Agility Real Estate

Annual Report (ESEF) • Apr 30, 2024

984500C784DD41E4AC47-2023-12-31-en.xhtml 984500C784DD41E4AC47 2023-01-01 2023-12-31 984500C784DD41E4AC47 2022-01-01 2022-12-31 984500C784DD41E4AC47 2023-12-31 984500C784DD41E4AC47 2022-12-31 984500C784DD41E4AC47 2023-12-31 ifrs-full:IssuedCapitalMember 984500C784DD41E4AC47 2023-01-01 2023-12-31 ifrs-full:IssuedCapitalMember 984500C784DD41E4AC47 2023-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 984500C784DD41E4AC47 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 984500C784DD41E4AC47 2023-01-01 2023-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 984500C784DD41E4AC47 2023-12-31 ifrs-full:RetainedEarningsMember 984500C784DD41E4AC47 2023-01-01 2023-12-31 ifrs-full:RetainedEarningsMember 984500C784DD41E4AC47 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 984500C784DD41E4AC47 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 984500C784DD41E4AC47 2023-12-31 ifrs-full:NoncontrollingInterestsMember 984500C784DD41E4AC47 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:IssuedCapitalMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:RetainedEarningsMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 984500C784DD41E4AC47 2022-12-31 ifrs-full:NoncontrollingInterestsMember 984500C784DD41E4AC47 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember 984500C784DD41E4AC47 2022-01-01 2022-12-31 ifrs-full:RetainedEarningsMember 984500C784DD41E4AC47 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 984500C784DD41E4AC47 2022-01-01 2022-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:IssuedCapitalMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:ReserveOfSharebasedPaymentsMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:RetainedEarningsMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 984500C784DD41E4AC47 2021-12-31 ifrs-full:NoncontrollingInterestsMember 984500C784DD41E4AC47 2021-12-31 iso4217:USD iso4217:USD xbrli:shares Agility Real Estate | Annual Report 20 2 3 1 Agility Real Estate | Annual Report 20 2 3 Cautionary Note (Agility Real Estate, formerly Thunderbird Resorts, is a British Virgin Islands company limited by shares with its registered office in Tortola, British Virgin Islands) Cautionary Note on “forward-looking statements” This Annual Report contains certain forward-looking statements within the meaning of the securities laws and regulations of various international, federal, and state jurisdictions. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential revenue, future plans, and objectives of Agility Real Estate are forward-looking statements that involve risk and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Group's forward-looking statements include competitive pressures, unfavorable changes in regulatory structures, and general risks associated with business, all of which are disclosed under the heading "Risk Factors" and elsewhere in the Group's documents filed from time-to-time with the Euronext Amsterdam exchange (“Euronext Amsterdam”) and other regulatory authorities. Agility Real Estate Inc. (formerly known as Thunderbird Resorts Inc.) is sometimes referred to herein as “the Company” or “the Group.” All currencies are in US dollars unless stated otherwise. Agility Real Estate | Annual Report 20 2 3 Table of Contents Table of Contents Chapter 1: Letter from the CEO 4 Chapter 2: 2023 Overview and Updates 7 Our Operations and Real estate 8 Group Overview 9 Peru 11 Nicaragua 12 Other Key Items 14 Chapter 3: Regulatory Environment 15 Chapter 4: Management Compliance Statement 18 Chapter 5: Report of the Board of Directors 22 Senior Management, Directors and Director Nominees 23 Board of Directors – Governance 25 Compensation to Senior Management and Directors 27 Chapter 6: Investor Relations, Shares & Dividends 29 Conflicts of Interest 31 Related Party Transactions 31 Description of Securities 31 Organizational Documents 32 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 38 Report of the Independent Auditors 39 Financial Statements 4 6 Notes to the Consolidated Financial Statements 5 2 Chapter 8: Risk Factors 113 Agility Real Estate | Annual Report 202 3 4 Chapter 1: Letter from the CEO Chapter 1: Letter from the CEO Agility Real Estate | Annual Report 202 3 5 Chapter 1: Letter from the CEO Dear Shareholders and Investors: As approved in our Annual General Shareholder Meeting on January 31, 2024, Thunderbird Resorts has rebranded as Agility Real Estate (see www.agility.realestate). We are pleased to announce that rebranding is now complete, including on the Euronext under the trading symbol AGIL. The rationale for rebranding was that Thunderbird Resorts Inc. no longer reflected the Group’s business model for two reasons: 1) With the completed conversion of our last hotel to condominiums, we are no longer a “resort” company; and 2) With our continuing operation of office space in Peru, raw land holdings in Costa Rica and entertainment real estate properties in Nicaragua, we are clearly a real estate developer, owner and operator specialized in emerging markets. In the post-Covid world, optimal use across many real estate sub-sectors has been evolving more radically and quickly than has been seen in at least a generation; therefore, agility is now evolving into a driving force of new real estate models and one into which the Group intends to innovate. The Group will have more to say about its model as we advance, but we are already pleased to share recent initiatives to optimize use under “Our Properties” below. The below summarizes the Group’s performance for the year ended in December 31, 2023. 1. CHANGES IN PERFORMANCE IN 2023 In summary, Group revenue from continuing businesses increased by $958 thousand or 6.6%, while adjusted EBITDA decreased by $856 thousand or -23.6%. Consolidated Profit from continuing operations for the period is $1.3 million, a reduction of $414 thousand or 44.7% as compared with 2022 results. A. EBITDA: Peru property EBITDA fell by $139 thousand and Nicaragua property EBITDA increased by $39 thousand, respectively, as compared to the same period in 2022. Corporate Expense increased by $756 thousand in 2023 as compared to 2022, which increase was largely due to one-time expenses and does do not reflect ongoing changes. Adjusted EBITDA decreased by $856 thousand or -23.6% through December 31, 2023 as compared to through December 31, 2022. B. Profit / (Loss): Our Profit increased by approximately $414 thousand for the period as compared to 2022. This improvement was the result of lower interest and financing costs and higher other gains. C. Debt: Gross debt as of December 31, 2023 decreased to $11 million from $13.2 million as compared to December 31, 2022, while Net debt increased to $7.8 million as compared to $7.2 over this period. Over the last 15 years, the Group has reduced its Gross debt by more than $160 million. Approximately $3.0 million of our Net debt is comprised of Obligations under leases and hire purchase contracts, meaning what are traditionally understood as net borrowings are now less than $5.0 million. 2. OUR PROPERTIES In relation to our properties, the Group continues to pursue decisions that support the best interest of shareholders according to the shareholder mandate set forth in the September 21, 2016 Special Resolutions. That resolution approved that Management could exit or not its assets and could return capital to shareholders or reinvest into growth. Please read the following progress carefully. Agility Real Estate | Annual Report 202 3 6 Chapter 1: Letter from the CEO A. Peru Real Estate Assets: As of the publication date of this 2023 Annual Report: - The Group has successfully completed the conversion of its 66-suite hotel into condominiums. As of this Q2 2024, the Group has sold 65 of its 66 condominium units, and the final unit is now under contract. Total sales of all units and related parking have exceeded $10.7 million, which approximately $2.2 million in gains are reflected between 2022 and 2023, please refer to Note 12, Assets classified as held for sale and Discontinued Operations. - The Group has made the decision to convert its 6,703 m2 of offices into 71 condominium apartments to commence pre-selling in this Q2 2024: Given the performance of the hotel conversion into condominium apartments, the Group has now made the decision to convert its office complex (located in the same building as the hotel conversion) into 71 condominium apartments with 40 mini store rooms and 78 parking spaces (includes parking for visitors). As of the publication of this 2023 Annual Report, we have secured master plan permits that allow the Group to begin to pre-sell units. We are now working on final construction plans. The development continues to have active office tenants, but we foresee terminating all leases within 2024 and commencing construction to convert the offices into condominiums in early 2025. The construction budget is currently forecasted to be approximately $3 million, the value of to-be-sold property to be approximately $12 million and for the project to be fully delivered and sold in 2026. All estimates are subject to further work and analysis. The Group will keep shareholders apprised. B. Nicaragua Gaming and Real Estate Assets: As of the publication date of this 2023 Annual Report, the Group continues to own a 56% interest in a Nicaraguan holding company that owns the following assets: i) Gaming: Six gaming venues with a combined approximately 655 gaming positions; and ii) Real Estate: Approximately 4,562 m2 of land divided among 5 parcels, and some with tenant improvements are more fully detailed on page 12. At this time, the Group has no news vis-à-vis these assets, accept that they continue to perform strongly as you will note on page 13. For now, as we continue to explore our new point of view around real estate, we have no further insights as to how freed up cash from asset sales may be managed with the exception that we intend to reduce debt to as close to zero as possible as asset sales facilitate accelerated debt principal paydown. Peter LeSar Chief Executive Officer April 30, 2024 Agility Real Estate | Annual Report 202 3 7 Chapter 2: 2023 Overview and Updates Chapter 2: 2023 Overview and Updates Agility Real Estate | Annual Report 202 3 8 Chapter 2: 2023 Overview and Updates Our Operations and Real Estate Agility Real Estate Inc. (www.agility.realestate), herein to be called “Agility” or the “Group” is publicly traded on the Euronext Amsterdam under the trading symbol AGIL. After years of aggressive debt reduction largely through asset sales, our core remaining businesses are a mix of real estate and entertainment businesses. As of year-end 2023, the Group operated in Peru and Nicaragua. We also retain a 50% ownership in certain Costa Rican real estate as described in the real estate table below. NICARAGUA $14.6M revenue 6 gaming venues 655 gaming positions COSTA RICA 11.6-hectare property in Tres Rios, between the cities of San Jose & Cartago PERU $864K revenue 1 office complex of 6,703m2 to be converted into condominiums 78 underground parking spaces Agility Real Estate | Annual Report 202 3 9 Chapter 2: 2023 Overview and Updates As of December 31, 2023, the Group owned the following real estate: Note: Please see the CEO Letter and Subsequent Events for information on changes to the Peru office complex. Group Overview for 2023 Below is our consolidated profit / (loss) summary for the twelve months ended December 31, 2023, as compared with the same period of 2022. In summary, Group revenue increased by $958 thousand or 6.6%, while adjusted EBITDA decreased by $856 thousand or -23.6%. Consolidated Profit for the period is $1.3 million, an increase of $414 thousand or 44.7% as compared with 2022 results. Amounts in Thousands of USD Country Property Type of Real Estate Type of Property Area in m2 TRI Ownership Peru Office complex Mixed use building Income producing 6,703 100% Costa Rica Tres Rios raw land Land Non-income producing 81,971 50% Nicaragua Warehouse & Other Offices Office building Non-income producing 1,410 Administrative Offices Office building Income producing 890 Pharaohs Bolivar Gaming Income producing 1,242 Pharaohs Chinandega Gaming Income producing 832 Carretera a Masaya Land Income producing 13,132 106,180 56% Total (In thousands) % 2023 2022 Variance change Net gaming wins 12,260$ 11,567$ 693$ 6.0% Food and beverage sales 2,331 1,891 440 23.3% Hospitality and other sales 894 1,069 (175) -16.4% Total revenues 15,485 14,527 958 6.6% Promotional allowances 678 687 (9) -1.3% Property, marketing and administration 10,220 9,153 1,067 11.7% Property EBITDA 4,587 4,687 (100) -2.1% Corporate expenses 1,813 1,057 756 71.5% Adjusted EBITDA 2,774 3,630 (856) -23.6% Property EBITDA as a percentage of revenues 17.9% 25.0% Depreciation and amortization 1,077 1,192 (115) -9.6% Interest and financing costs, net 808 1,610 (802) -49.8% Management fee attributable to non-controlling interest - 7 (7) -100.0% Project development 42 - 42 0.0% Foreign exchange loss / (gain) 164 (161) 325 -201.9% Other (gains) / losses (1,961) (1,483) (478) 32.2% Profit from equity investee (242) (93) (149) 160.2% Income taxes 1,545 1,631 (86) -5.3% Profit / (loss) for the period from continuing operations 1,341$ 927$ 414$ 44.7% Twelve months ended December 31, Agility Real Estate | Annual Report 202 3 10 Chapter 2: 2023 Overview and Updates Group debt: Below is the Group’s Gross debt and Net debt on December 31, 2023. Please note that as of 2021 and based on IFRS 16, the Group is now required to account for the net present value of real estate operating lease contracts as Obligations under leases and hire purchase contracts. The Group estimates its debt schedule as follows starting in January 2024: (In thousands) Dec-23 Dec-22 Borrowings 7,879$ 9,057$ Obligations under leases and hire purchase contracts 3,079 4,119 Gross Debt 10,958$ 13,176$ Less: cash and cash equivalents (excludes restricted cash) 3,127 5,957 Net Debt 7,831$ 7,219$ 2024 2025 2026 2027 2028 Thereafter Total Corporate 7,724,936$ -$ -$ -$ -$ -$ 7,724,936$ Nicaragua 808,411 681,788 582,440 512,575 185,880 460,438 3,231,532 $ 8,533,347 $ 681,788 $ 582,440 $ 512,575 $ 185,880 $ 460,438 $ 10,956,468 Interest Payment 2024 2025 2026 2027 2028 Thereafter Total Corporate 306,710$ -$ -$ -$ -$ -$ 306,710$ Nicaragua 380,135 271,087 190,249 114,168 67,998 95,184 1,118,821 $ 686,845 $ 271,087 $ 190,249 $ 114,168 $ 67,998 $ 95,184 $ 1,425,531 Total Principal Balance Total Agility Real Estate | Annual Report 202 3 11 Chapter 2: 2023 Overview and Updates Peru Update Description of Properties In Peru, as of December 31, 2023, the Group substantially completed the process to convert a 66-suite hotel into a condominium apartment building with all 66 units for sale. It has one final apartment that is under contract as of the publication of this 2023 Annual Report. In the same building, the Group continues to own approximately 6,704 m2 of office space that it has, as of the publication date of this 2023 Annual Report, begun to convert into 71 condominium apartments, 40 mini store rooms and 78 parking spaces. The offices have active tenants, but we foresee terminating all office leases within 2024 and to commence construction to convert the offices into condominiums in early 2025. The construction budget is forecasted to be approximately $3 million, the value of to-be-sold property to be approximately $12 million and for the project to be fully delivered and sold in 2026. All estimates are subject to further work and analysis. Summary of Peru 2023 Consolidated P&L: Our Peru profit / (loss) summary for the twelve months ended December 31, 2023, as compared with the same period of 2022 is set out below. In summary, Peru revenue and property EBITDA reduced by $82 thousand or -8.7% and $139 thousand or -32.6%, respectively. Profit for the period is $182 thousand, an improvement of $1.1 million or -119.8% as compared with 2022 results. Date Sold Thunderbird Office Complex Lima 2007 NA Office Spaces and Parking Units for Rent 6,703 Peru Total 6,703 Type M2Name Province Date Acquired (In thousands) % 2023 2022 Variance change Hospitality and other sales 864$ 946$ (82)$ -8.7% Total revenues 864 946 (82) -8.7% Property, marketing and administration 577 520 57 11.0% Property EBITDA 287 426 (139) -32.6% Property EBITDA as a percentage of revenues 33.2% 45.0% Depreciation and amortization 60 117 (57) -48.7% Interest and financing costs, net - 286 (286) -100.0% Foreign exchange loss / (gain) 85 (40) 125 -312.5% Other (gains) / losses (700) 1 (701) -70100.0% Income taxes 660 982 (322) -32.8% Profit / (loss) for the period from continuing operations 182$ (920)$ 1,102$ -119.8% Twelve months ended December 31, Agility Real Estate | Annual Report 202 3 12 Chapter 2: 2023 Overview and Updates Nicaragua Update Description of Properties In Nicaragua, the Group operates six standalone gaming venues. Below is a table that outlines information for each property as of December 31, 2023. The Group’s largest and most complete operation in Nicaragua is the Pharaoh’s Casino on the highway to Masaya, which is the main thoroughfare in the heart of Managua. The property is located across from an Intercontinental Hotel and close to high-end shopping. Summary of Nicaragua 2023 Consolidated P&L: Below is our Nicaragua profit / (loss) summary for the twelve months ended December 31, 2023, as compared with the same period of 2022. In summary, Nicaragua revenue increased by $1.2 million or 8.6%, while property EBITDA increased by $39 thousand or 0.9%. Profit for the period is $1.7 million, an improvement of $570 thousand or 52.3% as compared to 2022. Name Province Date Acquired Type Slots Table Positions Pharaoh’s Casino Chinandega Chinandega 2012 Slot Parlor 99 - Pharaoh’s Casino Esteli Esteli 2017 Slot Parlor 50 - Nicaragua Total 640 15 Pharaoh's Central Managua 2000 Casino 161 9 3 111 - Pharaoh's Bolivar Managua 2015 Slot Parlor 112 3 Pharaoh's Camino Real Managua 2005 Casino 107 Zona Pharaoh's Bello Horizonte Managua 2008 Casino Agility Real Estate | Annual Report 202 3 13 Chapter 2: 2023 Overview and Updates Below are graphs exhibiting our expected principal and interest payments based on loan contracts effective as of December 31, 2023. The principal and interest payments scheduled in the tables below reflects those debt service payments that are scheduled starting in January 1 st , 2024. (In thousands) % 2023 2022 Variance change Net gaming wins 12,260$ $11,567 693$ 6.0% Food and beverage sales 2,331 1,891 440 23.3% Hospitality and other sales 30 3 27 900.0% Total revenues 14,621 13,461 1,160 8.6% Promotional allowances 678 687 (9) -1.3% Property, marketing and administration 9,643 8,513 1,130 13.3% Property EBITDA 4,300 4,261 39 0.9% Property EBITDA as a percentage of revenues 29.4% 31.7% Depreciation and amortization 1,017 1,075 (58) -5.4% Interest and financing costs, net 213 515 (302) -58.6% Management fee attributable to non-controlling interest 630 1,057 (427) -40.4% Project development 42 - 42 0.0% Foreign exchange (gain) / loss 13 17 (4) -23.5% Other (gains) / losses (12) 50 (62) -124.0% Income taxes 737 457 280 61.3% Profit / (loss) for the period from continuing operations 1,660$ 1,090$ 570$ 52.3% Twelve months ended December 31, Agility Real Estate | Annual Report 202 3 14 Chapter 2: 2023 Overview and Updates Other Key Items MARKETING The Group’s marketing strategy in 2023 was focused on growing our gaming businesses in Nicaragua through awareness and promotional campaigns subject to local law, and on selling condominium apartments and renting office space in Peru also subject to local law. EMPLOYEES As of December 31, 2023, we employed 448, including 457 in Nicaragua, 22 in Peru, and 6 elsewhere. Labor laws in Latin America are generally more protective of employees than employers. Latin America has laws protecting employees from having their employment terminated without proper cause or without paying such employees severance compensation in established statutory amounts and, in some Latin American countries the law establishes a minimum number of vacation days. Each Agility subsidiary has its own country-level training and development programs according to the Group’s corporate guidelines. We offer opportunities for employees to be personally challenged with educational assistance now available at some of the Group’s locations. Most of the Group’s subsidiaries offer life and health insurance with a preferred provider network and co-payment methods to the Group’s upper/middle management as well as for the Group’s staff and operational employees. INSURANCE We typically obtain the types and amounts of insurance coverage that we consider appropriate for companies in similar businesses. We currently maintain certain insurance policies, including, without limitation, general commercial and liability, property (including earthquake coverage in certain markets), and employee compensation coverage, for all of the Group’s properties. In addition, for certain of the Group’s properties, we carry business interruption insurance. LITIGATION AND CONTROVERSIES The Group has disclosed ongoing litigation in Notes 18 and 23 of the financial statements. In addition to the litigation described in these Notes, we are subject to legal proceedings arising in the ordinary course of business or related to the Group’s discontinued business operations. Other than as described in this 2023 Annual Report in Notes 18 and 23 of the 2023 Consolidated Financial Statement, there are not and have not been any governmental, legal or arbitration proceedings that may have or have had significant effects on the Group’s financial position or profitability. Agility Real Estate | Annual Report 202 3 15 Chapter 3: Regulatory Environment Chapter 3: Regulatory Environment Agility Real Estate | Annual Report 202 3 16 Chapter 3: Regulatory Environment GOVERNMENT REGULATION The Group’s gaming operations are subject to extensive regulation, and each of the Group’s subsidiaries and joint ventures holds registrations, approvals, gaming licenses or permits in each jurisdiction in which it operates gaming activities. Gaming laws are based upon declarations of public policy designed to protect gaming consumers and the viability and integrity of the gaming industry, including prevention of cheating and fraudulent practices. Gaming laws may also be designed to protect and maximize state and local revenues derived through taxation and licensing fees imposed on gaming industry participants and enhance economic development and tourism. To accomplish these public policy goals, gaming laws establish procedures to ensure that participants in the gaming industry meet certain standards of character and fitness, or suitability. The limitation, conditioning, suspension, revocation or non-renewal of gaming licenses, or the failure to reauthorize gaming in certain jurisdictions would materially and adversely affect the Group’s gaming operations in that jurisdiction. Statutes and regulations can require us to meet various standards relating to, among other things, business licenses, registration and background investigations of employees, floor plans, building, fire and accessibility requirements, payment of gaming taxes, and regulations concerning equipment, machines, tokens, gaming participants and ownership interest. Civil and criminal penalties can be assessed against us and/or the Group’s Officers to the extent of their individual participation in, or association with, a violation of certain gaming statutes or regulations. We are also subject to safety and health, employment and environmental laws, regulations and ordinances that apply to the Group’s operations. For example, rules and regulations regarding the service of alcoholic beverages are often strict, and the loss of a license that permits such service would significantly impair the Group’s operations. Local building, parking and fire codes also affect the Group’s operations. We believe that we are currently in compliance with all applicable gaming and non-gaming regulations in the jurisdictions where we operate. The following is an overview of the gaming regulations in each of the Group’s current jurisdictions of operation. We are not subject to any material environmental regulation. NICARAGUA The Nicaraguan Casino Law was published in The Gazette, Official Newspaper Number 124, on July 5, 2011. Its full name is Law 766 Special Law for the Control and Regulation of Casinos and Slot Parlors. This law (Article 5) appoints the Nicaraguan Institute of Tourism (“INTUR”) as the Application Authority, with the express obligation to enforce the law, through the creation of a new Casino Commission, headed by a Director to be designated by the INTUR Executive President. The Law creates four categories for the casinos in Nicaragua: 1. Category A: Every casino with 71 slots machines or more and three or more table games will be considered an “A” class casino. The Group’s operations in Nicaragua are all Category A. 2. Category B: Every casino with 25 to 70 slots machines and/or two table games at least will be considered a “B” class casino. 3. Category C: A slots operator with 16 to 24 slot machines operating in one slot parlor will be considered a “C” Class casino, in counties with 30,000 inhabitants or less. 4. Category D: A slot parlor with 10 to 15 slot machines in counties with 30,000 inhabitants or less. This Nicaraguan Casino Law was reformed by the recently approved Law 884 “Law for the reform and addition to Law 766 Special Law for the Control and Regulation of Casinos and Slot Parlors”, which was published in The Gazette, Official Newspaper Number 215 on November 12 th , 2014. Agility Real Estate | Annual Report 202 3 17 Chapter 3: Regulatory Environment By this Law 884 (Article 4), the Application Authority was changed from the Nicaraguan Institute of Tourism (INTUR) to the Nicaraguan Ministry of Finance and Public Credit, with the express obligation to enforce this law through the creation of a special Office for the Casinos and Slot Parlors, headed by a Director to be appointed by the Minister of Finance and Public Credit. Article 5 of the Law 884 mandates the creation of a Board of Control and Regulation of Casinos and Slot Parlors, consisting of the Minister of Finance and Public Credit (President of this Board), the General Director of Income or his deputy, the General Director of the National Police or his (her) deputy, the General Director of the Financial Analysis Unit or his deputy and the Director from the Office for the Casinos and Slot Parlors, with voice but no vote in the meetings of this Board. This Board is in charge of hearing the appeals from the members of the Casinos and Slot Parlors, issuing rules and regulations for the industry, and supervision of tax payments. The Nicaraguan government applies specific taxes including corporate income tax, which apply to the Group’s operations as follows: a. Municipal tax of 1% of gross revenue, payable monthly. b. Advance monthly income tax payment of $400 per table; plus, advance monthly income tax payment of $25 per slot machine for the first 100 slots, $35 from 101 to 300 slots, and $50 from 301 or more per slot machine and per location or 1% of net win, whichever is higher. c. Income tax of 30% of taxable net income, payable annually, which is reduced by the amounts paid as monthly advance income tax payment; if the advance payments are higher than the 30% the higher amount paid becomes your tax obligation. d. We must pay the annual matriculate tax to the municipal government for the Group’s operating licenses, which is 2% of the average monthly revenue for the months of October, November and December. The matriculate tax applies to all companies in Nicaragua not just casinos. In 2013, the Financial Analysis Unit of Nicaragua issued certain regulations intended to strengthen the efforts to deter money laundering in certain businesses including casinos. With the new regulations effective on or about January 1, 2014, gaming companies are required to appoint a “compliance officer” to be the direct liaison between the company and the regulator. The compliance officer is responsible for presenting quarterly reports regarding the compliance efforts of the company with respect to these regulations and certain aspects of the company’s operations, before the regulator. PROVISIONS AND OTHER CONTINGENCIES See Notes 18 and 23 of the Group’s Financial Statements that describe certain matters such as the Costa Rica tax controversy, the Daman Hospitality loan guarantee, the Canadian tax controversy, the Guatemala controversy, the San Diego Federal District Court case, and the Costa Rica-CIRSA Escrow claim. Please note that effective February 25, 2015, and in conjunction with the sale of our Costa Rican operations, the Group’s Costa Rican subsidiaries paid in protest approximately $3.3 million (50% of which relates to the Group’s 50% stake in those subsidiaries at time of sale) to the Costa Rican tax authorities. The Group continues to dispute the validity of the Costa Rican contingent taxes as described in Note 23, as per our agreements with the buyers of our interests in our Costa Rican operations, any recovery is the benefit of the former shareholders, meaning 50% of any recovery will be to the benefit of the Group. Agility Real Estate | Annual Report 202 3 18 Chapter 4: Management Compliance Statement Chapter 4: Management Compliance Statement Agility Real Estate | Annual Report 202 3 19 Chapter 4: Management Compliance Statement The management of risks, internal controls, integrity and compliance forms an integral part of the business management within the Group and continues to be strengthened and embedded into the Group’s business objectives setting processes and its operations. It also documents the necessary disclosures as required by Management under the most recent best practice provisions of the EU Transparency Directive as incorporated in the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht). THE GROUP’S APPROACH TO RISK MANAGEMENT, INTERNAL CONTROL, AND COMPLIANCE INTERNAL CONTROL OVER FINANCIAL REPORTING Implement technology-based infrastructure and controls. The Group’s technology-based infrastructure and controls include, but are not limited to the following:  Daily and per-shift reporting and reconciliation of casino gaming activities;  Daily drop and win reports by game type and slot type and denomination, as well as food and beverage sales;  Weekly closing cycles for basic reconciliations and reporting of cash positions;  Monthly income statements versus budgets by casino property, as well as reviews of capital expenditures and cash position;  High quality, interlinked communication and monitoring systems to allow real-time monitoring of operations, which permits us to market the Group’s facilities, and manage the Group’s people and assets, more effectively;  Country-level accounting with budget compilation and variance reporting at the property and country levels;  Daily, detailed sales reports compared to budgets for all pertinent gaming and hospitality sales; and  Digital surveillance, online slot security systems, online liquor inventory control and custom cash management systems. The Group’s internal controls in each country are monitored by the Group’s principal operations office for that country. We implement similar standards in each of the Group’s properties to ensure consistency in security of assets and protection against theft. In addition, in many of the Group’s operations, communication and monitoring systems (such as the Group’s point of sale monitoring system) provide the ability to monitor cash inflows on a real-time basis. We believe that operating the Group’s properties using a consistent, high standard of controls provides us with a higher-quality operation, and we believe that the Group’s patrons recognize that higher quality. Agility Real Estate | Annual Report 202 3 20 Chapter 4: Management Compliance Statement RISK MANAGEMENT For more detail on Risk Factors, see Chapter 8 of this Annual Report. MANAGEMENT STATEMENT ON “GOING CONCERN” Management has reviewed their plan with the Directors and has collectively formed a judgment about the going concern of the Group. In arriving at this judgment, Management has prepared the cash flow projections of the Group. Directors have reviewed this information provided by Management and have considered the information in relation to the financing uncertainties in the current economic climate, the Group’s existing commitments and the financial resources available to the Group. Specifically, Directors have considered: (i) there are limited sources of new financing available to the Group; (ii) the Group has limited trading exposures to our local suppliers and retail customers; (iii) other risks to which the Group is exposed, the most significant of which is considered to be regulatory risk; (iv) sources of Group income, including management fees charged to and income distributed from its various operations; (v) cash generation and debt amortization levels; (vi) fundamental trends of the Group’s businesses; (vii) ability to re-amortize and unsecured lenders; and (vii) level of interest of third parties in the acquisition of certain operating assets, and status of genuine progress and probability of closing within the Going Concern period. The Directors have also considered these critical factors that might affect continuing operations:  Special Resolution: On September 21, 2016, the Group’s shareholders approved a special resolution that, among other items, authorized the Board of Directors of the Corporate to sell “any or all remaining assets of the Corporation in such amounts and at such times as determined by the Board of Directors.” This resolution facilitates the sale of any one or any combination of assets required to support maintaining of a going concern by the Group.  