest is distributed according to the management key and not according to the distribution in the table below. 208 Separate Financial Statements Information about Operating Segments - Separate Statement of Financial Position Mountain Resorts Leisure Parks Hotels Dining Sports Services and Stores Real Estate Main Segments TOTAL Other TOTAL in TEUR 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 Goodwill 23 769 23 770 - - 3 390 3 390 - - - - - - 27 159 27 160 - - 27 159 27 160 Intangible assets 3 273 3 284 1 088 2 579 533 894 141 4 65 11 69 1 5 169 6 773 - - 5 169 6 773 Property, plant and equipment 150 129 141 147 8 240 8 517 59 251 64 746 14 869 14 988 1 756 2 186 5 829 3 707 240 074 235 291 2 237 2 475 242 311 237 766 Right-of-use leased assets 30 330 31 769 22 759 260 3 736 3 156 1 716 876 715 867 - - 59 256 36 928 - - 59 256 36 928 Investments property - - - - - - - - - - 7 411 8 317 7 411 8 317 - - 7 411 8 317 Inventory 293 968 - - 813 539 - - 948 649 575 506 2 629 2 662 - - 2 629 2 662 Trade receivables 1 608 1 628 408 385 222 571 36 277 17 182 133 155 2 424 3 198 - - 2 424 3 198 Investments in associates 7 118 7 118 - - - - - - - - - - 7 118 7 118 - - 7 118 7 118 Participations with control 10 309 11 228 3 472 345 - 1 - - - - - - 13 781 11 574 1 293 - 15 074 11 574 Other receivables 3 143 692 424 6 435 - - - - - - 484 - 4 051 7 127 - - 4 051 7 127 Financial investments - - - - - - - - - - - - - - 36 36 36 36 Other assets 1 612 1 969 328 41 661 2 226 2 349 27 45 124 115 - - 4 317 46 139 - - 4 317 46 139 Loans provided - - - - - - - - - - - - - - 183 228 92 676 183 228 92 676 Cash and cash equivalents 1 996 6 187 400 665 1 512 2 541 778 701 302 100 344 - 5 332 10 194 - - 5 332 10 194 Assets held for sale - 711 - 237 - - - - - - - - - 948 - - - 948 Assets total 233 580 230 471 37 119 61 084 71 683 78 187 17 567 16 891 3 927 4 110 14 845 12 686 378 721 403 429 186 794 95 187 565 515 498 616 in TEUR 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 31.10.22 31.10.21 Loans and borrowings long-term 47 724 33 133 26 998 5 954 9 155 8 973 2 263 2 000 1 132 1 000 - - 87 272 51 060 - 55 501 87 272 106 561 Loans and borrowings short-term 15 787 22 635 1 280 68 287 417 45 67 23 33 - - 17 422 23 220 60 895 2 627 78 317 25 847 Lease liabilities 31 508 32 966 22 023 218 3 611 2 460 1 766 897 753 679 - - 59 661 37 220 - - 59 661 37 220 Trade payables 4 701 5 757 1 587 344 1 117 1 786 613 726 141 234 1 869 181 10 028 9 028 190 - 10 218 9 028 Other liabilities 6 795 6 345 2 082 1 715 2 667 2 016 939 1 348 372 529 4 776 - 17 631 11 953 803 1 277 18 434 13 230 Liabilities directly associated with the Assets held for sale - 645 - 215 - - - - - - - - - 860 - - - 860 Provisions 353 223 86 54 220 139 120 76 51 32 57 36 887 560 - - 887 560 Bonds issued - - - - - - - - - - - - - - 203 604 201 438 203 604 201 438 Deferred tax liability - - - - - - - - - - - - - - 16 203 15 137 16 203 15 137 Corporate income tax - - - - - - - - - - - - - - - - - - Total liabilities 106 868 101 704 54 056 8 568 17 057 15 791 5 746 5 114 2 472 2 507 6 702 217 192 901 133 901 281 695 275 980 474 596 409 881 Eliminations among segments are included in amounts reported for particular periods. The prices used among segments are deter mined based on market prices for similar services and financing. Loans and Borriwings and Bonds Issued in the Other category were n ot used to finance specific projects. 209 Separate Financial Statements 209 Increase and Decrease of Shares in Companies On 30 September 2022, the Company sold its 51% share in Tikar D.O.O. The consideration transferred was in the amount of EUR 2,350 thousand, part of which was used to settle loans with the corresponding outstanding interest in the amount of EUR 3,071 thousand. The transaction resulted in a loss from the sale of the subsidiary in the amount of EUR 721 thousand. On 1 July 2022, the Company acquired a 100% stake in the European company GOPASS SE with a place of business in the Czech Republic and a total value of CZK 2,924 thousand, which will serve to expand in the European market. This company for established solely for the purpose of further sale and before acquiring the 100 % share it did not carry out any business activity. By its purchase the Company acquired only receivable from unpaid share capital in the amount of CZK 2,924 thousand, which was not paid as at the date of acquisition. The consideration transferred in the amount of CZK 2,924 was settled in cash. On 22 June 2022, for the purpose of providing services within the TMR Group, International TMR services s.r.o. was founded in the Czech republic with a share capital of CZK 200 thousand, which became 100% owned by the Company. On 4 June 2021, GOPASS, a. s. was founded with registered capital of EUR 25 thousand. The Company became its sole shareholder. On 1 May 2021, the Company acquired a 90% share in Muttereralm Bergbahnen Errichtungs GmbH with a purchase price of EUR 3,714 thousand. The shareholding of 10% was acquired by the subsidiary Tatry mountain resorts AT GmbH. The company operates a ski resort in Austria. On 1 November 2020, the Company merged with its subsidiary 1. Tatranská. The additions due to the merger in 2020 are shown in the table below: in TEUR 1. Tatranská, akciová spoločnosť Intangible assets 3 071 Property, plant and equipment 13 041 Right-of-use of leased assets 4 642 Investment property 1 065 Investments in an associate and a joint venture 199 Inventories 43 Trade receivables 39 Loans provided * -14 652 Other receivables -3 508 Financial instruments 1 Cash and cash equivalents 105 Other assets 237 Retained earnings and other funds 497 Deferred tax liability -2 012 Trade payables -37 Lease liabilities -1 209 Provisions -14 Other current liabilities -31 Net identified assets and liabilities 1 477 Investment in subsidiary -25 247 Goodwill 23 770 Loans provided in the amount of EUR -14,652 thousand represent elimination of the loan receivable due from 1. Tatranská in the Company’s records as at the acquisition date. 210 Separate Financial Statements Other receivables in the amount of EUR -3,508 thousand represent elimination of the lease receivable due from 1. Tatranská in the Company’s records as at the acquisition date. Sales in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Mountain Resorts 34 473 12 898 Hotels 31 106 14 404 Restaurant facilities 13 747 6 019 Real Estate Projects 780 9 734 Leisure Parks 6 700 3 298 Sports Services and Stores 3 677 1 838 Total 90 483 48 191 Other Operating Revenue in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Claims paid by insurance company 22 45 Other operating revenue 1 362 203 Total 1 384 248 Other operating revenue is represented by revenues from the sale of a part of the business between the Company and GOPASS a.s. in the amount of EUR 1,066 thousand. This item also includes revenues related to the allowance for the provision of practical teaching in the dual education system, worth EUR 62 thousand, and the allowance for the provision of accommodation to displaced persons in the context of the war in Ukraine, worth EUR 32 thousand. Consumption of Material and Goods in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Material in hotels and restaurant facilities -7 745 -3 476 Goods -2 701 -2 043 Chalets sold -529 -8 032 Fuels -809 -277 Material for repair and maintenance -834 -718 Material and goods – other -2 514 -1 510 Total -15 132 -16 056 211 Separate Financial Statements Purchased Services in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Energy consumption -10 793 -3 992 Advertisement expenses -1 586 -1 389 Rental costs (cost of premises) and others -685 -1 102 Other administrative expenses -2 405 -1 316 Repairs and maintenance expenses -1 972 -1 371 Communication expenses -1 674 -1 458 Legal advice expenses -958 -749 Services related to owned premises -445 -290 Transport, accommodation, travel expenses -271 -224 Training expenses -111 -60 Other purchased services -4 745 -2 918 State aid related to rental costs and other costs 206 1 476 Total -25 439 -13 393 Other purchased services during financial year 2022 are represented by various costs of the Company related to its operation, such as the costs of washing and cleaning in the amount of EUR 923 thousand, costs related to the fees to GOPASS a.s. in the amount of EUR 635 thousand, costs related to services supplied from subsidiaries in the amount of EUR 498 thousand, also including costs related to the provision of music and animation for clients in the amount of EUR 421 thousand and the cost of guard and security services in the amount of EUR 225 thousand. Other purchased services represent the accounting, audit and other expenses related to administrative operation of the Company. The Company uses the services of KPMG Slovensko spol. s r.o. auditing company for the auditing of separate and consolidated financial statements. Between 1 November 2021 and 31 October 2022, the expense of these items represented EUR 178 thousand (for the period ended on 31 October 2021: EUR 165 thousand) for auditing of year-end financial statements and EUR 69 thousand (for the period ended on 31 October 2021: EUR 40 thousand) for other assurance services. Personnel Expenses in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Wages and salaries -16 051 -12 301 Personnel leasing -5 898 -2 730 Social security (compulsory) -6 691 -5 197 Remuneration of members of key management and Supervisory Board -1 531 -836 Other social expenses -15 -13 State aid related to wages and salaries 370 5 157 Total -29 816 -15 920 In the period between 1 November 2021 and 31 October 2022, the average number of Company employees was 918, of which management 14 (between 1 November 2020 and 31 October 2021, it was 881, of which management 14). During the year, the Company used the services of employment agencies for short-term personnel leasing. In the period between 1 November 2021 and 31 October 2022 it was 318 employees in average (between 1 November 2020 and 31 October 2021: 72 employees). 212 Separate Financial Statements The table below provides an overview of the Company's key management remuneration for the period from 1 November 2021 to 31 October 2022: in TEUR Remuneration of members of key management Base remuneration Extraordinary bonuses Variable component of renumeration Total Board of Directors 192 - 941 1 133 Supervisory Board 79 - - 79 Top management 219 100 - 319 Audit Committee - - - - Total 490 100 941 1 531 The table below provides an overview of the Company's key management remuneration for the period from 1 November 2020 to 31 October 2021: in TEUR Remuneration of members of key management Base remuneration Extraordinary bonuses Variable component of renumeration Total Board of Directors 192 - - 192 Supervisory Board 74 - - 74 Top management 350 220 - 570 Audit Committee - - - - Total 616 220 - 836 Based on organization structure of the Company effective 1 November 2019, top management consists of positions CEO, CFO, COO and CCO. The Board of Directors determines the remuneration of the top management. For the year ending 31 October 2022, base remuneration for top management amounted EUR 219 thousand (from 1 November 2020 to 31 October 2021: EUR 350 thousand). Extraordinary remuneration was paid to members of the top management in the total amount of EUR 100 thousand (from 1 November 2020 to 31 October 2021: EUR 220 thousand) in salary for the month of March 2022, based on the decision of the Board of Directors in view of the financial results achieved by the Company for the winter season 2021/2022. The Board of Directors of the Company has decided that the payment of additional remuneration to members of the top management will be decided in the month of March 2023, based on the results of the financial year ending on 31 October 2022 and the results of the Company achieved in the winter season 2022/2023. Members of the Board of Directors of the Company, in accordance with the Rules of Remuneration of Company Bodies dated 29 April 2020 (hereinafter referred to as the "Rules of Remuneration"), are granted remuneration for the performance of their duties as a member of the Board of Directors of the Company, which consists of a fixed component of remuneration and a variable component of remuneration. The amount of the fixed component of remuneration is agreed with the member of the Board of Directors in accordance with the Remuneration Rules in the contract for the performance of the duties of a member of the Board of Directors, which has been approved by the Supervisory Board of the Company. For the year ending 31 October 2022, fixed remuneration components totaling EUR 192 thousand were paid to the members of the Board of Directors (from 1 November 2020 to 31 October 2021: EUR 192 thousand). The variable remuneration component is paid to the members of the Board of Directors after fulfilling the criteria defined in the Remuneration Rules, the main criterion being the achievement of the EBITDA ratio at the next payout date specified in the Company for the payment of wages to employees after the publication of the consolidated statutory financial statements of the Company for the financial year for which the remuneration is paid. The total amount of the claimable variable component of the renumeration in the value of EUR 941 thousand represents a provision for the variable remuneration component of the 213 Separate Financial Statements members of the Board of Directors for the period from 1 November 2021 to 31 October 2022. The year-on-year increase occurred due to the fulfillment of the criteria set for the award of the variable remuneration component (fulfillment of the Company's EBITDA plan). The members of the Supervisory Board are paid fixed components of remuneration in accordance with the Rules on remuneration of members of the Supervisory Board and concluded contracts for the performance of their duties, the variable components of remuneration shall not be paid to the members of the Supervisory Board. For the year ending on 31 October 2022, basic remuneration totaling EUR 79 thousand was paid (from 1 November 2020 to 31 October 2021: EUR 74 thousand). Other Operating Expense in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Insurance (property, automobiles, travel cost) -343 -335 Fees and commissions -415 -125 Shortages and losses -92 -56 Other operating cost -29 -23 Total -879 -539 Finance Income and Expense in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Interest income calculated using effective interest rate 7 965 6 746 Financing costs -20 051 -17 741 Total -12 086 -10 995 Interest income calculated using effective interest rate is payable mainly from loans provided at a fixed interest rate. See Note 23 - Loans Provided. The table below shows the composition of financing costs: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Interest expense related to loans and borrowings -6 727 -5 479 Interest expense from bonds issued -11 457 -11 302 Interest expense from leasing -2 659 -1 628 Income associated with hedging derivative transaction SWAP 792 668 Financing costs total -20 051 -17 741 For information about received loans and borrowings see Note 31 – Loans and Borrowings. For information about bonds issued see Note 37 – Bonds Issued. For information about leases see Note 32 – Lease Liabilities. In the period from 1 November 2021 to 31 October 2022, the Company capitalised interest expense into assets with a total value of EUR 137 thousand (from 1 November 2020 to 31 October 2021: EUR 0 thousand). 