Corestate Capital Holding S.A.

Corestate Capital Holding S.A. 51 TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION PRELIMINARY REMARKS The management report and consolidated ﬁnancial statements of Corestate Capital Holding S.A. (hereinafter “Corestate” or “the Company”) cover the reporting period from 01 January 2021 until 31 December 2021, unless otherwise indicated. Information on market and product offering developments pertains to 2021 as well, unless otherwise indicated. The 2021 ﬁnancial statements have been subject to an external audit by Ernst & Young Luxembourg. Certain statements contained herein may be statements of future expectations and/or other forward-looking statements that are based on our current views and assumptions. These involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those expressed or implied in such statements. Corestate does not intend and does not undertake any obligation to revise these forward-looking statements. CORESTATE – ANNUAL REPORT 2021 52 TO OUR SHAREHOLDERS COMPANY BACKGROUND CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Corestate is a public limited liability company (Société Anonyme) incorporated under Luxembourg law, with registered ofﬁce at 4, rue Jean Monnet, L-2180 Luxembourg, Grand Duchy of Luxembourg. The Company was registered with the Luxembourg Register of Commerce and Companies (Registre de Commerce et des Sociétés) under B 199 780 on 07 September 2015 and was originally established on 21 August 2015. Corestate Capital Holding S.A., Luxembourg does not have any branches. all based on an experienced real estate management team‘s in-depth understanding of each deal and its underlying assets. This business provides commercial and technical property management services including service charge accounting to their clients. The asset management services also include ongoing ﬁnancial and real estate reporting for clients and banks. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS It is part of our real estate management services to continuously observe the market and to seek out and execute exit opportunities as far as they are in line with the clients‘ investment requirements. The sales team is responsible for monitoring favorable sale and exit opportunities. Corestate is one of the leading listed investment managers for real estate equity and debt in Germany and selected other European countries, with in total € 27.4bn in assets under management as at 31 December 2021, thereof around € 19bn asset under management in the core business. The market focus is predominantly on Continental Europe and the UK covering the entire lifecycle of investments in real estate. In our fully integrated business model, we are active as co-investor and manager for our clients applying our experience and expertise to a wide range of real estate investment product offerings. We combine proven real estate expertise, good market knowledge and the understanding of mega trends and environment, social affairs and corporate governance principles for optimal product performance and sustainable returns for our customers. Our business reporting is divided into three segments: (i) “Real Estate Equity”, (ii) “Real Estate Debt” and (iii) “Other”. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION As at 31 December 2021, our asset management activities covered 2.67 million m2 of managed space with more than 28,000 micro living units under management. Moreover, we had more than 114 funds under management as at 31 December 2021. (ii) The Real Estate Debt Segment contains structures and implements investment products via Corestate Bank. Furthermore, with our Group subsidiary HFS (Helvetic Financial Services) we offer mezzanine ﬁnancing (i.e. ﬁnancing that ranks below senior loans and above ordinary shareholders‘ equity) for residential and commercial real estate developments in Germany, Austria, Switzerland as well as Spain and seek to gain cross-selling opportunities from being involved in our clients‘ development from a very early stage. (i) The Real Estate Equity Segment encompasses the sourcing and acquisition of relevant real estate opportunities and investments. It covers ongoing and day-to-day asset and property management and other related services as well as project monitoring over the holding period with the aim of actively enhancing value and optimizing the relevant assets. It also encompasses management of the realization of the value of investment products through multiple eligible exit channels (e.g. asset-by-asset sales, portfolio sales, auctions). The products can be held in separate vehicles established by respective clients together with Corestate. Revenues are generated through acquisition fees, asset management fees, property management fees (in equity products) and sales and promote fees. The core business is to act as an initiator focusing on investments via debt securities. The fund capital is used to acquire bonds which are issued by the bond issuer, typically a real estate development company, for the early stages of a real estate development, usually as equity-replacing bridge ﬁnancing until certain milestones (e.g. the building permit or construction progress) have been achieved and the follow-on ﬁnancing for the entire project has been secured. In summer 2021 HFS launched a new senior fund Stratos VI and now the Company is able to provide senior and subordinated loans. The Stratos VI real estate bond fund has been set up as a special AIF (German special fund) and is targeted at professional and semi-professional investors. The asset and property management services that we provide during the holding period support the investment strategy deployed from the early sourcing phase through business planning. Such early involvement allows e.g. for an efﬁcient implementation of value enhancing measures such as capex investment, rent increases, vacancy reductions and operational cost optimization programmes, CORESTATE – ANNUAL REPORT 2021 53 It will ﬁnance high-return development and existing properties from the residential and commercial real estate segment. HFS intends to increase the fund volume to approximately € 1bn in the next two years. This substantially builds trust and related long-term relationships with the respective client group. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT In respect of the properties held for warehousing purposes, Corestate signed a contract with a regional investor group for the sale of the local shopping centre “neustädter“ (Tor) in Giessen at the end of December 2021. The purchase agreement is subject to customary conditions precedent with rights of rescission until the formal due diligence has been completed. The closing of the transaction is expected to take place in the ﬁrst half of 2022. As at 31 December 2021, the total committed fund volume amounted to approximately € 1.2bn, covering about 45 ﬁnanced projects with an average size of mezzanine ﬁnancing between € 25m and € 30m. The investor base of HFS included approximately 70 institutional investors, such as pension funds, investment funds, insurers and pension schemes. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS With the decision to spin-off CRM and Capera made in 2021, the Corestate Group will be able to concentrate even more on the proﬁtable asset management-related activities in the real estate equity sector in the future. Capera is a property manager for residential and commercial real estate in Germany and CRM is a leading operator of student accommodation in the UK. At the time the report was prepared, the spin-off initiated in 2021 is still ongoing. Therefore, both business units are recognized as discontinued operations in the annual ﬁnancial statements. Our integrated business model enables us to cover the entire lifecycle of investments in real estate equity and debt. We are a one-stop shop providing the full range of asset, fund and property management services and related investment products (managed accounts, open-ended and closed-ended funds, club deals, alternative investment funds and individual mandates), and ﬁnancial investment structuring and advisory services, covering all major real estate asset classes and all relevant investment vehicles. Our diversiﬁed product offering covers a broad range of asset classes with different risk-return proﬁles (from value-add/ opportunistic to core and core+), including ofﬁce, residential, micro living/purpose built student accommodation, city quarters, retail, hotel, logistics, debt and mezzanine ﬁnancing services, which enables us to target a broad range of clients, cross-sell our products and address the speciﬁc needs of different client types (institutional, semi-professional and private). The focus of our business strategy is on core and core+ investments. The diversiﬁcation offers additional business opportunities while mitigating business risks at the same time. FURTHER INFORMATION (iii) The Other Segments comprise alignment capital management activities as well as real estate operations and assets held for warehousing purposes, i.e. assets which we acquire on our own balance sheet for a certain short-term period in order to convert them into investment products and – to a lesser extent – assets owned by non-client third parties, with the aim of actively value-enhancing and optimizing the assets and, ultimately, structuring the exit from such real estate investments. An integral part of this business is to co-invest alongside our clients through our alignment capital investments. This means that we invest our own funds into the same products as our clients. As at 31 December 2021, we have invested € 145.9m (equity and loans) through our alignment capital investments. Typically, alignment capital investments range between approximately 5% and 10% of the total equity, depending on our clients‘ requirements and product structuring. To further expand and diversify our real estate debt products and services, improve our access to new sources of capital, extend our client base and capitalize on signiﬁcant cross-selling potential, the Company entered into a business combination agreement with the shareholders of Aggregate Financial Services GmbH (“AFS“) to acquire all shares. AFS is a German debt platform and fully licensed securities trading bank and now operates under the brand Corestate. The acquisition was part of the strategy to signiﬁcantly expand our position in the real estate development ﬁnancing market as well as the wider real estate sector by providing additional ﬁnancial investment structuring and advisory services. The takeover took place as a capital increase against contributions in kind by issuance of 8.5m new Corestate shares as well as payment of a cash component in the amount of € 5.0m. This transaction was signed in January 2021 and closed in May 2021. As a result, we also participate in the performance of the investment products through dividend payments and we realize capital gains upon successful exit from alignment capital investments. Through our alignment capital we “buy into“ the risks and rewards of the underlying transaction and assume responsibility far beyond the role of just an investment manager. CORESTATE – ANNUAL REPORT 2021 54 The following chart illustrates Corestate’s integrated business model. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT EQUITY PRODUCT RANGE DEBT PRODUCT RANGE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS German & European Investment Products ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Residential Micro Living City Quarters Ofﬁce Logistics Mezzanine Senior Loan Debt Advisory & Structuring FURTHER INFORMATION SALES Equity Raising | Client Relations Integrated Real Estate Management Platform BUSINESS FUNCTIONS Investment Management | Asset Management | Fund Management CORPORATE FUNCTIONS Risk Management | Compliance | Digitalization | ESG National & International Clients/Investors Semi-Professional Institutional Retail (~200) (~100) (~48,000) CORESTATE – ANNUAL REPORT 2021 55 With a combined approach and a unique real estate platform we are targeting primarily institutional, but also semi-institutional clients as well as private clients and providing real estate equity and debt products to each group. Our private and semi-institutional clients include family ofﬁces and ultra-high net-worth individuals. National and international institutional clients include investment funds, sovereign wealth funds, pension schemes and insurance companies. TO OUR SHAREHOLDERS CONTROL SYSTEM CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The Company‘s control system is geared toward the corporate strategy and is therefore consistently aligned with the Group’s short to medium-term objectives. The Management Board is responsible for overall planning and thus for achieving the stated objectives as part of the strategic corporate development. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Our institutional and semi-institutional investor base comprised more than 300 client contacts as at 31 December 2021. Furthermore, through Hannover Leasing together with its subsidiaries (the “HL Group“) approximately 48,000 retail clients have invested with us. In particular, through the STAM acquisition in 2020, we expanded our investor base considerably and improved our access to ﬁnancing and opportunities for new business, especially with international institutional investors. ANNUAL ACCOUNTS With the involvement of the Executive Committee (ExCom), the Management Board uses a strategy process to steer the development of the business segments and monitors the implementation of deﬁned measures. On the basis of global trends, growth paths are deﬁned, opportunities and risks are evaluated, portfolio decisions are made, and the focus of in-house market research is determined at annual strategy meetings. Strategy and planning meetings provide a planning basis for the following year and in medium-term group planning. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION We have, historically, concentrated on the DACH region. Germany is and will remain the main market for Corestate. However, we are also selectively looking at other attractive real estate markets in Europe such as Austria, Switzerland, France, the UK, Spain and the Benelux countries. Corestate operates principal ofﬁces in Germany, Switzerland, Spain, France and the UK, as well as a German network of branch ofﬁces of its property management platform Capera. As at 31 December 2021, the Group employed about 811 FTEs (previous year: 757 FTEs). A planning forecast for the coming year and a ﬁve-year period is made annually based on the corporate strategy and based on the market-driven strategic planning in the segments. The “counter ﬂow method” is used for planning (bottom up – top down). In the course of a year, the planning for that period is updated in several forecast cycles. Some changes to the Management Board occurred in the ﬁnancial year 2021. As part of the AFS transaction, in January 2021, both founders and shareholders Sebastian Ernst and Johannes Märklin were appointed as members of the Management Board of Corestate for a term of three years. On 01 August 2021, Udo Giegerich was appointed Chief Financial Ofﬁcer of the Group by the Supervisory Board for a three-year term. His predecessor, Lars Schnidrig, left the Company on 30 May 2021 at his own request for personal reasons. In July and August 2021 CIO Nils Hübener and Chief Legal & HR Ofﬁcer (CLHRO) Daniel Löhken stepped down from the Management Board. Both gentlemen are departing at their own request, for personal reasons and on the best of terms. Weekly Board meetings are used for operational control. There the division heads report to the Management Board on the development of transactions and customer relationships, the competitive situation and any exceptional business transactions. They employ standardized reporting methods largely involving performance indicators, information variables and qualitative assessments, which are then used to deﬁne further operating and strategic measures to achieve the objectives in the event of planning deviations. The internal reports – which are prepared monthly – provide aggregated ﬁnancial and non-ﬁnancial information for the segments and the holding company, which is used as a basis to allocate resources in a targeted manner, and pass resolutions on the Management Board. On the 08 February 2022 Johannes Märklin and Sebastian Ernst left the Company. The Supervisory Board resolved shortly before to remove both members from the Management Board of Corestate Capital Holding S.A. and released them from all other group functions. CORESTATE – ANNUAL REPORT 2021 56 TO OUR SHAREHOLDERS Explanation of the key indicators TARGETS AND STRATEGIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Corestate is mainly managed based on the aggregated revenue & gains and EBITDA (on adjusted and reported basis). Furthermore, assets under management, fund volume, investment return, net proﬁt, earnings per share, cash ﬂow, net ﬁnancial debt as well as speciﬁc ﬁnancial ratios associated to the key performance indicators are usually used by