Corporate Expense and Cash Flow: While it increased in 2023 over 2022, largely due to one-time expenses, Corporate expense has decreased materially in recent years but still must accommodate for compliance as a public company.  Liquidity and Working Capital: As of the date of publication of this 2023 Annual Report, the Group forecasts to operate with higher levels of reserves and working capital than in recent years, but to create a healthy level of working capital reserves for periods beyond the Going Concern period may require the sale of additional assets. In part, the Group believes that it is in a stronger position to sustain going concern as of the publication date of this 2023 Annual Report as compared to 2022 and that an improving trend has been in place for the last three years. Below are other events that could support increased liquidity and reduced risk of Going Concern.  The Group has made the decision to convert its 6,703 m2 of offices into 71 condominium apartments to commence pre-selling in this Q2 2024: Given the performance of the hotel conversion into condominium apartments, the Group has now made the decision to convert its office complex (located in the same building as the hotel conversion) into 71 condominium apartments with 40 mini store rooms and 78 parking spaces (includes parking for visitors). As of the publication of this 2023 Annual Report, we have secured master plan permits that allow the Group to begin to pre-sell units. We are now working on final construction plans. The development continues to have active office tenants, but we foresee terminating all leases within 2024 and commencing construction to convert the offices into condominiums in early 2025. The construction Agility Real Estate | Annual Report 202 3 21 Chapter 4: Management Compliance Statement budget is currently forecasted to be approximately $3 million, the value of to-be-sold property to be approximately $12 million and for the project to be fully delivered and sold in 2026. All estimates are subject to further work and analysis. The Group will keep shareholders apprised.  Other liquidity events: The Group continues to work with unsecured lenders and, in some cases, to negotiate payment plans and balances that meet the Group’s cash flow. If the Group is not able to create other liquidity events from its remaining Peru, Costa Rica and Nicaragua assets in 2023- 2024, it is reasonable to expect that some unsecured lenders may pursue years of litigation at that time, though as to whether this would then have an impact on Going Concern is hard to assess. Regardless, the amount of remain borrowings has been greatly reduced. Considering the above, Management and Directors are satisfied that the consolidated Group has adequate resources to mitigate the uncertainty and that the Group is able to continue as a going concern for at least the 12 months following the filing date of this report. For these reasons, Management and Directors have therefore prepared the consolidated financial statements on a going concern basis. MANAGEMENT’S RESPONSIBILITY STATEMENT The Directors and the Officers are responsible for preparing the Annual Report and the consolidated financial statements in accordance with applicable law and regulations, as promulgated by the Euronext and the AFM. In conjunction with the EU Transparency Directive as incorporated in the Dutch Financial Markets Supervision Act, Management confirms to the best of its knowledge that:  The consolidated financial statements for the year ended December 31, 2023, give a true and fair view of the assets, liabilities, financial position, and profit and loss of the Group’s consolidated companies;  The additional management information disclosed in the Annual Report gives a true and fair view of the Group as at December 31, 2023, and the state of affairs during the financial year to which the report relates; and  The Annual Report describes the principal risks facing the Group. These are described in detail in Chapter 8, “Risk Factors.” April 30, 2024 Peter LeSar, Chief Executive Officer & Chief Financial Officer Yazmina Escobar, Corporate Secretary and General Counsel Salomon Guggenheim, Executive Chairman Stefan Fitch, Director Reto Stadelmann, Director Agility Real Estate | Annual Report 202 3 22 Chapter 5: Report of the Board of Directors Chapter 5: Report of the Board of Directors Agility Real Estate | Annual Report 202 3 23 Chapter 5: Report of the Board of Directors Senior Management, Directors and Director Nominees The following table sets forth certain information about the persons who serve on the Group’s Board of Directors as of December 31, 2023. Members of the Group’s Board of Directors serve for a one-year term, which expires at each annual meeting. Unless otherwise indicated, the business address of each person listed below is Apartado 0823-00514 Zona 7, Panama City, Panama. There is no familial relationship between any of our senior management or members of the Group’s Board of Directors. The following table sets forth certain information about persons who serve as key management personnel that are not on our board of directors (see above): Note: As of December 31, 2023, Albert Atallah has retired and has been replaced by Yazmina Escobar since January 1 st , 2024. See background on Ms. Escobar below. SENIOR MANAGEMENT Salomon Guggenheim – Executive Chairman: Mr. Guggenheim joined us in 2002 as a Director. In 1987, he joined Gutzwiller & Partner Ltd., Zurich, a portfolio management company, where he was responsible for Investments and Trading. In 1991, he took over Gutzwiller & Partner from E. Gutzwiller & Cie., Banquiers, Basle (a privately-held Swiss bank) together with the senior management of Gutzwiller & Partner, through a management buy-out and sold the company in 1997. Gutzwiller & Partner was renamed Rabo Investment Management Ltd., where Mr. Guggenheim worked as a Managing Director until December 2001. From 2001 until 2012 he has owned and operated his own company, IC Day Trading Consulting Corp., a Swiss corporation focused on the advisement of private individuals in portfolio management and daily trading activities in different markets worldwide. From 2002 until 2011 he was also the Chief Executive Officer for Ecopowerstations Ltd., a Swiss corporation dealing with pollutant and emission-free wind power stations. Furthermore, he serves in various Companies as a board member and advisor. Mr. Guggenheim became the President and CEO of Agility in January 2013. Name Age Position Date of Birth Salomon Guggenheim 63 Chairman and Director 04-mar-60 Reto Stadelmann 59 Director 12-sep-64 Stephan Fitch 65 Director 30-ago-58 Name Age Position Date of Birth Albert Atallah 67 General Counsel and Corporate Secretary 09-abr-56 Peter LeSar 55 Chief Executive Officer & Chief Financial Officer 14-jun-68 Agility Real Estate | Annual Report 202 3 24 Chapter 5: Report of the Board of Directors Peter LeSar – CEO & CFO. Mr. LeSar has been the CFO of the Group since June 2011. Previously, he has worked for the Group as President of its Philippines businesses (1,400 employees and $55M in revenues at peak) and as Vice President of Business Development at the Group level. Adding to his hospitality bonafides, Mr. LeSar was also the founder of two restaurants recognized by The World’s 50 Best in its Discovery Series and is the author of the book Restaurant Strong. Previous to Agility, Mr. LeSar was the founding Executive Director of the Council for Investment & Development, which represented the Group in its successful bid in the privatization of Panama's state-owned gaming businesses. Mr. LeSar has also been the General Manager of MinAmerica Corporation, a publicly-traded mining company, and the Founder & CEO of iSpeak, a VC funded internet-based translation and localization venture. Albert Atallah – Corporate Secretary and General Counsel: Mr. Atallah retired as of December 31, 2023 and has been the Group’s General Counsel and Corporate Secretary since 2000. Before joining us, he was a partner with the California law firm of LaRocque, Wilson, Mitchell & Skola. He was admitted to the California and Michigan bars and is licensed to practice before the U.S. District Courts of California and Michigan, the U.S. Tax Court, and the U.S. Supreme Court. He received a B.B.A. in 1978 from the University of Michigan, a Juris Doctorate in 1981 from the University of Detroit School of Law, and an L.L.M. in Taxation from the University of San Diego School of Law in 1989. Mr. Atallah is a tax specialist certified by the California Board of Legal Specialization. Yazmina Escobar – Latam Regional Counsel (until December 31, 2023) and Corporate Secretary and General Counsel (starting January 1, 2024). Ms. Escobar joined the group in 2008, starting as Corporate Tax Counsel. She worked on many of the Group’s most significant transactions and was promoted to Latin America Regional Counsel in 2011. Ms. Escobar received her law degree with honors in Panama, at Santa Maria La Antigua University, and a Master in Law & Economics in Buenos Aires, Argentina. She has also post-graduate studies in International Arbitration & Stock Markets. Previous to joining the Group, Ms. Escobar worked as a Senior Consultant in Public Policy, Tax, Economy & Law at a consulting firm serving corporate clients, media and public institutions. INDEPENDENT BOARD OF DIRECTORS Reto Stadelmann. Mr. Stadelmann joined us as a Director in June 2021. In 1985 and 1986 Mr. Stadelmann studied law at the University of Zurich in Switzerland. In 1986 to 1987 he was involved in the International Educational Programme for the Union Bank of Switzerland in Zurich. In 1988 he was an FX-Forward Trader responsible for CHF currency for the Union Bank of Switzerland in Zurich. From 1989 to 1991 he was the Head of FX-Forward Products at the Union Bank of Switzerland in Tokyo. In 1984 to 1995, Mr. Stadelmann was the Treasurer at Schweizerische Bankgelsellschaft in Frankfurt, Germany. From 1995 to 1997 he was the European Head of FX-Forward Products at the Union Bank of Switzerland in Zurich. Then from 1997 to 1998, Mr. Stadelmann was the Global Head FX-Forward Products with the Union Bank of Switzerland in Zurich. From 1998 to 1999 he was the Head of Short Term Interest Rate Products with Asia Pacific UBS AG in Singapore. In 1999 he then became the Global Head of Cash and Collateral Trading Cash at UBS AG in Zurich. From 2000 to 2003 he was the Global Head of Cash and Collateral Trading at UBS AG in Zurich. From 2003 to 2009 he was the Global Co-Head of Foreign Exchange and Money Market at UBS AG. From 2009 to 2010 he was the Global Co-Head of Macro at UBS AG and was also a member of the UBS Investment Bank Board. Stephan Fitch. Mr. Fitch joined us as a Director in September 2016. Mr. Fitch was born in the United States of America and is the co-founder and Managing Director of the London based IAG Holdings Ltd. (IAGH), Agility Real Estate | Annual Report 202 3 25 Chapter 5: Report of the Board of Directors a private company which specializes in international merchant banking activities. Mr. Fitch has been involved in international corporate finance/investment banking activities for over 27 years specializing primarily in start-up, venture capital and small-capitalized public companies. FURTHER INFORMATION ON THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT None of the members of the Group’s Board of Directors or the Group’s senior management has been convicted in relation to any fraudulent offenses, served as a member of the administrative, management or supervisory body, been a partner with unlimited liability, founder or senior manager of any company currently subject to bankruptcy proceedings, receiverships or liquidations, or been disqualified by any court from acting as a member of the administrative, management or supervisory body of any issuer or from participating in the management or conduct of the affairs of any issuer, or has been subject to any public incrimination and/or sanctions by statutory or regulatory authorities or bodies. MANAGEMENT ON THE BOARD OF DIRECTORS For information regarding Salomon Guggenheim see above. Board of Directors - Governance GENERAL The Group’s Board of Directors consists of 3 Directors as of the date of this Annual Report, of whom 2 (Messrs. Stadelmann and Fitch) are independent. Independence determinations were made by the Group’s Board of Directors using the current guidelines of the Euronext for companies listed on that exchange. Members of the Group’s Board of Directors serve for a one-year term, which expires at each annual meeting. COMMITTEES OF THE BOARD The Group’s Board of Directors has established an Audit Committee, a Nominating and Governance Committee, a Compensation Committee and an Investment Committee. Each such committee has at least 2 independent Directors except the Investment Committee that is composed of three members of senior management and one independent Director. Agility Real Estate | Annual Report 202 3 26 Chapter 5: Report of the Board of Directors AUDIT COMMITTEE The Group’s Audit Committee consists of Messrs. Fitch, Stadelmann and LeSar as advisory member. Mr. Fitch is the Chairman of the Group’s Audit Committee. The audit committee is responsible for engaging independent public accountants, reviewing with the independent public accountants the plans and results of the audit engagement, approving professional services provided by the independent public accountants, reviewing the independence of the independent public accountants, considering the range of audit and non-audit fees the Group’s compliance with legal and regulatory requirements and reviewing the adequacy and integrity of the Group’s internal accounting controls. COMPENSATION COMMITTEE The Group’s Compensation Committee consists of Messrs. Stadelmann, Fitch and Guggenheim. Mr. Stadelmann is the Chairperson of this committee, which reviews and approves, or makes recommendations to the Board of Directors with respect to senior Management and Director (who are not employees) compensation, and the Group’s long-term incentive compensation program and equity incentive plans. NOMINATING AND GOVERNANCE COMMITTEE The Group’s Nominating and Governance Committee consists of Messrs. Fitch, Stadelmann and Guggenheim. Mr. Fitch is the Chairman of this committee, which is responsible for, among other things, seeking, considering and recommending to the Board of Directors qualified candidates for election as Directors and recommending nominees for election at the Group’s annual meeting, recommending the composition of committees of the Group’s Board, developing the Group’s corporate governance guidelines and policies and adopting a code of business conduct and ethics. In March 2012, the Group Board of Directors amended the Group’s articles of association, authorizing the Nominating and Governance Committee to adopt procedures and rules for the nomination and election of Directors, which completed in Q1 2012, and such procedures and rules are now reflected in the Committee’s charter, which is available upon request to yazmina@agility.realestate. INVESTMENT COMMITTEE The Group’s Investment Committee is composed of at least three members of senior management (as of year-end 2023, Salomon Guggenheim, Albert Atallah and Peter LeSar) and one independent director (Mr. Stephan Fitch), who acts as Chairman for the Committee and as liaison to the full Board (the “Liaison”). The purpose of the Investment Committee is to set investment policy and strategy, review proposals from management, set limits and structure with regard to investment authority, establish annual goals and objectives for investment concepts and the like. To that end, the Committee shall identify, consider, evaluate, analyze, prioritize material investments, material contracts, material loans and all guaranties granted by the Group, and shall make recommendations to the Board and implement the Board’s decisions. VACANCIES ON OUR BOARD OF DIRECTORS The Group’s charter provides that any and all vacancies on the Group’s Board of Directors may be filled only by the affirmative vote of a majority of the remaining Directors in office, even if the remaining Agility Real Estate | Annual Report 202 3 27 Chapter 5: Report of the Board of Directors Directors do not constitute a quorum, and any Director elected to fill a vacancy shall serve for the remainder of the full term of the Directorship in which the vacancy occurred and until a successor is elected. Any Director may resign at any time and may be removed with cause by our stockholders upon the affirmative vote of at least two-thirds of all the votes entitled to be cast for the election of Directors or without cause by the Group’s stockholders upon the affirmative vote of at least two-thirds of all the votes entitled to be cast for the election of Directors. Compensation to Senior Management and Directors SENIOR MANAGEMENT COMPENSATION Senior management is defined as officers and directors of the parent company. The following table sets forth the compensation of each of the Group’s senior management for 2023. For a discussion of the compensation of certain of senior management going forward, please see “Employment Agreements.” BOARD OF DIRECTOR COMPENSATION Director’s fees for Independent Directors are equal to $24,000 annually. The level of compensation and method will be reviewed annually. We also reimburse the Group’s Directors for their travel, hotel and other expenses incurred in the performance of their duties as Directors, including expenses incurred in attending Board of Directors meetings, Committee meetings and shareholder meetings. We do not have any pension programs for the Group’s Board of Directors, senior management or other employees. CHANGE IN CONTROL The Group has entered into various loan agreements in which a change in control (as defined in certain Loan Agreements) will result in such loan(s) becoming due and payable immediately upon the occurrence of a change of control. “Change of control” in these various loan agreements in general includes one or more of the following: a) Acquisition of more than 20% of shares by a shareholder or a shareholder group; b) An involuntary change in more than 1/6 th of the directors; c) An involuntary termination of 2 of 3 persons currently holding positions of General Counsel, Chief Financial Officer and VP Corporate Development (excluding resignations, retirements or terminations for cause); or d) Involuntary removal of more than one incumbent board of directors under certain circumstances. Senior Management Compensation Parent Company Salary Bonus Severance Aggregate other compensation Total compensation Salomon Guggenheim (1) Director-Employee $ 273,745 $ 46,732 $ - $ 6,609 $ 327,086 Albert Atallah (2) Director-Employee 180,001 83,212 102,000 26,013 391,226 Peter Lesar (3) Employee 240,000 242,435 - 17,675 500,110 Stephan Fitch Director 24,000 - - - 24,000 Reto Stadelmann Director 24,000 - - - 24,000 Total $ 741,746 $ 372,379 $ 102,000 $ 50,297 $ 1,266,422 (1) (2) (3) Aggregate other compensation includes discretionary expenses of $6,609. Aggregate other compensation includes discretionary expenses of $26,013. Mr. Atallah served as Director-Employee until his retirement on December 31, 2023. Aggregate other compensation includes health insurance of $101 and discretionary expenses of $17,574. Agility Real Estate | Annual Report 202 3 28 Chapter 5: Report of the Board of Directors AMENDMENT AND TERMINATION The Group’s Board of Directors may, at any time and from time to time, amend or terminate the Equity Plan. However, except as provided otherwise in the Equity Plan, no amendment shall be effective unless approved by the Group’s shareholders to the extent shareholder approval is necessary to satisfy any applicable law or securities exchange listing requirements. The Administrator at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Administrator may not affect any amendment which would otherwise constitute an impairment of the rights under any Award unless we request the consent of the Participant and the Participant consents in writing. EMPLOYMENT AGREEMENTS In the event of a Change of Control, each member of the Senior Management shall be entitled to receive as a grant from the Company 1/3 of 10% of the then outstanding TRI Publicly tradable shares, which shall become due and issuable immediately upon the occurrence of a Change of Control as set forth in the various employment agreements. 2023 PERFORMANCE BONUSES During 2023, officers were awarded bonuses totaling $372,379. Plans related to stock appreciation rights, 2007 equity incentive plan and performance compensation awards, are not current or applicable anymore. Agility Real Estate | Annual Report 202 3 29 Chapter 6: Investor Relations, Shares & Dividends Chapter 6: Investor Relations, Shares & Dividends Agility Real Estate | Annual Report 202 3 30 Chapter 6: Investor Relations, Shares & Dividends The following table sets forth information regarding the beneficial ownership of the Group’s common shares as of December 31, 2023 by:  Each person or entity that we know is more than a 5% beneficial owner;  Each Director or executive officer who beneficially owns more than 1% equity interest; and  All of the Group’s Directors and executive officers as a group (including those that are no longer executive officers as of December 31, 2023). All holders of the Group’s common stock have the same voting rights. Beneficial ownership generally includes any interest over which a person exercises sole or shared voting or investment power. Name Country of residence Position Approximate # of common shares beneficially owned, directly or indirectly, or controlled or directed (4) Percentage of issued and outstanding shares as of December 31, 2023 (1) Switzerland Chairman-Director 4,700,216 13.86% United States General Counsel 2,734,146 8.06% United States Chief Executive Officer & Chief Financial Officer 3,227,626 9.52% United Kingdom Independent Director 183,956 0.54% Total 10,845,944 31.98% (1) (2) (3) (4) (5) Salomon Guggenheim (3) Albert Atallah (5) Peter LeSar Stephan Fitch (2) Percentage based on 33,914,077 issued and outstanding shares as of December 31, 2023. Member of the Audit, Compensation, Investment and Nominating and Governance Committees. Member of the Investment Committee. Shares beneficially owned, directly or indirectly, or over which control or direction is exercised as at December 31, 2023, is based on information furnished to Thunderbird by individual Directors and officers. Mr. Albert Atallah served as General cousel until his retirement on December 31, 2023. Agility Real Estate | Annual Report 202 3 31 Chapter 6: Investor Relations, Shares & Dividends Conflicts of Interest There are no conflicts of interest or potential conflicts of interest exist between the private interests of any other officer or director of the Group and their duties to the Group. Related Party Transactions For information regarding related party transactions with joint ventures and with partners in the Group’s operating entities, see Note 21 to the Group’s consolidated financial statements for the year ended December 31, 2023, incorporated herein by reference. Description of Securities GENERAL We comply with the British Virgin Islands’ corporate governance requirements. Pursuant to our Memorandum of Association, the Group has the authority to issue an aggregate of 1.0 billion shares of capital stock, consisting of 500 million no par value common shares, and 500 million no par value preferred shares. The shares are governed by the laws of the British Virgin Islands. The Group’s common shares are listed on Euronext Amsterdam under the symbol “AGIL.” COMMON SHARES AND OPTIONS As of December 31, 2023, we had 33,914,077 common shares outstanding, ISIN VGG885761061; each common share is fully paid. The Group’s common shares do not have a conversion feature. The number of outstanding common shares as stated above may be impacted in the future by issuance of common shares available for future issuances under the Group’s 2007 equity incentive plan. Agility Real Estate | Annual Report 202 3 32 Chapter 6: Investor Relations, Shares & Dividends Organizational Documents The Group’s organizational documents consist of the Group’s Memorandum of Association and the Group’s Articles of Association which contain relevant information, including without limitation, meeting of the board or directors, meeting of shareholders, distributions, issuance of stock (both preferred and common) liability and indemnification of officers and directors, borrowing of money, election and removal of directors, the lack of pre-emptive rights for shareholders, limited rights for shareholders to call a meeting, and distribution of assets on liquidation. Certain material provisions are set forth below:  Holders of common shares are each entitled to cast one vote for each share held at a meeting of the shareholders or on any resolution of the shareholders. We have not provided for cumulative voting for the election of Directors in our Memorandum and Articles of Association. This means that the holders of a majority of the shares voted can elect all of the Directors then standing for election. The holders of outstanding common shares are entitled to receive an equal share in any dividend paid out of assets legally available for the payment of dividends at the times and in the amounts as the Group’s Board of Directors from time to time may determine. Upon the Group’s liquidation, holders of common shares are entitled to an equal share in the distribution of surplus assets. The Group’s common shares are not entitled to preemptive rights and are not subject to conversion into any other class of shares. We may purchase, redeem, or otherwise acquire any of our own shares for fair value. However, no purchase, redemption, or other acquisition of shares can be made unless the Directors determine that, immediately after the acquisition, the value of our assets will exceed our liabilities, and we will be able to pay our debts as they fall due.  Preferred shares may be issued in one or more series, and our Board of Directors is authorized to provide for the issuance of preferred shares in series, to establish the number of shares to be included in each series, to fix the rights, designation, preferences and powers of the shares of each series and its qualifications, limitations and restrictions.  If the Group’s common or preferred shares are divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the shares of that class) may be changed only with the consent in writing of the holders of a majority of the issued shares of that class or series and of the holders of a majority of the issued shares of any other class or series of shares which may be affected by such variation.  Dividend Policy: We have never paid any cash dividends on the Group’s common shares, and we do not expect to declare or pay any cash or other dividends in the foreseeable future. We may enter into credit agreements or other borrowing arrangements in the future that restrict the Group’s ability to declare cash dividends on our common shares. If our Board of Directors ever elects to declare a dividend, such dividend will be paid to shareholders of record out of legally available funds, and may be paid annually, semi-annually or quarterly, as determined by the Group’s Board of Directors. Any such declaration of dividends and any other payments by us, as determined by the Group’s Board of Directors, will be announced by us in a national daily newspaper distributed throughout the Netherlands, and in the Official Daily List of Euronext. Agility Real Estate | Annual Report 202 3 33 Chapter 6: Investor Relations, Shares & Dividends  Compulsory Transfer of Shares: The Group’s Board of Directors has the ability under certain circumstances to force a transfer of common shares in the manner described below, provided, however, that such forced transfer (including any change to the Company’s register of members) would occur at the direction of the Group without interference with the purchase, sale, or settlement of the Company’s common shares on Euronext Amsterdam or without interference with the settlement of such shares through any settlement system, including Euroclear Nederland and Euroclear Bank (for the sake of clarity, as a result of the foregoing there will be no null and void trades on Euronext Amsterdam or settlement of such trades through Euroclear Nederland and/or Euroclear Bank). If it comes to the notice of the Group’s Board of Directors that any common shares: a) Are or may be owned or held directly or beneficially by any person in breach of any law, rule, regulation or requirement applicable to us of any jurisdiction in which we operate or by virtue of which such person is not qualified to own those shares and, in the sole and conclusive determination of the Board of Directors, such ownership or holding or continued ownership or holding of those shares (whether on its own or in conjunction with any other circumstance appearing to the board to be relevant) would in the reasonable opinion of the Board of Directors, cause a significant pecuniary disadvantage to us which we might not otherwise have suffered or incurred; or b) Are or may be owned or held directly or beneficially by any person that is an “employee benefit plan” subject to the fiduciary provisions of Title I of ERISA, a plan subject to the prohibited transaction provisions of Section 4975 of the Code, a person or entity whose assets include the assets of any such “employee benefit plan” or “plan” by reason of the DOL Plan Asset Regulations or otherwise, or any other employee benefit plan subject to any federal, state, local or foreign law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code and their ownership of the shares means that the investor is a Benefit Plan Investor as that term is defined by the U.S. DOL Plan Asset Regulations and the investor’s interest is “significant” under those Regulations, or will result in a non-exempt “prohibited transaction” as defined in ERISA or section 4975 of the Code, the Board of Directors may serve written notice (a “Transfer Notice”) upon the person (or any one of such persons where shares are registered in joint names) appearing in the register as the holder (the “Vendor”) of any of the shares concerned (the “Relevant Shares”) requiring the Vendor within thirty days (or such extended time as in all the circumstances the Board of Directors consider reasonable) to transfer (and/or procure the disposal of interests in) the Relevant Shares to another person who, in the sole and conclusive determination of the Group’s Board of Directors, would not fall within paragraphs (a) or (b) above (such a person being hereinafter called an “Eligible Transferee”). On and after the date of such Transfer Notice, and until registration of a transfer of the Relevant Shares to which it relates pursuant to the provisions referred to in this paragraph or the following paragraph, the rights and privileges attaching to the Relevant Shares will be suspended and not capable of exercise. If within thirty days after the giving of a Transfer Notice (or such extended time as in all the circumstances the Board of Directors considers reasonable), the Transfer Notice has not been complied with to the satisfaction of the Board of Directors, we may sell the Relevant Shares on behalf of the holder at the best price reasonably obtainable at the time of sale to any one or more Eligible Transferees. To give effect to a sale, the Board of Directors may authorize in writing the Group’s officers or employees to transfer the Relevant Shares on behalf of the holder thereof (or any person who is automatically entitled to the shares by transmission or by law) or to cause the transfer of the Relevant Shares to the Eligible Transferee. An instrument of transfer executed by that person will be as effective as if it had been executed by the holder of or the person entitled by transmission to, the Relevant Shares. An Eligible Agility Real Estate | Annual Report 202 3 34 Chapter 6: Investor Relations, Shares & Dividends Transferee is not bound to see to the application of the purchase money and the title of the Eligible Transferee is not affected by any irregularity in or invalidity of the proceedings connected to the sale. The net proceeds of the sale of the Relevant Shares, after payment of our costs of the sale, shall be received by us, and receipt shall be a good discharge for the purchase moneys, and shall belong to us and, upon their receipt, we shall become indebted to the former holder of the Relevant Shares, or the person who is automatically entitled to the Relevant Shares by transmission or by law, for an amount equal to the net proceeds of transfer, in the case of certificated shares, upon surrender by him or them of the certificate for the Relevant Shares which the Vendor shall forthwith be obliged to deliver to us. We are deemed to be a debtor and not a trustee in respect of that amount for the member or other person. No interest is payable on that amount and we are not required to account for money earned on it. The amount may be employed in our business or as we think fit. We may register or cause the registration of the Eligible Transferee as holder of the Relevant Shares and thereupon the Eligible Transferee shall become absolutely entitled thereto. A person who becomes aware that he falls within any of paragraphs (a) or (b) above shall forthwith, unless he has already received a Transfer Notice either transfer the shares to one or more Eligible Transferees or give a request in writing to the Directors for the issue of a Transfer Notice. Every such request shall, in the case of certificated shares, be accompanied by the certificate(s) for the shares to which it relates. Subject to the provisions of our Articles of Association, our Board of Directors will, unless any Director has reason to believe otherwise, be entitled to assume without inquiry that none of the shares are held in such a way as to entitle the Board of Directors to serve a Transfer Notice