214 Separate Financial Statements Net Profit / (Loss) from Financial Operations in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Cost of administration of financial instruments -484 -357 Other, net -231 352 Total -715 -5 In the period between 1 November 2021 and 31 October 2022, category other is represented mainly by losses from foreign exchange rate differences (between 1 November 2020 and 31 October 2021, category other was represented mainly by gains from foreign exchange rate differences). Current and Deferred Income Tax Deferred income tax is calculated using statutory tax rates, which are expected in a period in which the receivable is realized, or the liability is settled. To calculate deferred tax from temporary differences originated in the Slovak Republic, the Company applied a 21% rate for the year 2022 (2021: 21%) resulting from the legal corporate income tax rate valid as at the date when the financial statements are being compiled. Income tax reported through other components of comprehensive income in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 Current tax: Tax of current accounting period - - Withholding tax on interest -1 -3 -1 -3 Deferred tax: Posting and release of temporary differences -1 359 5 221 Change of tax rate - - Total reported tax -1 360 5 218 215 Separate Financial Statements 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 in TEUR Before taxes Tax After taxes Before taxes Tax After taxes Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Net gain/(loss) on cash flow hedges -1 396 -293 -1 103 -2 467 -518 -1 949 Total comprehensive income -1 396 -293 -1 103 -2 467 -518 -1 949 Reconciliation of effective tax rate in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 % % Profit before taxes 4 647 -22 099 Tax rate 21% 21% 976 21% -4 646 Tax non-deductible expenses 16% 738 -5% 1 006 Income not subject to tax -2% -78 6% -1 286 Current tax: withholding tax on interest 0% 1 0% 3 Tax losses claimed during the period -6% -277 1% -295 Change of tax rate 0% - 0% - Total 29% 1 360 24% -5 218 216 Separate Financial Statements Movements of deferred tax liability (net) during 2022 and 2021 2022 in TEUR Balance as at 1 November 2021 Reported in profit and loss statement Reported in other comprehensive income Acquired through business combination Balance as at 31 October 2022 Non-current tangible and intangible assets -22 501 526 - - -21 975 Investment property -785 190 - - -595 Losses from impairment of trade receivables and other assets 6 996 -2 206 - - 4 791 Cash Flow hedge 398 - 293 - 691 Provisions and liabilities 183 343 - - 526 Leases (IFRS 16) -181 71 - - -110 Tax losses 753 -284 - - 469 Total, net -15 137 -1 360 293 - -16 203 2021 in TEUR Balance as at 1 November 2020 Reported in profit and loss statement Reported in other comprehensive income Acquired through business combination Balance as at 31 October 2021 Non-current tangible and intangible assets -23 547 3 991 - -2 945 -22 501 Investment property -976 191 - - -785 Losses from impairment of trade receivables and other assets 5 533 1 462 - - 6 996 Cash flow hedge -120 - 518 - 398 Provisions and liabilities 244 -61 - - 183 Leases (IFRS 16) -79 -117 - 15 -181 Tax losses 80 -245 - 918 753 Total, net -18 865 5 221 518 -2 012 -15 137 See also Note 21 - Deferred Tax Asset, Deferred Tax Liability. 217 Separate Financial Statements Property, Plant and Equipment in TEUR Land and buildings Individual movable assets and sets of movable assets Assets under construction Total Cost Opening balance as at 1.11.2020 242 539 131 220 10 118 383 877 Additions 1 209 420 2 678 4 307 Increases from company merger 5 773 7 009 259 13 041 Disposals -34 569 -7 094 -150 -41 813 Transfer from/to Investment property 1 077 - - 1 077 Transfer from Right-of-use asset - 1 678 - 1 678 Transfer from/to Assets held for sale - -5 - -5 Movements within assets 4 493 1 325 -5 819 - Balance as at 31.10.2021 220 522 134 553 7 086 362 162 Opening balance as at 1.11.2021 220 522 134 553 7 086 362 162 Increases 1 061 822 17 754 19 637 Disposals -4 216 -806 -298 -5 320 Transfer from Right-of-use asset - 350 - 350 Movements within assets 235 107 -343 - Balance as at 31.10.2022 217 602 135 026 24 199 376 829 Accumulated depreciation and losses from impairment of assets Opening balance as at 1.11.2020 -60 534 -62 876 - -123 410 Depreciation of current accounting period -7 003 -7 207 - -14 210 Decreases 7 996 6 119 - 14 115 Transfer from Right-of-use asset - -896 - -896 Transfer from/to Assets held for sale - 5 - 5 Balance as at 31.10.2021 -59 541 -64 855 - -124 396 Opening balance as at 1.11.2021 -59 541 -64 855 - -124 396 Depreciation of current accounting period -6 351 -6 134 - -12 485 Decreases 1 755 780 - 2 535 Transfer from Right-of-use asset - -172 - -172 Balance as at 31.10.2022 -64 137 -70 381 - -134 518 Carrying value As at 1.11.2020 182 005 68 344 10 118 260 467 As at 31.10.2021 160 981 69 698 7 086 237 766 As at 1.11.2021 160 981 69 698 7 086 237 766 As at 31.10.2022 153 465 64 645 24 199 242 311 In the period from 1 November 2021 to 31 October 2022, the Company made investments totaling EUR 19,637 thousand. The C ompany invested EUR 10,446 thousand in the construction of the Biela Púť – Priehyba cableway, EUR 3,689 thousand in the continuation of t he construction of the Centrum Jasná complex and completely strengthened snowmaking worth EUR 1,903 thousand. The Company also procured the gastronomic operation, named Humno, in Tatranská Lomnica 218 Separate Financial Statements in the value of EUR 780 thousand, invested EUR 402 thousand in the completion of water reservoir, named Zadné vody, and made other minor investments. The Company also reclassified assets with a right of use at an accounting residual value of EUR 177 thousand due to the termination of financial leasing during the period from 1 November 2021 to 31 October 2022. In the period from 1 November 2020 to 31 October 2021 , the Company made investments in total amount of EUR 4,307 thousand. The Company invested EUR 1,400 thousand in the construction of Biela Púť cableway. The Company also acquired an indoor swimming pool of EUR 540 thousand located in the FIS Hotel area at Štrbské pleso, invested EUR 398 thousand to complete the Zadné vody reservoir, EUR 325 thousand to continue the construction of the Centrum Jas ná complex, EUR 266 thousand to renovate the Chivas bar in Hotel Pošta, and made other minor investments. Additions in Property, plant and equipment due to the Company’s merger with 1. Tatranská as at 1 November 2020 amounted to EUR 13,041 thousand. As at 30 April 2021, the Company terminated the investment property lease and relaunched the operation of Hotel SKI in the Jasná resort. Accordingly, Hotel SKI was transferred from the Investment property category to the Property, plant and equipment category, in the amount of EUR 1,077 thousand. The Company also reclassified right-of-use assets in the net book value of EUR 782 thousand due to termination of financial leases during the period from 1 November 2020 to 31 October 2021. On 29 October 2021, the Company sold Aquapark Tatralandia and Holiday Village Tatralandia assets in the net book value of EUR 25,382 thousand to its subsidiary Tatry mountain resorts PL, a.s. Unused assets and fully depreciated used assets As at 31 October 2022 and 2021, the Company did not hold any unused assets. As at 31 October 2022 the Company used fully depreciated assets in acquisition cost EUR 19,259 thousand (2021: EUR 15,758 thousand). Impairment loss For the period ended on 31 October 2021 and 31 October 2022, the Company did not recognize any loss from impairment of land, buildings and equipment. Property Insurance in TEUR 31.10.2022 31.10.2021 Natural disaster and vandalism 490 820 453 114 General machinery risks 31 900 32 805 Liability for damage 5 706 9 556 Security As at 31 October 2022, Land, buildings and equipment in the amount of EUR 228,247 thousand were used as the security of the bank loans (as at 31 October 2021: in the amount of EUR 223,257 thousand). Capitalized financial cost As at 31 October 2022, the Company capitalized the interest expenses into the assets in the amount of EUR 137 thousand (as at 31 October 2021: EUR 0 thousand). 219 Separate Financial Statements Right-of-use of Leased Assets Movements in the carrying amounts of property, plant and equipment acquired through leasing were as follows : in TEUR Land and buildings Individual movable assets and sets of movable assets Total Cost Opening balance as at 1.11.2020 30 393 8 126 38 519 Increases from company merger 4 835 28 4 863 Additions 665 1 951 2 616 Transfer from/to Property, plant and equipment - -1 678 -1 678 Disposals -187 -90 -277 Modifications 990 -71 919 Balance as at 31.10.2021 / 1.11.2021 36 696 8 266 44 962 Additions 24 148 905 25 053 Transfer to Property, plant and equipment - -350 -350 Disposals -870 -832 -1 702 Modifications 1 732 46 1 778 Balance as at 31.10.2022 61 706 8 036 69 742 Accumulated depreciation Opening balance as at 1.11.2020 -2 833 -2 529 -5 362 Increases from company merger -214 -7 -221 Depreciation of current accounting period -2 112 -1 394 -3 506 Transfer to Property, plant and equipment - 896 896 Disposals 69 90 159 Balance as at 31.10.2021 / 01.11.2021 -5 090 -2 944 -8 034 Depreciation of current accounting period -2 947 -1 397 -4 344 Transfer to Property, plant and equipment - 172 172 Disposals 860 860 1 720 Balance as at 31.10.2022 -7 177 -3 309 -10 486 Carrying value As at 31.10.2021 31 606 5 322 36 928 As at 31.10.2022 54 529 4 727 59 256 220 Separate Financial Statements Goodwill and Intangible Assets in TEUR Goodwill Valuable rights Software Acquired intangible assets Total Acquisition price Opening balance as at 1.11.2020 3 740 3 803 3 612 706 11 861 Increases - - 567 93 660 Increases from company merger 23 770 3 071 - - 26 841 Decreases - - -1 - -1 Transfers within assets - - 665 -665 - Transfers from/to Assets held for sale - - -2 226 - -2 226 Balance as at 31.10.2021 27 510 6 874 2 617 134 37 135 Opening balance as at 1.11.2021 27 510 6 874 2 617 134 37 135 Increases - - 184 22 206 Decreases - -1 653 - -24 -1 677 Transfers within assets - - 110 -110 - Balance as at 31.10.2022 27 510 5 221 2 911 22 35 664 Accumulated depreciation and losses from impairment of assets Opening balance as at 1.11.2020 -350 -1 076 -2 356 - -3 782 Depreciation of current accounting period - -174 -525 - -699 Decreases - - 1 - 1 Transfer from/to Assets held for sale - - 1 278 - 1 278 Balance as at 31.10.2021 -350 -1 250 -1 602 - -3 202 Opening balance as at 1.11.2021 -350 -1 250 -1 602 - -3 202 Depreciation of current accounting period - -158 -328 - -486 Decreases - 352 - - 352 Balance as at 31.10.2022 -350 -1 056 -1 930 - -3 336 Carrying value As at 1.11.2020 3 390 2 727 1 256 706 8 079 As at 31.10.2021 27 160 5 624 1 015 134 33 933 As at 1.11.2021 27 160 5 624 1 015 134 33 933 As at 31.10.2022 27 160 4 165 981 22 32 328 Valuable rights are represented in particular by the customer relationships obtained by merging the Company with the c ompany 1. Tatranská worth EUR 3,071 thousand. Disposals of valuable rights with a net book value of EUR 1,301 thousand are trademarks sold by the Company in the period from 1 November 2021 to 31 October 2022 to its subsidiary of TMR Parks, a.s. 221 Separate Financial Statements Investment Property in TEUR 31.10.2022 31.10.2021 Acquisition price Opening balance as at 1.11.2021 / 1.11.2020 8 317 8 329 Transfer from Property, Plant and Equipment - -1 077 Increases from company merger - 1 065 Revaluation at fair value -906 - Balance as at 31.10.2022 / 31.10.2021 7 411 8 317 As at 31 October 2022, investment property represents two hotels (Liptov, Kosodrevina), the accommodation facility Otupné, Chata Solisko and Vila Zámoček with an aggregate book value of EUR 1,789 thousand (as at 31 October 2021: EUR 2,695 thousand), which are leased out to third parties that operate them. In addition, investment property also includes forest areas and lots of land obtained during an acquisition in 2009 in the book value of EUR 5,6 22 thousand (as at 31 October 2021: EUR 5,622 thousand). Chata Solisko and Vila Zámoček in the amount of EUR 833 thousand (as at 31 October 2021: EUR 1,065 thousand) were acquired as a result of the Company’s merger with 1. Tatranská. As at 30 April 2021, the lease of Hotel SKI to a third party was terminated and accordingly, the Company reclassified Hotel SKI from the Investment property category to the Property, plant and equipment category, in the amount of EUR 1,077 thousand. As of 31 October 2022, based on the current market and contractual conditions, the m anagement of the Company has revised the value of investment property downwards by EUR 906 thousand (as at 31 October 2021: the Management of the Company concluded that the assumptions that would lea d to a change in the value of these investments have not changed significantly). The value of the leased properties was determined by management's estimate. The estimate of management's fair value is based on discounting future cash flows arising from currently concluded lease contracts after taking into account non- recoverable costs of 4-10% in each of the objects at yield of 6-10%, assuming continuation at current prices. During the current period the lease contract of the Hotel Kosodrevina was reviewed a nd decreased compared to the previous period. Other assumptions also changed during the current period presented, resulting in revaluation of investment property and decrease in their fair value. The value of the land was determined by the management using market prices, and the final value is based on an estimate of market price per square meter, depending on the type of land and market transactions for similar lots of land. The price per m 2 for forest land is in a range between EUR 0.60 – EUR 1.10, the price for land with built- up areas and courtyards ranges from EUR 60 to EUR 110 per m 2 . Prices per m 2 for individual types of land did not change during the presented or comparable period. If the fair value of that part of investment property that was determined based on management's estimates differed by 10%, the carrying amount of investment property would be EUR 741 thousand higher or lower compared to the amount reported as at 31 October 2022 (as at 31 October 2021: EUR 832 thousand). In the period between 1 November 2021 and 31 October 2022, income from investment property accounted for EUR 138 thousand and direct operating cost related to investment property was EUR 39 thousand (between 1 November 2020 and 31 October 2021: income from in vestment property accounted for EUR 140 thousand, and direct operating cost related to investment property was EUR 38 thousand). Security As at 31 October 2022, a part of investment property in the amount of EUR 1,257 thousand was used as the security for bank loans (as at 31 October 2021: in the amount of EUR 1,325 thousand). 222 Separate Financial Statements Investment in an Associate and a Joint Venture in TEUR 31.10.2022 31.10.2021 MELIDA, a.s. (25% stake) 7 118 7 118 Total 7 118 7 118 On 15 December 2019, the Company signed an agreement regarding transfer of securities, on the basis of which it purchased an additional 15.5% stake in MELIDA a.s., which is the operator of the Špindlerův Mlýn ski resort in the Czech Republic. By signing th e contract, the Company became owner of a total share of 25% in the amount of EUR 7,118 thousand. As at 31 October 2022, the stake in MELIDA a.s. is reported as an investment in associates at cost. The purchase price of MELIDA a.s. in the amount of EUR 7,118 thousand was the fair value of the share held as at 30 October 2019, increased by an additional cash consideration in the amount of EUR 2,027 thousand. The valuation of the 9.5% stake held as at 30 October 2019 in the amount of EUR 4,498 thousand, which was increased by additional capital contributions of EUR 593 thousand, totaled EUR 5,091 thousand, was assessed by the Company as a reliable estimate of the fair value of the 9.5% stake held as of 15 December 2019. As at 31 October 2019, the Company recorded a financial investment of 9.5% stake in MELIDA, a.s. in the amount of EUR 4,498 thousand. As at 29 October 2019, the Company signed an agreement on the transfer of securities with CAREPAR, a.s., on the basis of which the Company acquired 19 ordinary shares of MELIDA, a.s. and thus became a direct shareholder (9.5% stake) in MELIDA, a.s.. Investments in Subsidiaries in TEUR 31.10.2022 31.10.2021 Szczyrkowski Ošrodek Narciarski S.A. (97% stake) 7 191 7 191 Muttereralm Bergbahnen Errichtungs GmbH (90% stake) 3 714 3 714 TMR Parks, a.s. (the original name: Tatry mountain resorts PL, a.s.) (100% stake) 2 327 27 GOPASS, a.s. (100% stake) 1 102 28 Korona Ziemi Sp. z o.o. (73% stake) 317 317 GOPASS SE (100% stake) 118 - Tatry mountain resorts CR, a.s. (100% stake) 79 79 TMR Finance CR, a.s. (100% stake) 78 78 TMR Ještěd a.s. (100% stake) 75 75 Mölltaler Gletscherbahnen GmbH (90% stake) 33 33 Tatry Mountain Resorts AT GmbH (100% stake) 32 32 International TMR services s.r.o. (100% stake) 8 - Mölltaler Gletscherbahnen GmbH & Co KG (90% stake) 0,002 0,002 Tikar D.O.O. (51% stake) - 1 Total investments in subsidiaries 15 074 11 574 As at 7 September 2022, a change of the name of the company Tatry mountain resorts PL, a.s. to TMR Parks, a.s. was registered in the Commercial Register. 223 Separate Financial Statements On 30 September 2022, the Company sold its 51% share in Tikar D.O.O. The consideration transferred was in the amount of EUR 2,350 thousand, part of which was used to settle loans with the corresponding outstanding interest in the amount of EUR 3,071 thousand. The transaction resulted in a loss from the sale of the subsidiary in the amount of EUR 721 thousand. As of 7 September 2022, an increase in the registered capital of TMR Parks, a.s. by EUR 2,300 thousand was entered in the Commercial Register. On 1 July 2022, the Company acquired 100% of the shares in the European company GOPASS SE with a value of CZK 2,924 thousand, which will be used for the purpose of expansion into the European market. On 22 June 2022, the company International TMR services, s.r.o. was established with a registered capital of CZK 200 thousand, in which the Company became the sole shareholder. The Company will serve to provide services within the Group. As at 12 April 2022, an increase in the registered capital of GOPASS, a.s. by EUR 1,074 thousand was entered in the Commercial Register. On 4 June 2021, GOPASS, a.s. was founded with registered capital of EUR 25 thousand. The Company became its sole shareholder. GOPASS, a.s. will be used for expansion into Alpine ski resorts which are planned to be incorporated into its platform. On 1 May 2021, the Company acquired a 90% share in Muttereralm Bergbahnen Errichtungs GmbH, amounting to EUR 3,714 thousand. The shareholding of 10% was acquired by the subsidiary Tatry mountain resorts AT GmbH. The Company operates a ski resort in Austria. On 1 November 2020, the Company merged with its subsi diary 1. Tatranská. As a result of this merger, the Company increased its direct interests in Korona Ziemi Sp. z o.o. and TIKAR D.O.O. in the amount of EUR 317 thousand (73% interest) and EUR 1 thousand (51% interest), respectively. On 31 May 2020, the Co mpany acquired 100% stake in 1.Tatranská, akciová spoločnosť for EUR 25,247 thousand. Acquired company operates the ski resort Štrbské pleso in High Tatras in Slovakia, provides restaurant and catering services and runs a ski and snowboard school. On 1 May 2019, the Company acquired 90% stake in Mölltaler Gletscherbahnen GmbH for 33 thousand and 90% stake in Mölltaler Gletscherbahnen GmbH & Co KG for EUR 1.8. 10% stake in Mölltaler Gletscherbahnen GmbH and 10% stake in Mölltaler Gletscherbahnen GmbH & Co KG were purchased by Tatry Mountain Resorts AT GmbH. The acquired Companies run the ski resorts Mölltaler Gletscher and Ankogel in Austria. On 16 February 2018 Tatry mountain resorts CR, a.s. was founded with a registered capital of CZK 2,000 thousand (EUR 79 thousand). Its sole shareholder has become the Company. The company Tatry mountain resorts CR, a.s. will serve for future acquisition in the Czech Republic. On 28 May 2018, the Company signed a purchase agreement of PHIG Holding GmbH, which was later renamed to Tatry mountain resorts AT GmbH. The purchase amount was agreed to EUR 32 thousand, with the Company becoming the sole owner of the business. The net asset value of the company at the time of acquisition amounted to EUR 32 thousand. On 14 September 2018, TMR Finance CR, a.s. was founded, with a registered capital of CZK 2,000 thousand (EUR 78 thousand). Its sole shareholder has become the Company. TMR Finance CR, a.s. issued bonds on the Prague Stock Exchange on 7 November 2018. On 5 May 2017, company Tatry mountain resorts CR, a.s. was incorporated, with share capital in total amount of CZK 2,000 thousand (EUR 75 thousand). The Company became sole shareholder in the new company. On 31 January 2018, the company Tatry mountain res orts CR, a.s. was renamed to TMR Ještěd a.s.. 224 Separate Financial Statements On 30 September 2017, company TMR Parks, a.s. (former name: Tatry mountain resorts PL, a.s.) , with share capital in total amount of EUR 27 thousand was incorporated. The Company became sole shareholder in the new company. Tatry mountain resorts PL, a.s. then on 6 December 2017 purchased the entire 75% stake in Slaskie Wesole Miasteczko Sp. Z o.o. in the total value of PLN 30,000 thousand. On 14 April 2015, the Company acquired a 70% stake in Polish company PS Rozrywka, which was later renamed to Ślaskie Wesole Miasteczko Sp. z o. o. (hereinafter referred to as SWM). For such a 70% stake, the Compa ny paid EUR 6,727 thousand. On 4 August 2015, the Company purchased an additional 5% stake, in a total amount of EUR 723 thousand. The company SWM is the operator of a theme park in the town of Chorzow, Poland. The total value of the assets, as the date of acquisition after revaluation at the fair value was EUR 9,489 thousand, and the total value of equity was EUR 9,077 thousand. On 6 December 2017 the Company sold its 75% stake in Ślaskie Wesole Miasteczko Sp. Z o.o., to the subsidiary Tatry mountain resorts PL, a.s. for PLN 30 million. On 5 March 2014, the Company purchased 97% shares of Szczyrkowski Osrode Narciarski S.A. (hereinafter referred to as SON), in a total amount of EUR 7,191 thousand. It is a company holding and running a ski centre in Poland. The total value of the assets, as the date of acquisition after revaluation at the fair value was EUR 13,321 thousand, and the total value of equity was EUR 9,031 thousand. Security As at 31 October 2022, shares in subsidiary SON in the amount of EUR 7,191 thousand (as at 31 October 2021: in the amount of EUR 7,191 thousand) were used to secure bank loans of the subsidiary SON. Deferred Tax Asset, Deferred Tax Liability Deferred tax asset (liability) was posted for the following items: in TEUR Receivables Payables Total 31.10.2022 31.10.2021 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Temporary differences related to: Non-current fixed and intangible assets - - -21 975 -22 501 -21 975 -22 501 Investments property - - -595 -785 -595 -785 Losses from impairment of trade receivables and other assets 4 791 6 996 - - 4 791 6 996 Cash flow hedge 691 398 - - 691 398 Provisions and liabilities 526 183 - - 526 183 Leases (IFRS 16) - - -110 -181 -110 -181 Tax losses 469 753 - - 469 753 Set-off -6 477 -8 330 6 477 8 330 - - Total - - -16 203 -15 137 -16 203 -15 137 225 Separate Financial Statements Deferred tax asset was not posted for the following items (tax base): in TEUR 31.10.2022 31.10.2021 Tax losses - - Total - - Deferred tax asset from unredeemed losses from previous periods is posted only up to the amount to which it may be probably redeemed in the future against future tax profits. Expected last periods for redemption of tax losses are as follows: in TEUR 2023 2024 2025 post 2025 Tax losses 1 343 891 - - Based on the legislative change, the tax loss can be deducted from the tax base for 2022 as follows: • for the year 2018 - in the amount of ¼ , if it has not been applied under the Corona Act from the tax base for 2019, • for the year 2019 - in the amount of ¼ , • for the year 2020 - in any amount, but not more than 50% of the tax base of the current year, • for the year 2021 - in any amount, but not more than 50% of the tax base of the current year. Inventory in TEUR 31.10.2022 31.10.2021 Goods 947 1 181 Material 1 107 975 Chalets and apartments developed for sale 575 506 Total 2 629 2 662 Chalets and apartments for sale worth EUR 575 thousand are recreational objects in the cottage settlement Bobrovečky 1, the construction of which the Company carries out and subsequently plans to sell to third parties. Revenue from the sale of recreational objects will be recognized in 2023 or later. These are 16 recreational objects in the cottage settlement Bobrovečky 1, Liptovská Ondrášová. In the period from 1 November 2021 to 31 October 2022, inventories amounting to EUR 9,104 thousand (from 1 November 2020 to 31 October 2021: EUR 4,821 thousand) were recognized as an expense during the year and included in the income statement. The Company did not create a valuation allowance for inventories in the reporting and comparative period. Security As at 31 October 2022, inventory of EUR 2,629 thousand (as at 31 October 2021: EUR 2,662 thousand) was used to secure bank loans. 226 Separate Financial Statements Loans Provided in TEUR 31.10.2022 31.10.2021 Short-term 182 439 113 230 Long-term 23 351 11 137 Total 205 790 124 367 Impairment allowance -22 562 -31 691 Total with allowance 183 228 92 676 Table below summarizes short-term loans as at 31 October 2022 and 31 October 2021. As at 31 October 2022, the weighted average interest rate applied on the short-term loans was 5.45% p.a. (as at 31 October 2021: 6.95% p.a.). As at 31 October 2022 in accordance with the rules of IFRS 9, the value of the provision for short-term loans was EUR 6,447 thousand (as at 31 October 2021: EUR 4,169 thousand) and the specific provision for short-term loans to companies within the Group - Ślaskie Wesole Miasteczko Sp. z o.o./ TMR Parks, a.s. in the amount of EUR 16,116 thousand (as at 31 October 2021: EUR 27,522 thousand). in TEUR 31.10.2022 31.10.2020 Debtor Interest rate type Loan value Loan value Szczyrkowski Osrodek Narciarski S.A. 7% p.a. 36 941 34 456 TMR Parks, a.s. (Tatry mountain resorts PL, a.s.) - 35 725 - TMR Parks, a.s. (Tatry mountain resorts PL, a.s.) 7% p.a. 28 692 27 031 Ślaskie Wesole Miasteczko Sp. z o. o. 12M EURIBOR + 6% p.a. 27 142 - Ślaskie Wesole Miasteczko Sp. z o. o. 7% p.a. 19 902 21 378 Mölltaler Gletscherbahnen GmbH & Co KG 7% p.a. 9 122 6 061 Szczyrkowski Osrodek Narciarski S.A. 7% p.a. 5 454 4 582 TMR Ještěd a.s. 7% p.a. 3 743 2 517 Ślaskie Wesole Miasteczko Sp. z o. o. 7% p.a. 3 227 - TMR Ještěd a.s. 7% p.a. 2 955 2 402 Tatry mountain resorts CR, a.s. 7% p.a. 2 537 2 272 Korona Ziemi 7% p.a. 1 615 1 495 Ślaskie Wesole Miasteczko Sp. z o. o. 7% p.a. 1 193 - Thalia s.r.o. 5% p.a. 1 033 990 SON Partner 7% p.a. 963 948 TMR Ještěd a.s. 7% p.a. 901 813 Muttereralm Bergbahnen Errichtungs GmbH 5% p.a. 468 - Tatry mountain resorts AT GmbH 5% p.a. 349 333 TMR Finance CR a.s. 4.51% p.a. 205 136 OSTRAVICE HOTEL a.s. 4% p.a. 138 - P.M.I.R a.s. 5% p.a. 132 126 Other 4% p.a. 2 71 TMR Parks, a.s. (Tatry mountain resorts PL, a.s.) 7% p.a. - 1 193 TIKAR d.o.o. 4% p.a. - 329 Muttereralm Bergbahnen Errichtungs GmbH 5% p.a. - 363 HRQ services SK s. r. o. 5% p.a. - 6 TMR Parks, a.s. (Tatry mountain resorts PL, a.s.)* 7% p.a. - 5 728 Total short-term provided loans 182 439 113 230 * These items represent bills of exchange. 227 Separate Financial Statements Table below summarizes long-term loans as at 31 October 2022 and 31 October 2021. As at 31 October 2022, the weighted average interest rate applied on the long-term loans was 4.68 % p.a. (as at 31 October 2021: 5.76% p.a.). in TEUR 31.10.2022 31.10.2020 Debtor Interest rate type Loan value Loan value EUROCOM Investment s.r.o. 4.75% p.a. 11 781 - Molltaler Gletscherbahnen Gesellschaft GmbH & Co KG 5% p.a. 10 498 7 584 MELIDA, a.s. - 894 852 WORLD EXCO, s.r.o. 4.75% p.a. 178 - TIKAR d.o.o. 10% p.a. - 2 574 OSTRAVICE HOTEL a.s. 4% p.a. - 127 Total long-term provided loans 23 351 11 137 For more information on credit risk management, see Note 40 – Information on Risk Management, Credit Risk section. Trade Receivables in TEUR 31.10.2022 31.10.2021 Trade receivables 2 657 3 391 Impairment allowance to receivables -233 -193 Total 2 424 3 198 Short-term 2 424 3 198 Long-term - - Total 2 424 3 198 As at 31 October 2022, trade receivables amount to EUR 2,424 thousand and comprise current operating receivables. As at 31 October 2021, trade receivables involved current operating receivables amounting to EUR 3,198 thousand. The ageing structure of receivables is as follows: in TEUR 31.10.2022 31.10.2021 Gross Impairment allowance Net Gross Impairment allowance Net Within due period 2 267 -55 2 212 2 366 - 6 2 360 Overdue within 30 days 136 -3 133 721 -19 702 Overdue from 30 days to 180 days 54 -36 18 153 -17 136 Overdue from 180 days to 365 days 76 -15 61 1 -1 - Overdue over 365 days 123 -123 - 150 -150 - Total 2 656 -232 2 424 3 391 -193 3 198 As at 31 October 2022 and 31 October 2021, the amount of impairment allowance is related to current operating receivables. 228 Development of value adjustment during accounting period is shown in the following overview: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 193 76 Creation of value adjustment 71 128 Use -25 -2 Reversal of value adjustment -7 -9 Balance as at 31.10.2022 / 31.10.2021 232 193 Security As at 31 October 2022, receivables in amount of EUR 2,424 thousand (as at 31 October 2021: EUR 3,198 thousand) were used to secure bank loans. Other Receivables in TEUR 31.10.2022 31.10.2021 Advance payments made 4 051 7 127 Total 4 051 7 127 Short-term 3 923 6 819 Long-term 128 308 Total 4 051 7 127 The advances provided, totaling EUR 3, 587 thousand, are mainly related to unfinished investment activity (as at 31 October 2021: EUR 462 thousand). The advance provided in respect of future planned acquisitions in the amount of EUR 6,388 thousand (value as at 31 October 2021) was transferred on 28 February 2022 to the subsidiary TMR Parks, a.s. Assets held for sale and liabilities directly associated As at 31 October 2022, the Company did not recognize any assets held for sale or any related liabilities. As ot 31 October 2021, the Company reported the following assets held for sale and related liabilities: in TEUR 2021 Intangible assets 948 Other current liabilities -860 Total 88 At the Company's Annual General Meeting held on 1 July 2021, the shareholders approved the sale of part of the business to subsidiary GOPASS, a.s. As a result, the related assets and liabilities have been reclassified and are reported as assets held for sale and related liabilities. Intangible assets in the total amount of EUR 948 thousand are represented by the Gopass software including its complete upgrades of EUR 561 thousand, the Gopass.travel mobile application of EUR 133 thousand, Revenue management software of EUR 130 thousand, as well as two other supporting software Separate Financial Statements 229 products in the aggregate value of EUR 123 thousand. Other current liabilities in the amount of EUR 860 thousand represent loyalty credits of Gopass clients. These assets and related liabilities are classified as held for sale in connection with the establishment of the subsidiary GOPASS, to which the Company plans to sell these assets. The Company expects to sell these assets within one year of the date of their classification as held for sale. Fair value less costs to sell represents an approximation of the original carrying amount. The Company did not recognize any revaluation gains or losses on classification of the assets as held for sale. After the end of the financial year, the Company sold the Gopass division in excess of its carrying amount. Information regarding individual segments where the assets originate from can be found in Note 4 - Information about Operating Segments. Other Assets in TEUR 31.10.2022 31.10.2021 Prepaid expenses and accrued income 1 563 971 Other tax assets - 168 Finance sublease receivables 97 149 Derivative operations - currency SWAP 254 - Other assets 2 419 46 271 Impairment allowance -16 -1 420 Total 4 317 46 139 Short-term 4 268 46 043 Long-term 49 96 Total 4 317 46 139 Other assets totalling EUR 2,419 thousand mainly represent a receivable from Penzión Energetik s.r.o. . Based on an assignment contract and set-off agreement, the Company records a receivable against Penzión Energetik s.r.o.in the amount of EUR 1,994 thousand as at 31 October 2022 (31 October 2021: EUR 1,994 thousand). As at 31 October 2021, the other assets in the total amount of EUR 46,271 thousand, in addition to the receivable against Penzión Energetik s.r.o., included a receivable from the sale of the property of Aquapark Tatralandia and Holiday Village Tatralandia to the subsidiary Tatry mountain resorts PL, a.s., in the amount of EUR 35,725 thousand, as well as the Company's receivable from the sale of 75% of the shareholding in Slaskie Wesole Miasteczko Sp. z o.o. against Tatry mountain resorts PL, a.s., in the amount of EUR 6,491 thousand. The Company's receivable from the sale of the property of the Aquapark Tatralandia and Holiday Village Tatralandia was in the period from 1 November 2021 to 31 October 2022 due to a change in the payment method reclassified as a promissory note for direct debit (for more information, see Note 23 - Loans provided). The Company's receivable from the sale of 75% of the shares was settled by mutual crediting on 6 April 2022. As at 31 October 2021 other assets of EUR 1,402 thousand represents also a receivable from subsidies from the state budget for the tourism sector in situation caused by the COVID-19 for the period of November 2020 to May 2021. This receivable was paid during the financial year. For more information on government grants, see Note 35 - Other liabilities. As at 31 October 2022, in accordance with the rules of IFRS 9, the impairment allowance for other assets amounted to EUR 16 thousand (as at 31 October 2021: EUR 1,420 thousand). Separate Financial Statements 230 Financial Investments in TEUR 31.10.2022 31.10.2021 Financial instruments measured at fair value through profit or loss 36 36 Total 36 36 As at 31 October 2022 the financial investments in the amount of EUR 36 thousand represent a share in the company Tatranské družstvo (as of 31 October 2021: EUR 36 thousand) . Cash and Cash Equivalents in TEUR 31.10.2022 31.10.2021 Cash 10 10 Meal vouchers 31 - Current accounts with banks 5 293 10 188 Impairment allowance -2 -4 Total 5 332 10 194 As at 31 October 2022, the Company created impairment allowance of EUR 2 thousand in light of IFRS 9 expected credit loss changes (as at 31 October 2021: EUR 4 thousand). Security The Company can freely dispose of bank accounts. Equity Share capital and share premium As at 31 October 2022 and 31 October 2021, the approved, subscribed and fully paid-up share capital consisted of 6,707,198 ordinary shares in the nominal value of 7 EUR per share. The emission of shares is marked by ISIN: SK1120010287. On 25 May 2022, an ordinary general assembly of Tatry mountain resorts, a.s. was held. The general assembly decided, among other things, on the settlement