in respect thereof. The Board of Directors may, however, at any time and from time-to-time call upon any holder (or any one of joint holders or a person who is automatically entitled to the shares by transmission or by law) of shares by notice in writing to provide such information and evidence as they require upon any matter connected with or in relation to such holder of shares. In the event of such information and evidence not being so provided within such reasonable period (not being less than thirty calendar days after service of the notice requiring the same) as may be specified by the Board of Directors in the said notice, the Board of Directors may, in its absolute discretion, treat any share held by such a holder or joint holders or person who is automatically entitled to the shares by transmission or by law as being held in such a way as to entitle them to serve a Transfer Notice in respect thereof. The Board of Directors will not be required to give any reasons for any decision, determination or declaration taken or made in accordance with these provisions. The exercise of the Board of Director’s powers with respect to the compulsory transfer of shares may not be questioned or invalidated in any case on the grounds that there was insufficient evidence of direct or beneficial ownership or holding of shares by any person or that the true direct or beneficial owner or holder of any shares was otherwise than as appeared to the Board of Directors at the relevant date provided that the said powers have been exercised in good faith. BRITISH VIRGIN ISLANDS LAW The laws of the British Virgin Islands do not contain any limitations on the right of nonresident or foreign owners to hold or vote the Group’s common shares. There are no laws, decrees, statutes or other provisions of the laws of the British Virgin Islands which would operate to prohibit or regulate the remittance of dividends, interest and other payments to nonresident holders of common shares. British Virgin Islands law permits the Group’s Board of Directors to modify any of the Group’s governing documents without shareholder approval, so long as such modification does not have an adverse effect on the rights of the Group’s shareholders. Any modification that would have such an adverse effect requires the approval of holders of at least a majority of our outstanding shares. Agility Real Estate | Annual Report 202 3 35 Chapter 6: Investor Relations, Shares & Dividends CANADIAN LAW Prior to July 1, 2009, the Group’s common shares were listed on the CNSX. Effective July 1, 2009 and thereafter, at the request of the Company, the Group’s shares have been delisted from the CNSX. Though delisted, we continue to be a “reporting issuer” subject to securities laws of British Columbia and Ontario due to the number of the Group’s existing Canadian shareholders. Those laws require any 10% holder of a reporting issuer to file reports disclosing that holder’s direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, and any changes in that ownership. If they acquire 10% or more of our outstanding common shares, they will be required to file an “insider report form” within ten business days from the date their ownership exceeded 10%, and then within ten business days after any trades or other changes in their holdings of common shares. They would also be required to issue a press release and file a report every time they acquire an additional 2% or more of the Group’s common shares. If a person or entity acquires 20% or more of our outstanding common shares, it would be a “control person” of ours. As such, it would be deemed to be not only knowledgeable about our affairs, but to have the ability, by virtue of its significant equity position, to direct the Group’s affairs. Thereafter, any sale by that holder of common shares would be deemed under provincial law to be a distribution, requiring the filing of a prospectus and compliance with other securities disclosure laws. In addition, if a person or entity acquires 20% or more of the Group’s common shares, it will be deemed under provincial securities laws to have made a “take-over bid” and, accordingly, unless it can obtain an exemption, or unless an exemption exists by virtue of the Company’s status as a “designated foreign issuer” as described below, that holder would be required to comply with detailed rules governing bids. 20% holders are also required to file insider reports within three calendar days versus the normal 10-day requirement that applies to all other parties required to file insider reports. The provincial securities commission has the right to veto the individual or entity from remaining an insider or control person if the individual or entity is deemed unsuitable to be involved in the Canadian public markets. Additionally, as a “designated foreign issuer” under Canadian securities laws, the Group’s financial reporting requirements can be met by filing on SEDAR the same financial information we provide to and file with the Euronext Amsterdam. Since January 1, 2009, the Group’s financial information prepared under IFRS is sufficient to meet the requirements of Canadian securities laws. YEARLY AND HALF-YEARLY INFORMATION As a result of the implementation of the EU Directive 2004/109 of December 15, 2004 on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (the “Transparency Directive”), the Group is required to make its annual financial report available to the public 4 months after the end of each financial year. The annual financial information consists of the audited annual accounts, the annual report, a description of the main risks and uncertainties facing the Group and a statement by persons within the Group designated by the latter as the “responsible persons,” indicating (i) that the annual accounts give a fair view of the assets and financial position of the Group and, in the case of consolidated accounts, of the enterprises included in the consolidation, and (ii) that the annual report gives a fair view of the Group’s condition on the balance sheet date, the development of the Group and its affiliated companies during the previous financial year and all material risks to which the Group is exposed. Agility Real Estate | Annual Report 202 3 36 Chapter 6: Investor Relations, Shares & Dividends The Group must publish its half-yearly information within two months after the end of the first six months of its financial year. Both the annual and half-yearly financial information must be filed with the AFM and Euronext Amsterdam and must remain publicly available for at least five years. INTERIM MANAGEMENT STATEMENTS As of January 1, 2016 the Group is no longer obligated to publish and file Q1 and Q3 reports. If the Group wishes to publish Q1 and Q3 reports, those interim reports are to be filed as Price-Sensitive Statements via the Portal: https://www.afmextranet.nl/AFMPortal/logon.aspx?LanguageID=ENG DUTCH TAKEOVER ACT On October 28, 2007, the Dutch Act implementing the European Directive 2004/25/EC of April 2004 relating to public takeover bids (the “Dutch Takeover Act”) and the rules promulgated thereunder came into force. The provisions of the Dutch Takeover Act are included in the Financial Supervision Act and the rules promulgated thereunder apply to us. In general, under these provisions, we cannot launch a public offer for securities that are admitted to trading on a regulated market, such as the Group’s shares unless an offer document has been approved by the Dutch Authority for the Financial Market (“AFM”) and has subsequently been published. These public offer rules are intended to ensure that in the event of such a public offer, sufficient information will be made available to the holders of the Group’s securities, that the holders of the Group’s securities will be treated equally, that there will be no abuse of inside information and that there will be a proper and timely offer period. The provisions in the Dutch Takeover Act regarding mandatory takeover bids will not be applicable to us. MARKET ABUSE REGIME The market abuse regime set out in the Financial Supervision Act, which implements the European Union Market Abuse Directive (2003/6/EC), is applicable to us, our Directors, officers, other key employees, the Group’s insiders and persons performing or conducting transactions in the Group’s securities. Market abuse rules set out in the Financial Supervision Act that are relevant for investors are described hereunder. We make public price-sensitive information, which is information that is concrete and that directly concerns us which information has not been publicly disclosed and whose public disclosure might significantly affect the price of the shares or derivative securities, such as the options and warrants. We must also provide the AFM with this information at the time of publishing the Prospectus. Further, we must immediately publish the information on the Group’s website and keep it available on the Group’s website for at least one year. DISCLOSURE OF HOLDINGS The following provisions apply to us and to the Group’s shareholders:  If the substantial holding or short position of a shareholder equals or exceeds 3% of the issued capital, the shareholder should report this. Subsequently, the shareholder should notify the AFM again when the substantial holding or short position consequently reaches, exceeds or falls below a threshold. This can be caused by the acquisition or disposal of shares by the shareholder or because the issued capital of the issuing institution is increased or decreased. Thresholds are: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. The duty to notify applies to legal entities and to natural persons. Agility Real Estate | Annual Report 202 3 37 Chapter 6: Investor Relations, Shares & Dividends  We are required to notify the AFM of any changes in the Group’s outstanding share capital, including in the case of redemption of shares, and any amendment to the Group’s Articles of Association regarding voting rights. The AFM will publish any notification in a public registry. If, as a result of such change, a person’s interest in the Group’s capital or voting rights passively reaches or crosses the thresholds mentioned in the above paragraph, the person in question must immediately give written notice to the AFM no later than the 4 th trading day after the AFM has published the Group’s notification. TRANSFER AGENT AND REGISTRAR The Group’s transfer agent and registrar for the Group’s common shares is Computershare, Inc., 510 Burrard Street, 3 rd Floor, Vancouver, British Columbia, Canada V6C 3B9. PAYING AGENT ING Commercial Banking, Paying Agent Services, location code: TRC 01.013, Foppingadreef 7, 1102 BD Amsterdam, the Netherlands. SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES We are incorporated under the laws of the British Virgin Islands. Certain members of the Group’s Board of Directors are not residents of the United States, and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for the Group’s shareholders to effect service of process in the United States on persons who are not U.S. residents or to enforce in the United States judgments obtained in the United States against us or persons who are not U.S. residents based on the civil liability provisions of the U.S. securities laws. We have been advised by the Group’s British Virgin Islands counsel, O’Neal Webster, that there is doubt as to the direct enforceability in the British Virgin Islands of civil liabilities predicated upon the securities laws of other foreign jurisdictions. AVAILABILITY OF DOCUMENTS This Annual Report may also be inspected through the Euronext website (www.euronext.com) by Dutch residents only or through the website of the Netherlands Authority for the Financial Markets (www.afm.nl). This Annual Report may be obtained on the Group’s website (www.agility.realestate). In addition, for so long as common shares are listed for trading on Euronext Amsterdam, the following documents (or copies thereof), where applicable, may be obtained free of charge (1) by sending a request in writing to us at Apartado 0823-00514, Panama City, Panama, (2) by emailing us at the following address yazmina@agility.realestate, or (3) at the offices of the Group’s local paying agent ING Commercial Banking, location code: TRC 01.013, Foppingadreef 7, 1102 BD Amsterdam, the Netherlands (Tel: + 31 20 563 6619, Fax: + 31 20 563 6959, Email: iss.pas@ing.nl) (a) This Annual Report and the Group’s Memorandum and Articles of Association. (b) All reports, letters, other documents, historical financial information (such as the Group’s 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016 consolidated financial statements), valuations and statements prepared by an expert at the Group’s request, any part of which is included or referred to in this Annual Report. Agility Real Estate | Annual Report 202 3 38 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Agility Real Estate | Annual Report 202 3 39 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Report of the Independent Auditors To the Shareholders and Board of Directors of Agility Real Estate Inc. Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Agility Real Estate Inc. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at December 31, 2023, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, 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 December 31, 2023, its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Going Concern We draw attention to Note 2 Management Statement on Going Concern, which indicates that uncertainties exist that may cast doubt on the Group’s ability to continue as a going concern, and that the Group has adequate resources in place to mitigate the uncertainty and that the Group is able to continue as a going concern for at least the 12 months following the filing date of the report. Our opinion is not modified in respect of this matter. Agility Real Estate | Annual Report 202 3 40 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Emphasis of Matters – Commitments and Contingencies We draw attention to Note 23 Commitments and Contingencies to the consolidated financial statements which describes the ongoing contingencies related to regulatory and tax legislation in the jurisdictions in which the Group operates. The ultimate outcome of the matters disclosed in note 23 cannot presently be determined, and no provisions for any liabilities has been made in the consolidated financial statements, except for those disclosed in the note. Our opinion is not modified in respect of this matter. Materiality We define materiality as the magnitude of misstatement in the consolidated financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work. We have determined materiality for the audit of the Group’s consolidated financial statements as a whole to be US$284,000, which is based on the total gross revenues. This basis is considered the most appropriate because this is a key performance measure used by the directors to report to investors on the financial performance of the Group. To each component in our audit scope, we allocate, based on our judgement, materiality that is less than our overall group materiality. The range of materiality allocated across components was between US$50,000 and US$100,000. We agreed with the audit committee the threshold at which we will communicate misstatements to be US$15,450. In addition, we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Agility Real Estate | Annual Report 202 3 41 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Key Audit Matters Going concern As disclosed in note 2 management statement on going concern, the consolidated financial statements have been prepared on a going concern basis. For both reporting period 2022 and 2023 the Group has recorded positive results and a positive equity. However, in order to meet its obligations, the Group has been forced to execute plans in order to create liquidity events. We therefore identified the going concern as a key audit matter requiring special audit consideration. How we responded to these matters We have reviewed the forecast model prepared by management and assessed the appropriateness of the key assumptions used and we have analyzed the effect on the financial position of the Group. We have verified the status and progress of the various strategies that management adopted and assessed their effects on the forecast model and the impact on the consolidated financial statements. We exercised professional judgement and maintained professional skepticism when discussing and evaluating the going concern assessment. Our procedures did not result in outcomes contrary to management’s assumptions and judgements used in the application of the going concern assumption. In line with 2022, the Group generated a positive result for the year which is mainly contributed by the sale of the real estate in Peru . Key observations Management has adequately disclosed the uncertainties related to the going concern assumptions in the consolidated financial statements in note 2 and has correctly prepared the consolidated financial statement on the going concern basis. Key Audit Matters Gaming revenue recognition How we responded to these matters Key observations The Groups main revenue is the Net gaming wins. The Group generates high volumes of cash due to the gaming revenues earned with the casinos. Auditing standards prescribe a presumed risk of fraud in revenue recognition in that revenue may be misstated through improper recognition. We have therefore identified gaming revenue recognition as a key audit matter requiring special audit consideration. We have evaluated the design, effectiveness and implementation of internal procedures and internal controls relating to the Group’s gaming revenues. We have performed test of operating effectiveness of controls of key controls relating to the Group’s gaming revenues. We have reconciled revenues from slot machines and table games with accounting records and underlying documentation. We have performed substantive analytical procedures based on actual figures in relation to expectations and the forecast. Based on our procedures performed we consider the gaming revenue to be recognized properly. Agility Real Estate | Annual Report 202 3 42 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Food, beverage, and other revenue recognition The Group also generates revenue from Food, beverage and other revenue. Auditing standards prescribe a presumed risk of fraud in revenue recognition in that revenue may be misstated through improper recognition. We have therefore identified revenue recognition from the above-mentioned services and sales as a key audit matter requiring special audit consideration. Impairment of Intangible assets, goodwill and non-current assets We have evaluated the design, effectiveness and implementation of internal procedures and internal controls and we have performed test of operating effectiveness of controls relating to the Group’s revenues from food, beverage, and other revenue. We have performed substantive analytical procedures based on actual figures in relation to expectations and the forecasts.. Based on our procedures performed we consider the revenue from food, beverage and other revenue to be recognized properly. As the Going concern is a key audit matter, a yearly assessment of impairment of assets is performed. For the impairment assessment, management prepares the impairment models, using the forecasting model. Therefore, we consider impairment testing a key audit matter requiring special audit consideration. We have reviewed the models used by management to determine the value in use for assets tested for impairment. We have assessed the appropriateness of the assumptions used, including support for the assumptions. We have performed a sensitivity analysis. We have concluded that the models used are appropriate and consistently applied. We have determined that the data arrays are consistent with the current year’s performance and that growth assumptions are acceptable. The determination of discount rates used are consistent with prior years. Report on other information included in the Annual Report In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit or otherwise appears to be Management is responsible for the other information. The other information comprises the information included in the Annual Report but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Agility Real Estate | Annual Report 202 3 43 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Report on other legal and regulatory requirements and ESEF Engagement We were engaged by management following the approval of the appointment of the auditor during the Annual General Meeting of the Shareholders held on January 31, 2024. No prohibited non-audit services We have not provided prohibited non-audit services as referred to in article 5(1) of the European Regulation on specific requirements regarding statutory audit of public-interest entities. European Single Electronic Format (ESEF) The Group has prepared the annual report, including the consolidated financial statements, in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (these requirements are hereinafter referred to as: the RTS on ESEF). In our opinion, the annual report prepared in XHTML format, including the (partially) marked-up consolidated financial statements as included in the reporting package by the Group, complies in all material respects with the RTS on ESEF. Management is responsible for preparing the annual report, including the consolidated financial statements, in accordance with the RTS on ESEF, whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the integrated annual report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch Standard 3950N on assurance engagements relating to compliance with criteria for digital reporting. Our examination included amongst others:  obtaining an understanding of the Group’s financial reporting process, including the preparation of the reporting package;  identifying and assessing the risks that the consolidated financial statements does not comply in all material respects with the RTS on ESEF and designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including: Agility Real Estate | Annual Report 202 3 44 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors  obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files, has been prepared in accordance with the technical specifications as included in the RTS on ESEF;  examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board, and for such internal control as management 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, management 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 management either intends to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism 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. Agility Real Estate | Annual Report 202 3 46 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Financial Statements AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Expressed in thousands of United States dollars) For the year ended December 31, 2023 (1) 2022 has been restated due to amendment to IAS 12. Please refer to 3.1 in the notes to the Consolidated Financial Statements. - continued - The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 (1) Assets Non-current assets Property, plant and equipment (Note 10) 7,710$ 7,898$ Investment Property (Note 11) 1,079 1,091 Investment accounted for using the equity method (Note 28) 2,745 2,183 Intangible assets (Note 9) 1,392 1,392 Deferred tax asset (Note 8) 940 1,408 Trade and other receivables (Note 13) 817 836 Due from related parties (Note 21) 48 433 Total non-current assets 14,731 15,241 Current assets Trade and other receivables (Note 13) 685 673 Due from related parties (Note 21) 2,132 2,085 Inventories (Note 14) 282 229 Restricted cash (Note 15) 1,067 823 Cash and cash equivalents (Note 15) 3,127 5,957 Other financial assets (Note 26) 127 112 Total current assets 7,420 9,879 Assets classified as held for sale (Note 12) 110 674 Total assets 22,261$ 25,794$ Agility Real Estate | Annual Report 202 3 47 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) (Expressed in thousands of United States dollars) For the year ended December 31, 2023 (1) 2022 has been restated due to amendment to IAS 12. Please refer to 3.1 in the notes to the Consolidated Financial Statements. The consolidated financial statements were approved by the Board of Directors on April 26, 2024. The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 (1) Equity and liabilities Capital and reserves Share capital (Note 19) 111,904 111,757 Retained earnings (102,208) (104,941) Translation reserve (7,167) (7,626) Equity attributable to equity holders of the parent 2,529 (810) Non-controlling interest 1,732 1,747 Total equity 4,261 937 Non-current liabilities Borrowings (Note 17) 1 293 Obligations under leases and hire purchase contracts (Note 22) 2,423 3,242 Deferred tax liabilities (Note 8) 685 855 Provisions (Note 18) 345 824 Trade and other payables (Note 16) 500 243 Total non-current liabilities 3,954 5,457 Current liabilities Trade and other payables (Note 16) 3,091 6,193 Due to related parties (Note 21) 207 1,661 Borrowings (Note 17) 7,878 8,764 Obligations under leases and hire purchase contracts (Note 22) 656 877 Other financial liabilities 370 529 Current tax liabilities 1,200 959 Provisions (Note 18) 644 417 Total current liabilities 14,046 19,400 Total liabilities 18,000 24,857 Total equity and liabilities 22,261$ 25,794$ Agility Real Estate | Annual Report 202 3 48 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Expressed in thousands of United States dollars) For the year ended December 31, 2023 - continued – The accompanying notes are an integral part of these consolidated financial statements 2023 2022 (1) Net gaming wins $ 12,260 $ 11,567 Food, beverage and other sales 3,225 2,960 Total revenue 15,485 14,527 Cost of goods sold (3,605) (2,838) Gross profit 11,880 11,689 Other operating costs Promotional allowances (678) (687) Operating, general and administrative (Note 30) (8,428) (7,379) Project development (42) - Depreciation and amortization (Note 10) (1,077) (1,192) Other gain / (loss) (Note 5) 1,961 1,483 Operating profit 3,616 3,914 Share of profit / (loss) from equity accounted investments (Note 28) 242 93 Financing Foreign exchange loss (164) 161 Financing costs (Note 7) (810) (1,569) Financing income (Note 7) 49 40 Other interest (Note 7) (47) (81) Finance costs, net (972) (1,449) Profit before tax 2,886 2,558 Income taxes expense Current (Note 8) (1,277) (1,130) Deferred (Note 8) (268) (501) Income taxes expense (1,545) (1,631) Profit / (loss) for the year from continuing operations $ 1,341 $ 927 Profit / (loss) for the year from discontinued operations (Note 12) 2,082 4,865 Profit / (loss) for the year $ 3,423 $ 5,792 (1) Adjusted for comparison purposes Agility Real Estate | Annual Report 202 3 49 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued) (Expressed in thousands of United States dollars) For the year ended December 31, 2023 The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 Other comprehensive income (amounts, which will be recycled) Exchange differences arising on the translation of foreign operations $ 459 $ 74 Other comprehensive income (amounts, which will not be recycled) Remeasurement of employee benefits 105 - Income tax relating to remeasurement of employee benefits (31) - Other comprehensive income / (loss) for the year 533 74 Total comprehensive income / (loss) for the year $ 3,956 $ 5,866 Profit / (loss) for the year attributable to: Owners of the parent 2,691 5,311 Non-controlling interest 732 481 $ 3,423 $ 5,792 Total comprehensive income attributable to: Owners of the parent 3,192 5,385 Non-controlling interest 764 481 $ 3,956 $ 5,866 Basic and diluted earnings / (loss) per share (in $) : (Note 20) Earnings from continuing operations 0.02 0.01 Earnings / (loss) from discontinued operations 0.06 0.16 Total 0.08 0.17 Agility Real Estate | Annual Report 202 3 50 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Expressed in thousands of United States dollars) For the year ended December 31, 2023 The accompanying notes are an integral part of these consolidated financial statements. Share capital Share options reserve Currency translation reserve Retained earnings Total Non- controlling interest Total equity Balance at January 1, 2022 111,757$ -$ (7,700)$ (110,252)$ (6,195)$ 2,228$ (3,967)$ Transactions with owners: Issue of new shares - - - - - - - Payment of dividends - - - - - (962) (962) -$ -$ -$ -$ -$ (962)$ (962)$ Profit / (loss) for the year - - - 5,311 5,311 481 5,792 Other comprehensive income: Exchange differences arising on translation of foreign operations - - 74 - 74 - 74 Total comprehensive income for the year - - 74 5,311 5,385 481 5,866 Balance at December 31, 2022 111,757$ -$ (7,626)$ (104,941)$ (810)$ 1,747$ 937$ Share capital Share options reserve Currency translation reserve Retained earnings Total Non- controlling interest Total equity Balance at January 1, 2023 111,757$ -$ (7,626)$ (104,941)$ (810)$ 1,747$ 937$ Transactions with owners: Issue of new shares 147 - - - 147 - 147 Payment of dividends - - - - - (779) (779) 147$ -$ -$ -$ 147$ (779)$ (632)$ Profit / (loss) for the year - - - 2,691 2,691 732 3,423 Other comprehensive income: Exchange differences arising on translation of foreign operations - - 459 - 459 - 459 Remeasurement of employee benefits - - - 42 42 32 74 Total comprehensive income for the year - - 459 2,733 3,192 764 3,956 Balance at December 31, 2023 111,904$ -$ (7,167)$ (102,208)$ 2,529$ 1,732$ 4,261$ Attributable to equity holders of parent Attributable to equity holders of parent Agility Real Estate | Annual Report 202 3 51 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors AGILITY REAL ESTATE INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Expressed in thousands of United States dollars) For the year ended December 31, 2023 The accompanying notes are an integral part of these consolidated financial statements. 2023 2022 Cash flow from operating activities Profit for the year 1,341$ 927$ Adjustments for: Depreciation and amortization 1,077 1,192 Foreign exchange 180 (173) (Decrease) / increase in provision (252) (258) Bad debt expense 24 - Other (gains) / losses (2,092) 57 Fair value adjustment on financial assets (15) 3 Finance income (49) (40) Finance cost 810 1,569 Other interests 47 81 Results from equity accounted investments (242) (93) Tax expenses 1,545 1,631 Net change in non-cash working capital items Decreas / (increase) in trade, prepaid and other receivables 398 (86) (Increase) in inventory (53) (44) (Decrease) / increase in trade payables and accrued liabilities (3,033) 254 Cash from operations (314) 5,020 Total tax paid (1,015) (622) Net cash generated by operations (1,329) 4,398 Net cash (used in) / from discontinued operations (159) (1,093) Net cash from operating activities (1,488)$ 3,305$ Cash flow from investing activities Expenditure on property, plant and equipment (891) (498) Proceeds on sale of Asset Held for Sale 2,134 7,857 Proceeds on sale of property, plant and equipment 10 - Interest received 49 29 Net cash (used in) / from investing activities 1,302$ 7,388$ Cash flow from financing activities Proceeds from issuance of new shares 147 - - Dividends paid to non-controling interest (779) (962) Repayment of loans and leases payable (1,574) (5,605) Interest paid (178) (981) Net cash used in financing activities (2,384)$ (7,548)$ Net change in cash and cash equivalents during the year (2,570) 3,145 Cash and cash equivalents, beginning of the year 6,780 3,595 Effect of foreign exchange adjustment (16) 40 Cash and cash equivalents, end of the year 4,194$ 6,780$ Agility Real Estate | Annual Report 202 3 52 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Notes to the Consolidated Financial Statements 1. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS Nature of operations With effect from April 18, 2024, the name of the Company was changed from Thunderbird Resorts Inc to Agility Real Estate Inc. The principal activities of Agility Real Estate Inc and its subsidiaries “the Group” is to develop, own and operate Gaming and real estate properties. These activities are grouped into the following service lines: ● Hospitality ● Office The exact mix and distribution of such properties for the year ended December 31, 2023 was hospitality properties in Nicaragua in the form of Gaming, Office property in Peru located in a mixed-use development. The Group also has a joint venture in Costa Rica which owns partially developed hospitality land. General information and statement of compliance with IFRS Agility Real Estate Inc, the Group’s ultimate parent company, is a limited by shares company, incorporated and domiciled in the British Virgin Islands, number 1055634. The Group’s common shares are listed on Euronext Amsterdam under the symbol “AGIL.” The Group’s 2023 consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3, page 56. Agility Real Estate | Annual Report 202 3 53 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 2. MANAGEMENT STATEMENT ON “GOING CONCERN” Management has reviewed their plan with the Directors and has collectively formed a judgment about the going concern of the Group. In arriving at this judgment, Management has prepared the cash flow projections of the Group. Directors have reviewed this information provided by Management and have considered the information in relation to the financing uncertainties in the current economic climate, the Group’s existing commitments and the financial resources available to the Group. Specifically, Directors have considered: (i) there are limited sources of new financing available to the Group; (ii) the Group has limited trading exposures to our local suppliers and retail customers; (iii) other risks to which the Group is exposed, the most significant of which is considered to be regulatory risk; (iv) sources of Group income, including management fees charged to and income distributed from its various operations; (v) cash generation and debt amortization levels; (vi) fundamental trends of the Group’s businesses; (vii) ability to re-amortize and unsecured lenders; and (vii) level of interest of third parties in the acquisition of certain operating assets, and status of genuine progress and probability of closing within the Going Concern period. The Directors have also considered these critical factors that might affect continuing operations: ● Special Resolution: On September 21, 2016, the Group’s shareholders approved a special resolution that, among other items, authorized the Board of Directors of the Corporate to sell “any or all remaining assets of the Corporation in such amounts and at such times as determined by the Board of Directors.” This resolution facilitates the sale of any one or any combination of assets required to support maintaining of a going concern by the Group. ● Corporate Expense and Cash Flow: While it increased in 2023 over 2022, largely due to one- time expenses, Corporate expense has decreased materially in recent years but still must accommodate for compliance as a public company. ● Liquidity and Working Capital: As of the date of publication of this 2023 Annual Report, the Group forecasts to operate with higher levels of reserves and working capital than in recent years, but to create a healthy level of working capital reserves for periods beyond the Going Concern period may require the sale of additional assets. In part, the Group believes that it is in a stronger position to sustain going concern as of the publication date of this 2023 Annual Report as compared to 2022 and that an improving trend has been in place for the last three years. Below are other events that could support increased liquidity and reduced risk of Going Concern. ● The Group has made the decision to convert its 6,703 m2 of offices into 71 condominium apartments to commence pre-selling in this Q2 2024: Given the performance of the hotel conversion into condominium apartments, the Group has now made the decision to convert its office complex (located in the same building as the hotel conversion) into 71 condominium apartments with 40 mini store rooms and 78 parking spaces (includes parking for visitors). As of the publication of this 2023 Annual Report, we have secured master plan permits that allow the Group to begin to pre-sell units. We are now working on final construction plans. The development continues to have active office tenants, but we foresee terminating all leases within 2024 and commencing construction to convert the offices into condominiums in early 2025. The construction budget is currently forecasted to be approximately $3 million, the value of to-be-sold property to be approximately $12 million and for the project to be fully delivered Agility Real Estate | Annual Report 202 3 54 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors and sold in 2026. All estimates are subject to further work and analysis. The Group will keep shareholders apprised. ● Other liquidity events: The Group continues to work with unsecured lenders and, in some cases, to negotiate payment plans and balances that meet the Group’s cash flow. If the Group is not able to create other liquidity events from its remaining Peru, Costa Rica and Nicaragua assets in 2024-2025, it is reasonable to expect that some unsecured lenders may pursue years of litigation at that time, though as to whether this would then have an impact on Going Concern is hard to assess. Regardless, the amount of remain borrowings has been greatly reduced. Considering the above, Management and Directors are satisfied that the consolidated Group has adequate resources to mitigate the uncertainty and that the Group is able to continue as a going concern for at least the 12 months following the filing date of this report. For these reasons, Management and Directors have therefore prepared the consolidated financial statements on a going concern basis. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Changes in accounting policies The consolidated financial statements have been prepared in accordance with the accounting policies adopted in the last annual consolidated financial statements for the year ended December 31, 2023, except for the adoption of the following new interpretations, revisions, and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to, and effective for the Group’s consolidated financial statements for the annual period beginning January 1, 2023. New currently effective requirements Amendments to IAS12 The Amendments clarify that the initial recognition exemption set out in IAS 12 does not apply to transactions that give rise to equal amounts of taxable and deductible temporary differences on initial recognition and require an entity to recognize differed taxes on these transactions. Agility Real Estate | Annual Report 202 3 55 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors The following is a reconciliation of the financial statement line items due to amendments to IAS 12 as of December 31 and January 1, 2022: Carrying amount at January 1, 2022 Remeasurement Amendments to IAS 12 Carrying amount at January 1, 2022 Deferred tax asset 1,073 716 1,789 Deferred tax liability (37) (716) (753) Total 1,036$ -$ 1,036$ Carrying amount at December 31, 2022 Remeasurement Amendments to IAS 12 Carrying amount at December 31, 2022 Deferred tax asset 589 819 1,408 Deferred tax liability (36) (819) (855) Total 553$ -$ 553$ Other accounting pronouncements which have become effective from January 1, 2023 and have therefore been adopted do not have a significant impact on the Group’s financial results or position. Standards issued but not yet effective At the date of authorization of these consolidated financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations have been published by the IASB or IFRIC. None of these Standards or amendments to existing Standards have been adopted early by the Group and no Interpretations have been issued that are applicable and need to be taken into consideration by the Group at either reporting date. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Group’s consolidated financial statements 3.2 Summary of accounting policies The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated financial statements. A summary of the Group’s significant accounting policies is set out below. Agility Real Estate | Annual Report 202 3 56 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Critical accounting estimates and judgments The preparation of financial statements with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are set out below. The best estimates of the Directors may differ from the actual results. 3.3 a Depreciable lives of assets and realisable residual value 10 3.3 b Future operating results growth rates, and discount factor applied 9 3.3 c Recognition of deferred tax asset 8 3.3 e Determination of control over economic activities 29 Recoverability of amounts due from related parties 21 3.3 h Judgments on probability of payment as a result of disputes 23 3.3 i Assessment of significance of debt modifications 17 a. Property, plant and equipment All property, plant and equipment are stated at acquired cost less depreciation and impairment. Land is not depreciated as no finite useful life can be determined. Acquired cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation on assets is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows: Properties 20 – 30 years Furniture and equipment 3 – 10 years Gaming machines 5 – 10 years Leasehold improvements over the lease term Profits and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. Construction in progress represents properties under construction and is stated at cost. This includes cost of construction, borrowing costs, and other direct costs. The assets are not depreciated until such time that the assets are completed and available for use. Transfers are made from the construction in progress category to the appropriate property, plant and Agility Real Estate | Annual Report 202 3 57 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors equipment asset categories when the construction of the asset has been substantially completed. Management reviews the useful lives of depreciable assets at least each reporting date. At December 31, 2023, Management assesses that the useful lives represent the expected utility of the assets of the Group. The carrying amounts are analyzed in Note 10. Actual results, however, may vary due to obsolescence. b. Investment property Investment properties are lands with no defined use, and are accounted for using the cost model. Investment properties are recorded at cost, which comprises its purchase price and any directly attributable expenditure; subsequently, on each reporting date these investment properties are measured at cost less impairment losses. c. Impairment testing of intangible assets and property, plant and equipment For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of the related business combination and represent the lowest level within the Group at which Management monitors goodwill. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, as set out in Note 9. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assets or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, Management estimates expected future cash flows from each cash-generating unit and determines a suitable rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect Management’s assessment of respective risk profiles, such as market and asset- specific risks factors. Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment loss is reversed if the assets or cash-generating unit’s recoverable amount exceeds its carrying amount. Agility Real Estate | Annual Report 202 3 58 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Impairment losses of continuing operations are recognized in our statement of comprehensive income in those expense categories consistent with the function of the impaired asset under review. c. Taxation including deferred tax The income tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity. Current tax is applied to taxable profits at the prevailing rate in the relevant country. Current tax assets and liabilities are measured at the amount expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date (IAS 12). Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Deferred tax is provided for in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if deferred tax arises from the initial recognition of goodwill, it is not recognized nor is deferred tax arising on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled. Withholding taxes on earnings of foreign operations are provided in the accounts only to the extent earnings are expected to be repatriated. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current taxation assets against current taxation liabilities and it is the intention to settle these on a net basis. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Management’s assessment over the probability of future taxable income in which deferred tax assets can be utilized is based on forecasts. The tax rules in the jurisdictions in which the Group operates are also taken into consideration. The recognition of deferred tax assets subject to legal or economic uncertainties are assessed by Management on the individual facts and circumstances. Agility Real Estate | Annual Report 202 3 59 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors d. Reporting and foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in US- dollars, which is also the Parent Company’s functional currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency of each individual entity using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss in financing costs. When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss. (c) Foreign operations The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency other than the presentation currency are translated into the presentation currency on consolidation as follows: (i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at each reporting date. (ii) Income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions) for the period presented. (iii) All resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of equity. When a foreign operation is disposed of or control is lost, the cumulative amount of the exchange differences relating to that operation accumulated in the separate component of equity is reclassified from equity to profit or loss and recognized as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing rate. Agility Real Estate | Annual Report 202 3 60 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors e. Consolidation The Group’s consolidated financial statements consolidate the financial statements of Agility Real Estate Inc. and the entities it controls drawn up to December 31, 2023 and its comparative periods. (a) Subsidiaries The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealized gains on transactions between Group subsidiaries are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies as applied to the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries that are not held by the Group and are presented separately within equity in the consolidated statement of financial position, from parent shareholders’ equity. (b) Business combinations The Group applies the acquisition method of accounting when accounting for business combinations. The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly attributable to the acquisition are charged to profit or loss as incurred. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets for the subsidiary acquired, the difference is recognized directly in profit or loss. (c) Investment in Joint ventures The Group has contractual arrangements with other parties which represent joint ventures. In this case, the arrangements take the form of agreements to share control over economic activities with Costa Rican assets. Strategic financial and operating decisions relating to these assets require the unanimous consent of both parties. Investments in joint ventures are accounted for using the equity method. Agility Real Estate | Annual Report 202 3 61 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Any goodwill or fair value adjustment attributable to the Group’s share in the joint venture is not recognized separately and is included in the amount recognized as investment. The carrying amount of the investment in joint ventures is increased or decreased to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealized gains and losses on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in those entities. Where unrealized losses are eliminated, the underlying asset is also tested for impairment. f. Intangible assets (a) Goodwill Goodwill represents the excess of the fair value of consideration transferred in a business combination over the fair value of the Group’s share of the net identifiable assets, liabilities and contingent liabilities at the date of the business combinations and is not amortized. 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. (b) Software and software licenses The Group includes acquired and internally developed software used in operations or administration as intangible assets. They are accounted for using the cost model whereby capitalized costs are amortized on a straight-line basis over their estimated useful life. Residual values and useful lives are reviewed at each reporting date. In addition, they are subject to impairment testing as described in Note 10. The following useful lives are applied: Software 2 – 5 years Amortization has been included within depreciation, amortization and impairment of non-financial assets. Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software. g. Leases The Group as a lessee For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined as “a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration”. To apply Agility Real Estate | Annual Report 202 3 62 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors this definition, the Group assesses whether the contract meets three key evaluations which are whether or not: ● the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group; ● the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract; and ● the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct “how and for what purpose” the asset is used throughout the period of use. Measurement and recognition of leases as a lessee At lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. Interest is charged on the lease liability at an even rate on the carrying amount of that liability (see above). It is re-measured to reflect any reassessment or modification, or if there are changes in lease liability. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are recognized as an expense in profit or loss on a straight- Agility Real Estate | Annual Report 202 3 63 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors line basis over the lease term. On the statement of financial position, right-of-use assets have been included in property, plant and equipment (except those meeting the definition of investment property) and lease liabilities have been included in Obligations underleases and hire purchase contracts. h. Provisions (a) Employee benefits The Group recognizes a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the Group’s profits. The Group recognizes a provision where it is contractually obliged to pay the benefits, and/or where there is a past practice that has created a constructive obligation. Defined Benefit Obligation (DBO) Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increase. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses. The liability recognized in the statement of financial position for DBO’s is the present value of the DBO at the report date. Management estimates the DBO annually using simplifications of the projected unit credit method as follow: (i) ignore estimated future salary increases, (ii) ignore future service of current employees and (iii) ignore possible in-service mortality of current employees between the reporting date and the date employees are expected to begin receiving post-employment benefits. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related liability. Service cost on the Group’s defined benefit plan is included in employee benefit expense. Net interest expense on the net defined benefit liability is included in finance cost. Gains and losses resulting from re-measurements of the defined benefit liability are included in other comprehensive income and are not reclassified to profit or loss in subsequent periods. (b) Other Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the end of each reporting period. Agility Real Estate | Annual Report 202 3 64 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors (c) Litigation provisions The Group provides against various litigation proceedings once judgments are rendered against it, as in Management’s view this provides the best indication that payment has become probable. The award amount is used as the Directors’ best estimate of the potential liability, even if the Group is appealing the judgment. Provisions are discounted to their present value, where the time value of money is material. i. Financial instruments Non-derivative financial instruments consist of: Financial assets Financial assets, which include cash and cash equivalents, trade receivables, unbilled revenues, finance lease receivables, employee and other advances, investments in equity and debt securities and eligible current and non-current assets. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Financial liabilities Financial liabilities, which include long and short-term loans and borrowings, bank overdrafts, trade payables, eligible current and non-current liabilities. Subsequent measurement of financial assets Non-derivative financial instruments are recognized initially at fair value. Subsequent to initial recognition, non-derivative financial instruments are measured as described below: Financial assets Financial assets are measured at initial recognition at fair value and are classified and subsequently measured at fair value through profit or loss, fair value through other comprehensive income or amortized cost. Financial assets are assigned to these different categories by Management on initial recognition, depending on the purpose for which they were acquired. The designation of financial assets is re-evaluated at every reporting date at which a choice of classification or accounting treatment is available. All financial assets are recognized when the Group becomes a party to the contractual provisions of the instrument. Trade receivables, related party receivables and cash and cash equivalents are measured subsequent to initial recognition at amortized cost using the effective interest method, less Agility Real Estate | Annual Report 202 3 65 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors provision for impairment. Any change in their value through impairment or reversal of impairment is recognized in profit or loss. Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The Group applies the expected credit loss model for recognizing impairment loss on trade receivables. Expected credit loss is the difference between the contractual cash flows and the cash flows that the entity expects to receive, discounted using the effective interest rate. Loss allowances for trade receivables are measured at an amount equal to lifetime expected credit loss. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. Lifetime expected credit loss is computed based on a provision matrix which takes in to account risk profiling of customers and historical credit loss experience adjusted for forward looking information. Accounts receivable are presented net of an allowance for doubtful accounts. The carrying amount of the receivable is reduced through use of an allowance account. A financial asset is derecognized only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred, and that transfer qualifies for de- recognition. A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the Group retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for de- recognition if the Group transfers substantially all the risks and rewards of ownership of the asset, or if the Group neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset. Financial liabilities Financial liabilities are obligations to pay cash or other financial assets and are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities categorized at fair value through profit or loss, are recorded initially at fair value. All other financial liabilities are recorded initially at fair value, net of direct issue costs. Financial liabilities categorized as at fair value through profit or loss, are measured at each reporting date at fair value, with changes in fair value being recognized in profit or loss. All other financial liabilities are recorded at amortized cost using the effective interest method, with interest-related charges recognized as an expense in finance cost in the statement of comprehensive income. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are charged to profit or loss on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. A financial liability is derecognized only when the obligation is extinguished, that is, when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated Agility Real Estate | Annual Report 202 3 66 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors as de-recognition of the original liability and the recognition of a new liability, such that the difference in the respective carrying amounts together with any costs or fees incurred are recognized in profit or loss. Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short-term maturity of these instruments. j. Inventories Inventories are valued at the lower of cost and net realizable value. Cost of inventory is determined on a ‘first-in-first-out’ basis. Inventory consists of food, beverages and supplies. k. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks with maturities of 3 months or less from inception, other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. Restricted cash includes all cash balances that are required to be maintained under regulatory requirements. Casino industry regulations vary by country but all require our casino operations to maintain specified minimum levels of cash to support chips in play, slot hoppers, and reserves. l. Borrowings and borrowing costs Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the period end date. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, or assets that take a substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. m. Share capital Common shares are classified as equity. Agility Real Estate | Annual Report 202 3 67 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Where the Group purchases the Group’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Group’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects are included in equity attributable to the Group’s equity holders. n. Share-based payments Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period, with the corresponding credit to the share option reserve. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Balance Sheet date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a change is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition. Where the terms of the options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged over the remaining vesting period. All share-based remuneration is ultimately recognized as an expense in profit or loss with a corresponding credit to retained earnings. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up are recognized as share capital. Where equity instruments are granted to persons other than employees, the Statement of Comprehensive Income is charged with the fair value of goods and services received. If fair value cannot be reliably measured the fair value of the goods or services received, the value of the services are recognized, and the corresponding increase in equity, is recognized indirectly, by reference to the fair value of the equity instruments granted. o. Net gaming wins and revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group, the revenue can be reliably measured, the risks and rewards of ownership have been transferred to the buyer, the Group no longer has control over the goods, and the costs incurred in respect of the transaction can be reliably measured. Revenue is recognized on specific items as follows: (a) Net gaming wins – Casino revenues represent the net wins/(losses) from gaming activities, which is, for slot machines, the difference between coins and currencies deposited into the machines and the payments to customers and, for other (table and Agility Real Estate | Annual Report 202 3 68 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors sports book) games, the difference between gaming wins and losses. Net gaming wins are recognized when they occur. (b) Food, beverage and hospitality sales – Revenue is recognized at the point of sale or upon the actual rendering of service. (c) Interest income – Revenue is recognized as the interest is accrued (taking into account the effective yield on the asset). Costs and expenses are recognized in profit or loss upon utilization of the service or at the date they are incurred. p. Earnings per share Basic earnings per share is calculated using the weighted-average number of shares outstanding during the period. The Group uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. q. Project development costs Project development costs incurred in an effort to identify and develop new Real Estate and Hospitality locations are expensed as incurred. r. Profit or loss from discontinued operations A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and: ● represents a separate major line of business or geographical area of operations; ● is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or ● is a subsidiary acquired exclusively with a view to resell. Profit or loss from discontinued operations, including prior year components of profit or loss, are presented in a single amount in the statement of comprehensive income. s. Fair value measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves Agility Real Estate | Annual Report 202 3 69 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date. 4. SEGMENTAL INFORMATION In identifying its operating segments, Management generally follows the Group's geographic country lines. These operating segments are monitored by the Group’s chief operating decision makers and strategic decisions are made on the basis of adjusted operating results. The activities undertaken by each operating segment include the operation of casinos and related food, beverage and hospitality activities. Each of these operating segments is managed separately by country managers as each country has a different regulatory environment and customs, as well as, different marketing approaches. All inter-segment transfers are carried out at arm's length prices when they occur. The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except that expenses relating to share-based payments are not included in arriving at the operating profit of the operating segments and results for the Group’s equity accounted joint venture is shown proportionally. Corporate assets that are not directly attributable to the business activities of any operating segment are not allocated to a segment. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss. No asymmetrical allocations have been applied between segments. Agility Real Estate | Annual Report 202 3 70 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Operating segments Costa Rica Nicaragua Peru 2023 2022 2023 2022 2023 2022 Continui ng operations Total revenue - - 14,621 13,461 864 946 Operating profit / (loss) before: project development, depreciation, amortization and other gains and losses (Adjusted EBITDA) - - 4,300 4,261 287 426 Project development - - (42) - - - Depreciation and amortization - - (1,017) (1,075) (60) (117) Other gains and (losses) - - 12 (50) 700 (1) Segments result - - 3,253 3,136 927 308 Foreign exchange gain / (loss) - - (13) (17) (85) 40 Share of profit / (loss) from equity accounted investments 242 93 - - - - Finance costs - - (178) (499) - (234) Finance income - - 12 13 - - Other interest - - (47) (29) - (52) Management fees - intercompany charges - - (630) (1,057) - - Profit / (loss) before taxation 242 93 2,397 1,547 842 62 Taxation - - (737) (457) (660) (982) Profit / (loss) for the year-continuing operations 242 93 1,660 1,090 182 (920) Profit / (loss) for the year-discontinued operations - - - - 2,082 4,865 Profit / (loss) for the year 242 93 1,660 1,090 2,264 3,945 Currency translation reserve and remeasurement of employee benefits - - 74 - - - Total comprehensive income for the year 242 93 1,734 1,090 2,264 3,945 Non-controlling interest - - (764) (481) - - Total comprehensive income attri butable to owners of the 242 93 970 609 2,264 3,945 Assets and l i abilities Segment intangible assets: Intangible assets with indefinite useful lives - - 1,387 1,387 - - Intangible assets with finite useful lives - - - - 5 5 Segment assets: Property, plant and equipment - - 5,346 5,557 2,364 2,341 Other segment assets (including cash) (1,066) (1,043) 3,637 3,876 17,786 18,792 Total segment assets (1,066) (1,043) 10,370 10,820 20,155 21,138 Assets classified as held for sale 4,860 4,251 - - 110 674 Total assets 3,794 3,208 10,370 10,820 20,265 21,812 Total segment li abilities - - 5,881 7,009 962 2,420 Liabilities associated with assets held for sale - - - - - - Total li abilities - - 5,881 7,009 962 2,420 Net assets 3,794 3,208 4,489 3,811 19,303 19,392 Non-controlli ng interest - - 1,732 1,747 - - Other segment items Capital expenditure - - 874 498 17 672 Depreciation and amortization - - 1,017 1,075 60 117 - continued - Agility Real Estate | Annual Report 202 3 71 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Total Operation Corporate and non- allocated (1) Costa Rica IFRS 11 Adjustments (2) Total 2023 2022 2023 2022 2023 2022 2023 2022 Continuing operations Total revenue 15,485 14,407 - 120 - - 15,485 14,527 Operating profit / (loss) before: project development, depreciation, amortization and other gains and losses (Adjusted EBITDA) 4,587 4,687 (1,813) (1,057) - - 2,774 3,630 Project development (42) - - - - (42) - Depreciation and amortization (1,077) (1,192) - - - - (1,077) (1,192) Other gains and (losses) 712 (51) 1,249 1,534 - - 1,961 1,483 Segments result 4,180 3,444 (564) 477 - - 3,616 3,921 Foreign exchange gain / (loss) (98) 23 (66) 138 - - (164) 161 Share of profit / (loss) from equity accounted investments 242 93 - - - - 242 93 Finance costs (178) (733) (632) (836) - - (810) (1,569) Finance income 12 13 37 27 - - 49 40 Other interest (47) (81) - - - - (47) (81) Management fees - intercompany charges (630) (1,057) 630 1,050 - - - (7) Profit / (loss) before taxation 3,481 1,702 (595) 856 - - 2,886 2,558 Taxation (1,397) (1,439) (148) (192) - - (1,545) (1,631) Profit / (loss) for the year-continuing operations 2,084 263 (743) 664 - - 1,341 927 Profit / (loss) for the year-discontinued operations 2,082 4,865 - - - - 2,082 4,865 Profit / (loss) for the year 4,166 5,128 (743) 664 - - 3,423 5,792 Currency translation reserve and remeasurement of employee benefits 74 - 459 74 - - 533 74 Total comprehensive income for the year 4,240 5,128 (284) 738 - - 3,956 5,866 Non-controlling interest (764) (481) - - - - (764) (481) Total comprehensive income attributable to owners of the 3,476 4,647 (284) 738 - - 3,192 5,385 Assets and liabilities Segment intangible assets: Intangible assets with indefinite useful lives 1,387 1,387 - - - - 1,387 1,387 Intangible assets with finite useful lives 5 5 - - - - 5 5 Segment assets: Property, plant and equipment 7,710 7,898 - - - - 7,710 7,898 Other segment assets (including cash) 20,357 21,625 (8,677) (6,579) 1,369 784 13,049 15,830 Total segment assets 29,459 30,915 (8,677) (6,579) 1,369 784 22,151 25,120 Assets classified as held for sale 4,970 4,925 - - (4,860) (4,251) 110 674 Total assets 34,429 35,840 (8,677) (6,579) (3,491) (3,467) 22,261 25,794 Total segment liabil ities 6,843 9,429 11,157 15,428 - - 18,000 24,857 Liabilities associated with assets held for sale - - - - - - - - Total liabiliti es 6,843 9,429 11,157 15,428 - - 18,000 24,857 Net assets / (li abilities) 27,586 26,411 (19,834) (22,007) (3,491) (3,467) 4,261 937 Non-controlling interest 1,732 1,747 - - - - 1,732 1,747 Other segment items Capital expenditure 891 1,170 - - - - 891 1,170 Depreciation and amortization 1,077 1,192 - - - - 1,077 1,192 (1) Includes non-operating entities (2) Includes adjustment to Costa Rica segment results for equity accounting under IFRS 11. Agility Real Estate | Annual Report 202 3 72 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 5. OTHER GAINS AND (LOSSES) 2023 2022 Gain on sale, write off of assets and liabilities (a) 1,109$ (40)$ Gain on debt extinguishment (b) 711 - Settlement of THLA tax case (c) 309 - Reimbursement to Group on lender settlement (d) 67 - Other (e) 68 - Settlement of other liabilities (f) (258) - Settlement of Costa Rica litigation (g) (30) - Restructuring costs (h) (15) (11) Tax liability Guatemala - (109) Sun Nippon Company S.A.C. - Coin-in Settlement -$ 1,643$ Total 1,961$ 1,483$ a. Gain on sale, write off of assets and liabilities During the year ended December 31, 2023, the Group recognized gains on the disposal of property, plant, and equipment of $3,000, gain on penalty from contract cancelation of $43,000, fair value gain on financial asset through profit and loss of $15,000, and gain from write-off of aged liabilities of $1,072,000, partially offset by a bad debt provision of $24,000. b. Gain on debt extinguishment During the year ended December 31, 2023, the group negotiated settlements with two lenders extinguishing $1,232,000 of principal and $164,000 of accrued interest .The settlements resulted in a $711,000 gain on debt extinguishment. c. Settlement of THLA tax case During the year ended December 31, 2023, SUNAT, the Peruvian tax authority recognized IGV paid by THLA for the year 2013 as a credit to be applied against any taxes owed by the company. The credit resulted in the recognition of a gain and was used to settle income taxes owed in relation to the 2008 THLA tax case. d. Reimbursement to Group on lender settlement During the year ended December 31, 2023, the group collected reimbursements and advances made to certain parties of $67,000. e. Other During the year ended December 31, 2023, The group recorded gains of $68,000 related to refunds of court fees and utilities charges. Agility Real Estate | Annual Report 202 3 73 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors f. Settlement of other liabilities During the year ended December 31, 2023, the group settled litigation with a former employee resulting in a loss of $258,000. g. Settlement of Costa Rica litigation During the year ended December 31, 2023, the group settled litigation in Costa Rica with a former employee resulting in a loss of $30,000. h. Restructuring costs During the year ended December 31, 2023, in an effort to restructure Peru overhead, the Group reduced its Peru head count. The restructuring costs are made up of severance settlements to liquidate employees totaling $15,000. 