of loss Tatry mountain resorts, a.s. generated in the period between 1 November 2020 and 31 October 2021 according to the financial statements compiled for that accounting period, in the amount of EUR 16,905 thousand as follows: - The balance in the amount of EUR 16,905 thousand transfer to losses from previous periods. Shareholders have a right to the payment of dividends, and the value of share vote in the Company general meeting is determined as a ratio of the value of one share and the total value of share capital. The following table presents the Company shareholders and the number of shares, ownership interest and voting rights. Separate Financial Statements 231 31 October 2022 Number Ownership Ownership Voting of shares interest interest rights in TEUR % % C.I. CAPITAL INDUSTRIES LIMITED 1 973 197 13 812 29.4% 29.4% FOREST HILL COMPANY, s.r.o. 1 030 919 7 216 15.4% 15.4% NEEVAS INVESTMENTS LIMITED 992 666 6 949 14.8% 14.8% STOCKLAC LIMITED 800 000 5 600 11.9% 11.9% RMSM1 LIMITED 404 486 2 831 6.0% 6.0% Minority shareholders 1 505 930 10 542 22.5% 22.5% Total 6 707 198 46 950 100% 100% 31 October 2021 Number Ownership Ownership Voting of shares interest interest rights in TEUR % % C.I. CAPITAL INDUSTRIES LIMITED 1 973 197 13 813 29.4% 29.4% FOREST HILL COMPANY, s.r.o. 1 030 919 7 216 15.4% 15.4% NEEVAS INVESTMENTS LIMITED 909 173 6 364 13.6% 13.6% STOCKLAC LIMITED 909 731 6 368 13.6% 13.6% RMSM1 LIMITED 677 666 4 744 10.1% 10.1% Minority shareholders 1 206 512 8 445 18.0% 18.0% Total 6 707 198 46 950 100% 100% Profit / (loss) per share 31.10.2022 31.10.2021 Profit / (loss) for the period in TEUR 3 287 -16 905 Weighted average number of ordinary shares 6 707 198 6 707 198 Profit / (loss) per share in EUR 0.490 -2.520 Legal reserve fund As at 31 October 2022, the legal reserve fund amounts to EUR 7,018 thousand (as at 31 October 2021: 7,018 thousand). According to the Slovak legislation, the creation of legal reserve fund is compulsorily created on a yearly basis in the minimum amount of 10% of the Company net profit and at least up to 20% of subscribed share capital (cumulatively). The legal reserve fund can only be used for the payment of Company losses and cannot be used for the payment of dividends. The calculation of reserve fund is made according to Slovak legal regulations. Profit (Loss) Distribution For the fiscal year ended on 31 October 2022, the Company’s management proposes the distribution of total profit in the amount of EUR 3,287 thousand as follows: − Allocation to the legal reserve fund of EUR 329 thousand − Allocation to the social fund on the basis of a collective agreement in the amount of EUR 16 thousand − Balance of EUR 2,942 thousand transfer to retained earnings of previous periods Separate Financial Statements 232 232 Loans and Borrowings in TEUR 31.10.2022 31.10.2021 Loans and borrowings received 165 589 132 408 Total 165 589 132 408 Short-term 78 317 25 847 Long-term 87 272 106 561 Total 165 589 132 408 Creditor Interest rate type Maturity date Unpaid amount as at 31.10.2022 in TEUR TMR Finance CR, a.s. 4.51% p.a. 30.11.2022 60 894 J&T BANKA, a.s. 3M EURIBOR + 4.75% 31.12.2029 38 116 J&T BANKA, a.s. 3M EURIBOR + 4.75% 31.12.2026 21 494 J&T BANKA, a.s. 3M EURIBOR + 5.25% 31.12.2026 20 116 EUROCOM Investment s.r.o. 4% p.a. On demand within 15 days 11 285 J&T BANKA, a.s. 3M EURIBOR + 4.75% 31.12.2026 9 418 Ślaskie Wesole Miasteczko Sp. z o. o. 7% p.a. 31.12.2023 4 147 GOPASS SE - 31.12.2032 119 Total 165 589 Creditor Interest rate type Maturity date Unpaid amount as at 31.10.2021 in TEUR TMR Finance CR, a.s. 4.51% p.a. 30.11.2022 58 128 J&T BANKA, a.s. 12M EURIBOR + 4.5% 31.1.2024 20 668 365.bank a.s. 12M EURIBOR + 4.657% p.a. 31.12.2028 19 141 EUROCOM Investment s.r.o. 4% p.a. 30.4.2022 7 929 365.bank a.s. 12M EURIBOR + 4.571% p.a. 30.6.2022 7 055 365.bank a.s. 3M EURIBOR + 3.818% p.a. 27.5.2022 4 959 365.bank a.s. 12M EURIBOR + 4.684% p.a. 31.12.2028 4 670 365.bank a.s. 12M EURIBOR + 4.686% p.a. 30.6.2032 4 223 Ślaskie Wesole Miasteczko Sp. z o. o. 7% p.a. 31.12.2023 3 955 365.bank a.s. 12M EURIBOR + 4.982% 31.12.2024 1 680 Total 132 408 The weighted average of interest rates for loans and borrowings as at 31 October 2022 accounted for 4.72 % (as at 31 October 2021: 4.57%). The interest is due on a monthly and quarterly basis. For more information, see Note 12 – Finance Income and Expense. Separate Financial Statements 233 As at 30 March 2022, the Company drew funds from a syndicated loan from J&T Banka and thus refinanced its existing loans from J&T Banka and 365.bank, the value of which was EUR 62,396 thousand as at 31 October 2021. The total outstanding amount of the loan to J&T Bank as at 31 October 2022 is of EUR 89,144 thousand. The funds provided served primarily as a loan to a subsidiary TMR Parks, a.s. to cover the purchase price for the transfer of EUROCOM Investment, s.r.o. shareholding of EUR 10,000 thousand, the refinancing of loans in the acquired companies EUROCOM Investment, s.r.o. and WORLD EXCO s.r.o. in the amount of EUR 11,651 thousand and the construction of the Biela púť - Priehyba cableway, while the amount drawn at the end of the financial year as at 31 October 2022 amounted to EUR 9,372 thousand out of the total loan value of EUR 12,300 thousand. As at 31 October 2022, the Company has committed to meet the covenant total consolidated EBITDA, which may not be less than EUR 29,000 thousand, and the covenant LTV ratio, which may not be higher than 60%. However, failure to meet the LTV ratio does not have effect the maturity of the debt only on the amount of security. The Company evaluated fulfillment of covenants as at 31 October 2022. The covenants which evaluation is due within the dates of issuing the consolidated financial statements were met. Fulfillment of other covenants will be evaluated later. In the period fro m 1 November 2020 to 31 October 2021, the Company drew new loans from Poštová banka, a.s. and J&T Banka in the amount of EUR 1,620 thousand and EUR 20,000 thousand, respectively. The loan from Poštová banka, a.s. was used to finance the construction of the Zadné vody reservoir; the outstanding balance of the loan as at the reporting date was EUR 1,680 thousand. The loan from J&T Banka was used to cover operating costs; the outstanding balance of the loan as at the reporting date was EUR 20,668 thousand. On 2 December 2018 the Company drawn new loan from TMR Finance CR, a.s. in the total amount of EUR 58,773 thousand. The outstanding unpaid balance of the loan as of the date of financial statements was of EUR 60,894 thousand. On 7 October 2019, the Company signed a short-term loan agreement with EUROCOM Investment, s.r.o. The amount of the loan was gradually increased to EUR 10,500 thousand by several amendments. By the Amendment no. 4, the repayment term was changed from 30 April 2022 to "on demand within 15 days". The total outstanding balance of the loan at the reporting date is EUR 11,285 thousand (31 October 2021: EUR 7,929 thousand). Security The following assets were used as a security of bank loans and bonds: land, technology and operating buildings of mountain lift facilities: lifts, chair-lift rope ways (hereinafter: RWs), funicular RWs, aerial RWs, gondola RWs, sub stations, economic buildings and structures: Hotel Tri Studničky, Hotel Srdiečko, Hotel Kosod revina, Hotel Liptov, Hotel SKI, former telecommunications building, Bungalows. All movable assets of the centres Jasná and High Tatras are put into pledge, also including trade receivables. As at 31 October 2022, lots of land, buildings and equipment, property investments, inventory and receivables of EUR 234,557 thousand were used as a security of bank loans (as at 31 October 2021: in the amount of EUR 230,443 thousand). Separate Financial Statements 234 Lease Liabilities in TEUR Opening balance as at 1.11.2020 35 646 Increases from company merger 1 209 Additions 2 534 Modifications 919 Interest 1 628 Lease payments -4 716 Balance as at 31.10.2021 37 220 Short-term 7 669 Long-term 29 551 Total 37 220 Additions 25 066 Modifications 1 782 Interest 2 659 Lease payments -7 066 Balance as at 31.10.2022 59 661 Short-term 7 760 Long-term 51 901 Total 59 661 The maturity of lease liabilities is as follows: in TEUR 31.10.2022 31.10.2021 Less than 1 year 7 767 7 669 1 - 5 years 14 064 8 650 Above 5 years 37 830 20 901 Total 59 661 37 220 Separate Financial Statements 235 Separate Financial Statements Trade Liabilities in TEUR 31.10.2022 31.10.2021 Trade Liabilities 7 705 7 784 Unbilled deliveries 2 513 1 244 Total 10 218 9 028 Short-term 9 049 8 847 Long-term 1 169 181 Total 10 218 9 028 As at 31 October 2022, long-term liabilities amounting to EUR 1,169 thousand are mainly retention fees against suppliers for the construction of the Centrum Jasná complex and the Biela Púť - Priehyba cableway. As at 31 October 2022, overdue liabilities amounted to EUR 922 thousand (as at 31 October 2021: EUR 962 thousand). Overdue liabilities as at 31 October 2022 represent primarily unpaid retention fees due to signed construction contracts with suppliers for their performed and realised construction of individual buildings, in some cases repayment schedules are agreed with suppliers. Hedge Accounting The Company applies only cash-flow hedges and hedges only against foreign currency risk. Since the Company took out a loan from the Czech subsidiary, the Company has opened a position in CZK. The Company decided to manage the foreign currency risk against the Czech Crown on this particular instrument by hedging against changes in foreign currency exchange rates. The Company has decided not to hedge any other risks arising from this particular instrument besides the foreign currency risk, as they are managed otherwise. Please refer to section financial risks for further information. The hedged item is a long-term bullet-payment loan denominated in CZK provided by a Czech subsidiary with a fixed repayment schedule. Hedging instrument is a Foreign currency swap, swapping the CZK repayments on the loan exposure for repayments in EUR, retaining the fixed nature of interest rates in both currencies. There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign exchange and swap contracts match the terms of the loan (nominal value and repayment schedules). The Company has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange swap contracts are identical to the hedged risk components. As the terms of the swap copy the terms of the loan (nominal value and repayment schedules), the Company expects the hedging relationship to be effective to a high degree. The hedge inefficiencies can arise when the Company ceases to adhere to the repayment schedule. The company expects to repay the loan in accordance with the repayment schedule. Hedging Instrument profile – the hedging instrument has a fixed maturity in November 2022 for the entire nominal value of EUR 57.9 million. The forward rate used for hedging is 25.870 CZK / 1 EUR. 236 In the current period from 1 November 2021 to 31 October 2022, the impact of hedging instrument and hedged instrument on statement of financial position is: In ‘000 EUR Notional amount Carrying amount Line item in statement of financial position Changes in FV used for measuring ineff. Foreign exchange swap 57 943 254 Other assets 1 532 In ‘000 EUR Change in fair value used for measuring ineffectiveness. Cash flow hedge reserve Cost of hedging reserve Foreign exchange swap -1 532 -2 602 0 In current period, the effect of cash flow hedge on statement of financial performance is: In ‘000 EUR Total hedging gain/(loss) recognised in OCI Ineffectiveness recognised in profit or loss Line item in the statement of profit or loss Cost of hedging recognised in OCI Amount reclassified from OCI to profit or loss Line item in the statement of profit or loss Foreign exchange swap -1 103 0 - 0 379 Interest income calculated using the effective interest rate and Interest expense 2 865 Profit / (loss) from financial operations, net Separate Financial Statements 237 In previous period from 1 November 2020 to 31 October 2021, the impact of hedging instrument and hedged instrument on statement of financial position was: In ‘000 EUR Notional amount Carrying amount Line item in statement of financial position Changes in FV used for measuring ineff. Foreign exchange swap 57 943 -1 277 Other liabilities 920 In ‘000 EUR Change in fair value used for measuring ineffectiveness. Cash flow hedge reserve Cost of hedging reserve Foreign exchange swap -920 -1 499 0 In previous period, the effect of cash flow hedge on statement of financial performance was: In ‘000 EUR Total hedging gain/(loss) recognised in OCI Ineffectiveness recognised in profit or loss Line item in the statement of profit or loss Cost of hedging recognised in OCI Amount reclassified from OCI to profit or loss Line item in the statement of profit or loss Foreign exchange swap -1 949 0 - 0 317 Interest income calculated using the effective interest rate and Interest expense 3 315 Profit / (loss) from financial operations, net Separate Financial Statements 238 Other Liabilities in TEUR 31.10.2022 31.10.2021 Liabilities towards employees 2 831 1 430 Advances received 5 818 1 567 Hedging derivative transactions - foreign exchange SWAP - 1 277 Deferred revenues 4 770 3 896 Liabilities to shareholders from reduction in share capital 213 213 Contingent consideration 884 819 Other 3 266 2 435 Value added tax liabilities 652 1 593 Total 18 434 13 230 Short-term 17 550 12 411 Long-term 884 819 Total 18 434 13 230 As at 31 October 2022, liabilities towards employees represent mainly a provision for bonuses for the fiscal year between 1 November 2021 and 31 October 2022 in the amount of EUR 1,744 thousand (as at 31 October 2021: EUR 541 thousand) and wage liabilities to employees in the amount of EUR 1,047 thousand (as at 31 October 2021: EUR 862 thousand). As at 31 October 2022, advance payments received comprise in particular of advance payments received on construction of the water structure Pumping station and substation – Otupné, which the Company implements, in the amount of EUR 3,000 thousand, as well as advance payments for the purchase of Chalets in the amount of EUR 265 thousand (as at 31 October 2021 : EUR 328 thousand) and advance payments for hotel accommodation in the amount of EUR 2,511 thousand (as at 31 October 2021: EUR 1,205 thousand). As at 31 October 2022, derivative operations - currency SWAP represents the fair value of the derivative in the amount of EUR 254 thousand recognised within Note 27 - Other assets (as at 31 October 2021: recognised within Note 35 - Other liabilities in the amount of EUR 1,277 thousand). For more information, see Note 34 - Hedge Accounting. As at 31 October 2022, the deferred revenues include mainly the amount of EUR 3,485 thousand for accrual of ski passes sold - “Šikovná sezónka“ (as at 31 October 2021: EUR 2,706 thousand), the subsidy amount of EUR 453 thousand for construction of the cabl eway Furkotka in ski resort Štrbské pleso (as at 31 October 2021: EUR 464 thousand) and the amount of EUR 74 thousand represents a subsidy for the Hotel Tri Studničky (as at 31 October 2021: EUR 76 thousand). The provision for discounts on purchases was as at 31 October 2022 in total amount of EUR 384 thousand (as at 31 October 2021: EUR 384 thousand). Deferred revenues relating to government grants amounted to EUR 527 thousand as at 31 October 2022 (as at 31 October 2021: EUR 550 thousand). Details of movement of government grants are presented in the table: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 550 438 Received during the year 576 6 299 Increases from company merger - 470 Released to the statement of profit and loss and other comprehensive income -599 -6 657 Balance as at 31.10.2022 / 31.10.2021 527 550 Separate Financial Statements 239 State aid related to COVID-19 was received during the year in the amount of EUR 576 thousand. This is short-term state aid that has been recognized in the statement of comprehensive income as income during the period in which the related costs to be reimbursed are recorded. In the period from 1 November 2021 to 31 October 2022 the state aid was recognized in the statement of comprehensive income in the amount EUR 599 thousand (as at 31 October 202: EUR 6,657 thousand). For more details see Note 9 - Purchased Services and Note 10 - Personnel Expenses. Details of government grants recognised in the statement of other comprehensive income are presented in the table: in TEUR 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 State aid related to rental costs 206 76 State aid related to wages and salaries 370 5 157 State aid related to other costs 23 1 424 Total 599 6 657 As at 31 October 2022, the liabilities to shareholders from the reduction in share capital amount to EUR 213 thousand (31 October 2021: EUR 213 thousand) and comprise mainly the remaining liability from the reduction in share capital in 2013 totaling EUR 174,388 thousand. As at 31 October 2022, the conditional part of the purchase price of EUR 884 thousand (31 October 2021: EUR 819 thousand) represents the part of the purchase price for the subsidiary Muttereralm Bergbahnen Errichtungs GmbH (see also Note 5 – Increase and Decrease of Shares in Companies) that is conditional on the seller fulfilling the contractually stipulated conditions. As at 31 October 2022, the amount of other liabilities mainly contains EUR 2,125 thousand liabilities related to social security (as at 31 October 2021: EUR 2,055 thousand) as well as liabilities in respect of Gopass credits sold in the total amount of EUR 660 thousand. The creation and drawing from the social fund during the accounting period are presented in the table below: in TEUR 31.10.2022 31.10.2021 Balance as at 1.11.2021 / 1.11.2020 -3 18 Creation of social fund against expenses 86 58 Drawing -73 -79 Balance as at 31.10.2022 / 31.10.2021 10 -3 Separate Financial Statements 240 Provisions in TEUR Unused vacations Other Total Opening balance as at 1.11.2021 536 24 560 Creation of provisions during the year 754 113 867 Use of provisions during the year -540 - -540 Balance as at 31.10.2022 750 137 887 31.10.2022 31.10.2021 Short-term 754 540 Long-term 133 20 Total 887 560 Bonds Issued On 10 October 2018, the Company issued the third bond issue in the total value of EUR 90,000 thousand. In February 2021, the Company issued new TMR V bonds in the total value of up to EUR 150 million, at an interest rate of 6% p.a. and with a maturity date in 2026. On 28 October 2022, the Company issued TMR VI bonds up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and maturity in 2027. On 28 October 2022, EUR 1,552 thousand worth of bonds were traded. Details on particular bonds as of end of current and immediately preceding accouting period are presented in the table below. in TEUR ISIN Date of issue Maturity date Currency of the issue Face value of the issue in the initial currency in '000 Interest rate p.a. in % Effective interest rate p.a. in % Carrying value as at 31.10.2022 Carrying value as at 31.10.2021 Name TMR III 4.40%/2024 SK4120014598 10.10.2018 10.10.2024 EUR 90 000 4.4 4.940 89 229 88 825 TMR V 6.00%/2026 SK4000018255 2.2.2021 2.2.2026 EUR 110 000 6.0 6.697 113 091 112 612 TMR VI 5.40%/2027 SK4000021713 28.10.2022 28.10.2027 EUR 59 000 5.4 5.924 1 284 - Total 203 604 201 437 Short-term 5 108 5 108 Long-term 198 496 196 330 Total 203 604 201 438 Separate Financial Statements 241 All three bonds represent a book-entry security in bearer form, and their issue was approved by the National Bank of Slovakia. Covenants Issue of TMR III - The Company has committed that, until all of its monetary obligations under the Bonds have been met, the Net Senior Debt to Modified EBITDA (Leverage) ratio will not exceed 8. The Company has also committed to the LTV ratio, this indicator may not be higher than 70%. However, failure to meet the LTV ratio does not affect the maturity of the debt only the amount of security. Issue of TMR V does not include conditions causing its immediate repayment. At the same time, the Company is entitled under certain conditions to postpone payment of interest. Issue of TMR VI - The Company has committed that until all of its monetary obligations under the Bonds have been satisfied, the LTV ratio may not be higher than 70%. However, failure to meet the LTV indicator does not affect the maturity of the debt only the amount of security. The Company evaluated fulfillment of covenants as at 31 October 2022. The covenants which evaluation is due within the dates of issuing the consolidated financial statements were met. Fulfillment of other covenants will be evaluated later. All of the three issues are associated with regular payment of the coupon which is provided by the Company from its own resources. Out of the total value of liability of EUR 203,604 thousand (as at 31 October 2021: EUR 201,438 thousand), a short-term portion amounts to EUR 5,108 thousand, which represents a liability from coupon due in the period of 12 months after 31 October 2022 (as at 31 October 2021: EUR 5,108 thousand, which represents a liability from coupon due in the period of 12 months after 31 October 2021). Security A right of lien (“Pledge”) for the issued TMR III bonds on the property, movable assets and part of receivables owned by the Company, in the total amount of EUR 97,578 thousand (as at 31 October 2021: EUR 103,254 thousand). It is property that is not used as a security for other Company ’s liabilities. Separate Financial Statements 242 Information about the Fair Value The following table contains information about the book value and fair value of Company financial assets and liabilities, that are not accounted for at fair value: in TEUR Carrying value Fair value 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Financial assets Loans provided 23 183 228 92 676 179 276 92 914 Total 183 228 92 676 179 276 92 914 in TEUR Carrying value Fair value 31.10.2022 31.10.2021 31.10.2022 31.10.2021 Financial liabilities Bonds issued 37 203 604 201 438 201 752 202 458 Total 203 604 201 438 201 752 202 458 The table does not present financial instruments for which the carrying amount is considered to be an approximation of fair value. Changes in Liabilities Arising from Financial Activities in TEUR 1 November 2021 Additions / Drawings Payment Interest Additions due to business combinations Other 31 October 2022 Loans and borrowings 132 408 37 023 -13 505 6 727 - 2 936 165 589 Lease liabilities 37 220 26 848 -7 066 2 659 - - 59 661 Bonds issued 201 438 1 518 -10 560 11 457 - -249 203 604 Total liabilities from financing activities 371 066 65 389 -31 131 20 843 - 2 687 428 854 In case of loans and borrowings, the category Other represents the impact of foreign currency loan hedge (see also Note 34 – Hedge accounting). In case of issued bonds, the category Other represents administrator’s fee for bond issuance administration. in TEUR 1 November 2020 Additions / Drawings Payment Interest Additions due to business combinations Other 31 October 2021 Loans and borrowings 99 543 28 977 -4 832 5 448 - 3 272 132 408 Lease liabilities 35 646 3 453 -4 716 1 628 1 209 - 37 220 Bonds issued 203 244 109 636 -120 560 11 302 - -2 184 201 438 Total liabilities from financing activities 338 433 142 066 -130 108 18 378 1 209 1 088 371 066 Separate Financial Statements 243 Information on Risk Management This section provides details of risks to which the Company is exposed, and the method of management of the risks. The Company is exposed to risks in the following areas: - Credit Risk - Liquidity Risk - Market Risk - Operational Risk The management is generally responsible for setting and control of Company risk management. Credit Risk The Company is exposed to this risk mainly with respect to trade receivables, lease receivables, other receivables, advance payments and loans provided. The volume of exposure to this risk is expressed as the book value of these assets in the balance sheet in case that no form of guarantees is provided. The book value of receivables, advance payments and loans provided expresses the highest possible book loss that would have been posted if the counterpart completely fails in performing its contractual obligations, and all securities and guarantees would have a zero value. Therefore, this value far exceeds the expected losses which are included in the provisions for irrecoverable debts. Before signing major contracts the Company board at regular board meetings evaluates credit risk related to counterpart. In case of identifying significant risks, the Company withdraws from signing the contract. Loans provided The Company assigns a degree of credit risk to loans provided on the basis of data that is expected to predict credit risk (including but not limited to external ratings, financial statements, management accounts and cash flow projections and available counterparty press releases), potential days past due and applying experienced credit judgment. The grades of credit risk are defined by qualitative and quantitative factors that indicate the risk of default and are consistent with external credit rating definitions from credit rating agencies such as Moody's and Standard & Poors. The probability of default is then assigned based on historical data collected by these agencies. The default loss (LGD) parameters generally reflect an expected rate of return of 40%, except when the loan is reduced by a loan. Probability of default (PD) Loss Given Default (LGD) Carrying amount Impairment allowance (ECL) 1.99% - 7.38% 40% 205,790 -22,562 Sensitivity analysis If the borrower's credit quality has changed, the probability of default would also change. If PD increased by 10%, ECL would increase by EUR 2,265 thousand. If PD decreased by 10%, ECL would decrease by EUR 2,265 thousand. The Company also takes into account the differences between the economic conditions during the period in which the historical data were collected, the current conditions and the Company's view of the economic conditions over the expected life of the loan. Separate Financial Statements 244 As at 31 October 2022, the Company was exposed to the following credit risk: in TEUR Legal entities Banks Other financial institutions Other Total Financial assets Loans provided 183 226 - - 2 183 228 Other receivables 248 - - - 248 Trade receivables 2 424 - - - 2 424 Cash and cash equivalents - 5 291 - 41 5 332 Other Assets 2 220 254 156 8 2 638 Total 188 118 5 545 156 51 193 870 As at 31 October 2021, the Company was exposed to the following credit risk: in TEUR Legal entities Banks Other financial institutions Other Total Financial assets Loans provided 92 605 - - 71 92 676 Other receivables 47 - - - 47 Trade receivables 3 198 - - - 3 198 Cash and cash equivalents - 10 184 - 10 10 194 Other Assets 43 435 - 45 1 402 44 882 Total 139 285 10 184 45 1 483 150 997 Liquidity Risk Liquidity risks arise within general financing of the Company and management of financial positions. It covers the risk of insolvency regarding the financing of assets within the agreed maturity period and at the interest rate, and also the risk of asset management at a reasonable price within an adequate timeframe. The Company management focuses on liquidity management and monitoring. Due to liquidity management, the management changed the accounting period to a fiscal year ended on 31 October. In the first half of its accounting period, the Company has a winter season, which represents 60% of Company’s income. According to the trend in the first half-year, the Company can affect the side of revenues and expenses sufficiently early, so that they are able to keep sufficient liquidity for Company’s operation. In the High Tatras centre, the seasonal nature is also balanced with a strong summer season, which ensures its more stable liquidity all year round. The liquidity risk associated with the crisis in Ukraine and the energy crisis is described in Note 2 (b) - Basis of preparation. The following table presents an analysis of Company financial assets and liabilities grouped by the residual maturity. The analysis presents the most prudent variant of residual maturity including interest, based on contracted terms. Therefore, for liabilities, the earliest possible repayment is reported, and for assets, the latest possible repayment is reported. Assets and liabilities which have no maturity are posted in the catego ry “Without specification“. Separate Financial Statements 245 As at 31 October 2022, the Company had financial assets and liabilities with the following remaining maturities: in TEUR Carrying value Future cash flow Up to 3 months 3 months up to 1 year 1 year up to 5 years Above 5 years Without specification Financial assets Loans provided 183 228 205 791 118 399 64 040 11 959 11 393 - Other receivables 248 248 248 - - - - Trade receivables 2 424 2 657 2 657 - - - - Cash and cash equivalents 5 332 5 333 5 333 - - - - Other assets 2 638 2 646 2 556 90 - - - Total 193 870 216 675 129 193 64 130 11 959 11 393 - Financial liabilities Loans and borrowings -165 589 -183 233 -74 893 -7 544 -86 099 -14 697 - Lease liabilities -59 661 -132 534 -2 195 -11 126 -38 800 -80 413 - Bonds issued -203 604 -236 291 - -10 644 -225 647 - - Trade payables -9 835 -9 835 -9 835 - - - - Other liabilities -2 098 -1 924 -1 040 - -884 - - Total -440 787 -563 817 -87 963 -29 314 -351 430 -95 110 - As at 31 October 2022 the loans provided up to 1 year amount to EUR 182,439 thousand (as at 31 October 2021: EUR 113,230 thousand), a majority of which is payable on demand or by the end of October 2023. These loans will not be paid within 1 year. The Company plans to require the repayment of these financial resources based on the needs for the purposes of financing the investment activity and acquisition. The expected drawdown of the loan provided is within 3 years. For securing sufficient liquidity shortly after the end of the accounting period the Company has increased an overdraft from J&T Bank and the bonds from TMR VI issue were traded as described in Note 2 (b) - Basis of preparation. As at 31 October 2021, the Company had financial assets and liabilities with the following remaining maturities: in TEUR Carrying value Future cash flow Up to 3 months 3 months up to 1 year 1 year up to 5 years Above 5 years Without specification Financial assets Loans provided 92 676 126 645 111 840 1 390 2 701 10 714 - Other receivables 47 47 47 - - - - Trade receivables 3 198 3 198 3 198 - - - - Cash and cash equivalents 10 194 10 199 10 199 - - - - Other assets 44 882 46 302 46 031 56 215 - - Total 150 997 186 391 171 315 1 446 2 916 10 714 - Financial liabilities Loans and borrowings -132 408 -143 945 -2 467 -25 122 -101 378 -14 978 - Lease liabilities -37 220 -52 281 -899 -7 913 -12 435 -31 034 - Bonds issued -201 438 -244 880 - -10 560 -234 320 - - Trade payables -8 697 -8 696 -8 696 - - - - Other liabilities -2 581 -2 582 -311 - -2 271 - - Total -382 344 -452 384 -12 373 -43 595 -350 404 -46 012 - The book value of Other receivables contains mainly advance payments made, which are not expected to be paid in cash, but by a transfer of shares. Separate Financial Statements 246 Currency Risk Due to the acquisition of subsidiaries in Poland and in the Czech Republic and due to providing loans to and receiving loans from these companies during 2021 and 2022, the Company is primarily exposed to the risk of changes in the exchange rate of Polish Zloty and Czech Crown against the euro. The management monitors regularly whether there is a large difference between foreign currency liabilities and receivables. As at 31 October 2022, the Company reported an investment in the subsidiaries in Polish Zloty in the amount of EUR 7,508 thousand, and loans provided in Polish Zloty were in amount of EUR 31,159 thousand. The Company also reported investment in the subsidiaries in Czech Crown in the amount of EUR 358 thousand, and loans provided in Czech Crown in the amount of EUR 8,280 thousand. Since the Company has drawn a loan from its subsidiary in Czech Republic, denominated in Czech Crown, the open position on the currency risk at the Czech Crown has significantly opened. The Company decided to hedge its currency position against fluctuations in the Czech Crown for this particular debt instrument. For more information, see Note 34 - Hedge Accounting. The other Company assets and liabilities are denominated in euro. Secondarily, there is a risk that weakening of the Czech Crown or Polish Zloty against the euro would lead to reducing the number of visitors from the above stated countries. Sensitivity analysis 5% strengthening of the EUR against the Polish Zloty and the Czech Crown would have the following effect on the financial assets and financial liabilities of the Company: in TEUR 2022 2021 PLN -1 558 -1 745 CZK -414 -330 5% weakening of the EUR against the Polish Zloty and the Czech Crown would have an identically high but opposite effect on the financial assets and financial liabilities in comparison with strengthening of the euro. Separate Financial Statements 247 Interest Risk Company transactions are exposed to the risk of interest rate changes. The volume of this risk is equal to the amount of interest-bearing assets and interest-bearing liabilities, for which the interest rate differs, in the maturity period or in the period of change, from the present interest rate. Therefore, the period for which a fixed interest rate is determined for the financial instrument, expresses the exposure to the risk of changes in interest rates to which the Company is exposed. The table below presents Company exposure to the risk of changes in interest rates based on contractual maturity period of financial instruments. As at 31 October 2022 and as at 31 October 2021, the Company has the following assets and liabilities linked to interest rates: in TEUR 31.10.2022 31.10.2021 Fixed interest rate Assets 166 666 150 997 Payables -351 643 -319 947 Variable interest rate Assets 27 204 - Payables -89 144 -62 397 Sensitivity analysis