6. COMPENSATION OF KEY PERSONNEL Key Management of the Group are the members of the Board of Directors and officers. The remuneration of key management personnel during the year was as follows: 2023 2022 Salaries and bonuses 1,216 669 Short-term benefits 50 29 Total 1,266$ 698$ The following table provides additional detail of remuneration to key management personnel during the year: Agility Real Estate | Annual Report 202 3 74 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Name Officer/Director Salary Bonus Severance Short-term benefits Total compensation Salomon Guggenheim (1) Director-Officer 274 $ 47 $ - $ 7 $ 328 $ Albert Atallah (2) Officer 180 83 102 26 391 Peter Lesar (3) Officer 240 242 - 17 499 Stephan Fitch Director 24 - - - 24 Reto Stadelmann Director 24 - - - 24 Total 742$ 372$ 102$ 50$ 1,266$ (1) Aggregate other compensation includes discretionary expenses of $7,000. (2) Aggregate other compensation includes discretionary expenses of $26,000. Mr. Atallah was a Director-Employee until his retirement on December 31, 2023. (3) Aggregate other compensation includes discretionary expenses of $17,000. The remuneration of key personnel is determined by the compensation committee taking into account the performance of individuals and market trends. 7. FINANCING COSTS AND INCOME Finance cost and income includes all interest-related expenses and income, other than those arising from financial assets at fair value through profit or loss. The following amounts have been included in profit or loss for the reporting periods presented: 2023 2022 Finance cost Bank loans 32$ 267$ Other loans 471 560 Related party loans 123 113 Related party payables - 120 Finance charges payable under finance leases and hire purchase contracts 138 453 Amortization of borrowing costs - 8 Other finance charges 46 48 Total finance costs (on a historical cost basis) 810 1,569 Finance income Bank interest receivable 49 29 Related party interest receivable - 11 Total finance income (on a historical cost basis) 49$ 40$ Other interest Other interest 47 81 Total other interest 47$ 81$ Agility Real Estate | Annual Report 202 3 75 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 8. INCOME TAXES AND DEFERRED TAX LIABILITY a) Tax charged in profit or loss 2023 2022 (restated) Current Income Tax Foreign tax 1,277$ 1,130$ Total current income tax 1,277 1,130 Deferred Tax Origination and reversal of temporary differences 268 501 Total deferred tax 268 501 Tax charged in the statement of comprehensive income 1,545$ 1,631$ Taxes allocated to: Loss for the year 1,545 1,631 Totals 1,545$ 1,631$ Agility Real Estate | Annual Report 202 3 76 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors b) Reconciliation of the total tax charge The tax expense in the statement of comprehensive income for the year is higher than the standard rate of corporate tax in the British Virgin Islands of 0%. The differences are reconciled below: 2023 2022 (restated) Accounting profit / (loss) before income tax 2,886$ 2,558$ Effect of different tax rates on overseas earnings 1,545 1,631 Total tax expense reported in the statement of income 1,545$ 1,631$ Deferred income tax assets Temporary differences on net assets 940 1,408 Total deferred tax 940$ 1,408$ Deferred income tax liabilities Other 685 855 Total deferred tax liabilities 685$ 855$ At December 31, 2023, the Group has unrecognized United States income tax net operating losses of $18,231,000 (2022 - $18,622,000). These operating losses expire at various dates for up to 20 years. The potential income tax benefits related to United States loss carry forwards have not been reflected in the accounts as the Group does not anticipate future United States net income. The Group has recorded a deferred tax asset in the amount of $940,000 (2022 restated - $1,408,000), related to leases in the Group’s Nicaragua Subsidiary and to provisions and book reserves in certain Peru subsidiaries. Statement of Financial Position Statement of Financial Position 2023 2022 (restated) Deferred Tax Assets Deferred Tax Liabilities Deferred Tax Total Deferred Tax Assets Deferred Tax Liabilities Deferred Tax Total Balance at beginning of year 1,408$ (855)$ 553$ 1,789$ (753)$ 1,036$ Movement in profit or loss (460) 161 (299) (383) (118) (501) Foreign exchange and other (8) 9 1 2 16 18 Balance at end of year 940$ (685)$ 255$ 1,408$ (855)$ 553$ Agility Real Estate | Annual Report 202 3 77 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 9. INTANGIBLE ASSETS 2023 2022 Goodwill Others (Software and license) Total Goodwill Others (Software and license) Total Cost Balance at beginning of year 1,387 $ 3,044 $ 4,431 $ 1,387 $ 3,044 $ 4,431 $ Additions - - - - - - Sale of subsidiary - - - - - - Balance at end of year 1,387 3,044 4,431 1,387 3,044 4,431 Accumulated amortization and impairment Balance at beginning of year - 3,039 3,039 - 3,040 3,040 Change for the year - - - - (1) (1) Balance at end of year - 3,039 3,039 - 3,039 3,039 Carrying amount At beginning of year 1,387 5 1,392 1,387 4 1,391 At end of year 1,387$ 5$ 1,392$ 1,387$ 5$ 1,392$ Impairment review For the purposes of assessing potential impairment, the Group’s assets are grouped and reviewed for impairment at the lowest cash generating unit (CGU) level, where cash flows are independent of one another. The review is focused on our ongoing operating segments located in Nicaragua, where GCU is deemed by operating location/venue. For the purpose of annual impairment testing, goodwill in Nicaragua was allocated to each individual CGU proportional to its percentage of country-wide revenue. 2023 Goodwill Other assets considered for impairment Total assets considered for impairment Nicaragua 1,387 5,284 6,671 Total 1,387$ 5,284$ 6,671$ (1) Calculated as net asset of the CGU plus borrowings less cash and cash equivalents. The recoverable amount of each CGU was determined based on value-in-use calculations. The following paragraphs describe the key assumptions on which Management has based its cash flow Agility Real Estate | Annual Report 202 3 78 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors projections for the period covered by the most recent budgets/forecasts and a description of Management’s approach to determining the value(s) assigned to each key assumption. Management’s key assumptions to forecast cash flow include: 1. Revenue and revenue growth: Revenue and revenue growth was considered as a key assumption. Specifically, revenue for future years was forecasted by: a) Taking into account as a base line the revenue generated in each CGU in 2023; and b) Increasing that base line revenue equal to an organic growth that is equal to the long-term GDP growth forecasted by independent analysts for Nicaragua. 2. Cost of goods sold and growth of costs of goods sold: Cost of goods sold and growth in cost of goods sold was considered as a key assumption. Specifically, costs of goods sold for future years was forecasted by: a) Taking into account as a base line the cost of goods sold in each CGU in 2023; and b) Increasing that base line cost of goods sold by the long-term rate of inflation rate forecasted by independent analysts for Nicaragua. 3. Operating costs and growth of operating costs: Operating costs and growth in operating costs was considered as a key assumption. Specifically, operating costs for future years were forecasted by: a) Taking into account as a base line the operating cost of in each CGU in 2023; and b) Increasing those base line operating costs by the long-term rate of inflation rate forecasted by independent analysts for Nicaragua. 4. Depreciation and amortization: Depreciation and amortization are forecasted based on the known future schedule of depreciation and amortization as of December 31, 2023 for each CGU, and then adjusted based on the future depreciation of assets to be purchased in the future using maintenance capex. For the purpose of annual impairment testing, depreciation and amortization in Nicaragua were allocated to each individual CGU proportional to its percentage of country-wide revenue. 5. Financing costs, net: Financing costs, net are forecasted based on the schedule of all known debt as of December 31, 2023 for each CGU. For the purpose of annual impairment testing, financing costs, net in Nicaragua were allocated to each individual CGU proportional to its percentage of country-wide revenue. 6. Direct and indirect taxes: Direct and indirect taxes were forecasted based on the tax regime in place as of December 31, 2023. 7. Maintenance Capex: Maintenance capex was forecasted for future years based on the percentage of revenue allocated to maintenance capex in 2023 for each CGU. Discount rates The present value of the expected cash flows of each segment is determined by applying a suitable discount rate. The discount rate was derived based on the calculation of Weighted Average Cost of Capital (WACC) for the Group, adjusted to reflect market data for companies in the gaming industry. The discount rates reflect appropriate adjustments relating to market risk and specific risk factors of each segment (incorporating adjustments for geographic location and currency risk). The discount rate applied to Nicaragua was 16.23%. With regard to the assessment of value in use of each acquisition, there are possible changes in key assumptions that could cause the carrying value of the unit to exceed its recoverable amount. These are discussed below: Agility Real Estate | Annual Report 202 3 79 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 1. Revenue and revenue growth: Gaming revenue can be impacted by a) Changes in drop levels, which may be affected by the number of customers, seasonality, effective marketing efforts, a change in technology, competition or regulatory changes; and b) Changes in Hold %, representing the probability of individual games, which change can happen through chance, changes in gaming regulation and changes in gaming technology. Hotel revenue can be impacted by competition and seasonality. Growth rates, which are based on estimated GDP growth may be affected by material shifts in disposable income available for entertainment and hospitality. 2. Cost of goods sold and growth of costs of goods sold: Costs of goods sold can be impacted by changes in the market price of different goods and services, our competitiveness and requirements to increase promotional allowances, and by payroll adjustments because of changes in labor market conditions and/or management efficiencies. Cost of goods growth rates, which are based on estimated inflation rates, may be affected by changes in market and/or economic conditions. 3. Operating costs and growth of operating costs: Operating costs can be impacted by changes in the market price of different goods and services, our competitiveness and requirements to increase marketing expense, and by payroll adjustments because of changes in labor market conditions and/or management efficiencies. Operating cost growth rates, which are based on estimated inflation rates, may be affected by changes in market and/or economic conditions. 4. Depreciation and amortization: Depreciation and amortization may be affected by the addition or sale of depreciable property, plant and equipment, including capital expenditures for maintenance purposes. 5. Financing costs, net: Financial Costs, net may be affected by the addition or pre-payment of debt from the current debt schedule and by changes in the financial interest charged by banks. 6. Direct and indirect taxes: Direct and indirect taxes may be affected by changes in tax legislation, regulation and judicial rulings. 7. Maintenance Capex: Maintenance capex may be affected by the non-planned deterioration of assets, whose replacement will deviate from the investment time and investment amount considered in our estimations. Agility Real Estate | Annual Report 202 3 80 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 10. PROPERTY, PLANT AND EQUIPMENT Property (1) Leasehold improvements Gaming machines Furniture and equipment Construction in progress and advances Total Cost As of January 1, 2023 10,386$ 1,622$ 4,754$ 3,896$ -$ 20,658$ Foreign exchange adjustments 9 (17) (42) (26) - (76) Additions - - 246 212 433 891 Disposals - - - (95) - (95) Transfers 17 26 203 187 (433) - As of December 31, 2023 10,412 1,631 5,161 4,174 - 21,378 Depreciation As of January 1, 2023 3,404$ 1,534$ 4,348$ 3,474$ -$ 12,760$ Foreign exchange adjustments (5) (17) (36) (23) - (81) Charge for the year 732 32 155 158 - 1,077 Disposals - - - (88) - (88) As of December 31, 2023 4,131 1,549 4,467 3,521 - 13,668 Net book value as of January 1, 2023 6,982 88 406 422 - 7,898 Net book value as of December 31, 2023 6,281 $ 82 $ 694 $ 653 $ - $ $ 7,710 Property (1) Leasehold improvements Gaming machines Furniture and equipment Construction in progress and advances Total Cost As of January 1, 2022 10,465$ 1,654$ 4,834$ 3,914$ 18$ 20,885$ Foreign exchange adjustments (7) (32) (73) (50) 1 (161) Additions 617 (4) 248 307 2 1,170 Transfer to Assets Held for Sale (672) - - - - (672) Disposals (32) (255) (277) - (564) Transfers 15 4 - 2 (21) - As of December 31, 2022 10,386 1,622 4,754 3,896 - 20,658 Depreciation As of January 1, 2022 2,818$ 1,511$ 4,463$ 3,608$ -$ 12,400$ Foreign exchange adjustments (14) (30) (66) (45) - (155) Charge for the year 797 53 196 146 - 1,192 Correction to accumulated depreciation (176) - - - - (176) Disposals (21) (245) (235) - (501) As of December 31, 2021 3,404 1,534 4,348 3,474 - 12,760 Net book value as of January 1, 2022 7,647 143 371 306 18 8,485 Net book value as of December 31, 2022 6,982 $ 88 $ 406 $ 422 $ - $ 7,898 (1) Includes right-of-use assets, whose net value as of December 31, 2023 is $2,108,000 (2022 - $2,728,000). $ Agility Real Estate | Annual Report 202 3 81 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Assets pledged as security Assets with the following amounts have been pledged to secure borrowings of the Group: December 31, 2023 December 31, 2022 Cost Amortized cost Cost Amortized cost Property 2,036$ 637$ 2,043$ 711$ Total 2,036$ 637$ 2,043$ 711$ The carrying value of assets held under finance leases and hire purchase contracts at December 31, 2023 was $2,109,000 (2022 - $2,729,000). 11. Investment Property Investment property includes land in the Group's Nicaraguan subsidiary located adjacent to its headquarters on the highway to Masaya, whose use has not been defined by the Group. The land is carried at historical cost. 2023 2022 Land 1,079 1,091 Total 1,079$ 1,091$ The fair value of this property is up to $4,249,000, according to the last valuation performed by an independent appraisal. Agility Real Estate | Annual Report 202 3 82 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 12. ASSETS CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS In 2021, the Group decided to convert it’s 66-suite hotel in Lima, Peru into a 66-unit condominium apartment complex. As of October 31, 2021 the Group’s Peru hotel ceased operations as a hotel and legally cancelled its hotel operating license. The Group has completed the process to: i) Legally sub-divide the former hotel in to 66 individually titled apartment units; ii) Procure all change of use and other regulatory approvals. The decision was taken in line with the Group’s strategy to reduce debt and to improve the Group’s financial position. The Peru hotel operation has been reported as a discontinued operation. As of the date of publication of this 2023 Annual Report, the Group has sold 65 out of the 66 apartment units: 15 apartments and 30 parking spaces were sold in 2023. Revenues and expenses, gains and losses relating to the Peru hotel operation have been eliminated from the Group’s statement of comprehensive income and are shown in a single line item on the face of the statement of comprehensive income (see “profit/ (loss) for the period from discontinued operations”). 2023 2022 Food, beverage, hospitality and other sales -$ -$ Total revenue - - Cost of goods sold - - Gross profit - - Other operating costs Operating, general and administrative (199) (483) Depreciation and amortization - - Other (losses) and gains 40 62 Operating (loss) / profit (159) (421) Loss before tax (159) (421) Profit for the year (159) (421) Gain on disposal 2,241 5,286 Profit / (loss) for the year from discontinued operations 2,082$ 4,865$ The carrying amount of Peru hotel assets that are held for sale may be summarized as follows: Peru Hotel 2023 2022 Property, plant and equipment 110$ 674$ Assets classified as held for sale 110$ 674$ Agility Real Estate | Annual Report 202 3 83 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Cash flows generated by the Peru Hotel operation for the reporting period are summarized as follows: 2023 2022 Net cash from operating activities (159) (421) Net cash (used) for investing activities - (672) Net cash (used) for financing activities - - Effect of foreign exchange adjustment - - Cash flows from discontinued operations (159)$ (1,093)$ Gain on disposal During the period ended December 31, 2023, 15 apartments and 30 parking spaces held for sale were sold. There is 1 apartment and 9 parking spaces pending and expected to be sold in 2024. The transactions resulted in a gain on disposal to the Group of approximately $2.24 million. The consideration received was approximately $2.8 million in cash as described below. Peru Asset Sales Property, plant and equipment 579$ Net assets disposed 579$ Consideration in cash 2,819 Fair value of proceeds 2,819$ Gain on Disposal 2,240$ Agility Real Estate | Annual Report 202 3 84 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 13. TRADE AND OTHER RECEIVABLES Trade and other receivables consist of the following: 2023 2022 (1) Trade and other receivables (Non-current) Deposits for rental, land and equipment 65 83 Other receivables 752 753 Total trade and other receivables (non-current) 817$ 836$ Trade and other receivables (Current) Trade receivables, gross 1,059 1,065 Allowance for credit losses (906) (884) Notes receivable - 2 Prepaid expense 144 155 Value added tax and employee receivables 388 335 Total trade and other receivables (current) 685$ 673$ (1) Figures have been adjusted for comparative purposes. Trade and other receivables The carrying value of the trade receivables is considered a reasonable approximation of fair value. All of the Group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a provision of $22,000 (2022 - $Nil) has been recorded accordingly. The age of the trade receivables past due but not impaired is as follows: 2023 2022 Not more than 3 months 110 99 More than 3 months but not more than 6 months 7 27 More than 6 months but not more than 1 year 8 37 More than 1 year 28 18 Total 153$ 181$ Agility Real Estate | Annual Report 202 3 85 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 14. INVENTORIES 2023 2022 Food and beverage supplies 96 77 Casino goods and promotional items 83 63 Hotel food service and room supplies - - Uniform and operational supplies 48 56 Gaming machine parts 55 33 Total 282$ 229$ Cost of goods sold within Cost of sales was $1,138,832 for the year ended December 31, 2023 and $921,098 for the year ended December 31, 2022. There were inventory write downs of $0 in 2023 (2022 - $0). 15. CASH AND CASH EQUIVALENTS For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise the following at December 31, 2023 and December 31, 2022: 2023 2022 Cash at banks and on hand 3,127 5,957 Restricted cash 859 618 Short-term deposits 208 205 Total 4,194$ 6,780$ Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of time between one day and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. The fair value of cash and short-term deposits is $3,127,000 as of December 31, 2023 (2022 - $5,957,000). Restricted cash includes the casino’s bankroll, hopper loads, and a certificate of deposit that renews monthly and yields interest of 1.5% per year that is required by the gaming authorities in Nicaragua. The Group classifies the casino bankroll as restricted, as these balances are required to operate the business, thus these funds cannot be used to pay the obligations of the Group. The fair value of restricted cash is $1,067,000 at December 31, 2023 (2022 - $823,000). Agility Real Estate | Annual Report 202 3 86 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 16. TRADE AND OTHER PAYABLES 2023 2022 Trade and other payables (Non-current) Trade and other payables 32 32 Other liabilities 455 197 Deferred Income 13 14 Total trade and other payables (non-current) 500$ 243$ Trade and other payables (current) Trade and other payables 1,824 3,684 Other accrued liabilities 1,267 2,509 Total trade and other payables (current) 3,091$ 6,193$ Current - trade payables are non-interest bearing and are normally settled on 30-to-90-day terms. Agility Real Estate | Annual Report 202 3 87 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 17. BORROWINGS Borrowings consist of loans payable detailed as follows: Schedule of principal repayments 2024 2025 2026 2027 2028 Thereafter Unamortized premiums, discounts & issuance costs Total Interest Rate (1) : >10% 144$ -$ -$ -$ -$ -$ -$ 144$ 8% to 9% (2) 7,201 1 - - - - - 7,202 <5% 533 - - - - - - 533 Total pri ncipal repayments 7,878$ 1$ -$ -$ -$ -$ -$ 7,879$ 1. Floating rate loans are calculated as of the effective rate on December 31, 2023. 2024 2025 2026 2027 2028 Thereafter Unamortized premiums, discounts & issuance costs Total Country: Corporate (2) 7,725$ -$ -$ -$ -$ -$ -$ 7,725$ Nicaragua 153 1 - - - - - 154 Total pri ncipal repayments 7,878$ 1$ -$ -$ -$ -$ -$ 7,879$ 2. The Group's parent entity (Corporate) assumed outstanding debt balances of our Guatemala and Poland entities. The balances outstanding at December 31, 2023 for Guatemala and Poland were $129,675 and $302,301 respectively. Borrowing summary 2023 2022 Total borrowing 7,879 9,057 Less current portion of borrowings (7,878) (8,764) Borrowing non-current 1$ 293$ The following table provides additional detail of additions, refinancing, repayments, and disposals taking place during the year: Additions Summary Balance Dec 31, 2022 Additions Interest Capitalization Refinancing Extinguishment Repayments Balance Dec 31, 2023 Loans with financial entities 365$ -$ -$ -$ (212)$ 153$ Loans with non-financial entities 8,692 - 588 (1,232) (322) 7,726 Total 9,057$ -$ 588$ (1,232)$ (534)$ 7,879$ Notes Additions There were no new loans for the year ended December 31, 2023. Agility Real Estate | Annual Report 202 3 88 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Interest Capitalization a. The Group has promissory notes with private lenders where principal and interest payments are deferred. Loan interest is accrued and capitalized until maturity. During the year ended December 31, 2023, accrued interest of $588,000 was capitalized and added to outstanding principal balances. Repayments a. During the year ended December 31, 2023, the Group repaid or extinguished a total of $212,000 and $1,554,000 of loan principal of loans with financial entities and loans with non-financial entities, respectively. 18. PROVISIONS Current Non-Current Current Non-Current 2023 2023 2022 2022 Employee benefits 388$ 345$ 392$ 357$ Other 256 - 25 - Litigation provisions - - - 467 644$ 345$ 417$ 824$ Employee benefits Litigation Other Total Balance at January 1, 2022 551$ 922$ 26$ 1,499$ Provisions recognized 591 - 62 653 Provisions utilized (385) (493) (63) (941) Provisions released - - - - Differences arising from foreign exchange (8) 38 - 30 Balance at December 31, 2022 749 467 25 1,241 Provisions recognized 594 - 303 897 Provisions utilized (550) - (70) (620) Provisions released (58) (477) - (535) Differences arising from foreign exchange (2) 10 (2) 6 Balance at December 31, 2023 733$ -$ 256$ 989$ Agility Real Estate | Annual Report 202 3 89 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Employee benefits Current employee benefits are paid time off for vacations and sick time earned but not yet used by the employee. Non-current employee benefits include severance pay, which is the cost associated with the severance packages as described below: The subsidiary employee provisions by country are as follows: Nicaragua The Nicaraguan Labor Code established a severance payment plan for employees in the event of death, retirement or dismissal without just cause. This compensation is determined according to employee length of service. The plan compiles a month of salary for each labor year (for the first three labor years) and twenty days of salary after the fourth labor year, until the compensation reaches a maximum of five months’ salary. Compensation cannot be less than one month’s salary or more than five months’ salary. The amount of $733,000 (2022- $749,000) includes $457,000 of retirement benefit obligations. For determination of the retirement benefit obligations in 2023 and 2022, the following actuarial assumptions were used: 2023 2022 Discount rates 9.61% and 10.25% 7.87% and 8.01% Expected rate of salary increases 0% 1% Staff turnover 5 and 7 years 5 and 7 years The Group records a monthly provision as an expense to the respective period to cover any severance payment reimbursement incurred by the Group to terminated employees under this plan. As of December 31, 2023, the Group has recorded provisions amounting to $168,000 (2022 - $334,000), which represents Management’s best estimate of the liability. This is an accrual under Nicaraguan law and is not a pension scheme. Additionally, the other countries in which the Group operates have various severance requirements as described in Note 3. The severance requirements are classified as long term. The short-term employee benefits are primarily accrued vacation payable to employees. Litigation Peru THLA tax cases In a ruling by the tax Court (Tax Court File 15182-2014), involving SUNAT resolutions 0220030035681-0220030035690 for the tax year 2008 related to withholding on payments made abroad. The tax assessment is made up of principal of S/. 257,954 plus interest of S/. 317,825 (US$ 69,473 interest: US$85,598). In separate Resolutions 0220020013107-0220020013114, the tax authorities issued fines related to the prior mentioned resolutions in the amount of S/.107,530 plus Agility Real Estate | Annual Report 202 3 90 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors interest of S/.134,033 (US$28,960 interest: US$36,098). A provision had been recognized in connection with the resolution above totaling S/. 843,741 (US$227,240) including tax, penalties and interest. As of December 31, 2023 This tax case has been paid in full and the provision totaling S/. 843,741 has been released. The appeal also refers to Resolution 0220030036535-0220030036541 for the tax year 2008 related to payments in advance of the income tax of S/. 45,337 plus interest of S/. 49,585 (US$13,288, interest: US$13,354). Resolutions 0220020013229-0220020013238 imposed fines related to the prior mentioned resolutions of S/. 381,969 plus interest of S/. 456,403 (US$102,873, interest: US$122,920). A provision has been recognized in connection with the resolution above totaling S/. 940,923 (US$253,413) including tax, penalties and interest. As of December 31, 2023 This tax case has been paid in full and the provision totaling S/. 940,923 has been released. 19. SHARE CAPITAL AND RESERVES A majority of the Group’s shareholders voted in favor of continuing the Group’s charter from the Yukon, Canada to the British Virgin Islands (“BVI”). The Group formally continued its corporate charter into the BVI effective October 6, 2006 and filed “discontinuation documents” with the Yukon Registrar. Holders of common shares are entitled to one vote for each share held. There are no restrictions that limit the Group’s ability to pay dividends on its common stock. The Group has not issued preferred shares. The Group’s common stock has no par value. Number of shares Share capital ($USD in 000's) Shares authorized 500,000,000 common shares without par value 500,000,000 preferred shares without par value Shares issued Balance as at December 31, 2021 30,914,077 111,757$ Share based payments - - Balance as at December 31, 2022 30,914,077 111,757$ Shares issued 3,000,000 147 Balance as at December 31, 2023 33,914,077 111,904$ Options The Group, through its Board of Directors and shareholders, adopted two Stock Option Plans, the first on July 1, 1997, and the second on June 25, 2005. Both plans will continue separate and apart Agility Real Estate | Annual Report 202 3 91 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors from one another. The Group has granted a number of stock options and entered into various agreements of which up to no shares remain available for purchase pursuant to options granted under these plans. All of the stock options issued under these plans are nontransferable and terminate on the earlier of the expiry date or 30 days after the grantee ceases to be employed by the Group. Stock option plan I dated July 1, 1997 and Stock option plan II dated June 25, 2005 Options granted under these plans were awarded by the Board of Directors at its sole discretion to select Directors and employees. The options granted to the option holder may be exercised in whole or in part at any time, or from time-to-time during the exercise period. The options may lapse due to time limitations, death or change in employment status. The price at which an option holder may purchase a share upon the exercise of an option, shall be set forth in the option certificate, but not less than the market value of the Group shares as of the award date. Option grants have ceased under both plans as of November 19, 2007. 