for instruments with a variable interest rate Change by 100 basis points in interest rates would have the following effect on the profit/loss from operations and cash flow sensitivity: in TEUR Profit (Loss) 100 bb growth 100 bb decline 31 October 2022 Instruments with variable interest rate 619 -619 Effect 619 -619 in TEUR Profit (Loss) 100 bb growth 100 bb decline 31 October 2021 Instruments with variable interest rate 624 - Effect 624 - Company interest-bearing liabilities have a variable interest rate referring to EURIBOR. The Company considers the variable interest rate as the self-management of interest risk. During an economic expansion, the EURIBOR is growing, but at the same time, the population economic performance is growing, and the company has higher revenues and profits. During an economic recession, the situation is completely opposite. In the previous period, when EURIBOR had negative value, the variable interest component of the total interest rate did not affect the economic result and cash flow sensitivity, as according to the loan agreements the value of EURIBOR is then taken at the level of 0%. In the current period, EURIBOR has positive values and therefore a decrease of 100 basis points in interest rates would have an impact on the economic result and cash flow sensitivity. Separate Financial Statements 248 Operational Risk Operational risk is the risk of loss resulting from any fraud, unauthorised activities, failures, errors, inefficiency or failure of systems. The risk is created in all Company activities. Operational risk also includes the risk of legal disputes. The aim of the Company is to manage the operational risk to prevent any financial losses and detriment to the Company reputation within the cost-efficiency of cost spent on achieving this objective, while avoiding any measures preventing initiatives and creativity. The Company management has key responsibility for the implementation of inspections related to the operational risk management. The responsibility is supported by the implementation of standards for the management of operational risk which is common for the whole Company. Operational risk is governed by a system of directives, minutes of meetings and control mechanisms. The Company has a controlling department which attempts to eliminate all operational risks through regular inspections. The Company is also exposed to the risk of unfavourable conditions with respect to the weather. The number of visitors in the centre depends on the snow and snowfall periods. Unfavourable conditions adversely affect the number of skiers and the revenue of profit/loss from operations. Warm weather can unreasonably increase the cost of snowmaking and reduce the area where skiing is possible. Historically, the Low Tatras and the High Tatras region had on average 54 cm and 59 cm of snow during the winter season, respectively. The start of winter season and snow conditions affect the perception of the whole season by skiers. The Company is not able to forecast reliably in any manner the snow conditions at the beginning of winter season. Thanks to the system of snowmaking, the snow conditions during the winter are stable each year. Separate Financial Statements 249 Related Parties Identification of related parties As provided in the following overview, the Company has relations of a related party with respect to its shareholders having significant influence in the Company, and with respect to other parties, as at 31 October 2022 and 31 October 2021 or during the period between 1 November 2021 and 31 October 2022 and 1 November 2020 and 31 October 2021: (1) Companies controlling jointly or having significant influence on the accounting entity and its subsidiary and associate companies (2) Jointly controlled companies in which the Company is a partner (3) Associates (4) The members of company top management or Company shareholders or companies in which top management has control or significant influence (see also Note 10 – Personnel Expenses) Information on remuneration of Members of Key management is stated in Note 10 – Personnel Expenses. All transactions with related parties, including transactions with Key management, were realized based on conditions, which are ordinary (or expected) for non-related parties transactions realized on the market. None of the related parties was privileged in any kind of transactions. The Company has the transactions provided below with respect to related parties: in TEUR Note: Receivables Payables Receivables Payables 31.10.2022 31.10.2022 31.10.2021 31.10.2021 Szczyrkowski Osrodek Narciarski S.A. 1 42 399 8 39 085 - Ślaskie Wesole Miasteczko Sp. z o. o. 2 51 465 4 147 21 379 3 954 TMR Ještěd a.s. 3 7 618 18 5 787 34 Tatry mountain resorts CR, a.s. 4 2 543 2 2 272 1 TMR Parks, a.s. 5 64 465 1 024 76 169 - Mölltaler Gletscherbahnen GmbH & Co KG 6 19 693 5 13 697 135 Mölltaler Gletscherbahnen GmbH 7 6 - 4 - Grundstücksverwertungs -GmbH Flattach 8 5 - 4 - TMR Finance CR, a.s. 9 205 60 895 140 58 128 Ostravice Hotel a.s. 10 138 - 127 - MELIDA, a.s. 11 966 4 852 - TIKAR d.o.o 12 - - 2 902 - Korona Ziemi sp.z o.o. 13 1 615 - 1 495 - Muttereraim Bergbahnen Errichtungs GmbH 14 468 - 429 - Tatry mountain resorts AT GmbH 15 350 - 333 - GOPASS, a.s. 16 47 748 - - WORLD EXCO s.r.o. 17 178 - - - EUROCOM Investment, s.r.o. 18 12 426 11 420 - - International TMR services, s.r.o. 19 1 1 - - GOPASS SE 20 - 119 - - Members of Key Management 25 983 31 111 Separate Financial Statements 250 in TEUR Note: Revenues Costs Revenues Costs 1.11.2021 - 31.10.2022 1.11.2021 - 31.10.2022 1.11.2020 - 31.10.2021 1.11.2020 - 31.10.2021 Szczyrkowski Osrodek Narciarski S.A. 1 2 322 8 2 408 3 Ślaskie Wesole Miasteczko Sp. z o. o. 2 1 885 212 1 158 201 TMR Ještěd a.s. 3 618 333 378 107 Tatry mountain resorts CR, a.s. 4 144 213 167 8 TMR Parks, a.s. 5 2 301 1 258 36 609 - Mölltaler Gletscherbahnen GmbH & Co KG 6 924 5 683 - Mölltaler Gletscherbahnen GmbH 7 5 - 4 - Grundstücksverwertungs -GmbH Flattach 8 5 - 4 - TMR Finance CR, a.s. 9 8 2 630 4 2 518 Ostravice Hotel a.s. 10 - - - - MELIDA, a.s. 11 - - - - TIKAR d.o.o 12 167 - 183 - Korona Ziemi sp.z o.o. 13 81 - 74 - Muttereraim Bergbahnen Errichtungs GmbH 14 19 - 13 - Tatry mountain resorts AT GmbH 15 16 - 8 - GOPASS, a.s. 16 37 927 - - WORLD EXCO s.r.o. 17 10 - - - EUROCOM Investment, s.r.o. 18 1 785 327 - - International TMR services, s.r.o. 19 - 101 - - GOPASS SE 20 - - - - Members of Key Management 43 5 613 242 3 492 1 Szczyrkowski Osrodek Narciarski S.A. became a related party on 30 April 2014. 2 Ślaskie Wesole Miasteczko Sp. z o. o. became a related party on 1 May 2015. 3 TMR Ještěd a.s. became a related party on 5 May 2017. 4 Tatry mountain resorts CR, a.s. became a related party on 16 February 2018. 5 Tatry Parks, a.s. became a related party on 30 September 2017. 6 Mölltaler Gletscherbahnen GmbH & Co KG became a related party on 1 May 2019. 7 Mölltaler Gletscher bahnen GmbH became a related party on 1 May 2019. 8 Grundstücksverwertungs -GmbH Flattach became a related party on 1 May 2019. 9 TMR Finance CR, a.s became a related party on 14 September 2018. 10 OSTRAVICE HOTEL a.s. became a related party on 31 December 2018. 11 MELIDA, a.s. became a related party on 15 December 2019. 12 TIKAR d.o.o. was a related party from 31 May 2020 to 30 September 2022. 13 Korona Ziemi sp. Z.o.o. became a related party on 31 May 2020. 14 Muttereraim Bergbahnen Errichtungs GmbH became a related party on 1 May 2021. 15 Tatry mountain resorts AT GmbH became a related party on 28 May 2018. 16 GOPASS, a.s. became a related party on 4 June 2021. 17 WORLD EXCO s.r.o. became a related party on 1 April 2022. 18 EUROCOM Investment, s.r.o. became a related party on 1 April 2022. 19 International TMR services, s.r.o. became a related party on 22 June 2022 . 20 GOPASS SE became a related party on 1 June 2022 . Separate Financial Statements 251 Subsequent Events On 3 November 2022, bonds of the TMR VI issue worth EUR 57,448 thousand were traded. On 4 November 2022, a loan granted by a subsidiary of TMR Finance CR in the amount of CZK 1,533,750 thousand was repaid. Subsequently, on 7 November 2022, the TMR IV bonds issued by TMR Finance CR were paid out to the creditors in the Czech Republic. On 8 November 2022, GOPASS SE, an organizational unit in Slovakia, was founded. It is an enterprise of a foreign entity of the European company GOPASS SE. For more information, see point 20 – Investments in subsidiaries. In December 2022, the management negotiated an increase of the overdraft by an additional EUR 4,000 thousand for the purposes of operations management of financial needs. On 2 February 2023, the Company paid out a coupon from the TMR V bond in the amount of EUR 6,600 thousand. Information on events related to the crisis in Ukraine and the energy crisis after the end of the accounting period are described in point 2(b) – Basis of Preparation. Capital Commitments and Capital Management During 2014, the Company issued two bond issues in the total nominal value of EUR 180,000 thousand, which, starting from 19 February 2014, were admitted to trading on the Bratislava Stock Exchange. On 10 October 2018, the Company issued the third bond issue TMR III in the nominal value of EUR 90,000 thousand. Interest income on the TMR III bond is paid for each income period on a semi-annual basis, on 10 October and 10 April each year, starting on 10 April 2019. The TMR III bond has maturity on 10 October 2024. During February 2021, the Company issued TMR V bonds with a total nominal value of EUR 110,000 thousand. Interest income from this bond is paid for each annual period in arrears, always on the 2 February, with the first occurrence on 2 February 2022. The maturity of TMR V bond is on 2 February 2026. On 28 October 2022, the Company issued TMR VI bonds with a total value of up to a maximum of EUR 65,000 thousand with an interest rate of 5.4% p.a. and a maturity in 2027. On 28 October 2022, bonds worth EUR 1,552 thousand were traded. Interest income from this bond will be paid for each income period on a semi-annual basis in arrears, always on 28 April and 28 October of each year, the first time on 28 April 2023. The maturity of TMR VI bond is on 28 October 2027. Further information on issued bonds and related covenants are provided in Note 37 – Bonds Issued. The Company management manages capital in order to ensure sufficient amount of resources for planned investments in that period for which investments are planned, if necessary in cooperation with bank loans. No external requirements for capital management are linked either to the Company or to its subsidiaries. Over the course of the period between 1 November 2021 and 31 October 2022, no changes occurred in the Company’s management approach to capital management. Separate Financial Statements 252 Contingent Assets and Contingent Liabilities With respect to that many areas of Slovak law on taxation have not been sufficiently ascertained in practice, there is uncertainty in how tax offices will apply them. It is not possible to quantify the level of this uncertainty and it will only cease to exist when legal precedents or official interpretations of the relevant bodies are available. The Company has initiated several legal proceedings. The maximum amount of compensation in all legal proceedings can be up to EUR 260 thousand and accessions thereof. .................................................................................................................................................................................... Igor Rattaj Jozef Hodek Marián Klas Marián Vojtko The Chairman of the Member of the Finance Person responsible for Board of Directors Board of Directors Director bookkeeping Separate Financial Statements 253 Separate Financial Statements Independent Auditor‘s Report Translation of the Independent Auditors' Report originally prepared in Slovak language Independent Auditors' Report To the Shareholders, Supervisory Board and Board of Directors of Tatry mountain resorts, a.s. Report on the Audit of the Separate Financial Statements Opinion We have audited the separate financial statements of Tatry mountain resorts, a.s. (the “Company”), which comprise: • the separate statement of financial position as at 31 October 2022; and, for the period then ended: • the separate statement of profit or loss and other comprehensive income; • the separate statement of changes in equity; • the separate statement of cash flows; and • notes to the separate financial statements, including a summary of significant accounting policies. In our opinion, the accompanying separate financial statements give a true and fair view of the unconsolidated financial position of the Company as at 31 October 2022, and of its unconsolidated financial performance and its unconsolidated cash flows for the period then ended in accordance with International Financial Reporting Standards as adopted by the European Union. KPMG Slovensko spol. s r. o. Dvořákovo nábrežie 10 811 02 Bratislava Slovakia Tel + Web www.kpmg.sk 421 (0)2 59 98 41 11 IČO/Registration number: 31 348 238 Evidenčné číslo licencie audítora: 96 Licence number of statutory auditor: 96 Obchodný register Okresného súdu Bratislava I, oddiel Sro, vložka č. 4864/B Commercial register of district court Bratislava I, section Sro, ﬁle No. 4864/B KPMG Slovensko spol. s r.o., slovenská spoločnosť s ručením obmedzeným a členská spoločnosť globálnej organizácie KPMG nezávislých členských spoločností pridružených ku KPMG International Limited, súkromnej anglickej spoločnosti s obmedzeným ručením. Všetky práva vyhradené. KPMG Slovensko spol. s r.o., a Slovak limited liability company and a member ﬁrm of the KPMG global organization of independent member ﬁrms aﬃliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. 254 Separate Financial Statements Independent Auditor‘s Report Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”) and Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements of the Act No. 423/2015 Coll. on statutory audit and on amendments to Act No. 431/2002 Coll. on accounting as amended (“the Act on Statutory Audit”) including the Code of Ethics for an Auditor that are relevant to our audit of the separate financial statements, 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 judgment, were of most significance in our audit of the separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the following key audit matters: Going concern considerations For the year ended 31 October 2022, the Company recognized profit in amount of EUR 3,287 thousand. Refer to Notes 2b) (Basis for preparation) of the separate financial statements Key audit matter Our response The Company’s separate financial statements are prepared on a going concern basis. As discussed in Note 2b), the outbreak of the COVID-19 pandemic and the measures adopted by the government of Slovak republic to mitigate the pandemic’s spread have significantly negatively impacted the Company’s liquidity position and financial performance of the Company for last two years. Also, significant uncertainty arises over how the current volatile economic environment, ongoing war in Ukraine or increasing energy prices will impact the Company’s business in future periods and customers’ demand for its services. The Company’s going concern assessment was based on cash flow forecasts, which in the management’s view support the assertion that the Company will have sufficient resources to continue for a period of at least 12 months from the reporting date. Our audit procedures in the area included, among others: • Understanding the Company’s business planning process over the assessment of the Company’s ability to continue as a going concern; • Inspecting the management ’s assessment of the going concern basis of accounting, including their evaluation of the business/operating and liquidity risks arising from impacts of COVID-19 outbreak, volatile economic environment, ongoing war in Ukraine or increasing energy prices and plans for further actions in response to the risks identified. As part of the procedure we also made corroborating inquiries of the Company’s management; • Independently evaluating the reasonableness and feasibility of the plans for future actions in order to alleviate the effects of the outbreak, by reference to the preceding procedure as well as by performing the following: 255 Separate Financial Statements Independent Auditor‘s Report The preparation of these forecasts incorporated a number of assumptions and significant judgment under a number of scenarios, including access to additional financing. As part of the assessment, the Company also considered a number of actions aimed at alleviating the potential disruption to its business and liquidity position, such access to additional financing and deferment of unnecessary expenditures. The management concluded that the range of possible outcomes considered at arriving at this judgment does not give rise to material uncertainties related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. Note 2b) further explains how the judgment was formed. The COVID-19 pandemic followed by volatile economic environment, ongoing war in Ukraine and increasing energy prices are an unprecedented challenge for the economy globally, and at the date of the separate financial statements their effects are subject to significant levels of uncertainty. The Company’s use of the going concern basis of accounting is a key audit matter due to the associated extent of uncertainty, and consequently, high level of judgment required in evaluating the management’s plans for future actions and their financial impact. - Challenging the key assumptions used in the determination of the forecast financial information under various scenarios. This primarily included challenging the assumed capital expenditure and sales forecast based on our understanding of the Company’s activities and by reference to publicly available industry/market reports; - Performing an analysis of the going concern conclusion’s sensitivity to changes in the aforementioned key assumptions adopted in the going concern assessment, and considering whether there were any indicators of management bias in the assessment; • Assessing the availability of banking and other financing facilities and arrangements, by inspecting underlying documentation, such as draft banking facility agreements and singed contract amendments before and after the reporting period end, and assessing the impact of any covenants and other restrictive terms therein; • Considering whether any additional relevant facts or information have become available since the date on which the Company made its assessment; • Evaluating the appropriateness of Company’s disclosures in respect of the going concern assessment, subsequent events and any related uncertainties in the separate financial statements against the requirements of the financial reporting standards. 256 Separate Financial Statements Independent Auditor‘s Report Impairment of property, plant and equipment and intangible assets Carrying amount of property, plant and equipment and intangible assets as at 31 October 2022: EUR 274,639 thousand (31 October 2021: EUR 271,699); Impairment allowance of assets as at 31 October 2022: EUR 0 thousand (31 October 2021: EUR 0 thousand) Refer to Notes 2l), 2m) and 2n) (Summary of significant accounting policies), Note 3b) (Goodwill and impairment testing, Note 3c) (Assets impairment testing), Note 15 (Property, plant and equipment) and Note 17 (Goodwill and intangible assets) of the separate financial statements. Key audit matter Our response As described in Note 3c) of the separate financial statements, in the current year, the Company identified impairment indicators in respect of its property, plant and equipment and intangible assets, including ones related to business disruption and loss incurred during last two years as a result of the COVID-19 pandemic, ongoing war in Ukraine and increasing energy prices. In the wake of the above factors, as at 31 October 2022, the Company tested property, plant and equipment and intangible assets for impairment, as part of the impairment test performed for the cash generating unit („CGU”) ski resort Vysoke Tatry and CGU ski resort Nizke Tatry. The Company determined recoverable amount for above mentioned CGU’s based on their value in use estimated under the discounted cash flow method. Determination of the recoverable amount requires making a number of assumptions and judgments, in particular those relating to grouping of assets into CGUs, discount rates used and future cash flows, with key assumptions made about prices for services provided, costs, and expected levels of sales, output and operating costs. Due to the above factors, coupled with the significantly higher estimation uncertainty stemming from the volatile economic environment, ongoing war in Ukraine and increasing energy prices, assessment of property, plant and equipment and intangible assets for impairment required our significant judgment and increased attention in the course of our audit. As a consequence, we consider the area to be our key audit matter Our audit procedures in the area included, among others: • Evaluating against the requirements of the relevant financial reporting standards the Company’s accounting policy for identification of impairment, and measurement and recognition of any impairment losses in respect of property, plant and equipment and intangible assets; • Evaluating design and implementation of internal controls relating to the identification of impairment indicators and to the process of impairment testing; • Evaluating the quality of the Company’s forecasting by comparing historical projections with actual outcomes; • Assessing the appropriateness of asset grouping into CGUs, based on our understanding of the Company’s operations and business units; • Inquiring of the management of the Company regarding the impact of the volatile economic environment, ongoing war in Ukraine and increasing energy prices and its results in the current year and going forward. • Assisted by our own valuation specialists, challenging the reasonableness of the Company’s key assumptions and judgments used in estimating the recoverable amount, including: - Assessing the Company’s discounted cash flow model against the relevant financial reporting standards and market practice, 257 Separate Financial Statements Independent Auditor‘s Report - Challenging reasonableness of the key macroeconomic assumptions used, such as those in respect of discount rates by reference to publicly available external sources, and - Using our knowledge of the Company, its past performance, business, and our industry experience, and also our understanding of the effects of the ongoing war in Ukraine and increasing energy prices, assessing reasonableness of the assumptions relating to future prices of services provided, as well as those in respect of expected sales, output and operating costs, by reference to publicly available reports, market reports and the Company’s internal documents; - Assessing susceptibility of the impairment model and the resulting impairment conclusion to management bias, by challenging the Company’s analysis of the model’s sensitivity to changes in key underlying assumptions; • Evaluating the appropriateness and completeness of impairment-related disclosures in the separate financial statements against the requirements of the financial reporting standards. 258 Separate Financial Statements Independent Auditor‘s Report Impairment of loans provided As at 31 October 2022, the carrying amount of loans provided (long term and short term): EUR 183,228 thousand; related impairment allowance: EUR 22,562 thousand; impairment loss / (release) for the year then ended: EUR (9,129) thousand (as at 31 October 2021 and for the year then ended: EUR 92,676 thousand, EUR 31,691 thousand and EUR 5,639 thousand, respectively) Refer to Notes 2f) (Summary of significant accounting policies) and Note 23 (Loans provided) of the separate financial statements Key audit matter Our response As at 31 October 2022, loans provided are represented primarily by uncollateralized loans to related companies totalling EUR 205,790 thousand. Loans provided are assessed by the Company for impairment as at each reporting date, both at an individual asset and collective basis. Management measures the loss allowance at an amount equal to expected credit losses (ECLs) being a probability weighted estimate of credit losses. Credit losses are measured as the present value of an expected cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that it expects to receive). The estimate takes into account, among other things, repayment history and past credit loss experience, adjusted for factors that are specific to the debtors and an assessment of both the current and forecast general economic conditions at the reporting date. For collectively assessed exposures, the Company uses statistical models with parameters such as the probability of default (PD) and loss given default (LGD) using historical data, as adjusted for appropriate forward-looking information. We identified impairment of loans provided as a key audit matter because these assets are material to the Company and due to the fact that estimating ECLs is inherently subjective and requires the exercise of significant management judgment including due to significantly higher estimation uncertainty stemming from the business disruption impact of the COVID-19 global pandemic in last two years, volatile economic environment, ongoing war in Ukraine and increasing energy prices. Our audit procedures in the area, performed where applicable, with the assistance from our own financial instruments and valuation specialists, included: • Updating understanding of and assessing the design and implementation of key internal controls over the credit control, the loans collection process and making loss allowances for loans provided; • Assessment of the appropriateness of the Company's impairment methodology against the relevant financial reporting requirements; • Evaluating whether the Company's estimates of expected credit losses appropriately consider both current economic conditions and forward-looking information; • Evaluating whether in its loan staging and ECL measurement the Company appropriately considered the effects of the market disruption resulting from the COVID- 19 pandemic in last two years, volatile economic environment, ongoing war in Ukraine and increasing energy prices. • Assessment of the accuracy and completeness of the Company's ECL estimates at 31 October 2022 including: 259 Separate Financial Statements Independent Auditor‘s Report For loans assessed individually, for a risk-based sample of debtors: - Inspecting the debtors' most recent financial statements, credit terms and historical repayment patters, and making corroborating inquiries of the Company's management and relevant finance personnel, to obtain understanding of any credit/ repayment uncertainties, significant increase in credit risk or default; - Inspecting supporting documents in relation to cash receipts from debtors subsequent to the end of the reporting period; - Considering the outcome of the above procedures, critically assessing the Company's estimate of the expected cash flows from each loan and other receivable in the sample, also assessing the appropriateness of the discount rate used. For collective impairment assessment: - Assessing the key collective impairment model parameters, such as the PD and LGD, and the effects thereof on the model, by reference to the Company's own historical credit loss experience, our understanding of the business, current economic trends and expectations, and market practices; - Performing a retrospective assessment of the historical accuracy of the management's impairment assumptions and estimates, including estimated loss rates, against actual outcomes; • Evaluating whether the disclosures in the separate financial statements in respect of the expected credit losses for the loans and other receivables satisfy the requirements of the relevant financial reporting standards. 260 Responsibilities of the Statutory Body and Those Charged with Governance for the Separate Financial Statements The statutory body is responsible for the preparation of separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the statutory body determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the separate financial statements, the statutory body is 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 statutory body either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditors' Responsibilities for the Audit of the Separate Financial Statements Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the separate 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 the statutory body; • Conclude on the appropriateness of the statutory body’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 auditors’ report to the related disclosures in the separate 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 auditors’ 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 separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. Independent Auditor‘s Report Separate Financial Statements 261 Independent Auditor‘s Report Separate Financial Statements We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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. Report on Other Legal and Regulatory Requirements Reporting on other information in the Annual Report The statutory body is responsible for the other information. The other information comprises the information included in the Annual Report prepared in accordance with the Act No. 431/2002 Coll. on Accounting as amended (“the Act on Accounting”) but does not include the separate financial statements and our auditors’ report thereon. Our opinion on the separate financial statements does not cover the other information in the Annual Report. In connection with our audit of the separate financial statements, our responsibility is to read the other information in the Annual Report that we have obtained prior to the date of the auditors’ report on the audit of the separate financial statements, and, in doing so, consider whether the other information is materially inconsistent with the audited separate financial statements or our knowledge obtained in the audit of the separate financial statements, 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. With respect to the Annual Report, we are required by the Act on Accounting to express an opinion on whether the other information given in the Annual Report is consistent with the separate financial statements prepared for the same financial year, and whether it contains information required by the Act on Accounting. Based on the work undertaken in the course of the audit of the separate financial statements, in our opinion, in all material respects: • the other information given in the Annual Report for the year ended 31 October 2022 is consistent with the separate financial statements prepared for the same financial year; and • the Annual Report contains information required by the Act on Accounting. In addition to this, in light of the knowledge of the Company and its environment obtained in the course of the audit of the separate financial statements, we are required by the Act on Accounting to report if we have identified material misstatements in the other information in the Annual Report. We have nothing to report in this respect. 262 Reporting on other information related to European Single Electronic Format Independent assurance report on the compliance of the presentation of the separate financial statements with the requirements of the European Single Electronic Format (“ESEF”) We have been engaged by the Company to conduct a reasonable assurance engagement to verify the compliance of the presentation of the separate financial statements of the Company for the year ended 31 October 2022 included in the Annual Financial Report (the “Presentation of the Separate Financial Statements”) with the requirements of the ESEF Regulation. Description of subject matter and applicable criteria The Presentation of the Separate Financial Statements has been applied by the management to comply with the requirements of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The applicable requirements regarding the Presentation of the Separate Financial Statements are contained in the ESEF Regulation. The requirements described in the preceding paragraph with respect to the Presentation of the Separate Financial Statements constitute, in our view, appropriate criteria to form a reasonable assurance conclusion. Responsibility of the management and those charged with governance The management is responsible for the Presentation of the Separate Financial Statements that complies with the requirements of the ESEF Regulation. This responsibility includes: • preparation of the separate financial statements in XHTML format; and • designing, implementing and maintaining internal controls relevant for the preparation of the Presentation of the Separate Financial Statements which is free from material non-compliance with the requirements of the ESEF Regulation. Those charged with governance are responsible for overseeing the Company’s financial reporting process, which also includes the preparation of the separate financial statements that also comply with the requirements of the ESEF Regulation. Our responsibility Our responsibility is to express a reasonable assurance conclusion whether the Presentation of the Separate Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits and Reviews of Historical Financial Information, (the “ISAE 3000(R)”), issued by the International Auditing and Assurance Standards Board (the “IAASB”). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Presentation of the Separate Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. The nature, timing, and extent of procedures performed depend on the auditor’s judgment. Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance with ISAE 3000(R) always detects material non-compliance. Independent Auditor‘s Report Separate Financial Statements 263 Independent Auditor‘s Report Separate Financial Statements Our quality control and independence requirements We apply the provisions of International Standard on Quality Control 1 (issued by the IAASB) and, accordingly, maintain a comprehensive system of quality control, including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We comply with independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Summary of the work performed Our planned and performed procedures were aimed at obtaining reasonable assurance that the Presentation of the Separate Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. Our procedures included in particular: • obtaining an understanding of the internal control system and processes relevant to the application of the electronic reporting format of the separate financial statements, including the preparation of the XHTML format; and • verification whether the XHTML format was properly applied. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Conclusion In our opinion, based on the procedures performed, the Presentation of the Separate Financial Statements complies, in all material respects, with the requirements of the ESEF Regulation. 264 Additional requirements on the content of the auditors’ report according to Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities Appointment and approval of an auditor We have been appointed as a statutory auditor by the statutory body of the Company on 22 April 2022 on the basis of approval by the General Meeting of the Company held on 25 May 2022. The period of our total uninterrupted engagement, including previous renewals (extensions of the period for which we were originally appointed) and reappointments as statutory auditors, is 14 years. Consistency with the additional report to the audit committee Our audit opinion as expressed in this report is consistent with the additional report to the supervisory board of the Company, which was issued on 28 February 2023. Non-audit services No prohibited non-audit services referred to in Article 5 (1) of Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities were provided and we remained independent of the Company in conducting the audit. In addition to the statutory audit services and services disclosed in the separate financial statements of the Company, we did not provide any other services to the Company or accounting entities controlled by the Company. Audit firm: Responsible auditor: KPMG Slovensko spol. s r.o. Ing. Martin Kršjak License SKAU No. 96 License UDVA No. 990 Bratislava, 28 February 2023 except for the part of our Report on Reporting on other legal and regulatory requirements, including the Annual Report, dated 6 March 2023 and part of our Report on Independent assurance report on the compliance of the presentation of the separate financial statements with the requirements of the European Single Electronic Format (“ESEF”), which is dated on 6 March 2023 This is a translation of the original Slovak Auditors’ Report into English language. The separate financial statements have not been translated. For a full understanding of the information stated in the Auditors’ Report, the Report should be read in conjunction with the full set of the separate financial statements prepared in Slovak. Independent Auditor‘s Report Separate Financial Statements 265 Separate Financial Statements REMUNERATION REPORT 268 Remuneration report REMUNERATION REPORT OF MEMBERS OF THE BODIES OF PUBLIC LIMITED COMPANY TATRY MOUNTAIN RESORTS, A.S. Board of Directors of Tatry mountain resorts, a.s. with its registered seat at Demänovská Dolina 72, 031 01 Liptovský Mikuláš, ID: 31 560 636, registered in the Commercial Register kept by the District Court of Ž ilina, Section: Sa, Insert No. 62/L (hereinafter referred to as " The Company ") in accordance with the provision stated in § 201e of Act No. 513/1991 of the Commercial Code as amended (hereinafter referred to as the " Commercial Code ") prepared the following report on the remuneration of members of the Company's bodies for the financial year starting on 01.11.2021 and ending on 31.10.2022 (hereinafter referred to as the " Remuneration Report "). 1. REMUNERATION OF MEMBERS OF THE BOARD OF DIRECTORS 1.1. The Board of Directors of the Company was active in the financial year starting on 01.11.2021 and ending on 31.10.2022 (hereinafter referred to as the " Financial year ") in the following composition: 1.1.1 Ing. Igor Rattaj, Chairman of the Board of Directors since 30.04.2020 1.1.2 Ing. Jozef Hodek, Member of the Board of Directors since 30.06.2009 1.1.3 Čeněk Jílek, Member of the Board of Directors since 29.04.2020 1.2 Overview of all components of the total remuneration 1.2.1 In accordance with the remuneration rules of the Company's bodies approved by the General Meeting on 29.04.2020 (hereinafter referred to as " Remuneration rules ") the members of the Board of Directors are provided with so-called total remuneration of a member of the Board of Directors which consists of: (i) fixed component – point 2.2 of the Remuneration rules, (ii) variable component – point 2.3 of the Remuneration rules and (iii) bonuses and other benefits. 1.2.2 For the Financial year, these following components of the total remuneration were paid to the members of the Board of Directors: 1.2.2.1 Fixed component of the total remuneration: Ing. Igor Rattaj, in the amount of 96.000,- EUR Ing. Jozef Hodek, in the amount of 48.000,- EUR Čeněk Jílek, in the amount of 48.000,- EUR 1.2.2.2 Granted variable component of the total remuneration: Ing. Igor Rattaj, in the amount of 418.417,- EUR Ing. Jozef Hodek, in the amount of 261.511,- EUR Čeněk Jílek, in the amount of 261.511,- EUR 1.3 Proportional share of fixed and variable component in the total remuneration 1.3.1 The proportional share of fixed and variable component of the total remuneration for members of the Board of Directors is as follows: Fixed component Variable component Ing. Igor Rattaj 3,68% 96,32% Ing. Jozef Hodek 26,08% 73,92% Čeněk Jílek 7,10% 92,90% 1.4 Explanation of how the total remuneration corresponds to the agreed remuneration rules including how it contributes to a long-term performance of the Company and information on how the performance assessment criteria have been applied 1.4.1 The total remuneration provided or awarded to the members of the Board of Directors in the Financial year takes full account of the criteria for awarding remuneration within the meaning of the Remuneration rules. In the case of a fixed component of the total remuneration it is the proper performance of the function of a member of the Board of Directors and in the case of 269 the variable component of the total remuneration it is the achievement of the performance criteria, which is the positive financial result of the Company. 1.4.2 For the Financial year, the Company achieved positive consolidated financial result (EBITDA) of EUR 33,696 thousand and when comparing the so-called modified EBITDA like-for-like, the achieved modified EBITDA for the year ended 31.10.2022 (EUR 27,824 thousand) reached more than 90% of modified EBITDA for the year ended 31.10.2021 (EUR 4,106 thousand). At the same time, the Company properly complied with the set of non-financial performance indicators – the Company´s position as the so called “Creditable debtor”. Due to achievement of all criteria in terms of the Remuneration rules, the members of the Board of Directors in the Financial year were entitled to a variable component of the total remuneration in the amount specified in point 2.3.1. of the Remuneration rules. The granted variable components of remuneration in accordance with point 2.3.1 of the Remuneration Rules in the total amount of EUR 941,439 will be paid to the members of the Board of Directors in accordance with point 2.3.10 of the Remuneration rules on the next payment date determined by the Company for the payment of wages to employees after the publication of the consolidated IFRS financial statements of the Company for the year ended 31.10.2022. 2. REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD 2.1. The Supervisory Board of the Company served during the Financial year in the following composition: 2.1.1. Ing. Bohuš Hlavatý, Chairman of the Supervisory Board since 30.04.2020 2.1.2. Ing. František Hodorovský, Vice-Chairman of the Supervisory Board since 18.01.2011 2.1.3. Roman Kudláček, Member of the Supervisory Board since 21.04.2012 2.1.4. Ing. Pavol Mikušiak, Member of the Supervisory Board since 27.04.2013 2.1.5. Adam Tomis, Member of the Supervisory Board since 12.04.2014 2.1.6. Ing. Andrej Devečka, Member of the Supervisory Board since 29.04.2020 2.1.7. Miroslav Roth, Member of the Supervisory Board since 30.06.2012 until 03.06.2021 and since 30.06.2021 2.1.8. Mgr. Marek Schwarz, Member of the Supervisory Board since 30.06.2021 2.1.9. Ivan Oško, Member of the Supervisory Board since 30.06.2021 2.2. Overview of all components of the total remuneration 2.2.1. In accordance with the Remuneration rules, the members of the Supervisory Board are provided with the so-called total remuneration of a member of the Supervisory Board, which consists of: (i) fixed component – point 3.2 of the Remuneration rules, (ii) variable component – point 3.3 of the Remuneration rules and (iii) bonuses and other benefits. 2.2.2. For the Financial year, these following components of the total remuneration were paid to the members of the Supervisory Board: 2.2.2.1. Fixed component of the total remuneration: Ing. Bohuš Hlavatý, in the amount of 48.000,- EUR Ing. František Hodorovský, in the amount of 6.000,- EUR Roman Kudláček, in the amount of 3. 327,- EUR Ing. Pavol Mikušiak, in the amount of 3.600,- EUR Adam Tomis, in the amount of 3.600,- EUR Ing. Andrej Devečka, in the amou nt of 3.600,- EUR Miroslav Roth, in the amount of 3.600,- EUR Mgr. Marek Schwarz, in the amount of 3.600,- EUR Ivan Oško, in the amount of 3.600,- EUR 2.2.2.2. The variable component of the total remuneration is not granted to the members of the Supervisory Board in accordance with the Remuneration rules. Remuneration report 270 2.3. Proportional share of fixed and variable component in the total remuneration 2.3.1 The proportional share of fixed and variable component of the total remuneration of the members of the Supervisory Board is as follows: Fixed remuneration Variable remuneration Ing. Bohuš Hlavatý 100% 0% Ing. František Hodorovský 100% 0% Roman Kudláček 100% 0% Ing. Pavol Mikušiak 100% 0% Adam Tomis 100% 0% Ing. Andrej Devečka 100% 0% Miroslav Roth 100% 0% Mgr. Marek Schwarz 100% 0% Ivan Oško 100% 0% 2.4. Explanation of how the total remuneration corresponds to the approved remuneration rules, including how it contributes to the long-term performance of the Company and information on how the performance assessment criteria have been applied 2.4.1. The total remuneration provided or awarded to the members of the Supervisory Board in the Financial year takes full account of the criteria for awarding remuneration within the meaning of the Remuneration rules. Only a fixed component of the total remuneration is awarded to members of the Supervisory Board for the proper performance of the function of a member of the Supervisory Board. 3. COMMON PROVISIONS ON REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE MEMBERS OF THE SUPERVISORY BOARD 3.1. Annual remuneration summary regardless of its form of acquisition, annual development of the Company’s performance assessment and average annual remuneration summary based on comparison of income from total remuneration of a member of the Body of the Company and income of the Company’s employees who are not members of the Body of the Company and have a weekly working time established according to a special law, for at least five previous accounting periods 3.1.1. In accordance with the Remuneration rules a member of the Board of Directors and a member of the Supervisory Board also have the right to remuneration in the form of salary or any other form obtained from the Company for the act of employment contract or any other contract in the case of a membership within the Board of Directors and in the form of a salary in the case of a membership within the Supervisory Board. However, members of the Board of Directors and members of the Supervisory Board are not awarded remuneration for the performance of their duties in the bodies of other companies belonging to the TMR Group. No royalties were awarded or paid to the members of Board of Directors or members of Supervisory Board during the Financial year. 3.1.2. For the Financial year, members of the Board of Directors and members of the Supervisory Board were paid salaries and bonuses, and at the same time the members of Board of Directors were granted bonuses in aggregate as follows: Ing. Igor Rattaj, in the amount of 707.857,- EUR Ing. Jozef Hodek, in the amount of 537.029,- EUR Čeněk Jílek, in the amount of 545.615,- EUR Bohuš Hlavatý, in the amount of 48.000,- EUR Ing. Andrej Devečka, in the amount of 29.196,- EUR Ing. František Hodorovský, in the amount of 6.000,- EUR Remuneration report 271 Roman Kudláček, in the amount of 3. 327,- EUR Ing. Pavol Mikušiak, in the amount of 3.600,- EUR Adam Tomis, in the amount of 3.600,- EUR Miroslav Roth, in the amount of 26.194,- EUR Mgr. Marek Schwarz, in the amount of 98.529,- EUR Ivan Oško, in the amount of 32.627,- EUR 3.1.3. Comparison of income from total remuneration of a member of the Body of the Company and income of the Company’s employees in thousand EUR: „E“ Employees of the Company in the corresponding Financial year „EE“ Employees of the Company in the corresponding Financial year without the number of members of the Body of the Company „BoC“ Members of the Body of the Company (member of the Board of Directors, member of the Supervisory Board, persons on the highest level of management) in the corresponding Financial year 3.2. Number of shares and share options granted or offered in connection with the performance of the function 3.2.1. No member of the Board of Directors and the Supervisory Board has acquired any shares or stock options in connection with the performance of a member of the Board of Directors function neither as member of the Supervisory Board. Information on the number of shares of the Company owned by individual members of Board of Directors and members of the Supervisory Board is provided in the annual report prepared as of 31.10.2022, which includes this Remuneration report. 3.3. Information on the use of the possibility of recovering option of the variable component of the total remuneration 3.3.1. The Company has not set any criteria for recovering the variable component of the total remuneration. 3.4. Information on all cases pursuant to § 201a, section 3, including an explanation of the nature of exceptional cases and an indication of the specific provisions from which they have temporarily deviated 3.4.1. The Remuneration rules do not provide for any exceptional cases referred to in § 201a, section 3 of the Commercial Code, therefore the provisions in the Financial year have not been applied. Demänovská Dolina, 6.3.2023 Financial year 2022 2021 2020 2019 2018 Number of „E“ 1 359 1 193 1 332 1 456 1 402 Number of „BoC“ 12 13 12 19 18 Number of „EE“ 1 347 1 180 1 325 1 444 1 391 Total annual personal expenses for „EE“ 27 375 18 959 21 760 22 672 18 992 Total annual remuneration for „BoC“ 1 925 836 1 195 2 424 2 154 Total annual remuneration for BoC/number of BoC 160.4 64.3 99.6 127.6 119.7 Total annual personal expenses for EE/number of EE 18.9 15.4 15.5 14.0 12.1 Total annual remuneration BoC/number BoC to total annual personal expenses EE/number of EE 8.5 multiple 4.2 multiple 6.4 multiple 9.1 multiple 9.9 multiple Remuneration report STATEMENT BY THE BO ARD OF DIRECTORS 274 Statement by the Board of Directors The Board of Directors of Tatry mountain resorts, a.s. hereby states that according to its best knowledge Annual Report, Consolidated Financial Statements, and Separate Financial Statements have been prepared in accordance with relevant regulations, and they present a true and accurate description of assets, liabilities, ﬁnancial situation, and comprehensive results of the Group (Tatry mountain resorts, a.s. and its subsidiaries) and the Parent company. The Board further states that Annual Report contains a true and accurate review of performance, operating results, and position of the Group, as well as an explanation of key risks and uncertainty factors that the Group faces. Demänovská Dolina, February 28, 2023 Igor Rattaj Jozef Hodek Chairman of the Board of Directors Member of the Board of Directors, CFO 275 TATRY MOUNTAIN RESORTS, a.s., e-mail: info @ tmr.sk, www.tmr.sk, tel.: 0850 606 202 foto: Marek Hajkovský

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