2007 Equity incentive plan dated November 20, 2007 (amended in August 2009) The 2007 Equity Plan was amended in 2009 to authorize the Directors, at their discretion, to award grants in an aggregate amount of up to 5% of the Company issued and outstanding shares. Our 2007 Equity Incentive Plan (the “2007 Equity Plan”) is designed to enable us and our affiliates to obtain and retain the services of the types of employees, consultants and directors who will contribute to our long-term success and to provide incentives that are linked directly to increases in share value which will inure to the benefits of all of our shareholders. We have reserved up to 5% of our current issued and outstanding common shares, as of any given date, for the issuance of shares, which may be awarded under such Equity Plan. There are no outstanding options as of December 31, 2023. Currency translation reserve The translation reserve represents the foreign currency translation differences arising from the translation of our subsidiary financial statements into United States dollars. Retained earnings / (loss) Retained earnings / (loss) are the accumulated retained profits and/or losses. Share options reserve The Group issues equity-settled share-based payments to certain employees and Directors. For all share-based payment arrangements granted, an expense is recognized in profit or loss with a corresponding credit to equity. The fair value of share options is expensed over the vesting period of the options, based on an estimate of the number of shares that will eventually vest, and adjusted for the effect of non-market-based vesting conditions. The corresponding credit is taken to the share options reserve. The fair value is calculated using the Black-Scholes pricing model. Agility Real Estate | Annual Report 202 3 92 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 20. EARNINGS PER SHARE The following weighted average numbers of shares were used for computation of earnings per share: 2023 2022 Shares used in computation of basic loss per share (000's) 32,414 30,914 Shares used in computation of diluted loss per share (000's) 32,414 30,914 Earnings / (loss) for the period attributable to the parent 2,691$ 5,311$ Basic earnings / (loss) per share 0.08 0.17 Diluted earnings / (loss) per share 0.08 0.17 Basic earnings per share is calculated by dividing the net gain for the year by the weighted average shares used in the computation of basic earnings per share. Diluted earnings per share is calculated by dividing the net gain for the year by the weighted average shares used in the computation of diluted earnings per share. 21. RELATED PARTY TRANSACTIONS 2023 2022 Current Non-Current Current Non-Current Due from related parties Nicaraguan Partners -$ 41$ -$ 42$ Costa Rican Joint Venture 2,132 - 2,085 - Transactions with officers - 7 - 391 2,132$ 48$ 2,085$ 433$ Due to related parties Nicaraguan Partners 207$ -$ 208$ -$ Transaction with officers - - 1,453 - 207$ -$ 1,661$ -$ Agility Real Estate | Annual Report 202 3 93 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Due from related parties Receivables from joint ventures and related party receivables The Group charges management, marketing, administration and royalty fees to its subsidiaries and joint ventures. The income and expenses associated with management fees between subsidiaries have been eliminated in their entirety in these consolidated financial statements. The related party receivable represents amounts due from the Group’s partners in its non-wholly owned subsidiaries. All receivables are non-interest bearing and are due on demand by the Group. The Group has not provided for an allowance against these amounts as these amounts are deemed collectible by the Group. Included in due from related parties is $2,132,000 (2022 – $2,085,000) due from our Costa Rica joint ventures which are accounted for under the equity method, these receivables are non-interest bearing and are due on demand by the Group. Balances will be settled upon the sale of certain real estate in Costa Rica. Additionally, $41,000 (2022 – $42,000) is due from a shareholder in the Nicaraguan operation for their portion of the loan attributed to the purchase of the majority interest in Nicaragua in October 2004. Included in due from related parties are loans to officers for $Nil (2021 - $391,000). The amounts due from officers were as follows: Albert Atallah $248,000 ($225,000 plus $23,000 accrued interest); Peter LeSar $143,000 ($125,000 plus accrued interest $18,000). The amounts due from officers was settled during the period ended December 31, 2023. The remaining $7,000 recorded in Due from related parties relates to a payment made on behalf of a director. This amount will either be settled in cash or offset against future director fees. Due to related parties Payable to joint ventures and related party payables Included in due to related parties are amounts due to the Group’s Nicaraguan partners $208,000 (2022 – $208,000) for their portion of the accrued, but not yet paid management fees from the Nicaraguan entity. Included in due to related parties are accrued wages owed to the Groups’ officers and directors totaling $Nil (2022 – $1,453,000). The amounts owed were as follows: Salomon Guggenheim $Nil (2022 - $545,000); Peter LeSar $Nil (2022 - $507,000); Albert Atallah $Nil (2022 - $400,000). There are $Nil (2022 - $1,000) owed to directors as of December 31, 2023. As of December 31, 2023 the amounts due to officers and directors were paid in full. Transaction with Officers and Directors included within borrowings Salomon Guggenheim, who previous to the middle of 2013 only held the roles of Director and advisor to the Group, is a director and not a beneficial owner in a company called India Ltd. The Group has been loaned various amounts by India Ltd. Please see Officer related party in the table below for amount due and interest paid to India Ltd. during 2023 and 2022. Agility Real Estate | Annual Report 202 3 94 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 2023 2022 Amount due Interest paid Amount due Interest paid Country Officer related party Corporate 1,495 - 1,372 - Total 1,495$ -$ 1,372$ -$ 22. OBLIGATIONS UNDER OPERATING LEASES, FINANCE LEASES AND HIRE PURCHASE CONTRACTS Obligations under finance leases and hire purchase contracts The Groups Nicaragua subsidiary has leases for four casino properties and related parking areas, two residential properties. The lease liabilities are secured by the related underlying assets. As at December 31, 2023, future minimum lease payments under leases and hire purchase contracts of the Group are as follows: Future commitments due Future commitments due December 31, 2023 December 31, 2022 Minimun Lease Payments Present value Minimun Lease Payments Present value Not longer than one year 1,012$ 656$ 1,353$ 877$ After one year but not more than five years 2,606 1,963 3,567 2,558 After five years 556 460 867 684 Sub total 4,174 3,079 5,787 4,119 Present value of minimum lease payments 4,174$ 3,079$ 5,787$ 4,119$ Obligations under leases and hire purchase contracts current (656)$ (877)$ Obligations under leases and hire purchase contracts non-current 2,423$ 3,242$ Agility Real Estate | Annual Report 202 3 95 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Assets held under finance leases and hire purchase contracts as of December 31, 2023 and December 31, 2022: 2023 2022 Cost Amortized cost Cost Amortized cost Right-of-use assets 4,770 2,109 4,822 2,729 Total 4,770$ 2,109$ 4,822$ 2,729$ 23. COMMITMENTS AND CONTINGENCIES As at December 31, 2023, principal payments required under the terms of the loan agreements and their liabilities in each for the next five years are as follows: Year ending December 31: 2024 7,878 2025 1 2026 - 2027 - 2028 - Thereafter - Subtotal 7,879 Less: Debt Issuance Costs - 7,879$ Set out below is an overview of our ongoing contingencies, many of which are as a result of regulatory uncertainty. An estimate of the financial effect of each contingency is disclosed unless a reasonable estimate of the financial effect cannot be made. a. Peru tax controversies Thunderbird Hoteles Las Americas, S.A. – Tax issues: Tax issues: The company has filed an appeal procedure in a ruling by the Tax Court (Tax Court File 15182-2014), related to Resolutions 0220030035681-0220030035690 for the tax year 2008 referred to withholdings of payments made abroad in a total principal amount of S/. 257,954 plus interest in a total of S/. 317,825 (amounts in US$ 67,527, interest: US$83,200). In separate Resolutions 0220020013107-0220020013114 the tax authorities issued fines related to the prior mentioned resolutions in the amount of S/.107,530 plus interest in a total of S/.134,033 (amounts in US$28,149 interest: US$35,087). A provision has been recognized in connection with the resolution above totaling S/. 843,741 (US$220,875) including tax, penalties and interest. The appeal also refers to Resolution 0220030036535-0220030036541 for the tax year 2008 related to payments in advance of the income tax for a total amount of S/. 45,337 plus interest in a total Agility Real Estate | Annual Report 202 3 96 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors of S/. 49,585 (amounts in US$11,868, interest: US$12,980). Resolutions 0220020013229- 0220020013238 imposed fines related to the prior mentioned resolutions for the amount in total of S/. 381,969 plus interest in a total of S/. 456,403 (amounts in US$99,992, interest: US$119,477). Through Resolution N° 7826-11-2022 (served on November 18, 2022) the Tax Court has solved the tax proceeding related to 2008 Income Tax. The Tax Court has confirmed the tax debt related to (i) Income Tax Retained in 2008 for interest on loans from related parties; (ii) payments on account of Income Tax for the year 2008 and (iii) income tax for 2008 (deduction of interest not recorded in the accounts). A provision was made in connection with the above resolution for a total of S/. 940,923 (US$246,315) including tax, penalties and interest. The relevant tax debt assessed in this case was duly paid in Q1 2023. Through Intendancy Resolution 0250140020952, SUNAT issued a 2013 IGV with an assessed tax debt amounting S/. 1,013,295 (approximately US$271,770). This tax debt was originated as a consequence of SUNAT’s 2007 IGV assessment, which the Tax Court through Resolution 11395-4-2021 considered null, with no legal grounds, revoking it. Through resolution 11390- 4-2019 the Tax Court ruled that the result of this procedure depended on the result of 2007 process. 2013 IGV tax assessment stated in Resolution 0250140020952 was dismissed (based on Resolution 11395-4-2021) and amount has been included in Note 5, Other Gain and Losses. Thunderbird Hoteles Las Americas, S.A. – “Alcabala” (Property Transfer Tax) process: On September 25, 2007, THLA received a notification in connection with a resolution issued by the Tax Administration Service (SUNAT) demanding payment of US$ 522,824 (S/. 1,969,742) for a property transfer tax resulting from the purchase of the land and the building located at Alcanfores 475, Miraflores. SUNAT asserted that THLA wrongly calculated the tax on the first-time sale of such property (sold by La Caja Militar to THLA). On October 24, 2007, THLA filed an appeal against the resolution issued by SUNAT. THLA asserts that it had paid the corresponding property transfer tax for the land, as well as the VAT for a part of the building. THLA argues that the property transfer tax was not paid for part of the building as the sale of such part of the building was a first-time sale performed by the contractor and was exempt from tax. On October 17, 2014, the Tax Court ruled that the resolution issued by the SUNAT was void as it had not been properly supported (such resolution did not specify the reasons why the SUNAT considered that the total of the transfer was subject to property transfer tax). On March 12, 2015, SUNAT issued a new resolution in respect of the same issues, but provided no additional evidentiary support for its position. SUNAT’s new resolution (Resolution Nº 045- 012-00073684), demanded the payment of the property transfer tax for the same land and the same building for a total of S/. 1,052,993 (including interests and penalties), approximately US$282,417. THLA argued once again that the resolution issued by SUNAT lacks the proper supporting documentation. SUNAT claims that THLA must pay the property transfer tax but does not explain the legal basis supporting such standpoint. On April 13, 2015, THLA filed its opposition against Resolution Nº 045-012-00073684 asserting that THLA was not required to pay any property transfer tax and requesting that the new resolution be declared void as it lacked proper support. Such claim is currently under review. THLA contends that it is probable that the Tax Court, for a second time, will declare Agility Real Estate | Annual Report 202 3 97 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors such resolution to be void. The opposition writ is pending a ruling by the Municipal Administration (1st administrative instance). Should the opposition writ be rejected, THLA is entitled to file an appeal writ before the Tax Court (second administrative instance). b. Costa Rica tax controversies By way of background, the income tax in Costa Rica is collected by the General Income Tax Office. The Group previously owned various Costa Rica subsidiaries including, Thunderbird Gran Entretenimiento, S.A. (“TGE”), and Grupo Thunderbird de Costa Rica, S.A. (“GTCR”). On February 27, 2015, the Group sold its entire economic interest and management rights in its Costa Rican operations (of which the Group had approximately a 50% share) to CIRSA International Gaming Corporation (“CIRSA”), for a net price (gross price less debt payoff less working capital adjustments) of approximately $8.1 million. The $8.1 million net amount received was also net of approximately $192 thousand contingent tax liability paid by the group to the Costa Rica tax authority to cover GTCR contested tax liability and for the approximate $3.088 million TGE contested tax liability paid to the Costa Rica tax authority. These contested tax liabilities are fully described below. These payments to the Costa Rican tax authority were required to be paid as a condition to closing the sale of the Group’s interest in the Costa Rica operation. The payment made by the Group and its partner was made without prejudice or admission of liability and therefore, does not alter the Group’s position of taking a provision for these contingent taxes in 2014. Following the sale of the Costa Rica operations, and as part of the Group’s commitment on the sale of the operations, TGE continued to be engaged in a certain tax procedure. In addition, the Group’s 50% ownership in King Lion Network is engaged in a tax controversy as described below. The following sections describe the current status/outcome of these three tax controversies: (i) TGE received a proposed income tax assessment in Q1-2012 of $600 thousand for the tax year ended December 31, 2009, and a proposed tax assessment of $800 thousand for the tax year ended December 31, 2010. Additional gaming taxes of $200 thousand were assessed for each tax year ended December 31, 2009 and 2010. The assessments for both tax years were related to certain expenses which were deemed to be non-allowable deductions by the General Income Tax Office and for the imputation of interest income on intercompany advance balances. These matters were appealed to the Tribunal Fiscal Administrative (“TFA”) during Q3 and Q4 of 2012. On January 16, 2013, the Group was advised that the Administrator Tribunal Appeal was denied in regards to the TGE tax matter. The Group filed a lawsuit at the Court level in August 2014 to revoke the tax assessment. In February 2015, the Group paid the tax authorities $3.088 million on the alleged tax liability. The payment to the Costa Rican tax authority was required to be paid as a condition to closing the sale of the Group’s interest in Costa Rica to CIRSA, as described below. The payment made by the Group was made without prejudice or admission of liability. The preliminary hearing of the case was heard in June 2015 and the Administrative file is being reviewed by the Court. A trial date was set for June 2018. The Group continues with the judicial procedure and its claim to revoke the tax assessment so TGE could recover a portion of the payment over time. In relation to this, Cirsa Gran Entretenimiento de Costa Rica, S.A. (formerly TGE) filed an administrative procedure Agility Real Estate | Annual Report 202 3 98 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors against the Tax Authority before the Administrative Court contested the legality of certain Administrative Resolutions of the Direction of Great National Tax Payers of Costa Rica and the Fiscal Tribunal. There was a hearing on this case in June 2018. The Administrative Court rendered a judgment (number 62-2018-VIII) against TGE on July 12, 2018. TGE filed an appeal on August 7, 2018 in the First Chamber of the Supreme Court in respect of the only remaining issue for this controversy case, which is the legal fees to be charged against the taxpayer TGE for failing to prevail in the lawsuit. The legal fees are approximately $310,000 and the tax appeal is pending. (ii) The Costa Rica Tax authorities have assessed a tax against King Lion Network for the tax year 2011 for approximately 17.2 million colones (or $30 thousand) representing tax and interests due the non-recognition of the interests paid for the purchase of the shares related to the Tres Rios Project. The Company presented the appeal to this assessment on time and the case remains pending. c. Costa Rica-CIRSA Escrow claim In March of 2020, MMG Bank Corporation notified CIRSA, Thunderbird Resorts Inc. and Angular Investments S.A. that MMG Bank Corporation intended to make a disbursement of $532,906 to Thunder Resorts Inc. and to Angular Investments S.A. pursuant to that certain Escrow Agreement dated February 25, 2015. CIRSA filed an objection to release of escrow proceeds on the basis that CIRSA’S objection is based on three sets of factors:(1) Labor Law Suit/controversy filed by Murray Jo Zimmer and Michael G. Fox (sometimes collectively referred to as “ZIMMER AND FOX”) against Grupo Cirsa De Costa Rica S.A. in which ZIMMER AND FOX are seeking an estimated seven million dollars; (2) Certain Labor claims filed by “other employees of CIRSA”; (3) Certain Tax Claims filed by the Costa Rica tax administration against companies sold by Thunderbird Resorts Inc. to CIRSA Thunderbird Resorts Inc. disputed each of the claims that CIRSA. The general basis for disputing each of CIRSA’s claims as well as any claim that Thunderbird Resorts Inc. violated the Stock Purchase Agreement dated February 25, 2015 are completely without basis in law or in fact. Moreover, TRI’s position in respect of the issues raised by CIRSA and so called breach of the SPA is that TRI’s is not jointly and severally liable with Angular, Zimmer and Fox and demanded that the escrow proceeds ought to be disbursed solely to Thunderbird. By the way of background, in a related matter to the San Diego Federal District Court action, in February 2015, the Group had previously consummated Stock Purchase Agreement (SPA) in which CIRSA acquired the shares of Grupo Thunderbird De Costa Rica from Thunderbird Resorts Inc. (TRI) and Angular Investments S.A. The SPA provided that a certain portion of the monies to be paid by CIRSA to TRI/Angular were to be held in escrow pursuant to the SPA. In February 2015, CIRSA delivered $2,125,000, to the Escrow Agent (the “Escrow Amount”) in accordance with the terms and conditions of the SPA. The Escrow Agreement provided for a claims procedure by which certain claims could be made by third parties/tax authorities, vendors to be paid from the Escrow. In December 2017 and in March 2018, ZIMMER AND FOX acting as employees of GTCR filed certain claims against CIRS, GTCR and TRI. TRI position is that ZIMMER AND FOX had claimed in bad faith that they were entitled to a series of labor rights. The SPA and all related documents support the fact that ZIMMER AND FOX as a "seller shareholder" waived and released any and all claims, rights, Agility Real Estate | Annual Report 202 3 99 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors etc. that he may have had, including social benefits under Costa Rica law. TRI believe ZIMMER AND FOX have waived all his claims and therefore their labor claim is without merit. Based on our information and belief, ZIMMER intended to file this labor complaint in response to TRI’s actions against him wherein TRI had filed the aforementioned lawsuit against ZIMMER in the Federal District Court of San Diego, California, Zimmer’s bad faith as he is attempting to retaliate against TRI for the actions that TRI has taken against him in the USA litigation. TRI believes that ZIMMER’s claim is without merit and ultimately the labor tribunal made a ruling that ZIMMER’S claims against GTCR were without merit. A ruling was issued by the Labor Judge of the 1st judicial circuit of San Jose on October 8, 2018, in which the Labor Judge declared that the lawsuit filed by Jo Zimmer against Grupo Cirsa de Costa Rica had no legal basis and issued an order against Zimmer to pay the costs and expenses of the judicial process. Murray Jo Zimmer appealed ruling No. 2080 on October 12, 2018. In June 2022, the 2nd Tribunal of the Supreme Court ruled the Resolution 2022-001356, which is final and non-appealable, confirming the prior decisions against the plaintiff Murray Jo Zimmer. Cirsa is claiming certain legal fees related to this case against the escrow. TRI considers these legal fees need to be paid directly by Murray Jo Zimmer, as dictated by the judge in the ruling. In relation to the Michael Fox case, TRI was not served with this labor lawsuit, but in the aim of affording evidence and facts to the procedure, it filed voluntarily its response to the labor claim before the 2nd Labor Court of San Jose, Costa Rica. A hearing for this case scheduled for November 2020, which was suspended on account of the Court’s request to amend certain evidence previously received. New hearing date was appointed on October 4th, 2022, but postponed to September 11, 2023 due the requirement of a professional translator for the plaintiff. FOX, Cirsa and TRI agreed to enter in a settlement agreement in which Michael Fox desist of his labor case against Cirsa and TRI and in an effort to terminate with this litigation, both defendant companies assumed the payment of FOX lawyer fees. This final settlement was signed in front of the Labor Court of the 2nd Judicial Circuit of San Jose on September 8th, 2023, being this final and non-appealable, terminating with Fox litigation. TRI has disputed each of the claims that CIRSA made against the Escrow. The general basis for disputing each of CIRSA’s claims, as well as, any claim that Thunderbird Resorts Inc. violated the Stock Purchase Agreement dated February 25, 2015 are completely without basis in law or in fact. Neither ZIMMER AND FOX are entitled to any payment as has been previously mentioned in the description of their respective labor cases. Moreover, TRI position in respect of the issues raised by CIRSA and so-called breach of the SPA is that TRI is not jointly and severally liable with Angular, Zimmer and Fox. Certain distributions and claims have been paid out of the escrow, and a total of approximately US$1.5M remains as balance in the escrow account as of December 31, 2023. d. Canadian tax controversy Thunderbird Gaming, Inc. (“TGI”), a wholly-owned subsidiary of the Group that has been inactive since 1996, received notification of a reassessment from the Canada Revenue Agency (“CRA”) with respect to a transfer of assets in 1996 in relation to the California Indian gaming business previously operated by TGI. Specifically, this reassessment stems from a transfer of Agility Real Estate | Annual Report 202 3 100 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors assets which CRA contends was undervalued. The reassessment is in the amount of Canadian dollar (“CDN”) $380 thousand (US $381 thousand at December 31, 2010). TGI submitted applications to CRA utilizing its net operating loss (“NOL”) in a manner that reduced the actual tax liability to zero and is taking the position that the valuation of assets was accurate in order to preserve its NOL. By taking this position, TGI believes it avoids the imposition of interest on tax, which is the subject of the reassessment. Further, TGI filed a fairness application with the appropriate Canadian taxing authority requesting a complete abatement of the alleged interest imposed on the alleged tax liability. In this filing, management alleges that TGI received unconscionable and egregious treatment from CRA in addition to experiencing excessive delays in the reassessment process. TGI also filed an appeal of CRA’s assessment with the tax courts in Canada in which TGI will attempt to establish that the underlying tax liability should never have been assessed. The fairness application was rejected and in March 2007, TGI abandoned further appeal to the tax courts in Canada. Although the Group believes CRA’s case is without merit, the liability is contained within an insolvent subsidiary and consequently, even though TGI is responsible for the liability, the Group’s parent and subsidiaries have no exposure to the TGI liability. The Group does not expect that CRA will collect the judgment as TGI is insolvent and therefore there is no accrual in these consolidated financial statements related to this reassessment. e. Guatemala Tax cases The Superintendencia de Administración Tributaria-SAT (the Guatemalan tax authority) has attempted to open up Thunderbird de Guatemala, S.A. tax audits for 2009 and 2010, which the Group has been challenging. By the way of background, on March 20, 2017, Thunderbird de Guatemala was notified of decisions made by the Second Tribunal of Accounts and Controversies, which has decided over a Recusal Appeal, conceded to be in favor of Thunderbird de Guatemala and an Appeal for Reversal related to certain documents that the Tax Authority is requesting for the tax years 2008 and 2009 and the company considered time- barred. The Tribunal alleged that the matter as discussed, related to whether the delivery of certain documents, were or were not legally required under a statute of limitations. With this decision made, Thunderbird de Guatemala defense prepared its arguments and challenged the main matter of this case in relation to the statute of limitations of the Tax Years 2008 and 2009. In January 2021, the Company was notified that the Court ruled against Thunderbird de Guatemala in this 2009 tax case. The Company strongly believes in its arguments; specifically, that the case is time barred. The Company filed an “Amparo” in January of 2021 to continue defending its position before the Supreme Court. The writ of Amparo is generally described as a remedy available to any person whose right to life, liberty and security is violated or threatened with violation by an unlawful act or omission of a public official or employee, or of a private individual or entity. Court took knowledge of the Amparo in June 2021 and denied it in July 2023. At this instance, no further challenges are available. Agility Real Estate | Annual Report 202 3 101 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors f. San Diego Federal District Court In July 2023 following eight years of litigation spanning the globe, upon payment of a confidential sum to Mitchell, Thunderbird and Jack R. Mitchell, with his wholly owned company, Mitzim entered into a settlement of all claims including the federal court in San Diego, the ICC in Hong Kong, and collection actions taken in the BVI and in Costa Rica. The Parties agreed that neither will make, publish, or communicate any statement that defames, disparages, or places the other, or any of the Party’s owners, members, partners, affiliates, agents, directors, or officers. in a false light. This provision includes any postings, blogs, or communication with any media source, social media site, or account which seeks to damage the reputation of a Party to this Agreement or any such Party’s owners, members, partners, affiliates, agents, directors, or officers. Within the terms of the settlement agreement the parties acknowledged and agreed that Thunderbird as a public company has a continuing obligation to disclose material information including the history and nature of the lawsuits among the parties, along with the existence and terms of this Settlement Agreement, in that regard, the parties have settled their claims and released each other, with none of the parties admitting fault. g. The Group’s entry and exit from the India market The Group entered the India market in 2008 by initiating a hotel project in Daman, India, which is located just north of Maharashtra State whose capital is Mumbai (formerly Bombay). The project known as “Thunderbird Resorts – Daman” has faced both regulatory delays outside the Group’s control, as well as cost overruns in construction and pre-operating interest / expense due to the delays which ultimately caused the Group to exit the India market in April 2015. The entire history of the entry and exit as well as settlements with various parties is fully described in previously filed financial statements. All settlements have been completely satisfied with the exception of the settlement with Maravege. In that regard, The Group entered into a revised settlement with Maravege for an amount of U$815,000 which was entered on January 13th, 2023, with an outstanding payable of US$292,997.00 as December 31, 2023 as included in other non-current liabilities. The Company has two years to pay-off this outstanding payable. 24. RISK MANAGEMENT OBJECTIVES AND POLICIES The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and credit risk, which result from both its operating and investing activities. The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium term cash flows by minimizing the exposure to financial markets. Long term financial investments are managed to generate lasting returns. The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed to are described below. Agility Real Estate | Annual Report 202 3 102 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Foreign currency sensitivity Most of the Group’s transactions are carried out in the functional currency where the operations reside. Exposures to currency exchange rates arise from the Group’s loans payable, intercompany payables and cash balances, which are primarily denominated in US-dollars. To mitigate the Group’s exposure to foreign currency risk, non-functional currency cash flows are monitored. Generally, where the amounts to be paid for purchases completed in US-dollars versus the functional currency the financing of the purchase is short term; therefore, a decision is made to either finance the equipment or to pay in cash depending on the current value of the US-dollar compared to the functional currency. US-dollar currency denominated financial assets and liabilities in entities whose functional currency is not US-dollar are as follows: US-dollar amounts 2023 2022 Nominal amounts Country Financial assets Nicaragua 1,077$ 1,358$ Peru 1,298 2,234 Financial liabilities Nicaragua (1,207) (1,236) Peru - - Short term exposure 1,168$ 2,356$ Financial liabilities Nicaragua - (293) Peru - - Long term exposure -$ (293)$ The following table illustrates the sensitivity of the net income (loss) for the year and equity in regards to the Group’s financial assets and financial liabilities and the US-dollar exchange rates. Agility Real Estate | Annual Report 202 3 103 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors It assumes a percentage change of the US-dollar against the other currencies for the year ended at December 31, 2023 and 2022. These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. If the US-dollar had weakened against the functional currencies according to the percentages below then this would have had the following impact on net income and equity: 2023 2022 Percentage change Net effect on income Net effect on equity Percentage change Net effect on income Net effect on equity Country Costa Rica 5.35% 14$ 168$ 6.04% 6$ 152$ Nicaragua 0.01% 0 1 0.04% 0 1 Peru 23.56% 698 5,458 132.45% (16,102) (71,114) Total 712$ 5,626$ (16,096)$ (70,960)$ If the US-dollar had strengthened against the functional currencies according to the percentages below then this would have had the following impact on net income and equity: 2023 2022 Percentage change Net effect on income Net effect on equity Percentage change Net effect on income Net effect on equity Country Costa Rica 5.35% (12)$ (150)$ 6.04% (6)$ (135)$ Nicaragua 0.01% (1) (0) 0.04% (1) (1) Peru 23.56% (432) (3,376) 132.45% (2,248) (9,928) Total (445)$ (3,527)$ (2,255)$ (10,063)$ Interest rate sensitivity The Group’s policy is to minimize interest rate cash flow risk exposures on long-term financing. Longer-term are therefore usually at fixed rates. At December 31, 2023, the Group is exposed to changes in borrowings market interest rates through some of its bank borrowings of approximately $152,902 as of December 31, 2023 (2022 - $364,925), which are subject to variable interest rates. As in the previous year, all other financial assets and liabilities have fixed rates. The impact on profit or loss of a reasonably possible change in interest rates of +/- .11% as of December 31, 2023 (2022 - +/- .23%) with effect from the beginning of the year, would be an increase of $162 (2022 - $853) or a decrease of $162 (2022 - $853). These changes in interest rates are considered to be reasonably possible based on observation of current market conditions. The calculations are based on the Group’s financial instruments held at each statement of financial position date. All other variables are held constant. Agility Real Estate | Annual Report 202 3 104 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 25. FINANCIAL INSTRUMENT BY CATEGORY Loans, receivables and other finacial assets Group December 31, 2023 Assets as per statement of financial position Trade and other receivable 3,344$ Other financial assets 127 Cash and cash equivalents 4,194 Total 7,665$ Loans, receivables and other finacial assets Liabilities as per statement of financial position Borrowings 10,958$ Trade and other payables 3,298 Other financial liabilities 370 Total 14,626$ Loans, receivables and other finacial assets Group December 31, 2022 Assets as per statement of financial position Trade and other receivable 3,810$ Other financial assets 112 Cash and cash equivalents 6,780 Total 10,702$ Other financial liabilities Liabilities as per statement of financial position Borrowings 13,176$ Trade and other payables 7,854 Other financial liabilities 529 Total 21,559$ Agility Real Estate | Annual Report 202 3 105 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 26. FINANCIAL INSTRUMENTS Credit risk analysis: The Group continuously monitors defaults of customers and other counter parties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit rating and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties. The Group’s Management considers that all financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due. In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk for liquid funds and other short-term financial assets is considered negligible, since the counterparties are reputable banks with high quality external credit ratings. Liquidity risk analysis: The Group measures its liquidity needs by: • Monitoring short-term obligations on a country-by-country and global, consolidated basis, with short-term inflows and outflows forecasted for the financial year, updated weekly. • Monitoring long-term, scheduled debt servicing payments. • Rolling forward 5-year cash flow models each month based on the financial results year-to-date through the previous month. The Group has the capacity to manage liquidity with a number of different tools at its disposal, including: • Raising of debt or equity capital at both the operations and Group levels. • Selling of non-strategic assets. • Restructuring or deferral of unsecured lenders. • Restructuring of salaries of key personnel. • Deferral or aging of accounts payables. • Cost management programs at both the operations and Group levels. Based on the information available today and the liquidity tools at its disposal, Management anticipates that the Group can meet its liquidity needs over the next 12 months primarily from operational cash flows as set out in Note 2. Agility Real Estate | Annual Report 202 3 106 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors As at December 31, 2023, the table set below shows the Group’s liabilities maturities per year: 2024 2025 2026 2027 2028 Thereafter Total Long-term bank loans 176$ -$ -$ -$ -$ -$ 176$ Finance lease obligations 1,012 952 773 627 254 556 4,174 Loans with non-financial entities 8,032 - - - - - 8,032 Trade and other payables 2,404 - - - - - 2,404 Due to related parties 207 - - - - - 207 Total 11,831$ 952$ 773$ 627$ 254$ 556$ 14,993$ This compares to the maturity of the Group’s financial liabilities in the previous reporting period as stated below: 2023 2024 2025 2026 2027 Thereafter Total Long-term bank loans 113$ 316$ -$ -$ -$ -$ 429$ Finance lease obligations 1,353 1,124 988 800 655 867 5,787 Loans with non-financial entities 9,579 - - - - - 9,579 Trade and other payables 4,286 - - - - - 4,286 Due to related parties 1,661 - - - - - 1,661 Total 16,992$ 1,440$ 988$ 800$ 655$ 867$ 21,742$ Fair value measurement methods: The methods and valuation techniques used for the purposes of measuring fair value are unchanged from the previous reporting period. Measurement methods for financial assets and liabilities accounted for at amortized cost are described below. The carrying amount of trade and other receivables, cash and cash equivalents, and trade and other payables is considered a reasonable approximation of fair value. The fair value of borrowings has been estimated at amortized cost. Financial assets at FVTPL: Financial assets at FVTPL include holding in a diversified investment fund with most of the positions in gold and listed equity securities. The Group accounts for the investment at FVTPL and did not make the irrevocable election to account for it at FVOCI. The fair value was $127,000 as of December 31, 2023 (2022 - $112,000). Agility Real Estate | Annual Report 202 3 107 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 27. CAPITAL MANAGEMENT POLICIES AND PROCEDURES The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Group monitors capital on the basis of its leverage ratio. This ratio is calculated as net debt divided by EBITDA. 2023 2022 The leverage ratios at December 31, 2023 and 2022 were as follows: Total borrowings and finance lease obligations (Note 17 and 22) 10,958$ 13,176$ Less: Cash and cash equivalents and Restricted cash (4,194) (6,780) Less: Accrued interest (370) (529) Net Debt 6,394$ 5,867$ Operating profit from continuing operations before other gain and loss items 1,655 2,431 Add: Depreciation and amortization 1,077 1,192 EBITDA 2,732$ 3,623$ Leverage ratio 2.34 1.62 28. INVESTMENT IN JOINT VENTURE The Group has a material joint venture in a Costa Rican company, King Lion Network, S.A. (“KLN”). Name of the joint venture Country of incorporation and principal place of business Principal activity Proportion of ownership held by the Group 2023 2022 King Lion Network, S.A. Costa Rica Land Company 50% 50% Agility Real Estate | Annual Report 202 3 108 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors The investments in the Costa Rica joint venture is accounted for using the equity method in accordance with IAS 28. A reconciliation of the financial information above to the carrying amount of the investment in the Group’s Costa Rica joint venture is set out below: 2023 2022 Current assets 9,737$ 8,520$ Total assets 9,737 8,520 Current liabilities (4,248) (4,155) Total liabilities (4,248) (4,155) Total net assets 5,489 4,365 Proportion of ownership interest held by Group 50% 50% Carrying amount of investment in joint venture 2,745 2,183 Financial statements for the Group’s Costa Rica joint venture is as follows: 2023 2022 Profit / (loss) for the period 484 186 Proportion of ownership interest held by Group 50% 50% Group's share of loss for the period $ 242 $ 93 Agility Real Estate | Annual Report 202 3 109 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 29. PRINCIPAL SUBSIDIARIES The Group owns directly or indirectly the following companies. The principal operations are carried out in the country of registration; all subsidiaries have a December 31 year-end. The Group comprises a large number of companies and it is not practical to list all of them below. This list therefore includes those companies which the Directors consider principally affect the results or financial position of the Group. The following is a table of our organizational structure of material subsidiaries, including our effective record ownership structure as of December 31, 2023: Name of subsidiary Jurisdiction of formation Effective ownership interest Thunderbird Entertainment, S.A, Panama 100% Thunderbird Greeley, Inc. California 100% Total Gaming, Inc. California 100% Thunderbird Hoteles Las Americas S.A. Peru 100% Buena Esperanza Limitada S.A. Nicaragua 55.9 % (indirect) Camino Real (BVI) Investments Ltd. British Virgin Islands 100% International Thunderbird (BVI) Ltd. British Virgin Islands 100% International Thunderbird Brazil (BVI) Ltd. British Virgin Islands 100% The Group includes a subsidiary, Buena Esperanza Limitada, S.A. (“BELSA”), with material non- controlling interest (“NCI”): Name Country of incorporation and principal place of business Principal activity Proportion of ownership held by the NCI 2023 2022 Buena Ezperanza Limitada, S.A. ("BELSA") Nicaragua Gaming 44.10% 44.10% Dividends of $779,000 were paid to the NCI of BELSA during the year 2023 and $962,000 in 2022. Agility Real Estate | Annual Report 202 3 110 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors Summarized financial information for BELSA, before intragroup eliminations, is set out below: (in thousands) 2023 2022 Non-current assets 7,413$ 7,143$ Current assets 2,624 2,635 Total assets 10,037 9,778 Non-current liabilities (3,454) (3,928) Current liabilities (3,481) (3,426) Total liabilities (6,935) (7,354) Equity attributable to the owners of the parent 1,370 677 Non-controlling interest 1,732 1,747 BELSA (in thousands) 2023 2022 Revenue 14,621$ 13,461$ Profit / (Loss) for the year attributable to the owners of the parent 928 609 Profit / (Loss) for the year attributable to NCI 732 481 Profit / (Loss) for the year 1,660 1,090 Other comprehensive income for the year attributable to the owners of the parent 72 50 Other comprehensive income for the year for the year attributable to NCI 33 - Other comprehensive income for the year 105 50 BELSA 2023 2022 Net cash from operating activities $ 3,232 $ 3,057 Net cash used in investing activities (850) (527) Net cash (used in) from financing activities (2,376) (2,419) Effect of foreign exchange adjustment (24) (42) BELSA Agility Real Estate | Annual Report 202 3 111 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors 30. OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES As at December 31, 2023, operating, general and administrative expenses consist of the following: 2023 2022 Wages and benefits 3,966 3,267 Office and administration 1,837 1,699 Professional services 959 1,013 Directors fees 48 48 Travel and accomodations 23 35 Advertising, promotion and marketing 289 137 Rent expenses 32 149 Insurance 118 91 Repair and maintenance 484 363 Bank charges 331 302 Taxes and licences 341 275 Total 8,428$ 7,379$ 31. SUBSEQUENT EVENTS These are the material events to disclose from December 31, 2023 through the release of this 2023 Annual Report. ● The Group had its Annual General Meeting on January 31, 2024, in which shareholders approved: 1) Stephan Fitch, Reto Stadelmann and Salomon Guggenheim re-elected as directors; and 2) The change of name of the Company from Thunderbird Resorts, Inc. to Agility Real Estate Inc. ● Post the Shareholders Assembly, the Board of Directors named Peter LeSar as Chief Executive Officer, and Chief Financial Officer and named Yazmina Escobar as General Counsel and Corporate Secretary of the Group. Salomon Guggenheim was named Executive Chairman of the Board of Directors. ● The legal name of the entity was duly approved in the Public Registry of the British Virgin Islands on April 18, 2024 and the symbol at Euronext change from TBIRD to AGIL on April 22, 2024. Agility Real Estate | Annual Report 202 3 112 Chapter 7: 2023 Consolidated Financial Statements & Report of the Independent Auditors ● In Q2 2024, the Group has made the decision to convert its 6,703 m2 of offices into 71 condominium apartments to commence pre-selling in this Q2 2024: As of the publication of this 2023 Annual Report, we have secured master plan permits that allow the Group to begin to pre-sell units. We are now working on final construction plans. The development continues to have active office tenants, but we foresee terminating all leases within 2024 and commencing construction to convert the offices into condominiums in early 2025. The construction budget is currently forecasted to be approximately $3 million, the value of to- be-sold property to be approximately $12 million and for the project to be fully delivered and sold in 2026. All estimates are subject to further work and analysis. The Group will keep shareholders apprised. Agility Real Estate | Annual Report 202 3 113 Chapter 8: Risk Factors Chapter 8: Risk Factors Agility Real Estate | Annual Report 202 3 114 Chapter 8: Risk Factors Summary of Risk Factors: Prospective investors in Thunderbird Resorts Inc. should consider the risks described below associated with our business. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. Although we believe that the risks set forth below are our material risks, they are not the only risks we face. Additional risks not presently known to us or that we currently deem immaterial may also have an effect on us and the value of our common shares. An investment in our Group may not be suitable for all recipients of our Annual Report. Risks Associated with our Business: The gaming and hospitality industries and the markets in which we compete are highly competitive, and we expect competition to intensify. If our competitors operate more successfully than us, if their properties are enhanced or expanded, if their properties offer gaming, lodging, entertainment or other experiences that are perceived to be of better quality and/or value than ours, or if additional gaming or hospitality facilities are established in and around locations in which we conduct business, we may lose market share. In particular, the expansion of casino gaming (especially major market- style gaming) by our competitors in or near any geographic area from which we attract or expect to attract a significant number of our patrons could have a material adverse effect on our business, financial condition and results of operations. Our competitors vary considerably by their size, quality of facilities, number of operations, number of gaming tables and slot machines, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity, and many of our competitors have significantly greater resources than we do. Many international hotel companies are present in the markets where we have hospitality properties. Likewise, many casino operators are present in the markets where we have casinos and other gaming and entertainment venues. We also compete with other non-gaming resorts and vacation areas, and with various other entertainment businesses. We expect that competition in our existing markets will intensify. The expansion of existing casino and video entertainment properties and the increase in the number of such properties in many of our markets, as well as the aggressive marketing strategies of many of our competitors, have increased the competitive pressures on our operations. If we cannot effectively compete in a market, it will have a material adverse effect on our business, financial position, or results of operations. Unfavorable changes in general economic conditions, including recession or economic slowdown, or higher fuel or other transportation costs, may reduce disposable income of casino and hotel patrons, or result in fewer patrons visiting casinos or hotels, as well as reduced play levels. As our properties are located in Central and South America, we would be especially affected by economic downturns affecting those regions; however, economic difficulties in other regions may affect our expansion plans, as well as our ability to raise capital. In addition to general economic and business risks, our gaming and hospitality operations are affected by a number of factors beyond our control, including: downturn or loss in popularity of the gaming industry in general, and table and slot games in particular; the relative popularity of entertainment alternatives to casino gaming; the growth and number of legalized gaming jurisdictions; local conditions in key gaming markets, including seasonal and weather-related factors; increases in taxes or fees; the level of new casino construction and renovation schedules of existing casinos; competitive conditions in the gaming industry and in particular gaming markets; decreases in the level of demand for rooms and related services; over-building (cyclical and otherwise) in the hotel industry; restrictive changes in zoning and similar land use laws and regulations, or in health, safety and environmental laws, rules and regulations; the inability to obtain property and liability insurance fully to protect against all losses or to obtain such insurance at reasonable rates; changes in travel patterns; changes in operating costs, including energy, labor costs (including minimum wage increases and unionization), workers’ compensation and health-care related costs and insurance; changes in desirability of our existing markets’ geographic regions; and inflation-driven cost increases that cannot be fully offset with revenue increases. Agility Real Estate | Annual Report 202 3 115 Chapter 8: Risk Factors Any of these risks could have a material adverse effect on our business, financial position, or results of operations. Development Risks: The development and construction of hotels, casinos and other gaming and entertainment venues, and the expansion of existing properties, are susceptible to delays, cost overruns and other uncertainties, any of which could have an adverse effect on our business, financial condition, and results of operations. Our business strategy may contemplate future development and construction of casinos and other gaming and entertainment venues, as well as the expansion of our existing properties. All such projects are susceptible to various risks and uncertainties. Our failure to complete any new development or expansion project as planned, on schedule and within budget, could have a material, adverse effect on our business, financial condition, and results of operations. In addition, once a project is completed, we cannot assure you that we will be able to manage that project on a profitable basis or to attract a sufficient number of guests, gaming customers and other visitors to make it profitable. Mergers & Acquisitions: Any future mergers and acquisitions could prove difficult to integrate, disrupt our business, dilute shareholder value, and strain our resources. As part of our business strategy, we intend to continue to seek to acquire businesses and properties that we believe could complement or expand our business or otherwise offer growth opportunities. Any future acquisitions will involve numerous risks, including: difficulties in integrating operations, technologies, services, accounting and personnel; difficulties in supporting and transitioning customers of our acquired companies to our technology platforms and business processes; diversion of financial and management resources from existing operations; difficulties in obtaining regulatory approvals and permits for the acquisition; and the inability to generate sufficient revenues to offset acquisition or investment costs. Acquisitions also frequently result in recording of goodwill and other intangible assets, which are subject to potential impairments in the future that could have a material, adverse effect on our operating results. Furthermore, the costs of integrating acquired businesses (including restructuring charges associated with the acquisitions, as well as other acquisition costs, such as accounting, legal and investment banking fees) could significantly impact our operating results. Although we perform diligence on the businesses we purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual condition of these businesses. We may not be able to ascertain the value or understand the potential liabilities of the acquired businesses and their operations until we assume operating control of the assets and operations of these businesses. Once we acquire a business, we are faced with risks, including the following: the possibility that we have acquired substantial undisclosed liabilities; the need for further regulatory approvals; the risks of entering markets in which we have limited or no prior experience; and the possibility that we may be unable to recruit additional managers with the necessary skills to supplement the management of the acquired businesses. If we are unsuccessful in overcoming these risks, our business, financial condition, or results of operations could be materially and adversely affected. Risks to Cash Flow and Access to Capital: Our cash flow from operations and available credit may not be sufficient to meet our planned capital requirements and, as a result, we could be dependent upon future financing, which may not be available on acceptable terms, or at all. Our businesses are, and our planned growth and expansions may be, capital-intensive. Historically, we have not generated sufficient cash flow Agility Real Estate | Annual Report 202 3 116 Chapter 8: Risk Factors from operations to satisfy our capital requirements and have relied on debt and equity financing arrangements to satisfy such requirements. Should such financing arrangements be required but unavailable in the future, this will pose a significant risk to our ability to execute on our growth and expansion strategy, as well as to our cash requirements. There can be no assurance that future financing arrangements will be available on acceptable terms, or at all. We may not be able to obtain additional capital to fund currently planned projects or to take advantage of future opportunities or respond to changing demands of customers and competitors. Our planned projects and acquisitions that we may develop in the future will require significant capital. Although we intend to finance any such projects or acquisitions partially with debt financing, we do not have any financing commitments for all planned project debt financing and the financing commitments available to us are subject to a number of conditions, which may not be met. We may not be able to obtain any such financing on reasonable terms, or at all. The failure to obtain such financing could adversely affect our ability to construct any particular project, or reduce the profitability of such project. In addition, the failure to obtain such financing could result in potentially dilutive issuances of equity securities, guarantees of third party-debt, the incurrence of contingent liabilities and, an increase in amortization expenses related to goodwill and other intangible assets, any of which could have a material, adverse effect on our business, financial condition, or results of operations. Furthermore, an increase in the general levels of interest rates, or those rates available to us, would make it more expensive to finance our operations and proposed investments. Increases in interest rates could also make it more difficult to locate and consummate investments that meet our profitability requirements. In addition, we will be required to repay borrowings from time to time, which may require such borrowings to be refinanced. Many factors, including circumstances beyond our control, such as changes in interest rates, conditions in the banking market and general economic conditions, may make it difficult for us to obtain such new financing on attractive terms or even at all. Market Risks: Our business is international; accordingly, it is subject to political and economic risks. We own and operate, and may develop, own and operate, hotels, casinos and other gaming and entertainment venues in Central America and South America. Our existing and planned business, as well as our results of operations and financial condition, may be materially and adversely affected by significant political, social, and economic developments in these areas of the world and by changes in policies of the applicable governments or changes in laws and regulations or the interpretations thereof. Our current operations are also exposed to the risk of changes in laws and policies that govern operations of gaming companies. Tax laws and regulations may also be subject to amendment or different interpretation and implementation, thereby adversely affecting our profitability after tax. These changes may have a material, adverse effect on our business, financial position, or results of operations. The general economic conditions and policies in these countries could also have a significant impact on our financial prospects. Any slowdown in economic growth could reduce the number of visitors to our hotel and casino operations or the amount of money these visitors are willing to spend. International operations, generally, are subject to various political and other risks, including, among other things: war or civil unrest, expropriation and nationalization; costs to comply with laws of multiple jurisdictions; changes in a specific country’s or region’s political or economic conditions; tariffs and other trade protection measures; currency fluctuations; import or export licensing requirements; changes in tax laws; political or economic instability in local or international markets; difficulty in staffing and managing widespread operations; changing labor regulations; restrictions on our ability to own or operate subsidiaries, make investments or acquire new businesses in these jurisdictions; and restrictions on our ability to repatriate dividends from our subsidiaries. Government Regulatory Risk: We are subject to extensive governmental regulation. The gaming industry is highly regulated and we must maintain our licenses, registrations, approvals and permits in order to Agility Real Estate | Annual Report 202 3 117 Chapter 8: Risk Factors continue our gaming operations. Our gaming operations are subject to extensive regulation under the laws, rules and regulations of the jurisdiction where they are located. These laws, rules and regulations often concern the responsibility, financial stability, and character of the owners, managers, and persons with financial interests in the gaming operations. Certain jurisdictions empower their regulators to investigate participation by licensees in gaming outside of their jurisdiction and require access to, and periodic reports concerning, the gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. Regulatory authorities often have broad powers with respect to the licensing of gaming operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines, and take other actions, any one of which could have a material adverse effect on our business, financial condition, and results of operations. We also are responsible for the acts and conduct of our employees on the premises. Substantial fines or forfeiture of assets for violations of gaming laws or regulations may be levied against us, our subsidiaries, and the persons involved. We must periodically apply to renew our gaming licenses. We cannot assure you that we will be able to obtain such renewals. In addition, if we expand our gaming operations in the jurisdictions in which we currently operate or into new jurisdictions, we will have to meet suitability requirements and obtain additional licenses, registrations, permits and approvals from gaming authorities in these jurisdictions. The approval process can be time- consuming and costly and there is no assurance that we will be successful. In addition, regulatory authorities in certain jurisdictions must approve, in advance, any restrictions on transfers of, agreements not to encumber, or pledges of equity securities issued by an entity that is registered as an intermediary company with such jurisdiction, or holds a gaming license. If these restrictions are not approved in advance, they will be invalid. Although we believe that our organizational structure and operations are in compliance with all applicable laws and regulations where we operate, these laws and regulations are complex and a court or an administrative or regulatory body may in the future render an interpretation of these laws and regulations, or issue new regulations that differ from our interpretation, which could have a material adverse effect on business, financial condition, or results of operations. From time to time, legislators and special interest groups have proposed legislation that would expand, restrict, or prevent gaming operations in the jurisdictions in which we operate. In addition, from time to time, certain anti-gaming groups propose referenda that, if adopted, would limit our ability to continue to operate in those jurisdictions in which such referenda are adopted. Any expansion of permitted gaming or any restriction on, or prohibition of, our gaming operations could have a material, adverse effect on our operating results. From time to time, country, state and local governments have considered increasing the taxes on gaming revenues or profits. We cannot assure you that such increases will not be imposed in the future. Any such increases could have a material, adverse effect on our business, financial condition, or results of operations. In addition to gaming regulations, we are subject to various other federal, state, and local laws and regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could have a material, adverse effect on our business, financial condition, and results of operations. We cannot assure you that we will be able to comply with, or conduct business in accordance with, applicable regulations. Public Opinion Risk: The gaming industry is sensitive to declines in the public acceptance of gaming. Public opinion can negatively affect the gaming industry and our future performance. If there is a decline in public acceptance of gaming, this may affect our ability to do business in some markets, either through unfavorable legislation affecting the introduction of gaming into emerging markets, or through legislative and regulatory changes in existing gaming markets which may adversely affect our ability to continue to Agility Real Estate | Annual Report 202 3 118 Chapter 8: Risk Factors own and operate our gaming operations in those jurisdictions, or through resulting reduced casino patronage. We cannot assure you that the level of support for legalized gaming or the public use of leisure money in gaming activities will not decline. Risks to Shareholders: Certain holders of our common shares are subject to certain requirements of the gaming laws of some jurisdictions in which we are licensed. In such a situation it is possible that the regulators would require significant information about that shareholder and its assets and operations and, if the regulators were to determine that that shareholder is unsuitable, it could revoke our gaming license unless that shareholder divested some or all of its common shares. Risks to Pledged Shares and/or Assets: If we default under certain agreements, we could forfeit our pledged equity interest in certain subsidiaries and/or certain assets. Risks of Local Investors: We own many of our properties through entities that are partly owned by local companies or individuals. Accordingly, maintaining good personal and professional relationships with our local partners is critical to our proposed and future operations. Changes in management of our local partners, changes in policies to which our local partners are subject, or other factors that may lead to the deterioration of our relationship with a local partner may have a material adverse effect on our business, financial position, or results of operations. Our joint venture investments involve risks, such as the possibility that the local partner might become bankrupt or not have the financial resources to meet its obligations, or may have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. Our local partners often have shared control over, or certain veto rights with respect to, the operation of the local facilities. Therefore, we may be unable to take certain actions without the approval of our local partners. Disputes between us and local partners may result in litigation or arbitration that would increase our expenses and prevent our officers, directors, and employees from focusing their time and efforts on our business. Consequently, actions or disputes with local partners might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our local partners. We may not be able to find acceptable local partners, or enter into acceptable arrangements with local partners, which could limit our ability to expand into new markets. Our business strategy contemplates forming and maintaining relationships with local partners. We cannot assure you that we will be able to identify the best local partners or maintain our relationships with existing local partners, or enter into new arrangements with other local partners on acceptable terms, or at all. The failure to maintain or establish such relationships could have a material adverse effect on our business, financial position, or results of operations. In addition, the terms of our local partner agreements are influenced by contract terms offered by our competitors, among other things. We cannot assure you that any of our current arrangements with our local partners will continue, or that we will be able to renew our local partnerships, or enter into new local partnerships, on terms that are as favorable to us as those that exist today. Conflicts may arise between us and our local partners, such as conflicts concerning joint venture governance or economics, or the distribution or reinvestment of profits. Any such disagreement between us and a local partner could result in one or more of the following, each of which could harm our reputation or have a material, adverse effect on our business, financial position, or results of operations: unwillingness on the part of a local partner to (i) pay us amounts or render us services we believe are due to us under our arrangement; (ii) to keep us informed regarding the progress of its development and community relationship activities; or (iii) early termination or non-renewal of the relationship. Agility Real Estate | Annual Report 202 3 119 Chapter 8: Risk Factors Risks of Losing Key Personnel: Our ability to maintain our competitive position is dependent, to a large degree on the services of our senior management team. However, we cannot assure you that any of these individuals will remain with us, or that we would be able to attract and hire suitable replacements in the event of any such loss of services. The death or loss of the services of any of our senior managers or the inability to attract and retain additional senior management personnel could have a material, adverse effect on our business, including our ability to raise additional capital. Tax Risk: We may be subject to certain tax liabilities in connection with our operations. See Note 23 to the Financial Statements. Litigation Risk: We may be involved in legal and tax claims from time to time. Some of the litigation claims may not be covered under our insurance policies or our insurance carriers may seek to deny coverage. As a result, we might be required to incur significant legal fees, which may have a material adverse impact on our financial position. In addition, because we cannot predict the outcome of any action, it is possible that, as a result of current and/or future litigation, we will be subject to adverse judgments or settlements that could significantly reduce our earnings or result in losses. Please see Notes 18 and 23 of the financial statements for a description of our current material litigation. Acts of God: Our properties may be affected by acts of God, such as natural disasters, particularly in locations where we own and/or operate significant properties. Some types of losses, such as those from earthquake, hurricane, terrorism, and environmental hazards, may be either uninsurable or too expensive to justify insuring against. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Similarly, war (including the potential for war), political unrest, other forms of civil strife, terrorist activity (including threats of terrorist activity), epidemics (such as SARS and bird flu), travel-related accidents, as well as geopolitical uncertainty and international conflict, which impact domestic and international travel, may cause our results to differ materially from anticipated results. In addition, inadequate preparedness, contingency planning, or recovery capability in relation to a major incident or crisis may prevent operational continuity and consequently impact our business, financial position, or results of operations. Although we have all-risk property insurance for our properties covering damage caused by a casualty loss (such as fire and natural disasters), each such policy has certain exclusions. Our level of insurance coverage for our properties may not be adequate to cover all losses in the event of a major casualty. In addition, certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations, or conventions due to fear of terrorism, deterioration or corrosion, insect or animal damage and pollution, might not be covered at all under our policies. Therefore, certain acts could expose us to heavy, uninsured losses. In addition, although we currently have certain insurance coverage for occurrences of terrorist acts and certain losses that could result from these acts, our terrorism coverage is subject to the same risks and deficiencies as those described above for our all-risk property coverage. The lack of sufficient insurance for these types of acts could expose us to heavy losses in the event that any damages occur, directly or indirectly, as a result of terrorist attacks, which could have a significant negative impact on our operations. In addition to the damage caused to our property by a casualty loss (such as fire, natural disasters, acts of war or terrorism), we may suffer disruption of our business as a result of these events, or be subject to claims by third parties injured or harmed. While we carry business interruption insurance and general liability insurance, such insurance may not be adequate to cover all losses in such event. We renew our insurance policies on an annual basis. The cost of coverage may become so high that we may need to further reduce our policy limits or agree to certain exclusions Agility Real Estate | Annual Report 202 3 120 Chapter 8: Risk Factors from our coverage. Among other potential future adverse changes, in the future we may elect to not, or may not be able to, obtain any coverage for losses due to acts of terrorism. Management Risks: We derive our revenue from operations located in multiple countries and expect to further expand our business. As a result of long distances, different cultures, management and language differences, our operations pose risks to our business. These factors make it more challenging to manage and administer a dispersed business and increase the resources necessary to operate under several different regulatory and legislative regimes. Technology Risks: We use sophisticated information technologies and systems that are interconnected through the Internet. Any disaster, disruption or other impairment in our technology capabilities could harm our business. Our information technology system is vulnerable to damage or interruption from: earthquakes, fires, typhoons, floods, and other natural disasters; power losses, computer systems failures, internet, and telecommunications or data network failures, operator negligence, improper operation by or supervision of employees, physical and electronic losses of data, and similar events; and computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information, and other breaches of security. We rely on our systems to perform functions critical to our ability to operate, including our central reservation systems. Accordingly, an extended interruption in system’s functions could significantly curtail, directly and indirectly, our ability to conduct our business and generate revenue. In addition, if a breach of security were to occur, it could cause interruptions in our communications and loss or theft of data. To the extent our activities involve the storage and transmission of information, such as credit card numbers, security breaches could damage our reputation and expose us to a risk of loss or litigation, and possible liability. Our insurance policies might not be sufficient to reimburse us for losses caused by such security breaches. Further, the development and maintenance of these technologies may require significant capital. There can be no assurance that as various systems and technologies become outdated or new technology is required, we will be able to replace or introduce them as quickly as our competition, or within budgeted costs and timeframes for such technology. Further, there can be no assurance that we will achieve the benefits that may have been anticipated from any new technology or system. Demand Risks: Our properties must offer themes, products and services that appeal to potential customers. We may not anticipate or react quickly enough to any significant changes in customer preferences, such as jackpot fatigue (declining play levels on smaller jackpots) or the emergence of a popular gaming option provided by our competitors, or hotel amenities supplied by our competitors. In addition, general changes in consumer behavior, such as redirection of entertainment dollars to other venues or reduced travel activity, could materially affect our business, financial position and results of operations. Fraud Risks: We incorporate security features into the design of our gaming operations designed to prevent us and our patrons from being defrauded. However, we cannot assure you that such security features will continue to be effective in the future. If our security systems fail to prevent fraud, our business, financial position, or results of operations could be adversely affected and our brand could suffer. Marketing & Promotions Risks: We intend to promote the brands that we own and operate to differentiate ourselves from our competitors and to build goodwill with our customers. These promotional efforts may require substantial expenditures on our part. However, our efforts may be unsuccessful and these brands may not provide the competitive advantage that we anticipate, in which case we would not realize the expected benefits from our expenditures related to our brands. Agility Real Estate | Annual Report 202 3 121 Chapter 8: Risk Factors Holding Company Risks: We are a holding company with no material business operations of our own. Our only significant asset is the capital stock of our subsidiaries and joint ventures. We conduct virtually all of our business operations through our direct and indirect subsidiaries, and joint ventures. Accordingly, our only material sources of cash are dividends and distributions with respect to our ownership interests in our subsidiaries and joint ventures and management fees paid to us by certain of our joint ventures, all of which are dependent on the earnings and cash flow generated by the operating properties owned by our subsidiaries and joint ventures. Our subsidiaries and joint ventures might not generate sufficient earnings and cash flow to pay dividends or distributions in the future. In addition, our subsidiaries’ and joint ventures’ debt instruments and other agreements may from time to time limit or prohibit certain payment of dividends or other distributions to us. Risks Associated with Real Estate: Our business strategy contemplates our ownership of significant amounts of real estate, which investments are subject to varying degrees of risk. Real estate values are affected by a variety of other factors, such as governmental regulations and applicable laws (including real estate, zoning, tax and eminent domain laws), interest rate levels, and the availability of financing. For example, existing or new real estate, zoning or tax laws can make it more expensive and/or time consuming to develop real estate or expand, modify or renovate hotels. Governments can, under eminent domain laws, take real estate, sometimes for less compensation than the owner believes the estate is worth. When prevailing interest rates increase, the expense of acquiring, developing, expanding or renovating real estate increases, and values decrease as it becomes more difficult to sell estates because the number of potential buyers decreases. Similarly, as financing becomes less available, it becomes more difficult both to acquire real estate and, because of the diminished number of potential buyers, to sell real estate. Any of these factors could have a material, adverse impact on our business, financial position, or results of operations. Ownership of real estate also exposes us to potential environmental liabilities. Environmental laws, ordinances and regulations of various governments regulate our properties and could make us liable for the costs of removing or cleaning up hazardous or toxic substances on, under, or in estates we currently own or operate, or that we previously owned or operated. These laws could impose liability without regard to whether we knew of, or were responsible for, the presence of hazardous or toxic substances. The presence of hazardous or toxic substances, or the failure to properly clean up such substances when present, could jeopardize our ability to develop, use, sell or rent the real estate or to borrow using the real estate as collateral. Other laws, ordinances and regulations could require us to manage, abate or remove lead or asbestos containing materials. Similarly, the operation and closure of storage tanks are often regulated by foreign laws. Certain laws, ordinances and regulations, particularly those governing the management or preservation of wetlands, coastal zones and threatened or endangered species, could limit our ability to develop, use, sell or rent our real estate. Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties in response to changing economic, financial, and investment conditions may be limited. The real estate market is affected by many factors that are beyond our control, including:  adverse changes in international, national, regional, and local economic and market conditions;  changes in interest rates and in the availability, cost, and terms of debt financing;  changes in governmental laws and regulations, fiscal policies and zoning ordinances, and the related costs of compliance with laws and regulations, fiscal policies, and ordinances;  the ongoing need for capital improvements, particularly in older structures;  changes in operating expenses; and  civil unrest, acts of God, including earthquakes, floods, and other natural disasters and acts of war or terrorism, which may result in uninsured losses. Agility Real Estate | Annual Report 202 3 122 Chapter 8: Risk Factors We may decide to sell one or more of our properties in the future. We cannot predict whether we will be able to sell any property for the price, or on the terms, set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also, cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. In addition, we may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. Foreign Currency Risks: As of December 31, 2023, the Group owned operating assets in Peru and Nicaragua and real estate assets in Costa Rica, Peru and Nicaragua. Therefore, certain of our expenses and revenues are and will be denominated in local currencies. A significant amount of our debt is denominated in dollars, and the costs associated with servicing and repaying such debt will be denominated in dollars. Additionally, our financial information is, and in the future will be, prepared in dollars. Any target business with which we pursue a business combination may denominate its financial information in a currency other than the dollar or conduct operations in a currency other than the dollar. Our sales in a currency other than dollars may subject us to currency translation risk. Exchange rate volatility could negatively impact our revenues or increase our expenses incurred in connection with operating a target business. Currency rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by local governments, central banks or supranational entities, or by the imposition of currency controls or other political developments. We are exposed to market risks from changes in foreign currency exchange rates, and any significant fluctuations in the exchange rates between local currencies against the dollar may have a material adverse effect on our operating results. Furthermore, the portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations. We have not used any forward contracts, futures, swaps, or currency borrowings to hedge our exposure to foreign currency risk. Risks to Ground Leases: We hold certain of our properties through leasehold interests in the land underlying the buildings and we may acquire additional properties in the future that are subject to similar ground leases. As the lessee under a ground lease, we are exposed to the possibility of losing the property upon termination, or an earlier breach by us, of the ground lease, which may have a material adverse effect on our business, financial condition, results of operations, our ability to make distributions to our shareholders, and price of our common shares. Risks Associated with our Common Shares: We may not be able to sustain a market for our shares, options and warrants on Euronext Amsterdam, which would adversely affect the liquidity and price of our shares, options and warrants. The price of the shares, options, and warrants after the admission to listing also can vary due to general economic conditions and forecasts, our general business condition, and the release of our financial reports. Although our current intention is to maintain a listing on Euronext Amsterdam, we cannot assure you that we will always do so. In addition, an active trading market for our shares on Euronext Amsterdam may not develop or, if developed, may not be maintained. You may be unable to sell your shares unless a market can be established and maintained, and if we subsequently obtain another listing on an exchange in addition to, or in lieu of, Euronext Amsterdam, the level of liquidity of your shares may decline. In addition, because a large percentage of Euronext Amsterdam’s market capitalization and trading volume is represented by a limited number of companies, fluctuations in the prices of those companies’ securities may have an effect on the market prices for the securities of other listed companies, including the price of our shares. Euronext Amsterdam may delist our securities, which could limit the ability of our Agility Real Estate | Annual Report 202 3 123 Chapter 8: Risk Factors shareholders to make transactions in our securities and subject us to additional trading restrictions. Although we have met the listing standards of Euronext Amsterdam on admission, and are currently listed and trading, we cannot assure you that our securities will continue to be listed on Euronext Amsterdam as we might not meet certain continued listing standards. If we are delisted, we may not be able to list on any other exchange that provides sufficient liquidity. Even if an active trading market for our common shares develops, the market price of those securities may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common shares may fluctuate and cause significant price variations to occur. If the market price of our common shares declines significantly, you may be unable to resell such common shares at or above your purchase price, if at all. We cannot assure you that the market price of our common shares will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our common shares or result in fluctuations in the price or trading volume of our common shares include: variations in our quarterly operating results; failure to meet earnings estimates; publication of research reports about us, other companies in our industry or the failure of securities analysts to cover our shares in the future; additions or departures of key management personnel; adverse market reaction to any indebtedness we may incur, or preferred or common shares we may issue in the future; changes in market valuations of similar companies; announcements by us or our competitors of significant contracts, acquisitions and dispositions; speculation in the press or investment community; changes or proposed changes in laws or regulations affecting the hotel, casino or gaming industries, or enforcement of these laws and regulations, or announcements relating to these matters; general market, political and economic conditions and local conditions in the markets in which our properties are located; and other risks identified in this Annual Report. Any market on which our common shares trade will from time-to-time experience extreme price and volume fluctuations. These market fluctuations could result in extreme volatility in the trading price of our common shares, which could cause a decline in the value of your investment. You should also be aware that price volatility may be greater if the public float and trading volume of our common shares are low. Risks from Options, and Promissory Notes Convertible into Common Stock: As of December 31, 2023, we have existing options and promissory notes convertible into common shares. The potential issuance of additional common shares on exercise of these options or the conversion of these promissory note into shares could make us a less attractive investment, if exercise of the options and conversion of notes into shares at prices below current market prices. If, and to the extent, these options are exercised or conversion occur, shareholders may experience dilution to their holdings. As of April 2023, we have 33,914,077 common shares outstanding. See Chapter 7 for more detail on the unexercised option and promissory note convertible into shares. We do not anticipate paying any dividends on our common shares in the foreseeable future: We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common shares, as we intend to use cash flow generated by operations to pay off our debt and expand our business. Our debt arrangements may also restrict our ability to pay cash dividends on our common shares, and we may also enter into credit agreements or other borrowing arrangements in the future that restrict our ability to declare or pay cash dividends on our common shares. Ownership in us may be diluted in the future: Your percentage ownership in us may be diluted in the future because of equity awards that we expect will be granted over time to our directors, officers, and employees. Additionally, our Board of Directors may issue common shares and preferred shares without shareholder Agility Real Estate | Annual Report 202 3 124 Chapter 8: Risk Factors approval, which may substantially dilute shareholder ownership interest and serve as an anti-takeover measure. Because the Group is a British Virgin Islands company, our shareholders’ rights may not be able to enforce judgments against us: We are incorporated under the laws of the British Virgin Islands. As a result, it may be difficult for investors to effect service of process upon us in other jurisdictions to enforce against us judgments obtained in other jurisdictions, including judgments predicated upon the civil liability provisions of the securities laws of other foreign jurisdictions. We have been advised by our British Virgin Islands counsel that judgments predicated upon the civil liability provisions of the securities laws of other jurisdictions may be difficult to enforce in British Virgin Islands courts and that there is doubt as to whether British Virgin Islands courts will enter judgments in original actions brought in British Virgin Islands courts predicated solely upon the civil liability provisions of the securities laws of other foreign jurisdictions. Because the Group is a British Virgin Islands company, our shareholders’ rights may be less clearly established as compared to the rights of shareholders of companies incorporated in other jurisdictions: Our corporate affairs are governed by our Memorandum of Association and Articles of Association and by the International Business Companies Act of the British Virgin Islands. Principles of law relating to such matters as the validity of corporate procedures, the fiduciary duties of management and the rights of our shareholders may differ from those that would apply if we were incorporated in another jurisdiction. The rights of shareholders under British Virgin Islands law are not as clearly established as are the rights of shareholders in many other jurisdictions. Thus, our shareholders may have more difficulty protecting their interests in the face of actions by our Board of Directors than they would have as shareholders of a corporation incorporated in another jurisdiction. Our governing documents and British Virgin Islands law contain provisions that may have the effect of delaying or preventing a change in control of us: Our Memorandum of Association authorizes our Board of Directors to issue up to 500 million preferred shares and to determine the powers, preferences, privileges, rights, including voting rights, qualifications, limitations and restrictions on those shares, without any further vote or action by the shareholders. The rights of the holders of our common shares will be subject to, and may be adversely affected by, the rights of the holders of any preferred shares that may be issued in the future. The issuance of preferred shares could delay, deter or prevent a change in control and could adversely affect the voting power or economic value of your shares. In addition, provisions of our governing documents and British Virgin Islands law, together or separately, could discourage potential acquisition proposals, delay or prevent a change in control, and limit the price that certain investors might be willing to pay in the future for our common shares. Among other things, these provisions provide that: our Directors may only be removed without cause by the vote of shareholders holding at least a two-thirds of our outstanding common shares; and our shareholders may only call a special meeting by delivering to our Board of Directors a request for a special meeting by shareholders holding 50% or more of our outstanding common shares. Although we believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics and thereby provide an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our Board of Directors, these provisions apply even if the offer may be considered beneficial by some shareholders. Further, these provisions may discourage potential acquisition proposals and may delay, deter, or prevent a change of control of our Group, including through unsolicited transactions that some or all of our shareholders might consider to be desirable. As a result, efforts by our shareholders to change our direction or our management may be unsuccessful. Agility Real Estate | Annual Report 202 3 125 Chapter 8: Risk Factors Future sales of securities could depress the price of our securities: Sales of a substantial number of shares of our securities, or the perception that a large number of our securities will be sold could depress the market price of our common shares. Our governing documents authorize us to issue up to 500,000,000 preferred shares and 500,000,000 common shares. We are subject to certain Canadian securities legislation, which may affect our shareholders: Our common shares ceased to be listed on the CNSX, however, we are a “reporting issuer” subject to certain securities laws of British Columbia, Ontario, and the Yukon Territory even though we elected to delist from the CNSX. Among other things, those laws require any 10% holder of a reporting issuer to file reports disclosing that holder’s direct or indirect beneficial ownership of, or control or direction over, securities of the reporting issuer, and any changes in that ownership. If they acquire 10% or more of our outstanding common shares, they will be required to file an “insider report form” within ten business days from the date their ownership exceeded 10%, and then within ten business days after any trades or other changes in their holdings of common shares. They would also be required to issue a press release and file a report every time they acquire an additional 2% or more of our common shares. If they acquire 20% or more of our outstanding common shares, they would be a “control person” of ours under those provincial securities laws. As such, they would be deemed to be not only knowledgeable about our affairs, but they would be deemed to have the ability, by virtue of their significant equity position, to direct our affairs. Thereafter, any sale by them of common shares would be deemed under provincial law to be a distribution, requiring the filing of an Annual Report and compliance with other securities disclosure laws. In addition, if a shareholder acquires 20% or more of our common shares, they will be deemed under provincial securities laws to have made a “take-over bid” and, accordingly, unless they can obtain an exemption, they would be required to comply with detailed rules governing bids. 20% holders are also required to file insider reports within three calendar days versus the normal ten-day requirement that applies to all other parties required to file insider reports. They must also file personal information forms with the applicable securities commissions and Canadian exchange where the shares are posted for trading. The provincial securities commissions and the CNSX have the right to veto the individual or entity from remaining an insider or control person if the individual or entity is deemed unsuitable to be involved in the Canadian public markets. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common shares: At any time, the federal, state, local or foreign tax laws or regulations or the administrative or judicial interpretations of those laws or regulations may be changed or amended. We cannot predict when or if any new federal, state, local or foreign tax law, regulation or administrative or judicial interpretation, or any amendment to any existing tax law, regulation or administrative or judicial interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in, or any new tax law, regulation or administrative or judicial interpretation. We may be subject to certain tax liabilities in Canada in connection with our emigration from Canada and continuing our charter under the laws of the British Virgin Islands: In 2006, we filed “discontinuation documents” with the Yukon, Canada Registrar and continued our charter under the laws of the British Virgin Islands. In connection with this change we could be subject to certain Canadian tax liabilities associated with our deemed disposition of the assets and a deemed dividend calculated by us under Canadian tax laws. We determined we had no tax charges associated with our emigration from Canada. Although we believe the position we have taken in the submitted tax return was appropriate for determining any potential tax liabilities, there is no assurance that the Canadian tax authorities will not challenge the Agility Real Estate | Annual Report 202 3 126 Chapter 8: Risk Factors position to calculate the potential tax liability, which could result in us being subject to additional Canadian taxes. ERISA plan risks may limit our potential investor base: The U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 4975 of the U.S. Internal Revenue Code prohibit certain transactions that involve (1) certain pension, profit-sharing, employee benefit, or retirement plans or individual retirement accounts (as well as certain entities that hold assets of such arrangements as described below) and (2) any person who is a “party-in-interest” or “disqualified person” with respect to such a plan. Consequently, the fiduciary of a plan contemplating an investment in our common shares should consider whether we, any other person associated with the issuance of our common shares or any of their affiliates is or might become a “party-in-interest” or “disqualified person” with respect to the plan and, if so, whether an exemption from such prohibited transaction rules is applicable. In addition, the Department of Labor Plan Asset Regulations provide that, subject to certain exceptions, the assets of an entity in which a plan holds an equity interest may be treated as assets of an investing plan, in which event the underlying assets of such entity (and transactions involving such assets) would be subject to the prohibited transaction provisions and we could be subject to the prudence and other fiduciary standards of ERISA, which could materially and adversely affect our operations. We intend to take such steps so that we should qualify for one or more of the exceptions available and, thereby, prevent our assets from being treated as assets of any investing plan. However, there can be no assurance that we will be able to meet any of these exceptions. Cautionary Note Concerning Forward Looking Statements: Various statements contained in this Annual Report, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward looking statements. We use words such as “believe,” “intend,” “expect,” “anticipate,” “forecast,” “plan,” “may,” “will,” “could,” “should” and similar expressions to identify forward looking statements. The forward looking statements in this Annual Report speak only as of the date of this Annual Report and are expressly qualified in their entirety by these cautionary statements. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible to predict all of them. We disclaim any obligation to update these statements, and we caution our shareholders not to rely on them unduly. Our shareholders are cautioned that any such forward looking statements are not guarantees of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global, political, economic, business, competitive, market, and regulatory conditions as well as, but not limited to, the risk factors described in this Section. These risks and others described under the heading “Risk Factors” are not exhaustive. IMPORTANT INFORMATION This is Thunderbird Resorts Inc.’s 2023 Annual Report for the period ended December 31, 2023. Thunderbird Resorts Inc. is a designated foreign issuer with respect to Canadian securities regulations and this 2023 Annual Report is intended to comply with the rules and regulations for the Euronext Amsterdam by Euronext Amsterdam, the regulated market of the Euronext Amsterdam N.V. and with Canadian securities laws. No person has been authorized to give any information or to make any representation other than those contained in this 2023 Annual Report and, if given or made, such information or representations must not be relied upon as having been authorized by us. This 2023 Annual Report does not constitute an offer to sell or a solicitation of an offer to buy any securities. The delivery of this 2023 Annual Report shall not Agility Real Estate | Annual Report 202 3 127 Chapter 8: Risk Factors under any circumstances, create any implication that there has been no change in our affairs or that information contained herein is correct as of any time subsequent to the date hereof. Thunderbird Resorts Inc. accepts responsibility for the information contained in this 2023 Annual Report. To the best of our knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this 2023 Annual Report is in accordance with the facts and does not omit anything likely to affect the import of such information. The information included in this 2023 Annual Report reflects our position at the date of this Annual Report and under no circumstances should the issue and distribution of this 2023 Annual Report after the date of its publication be interpreted as implying that the information included herein will continue to be correct and complete at any later date. Thunderbird Resorts Inc. has adopted the U.S. Dollar (“USD”) as its reporting currency. As required by EU regulation, Thunderbird Resorts Inc.’s interim financial statements have been prepared in accordance with international financial reporting standards (“IFRS”) and interim financial statements IAS 34. Agility Real Estate | Annual Report 202 3 128 Corporate Office CORPORATE OFFICE Apartado 0823-00514 Panama, Republic of Panama Tel: (507) 223-1234 Fax: (507) 223-0864 DIRECTORS Salomon Guggenheim, Zurich, Switzerland Reto Stadelmann, Switzerland Stephan Fitch, United Kingdom AUDITOR Baker Tilly Curacao Snipweg 30 Willemstad Curacao OFFICERS Salomon Guggenheim, BOD Chairman and President Peter LeSar, Chief Executive and Chief Financial Officer Albert W. Atallah, General Counsel and Secretary TRANSFER AGENT Computershare 510 Burrard Street, 3 rd Floor Vancouver, BC V6C 3B9, Canada CAPITALIZATION Common shares issued: 33,914,077 (as of April 30 , 202 4 ) REGISTERED AND RECORD OFFICE FOR SERVICE IN BRITISH VIRGIN ISLANDS Icaza, Gonzalez-Ruiz & Aleman (BVI) Trust Limited Tortola Pier Park, Building 1, Second Floor Wickhams Cay 1, Road Town, Tortola British Virgin Islands SHARES LISTED Euronext Amsterdam Common Stock Symbol: AGIL WEBSITE www.agility.realestate