management to measure operating performance and for steering the Company. We use these metrics as a basis for strategic planning and forecasting, and they represent measures that we believe are widely used by certain investors, securities analysts and other parties as supplemental measures of operating and ﬁnancial performance. In the past ﬁnancial year Corestate undertook a change of perspective following a structured strategy process across the entire group. In the future, the Company will see itself as a manager of this value chain – from project to sale. To safeguard the implementation process and to react immediately to the changed market conditions during 2021, one of the ﬁrst strategic measurements was to bundle and strengthen the sales force. Furthermore, the consistent focus of the investment portfolio on sustainable, future-proof asset classes was initiated as another cornerstone of Corestate’s new strategy. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Nevertheless, the real core of the corporate strategy is to focus on investors and clients. Following the deﬁnition of the overarching goals – such as the new corporate vision, performance proﬁles and authentic ESG targets – we will use the strategy framework as the centrepiece to set out exactly how we are going to move forward. FURTHER INFORMATION Corestate’s non-ﬁnancial performance indicators include maturity proﬁle, attrition rate as well as asset allocation and ESG-related performance measures. Furthermore, Corestate utilizes planning tools such as corporate planning as well as rolling liquidity planning, which are used to steer operational business development. To implement the growth strategy, we are − striving to enlarge our business volume, in terms of AuM − continuing to expanding our customer base in our priority regions − expanding our fund product and real estate debt service offerings − reorganizing and simplifying our corporate structure RESEARCH AND DEVELOPMENT As part of its business purpose, Corestate has no technological research and development activities and is not dependent on licenses and patents. − actively managing our business portfolio with selective divestitures − driving an active cultural change and open mind-set within the Company − continuing to steadily strengthen our ﬁnancial resources to reduce our debt We have set a clear timetable for 2022 and beyond. Throughout the implementation period, all stakeholders will be updated continuously and transparently on the status, progress and successful implementation of the timetable. CORESTATE – ANNUAL REPORT 2021 57 TO OUR SHAREHOLDERS MARKET DEVELOPMENT CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The market environment for Corestate‘s business developed positively in 2021. The German investment market closed 2021 with a record total transaction volume of € 110.7bn, up 35.7% on 2020.1 € 76.6bn worth of real estate changed hands in the second half of the year alone. This means that the third and fourth quarters made up almost 70% of the annual transaction volume. The real estate private debt market in Europe in 2021 showed a volume of about € 80.0bn. In particular, demand for ﬁnancing from both the residential and commercial real estate sectors has been buoyant. COVID-19 has had little impact on the demand for ﬁnancing throughout the pandemic, with pricing holding up strongly as well, debt lenders seem to agree. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS This development was driven in particular by the market for residential real estate investments (incl. nursing homes and student accommodation) with a share of 47%, which is also heading for a new record. Both the number of apartments and apartment prices rose signiﬁcantly and are expected to reach over € 52.2bn for the ﬁrst time in the full year. Ofﬁce properties follow with a share of almost 25% (€ 27.5bn) and an increase of no less than 12% compared to 2020. The bottom of the market seems to have been reached and 2021 delivered the third best result of the past ten years. Logistic properties have continued to develop dynamically in the shadow of the two dominant real estate segments. With a total of € 10.2bn (share of 9.3%), more capital than ever before has ﬂowed into distribution, production and warehousing facilities. While this record ﬁgure demonstrates the attractiveness of the German market across all segments, it is still evidence of a lack of higher-yielding alternatives. The alternative lending sector is still growing because banks cannot - and are not willing to - cover the demand for ﬁnancing, due to the sheer volume of development taking place, on the one hand, and on the other because of much tighter regulation and more restrictive policies in their credit approval processes. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION The whole debt lending sector has become highly dynamic in 2021, and shows no sign of slowing down, with so many new ﬁnancing opportunities opening up across all levels of the capital stack. Germany is retaining its position as the dominant real estate market in Europe, therefore new foreign capital from North America and Asia is looking for more opportunities here. With the ongoing retreat of the traditional lending banks from ﬁnancing anything but rock-solid and blue-chip projects, a further wave of new alternative lenders have been eyeing up prospects in the European lending markets, with the announcement recently of several new providers looking to move into the space. 1 JLL, Investment Market Overview, 04 January 2022 CORESTATE – ANNUAL REPORT 2021 58 TO OUR SHAREHOLDERS BUSINESS AND PRODUCT OFFERING DEVELOPMENT In 2021, Corestate and the market it operates in was still impacted by the COVID-19 pandemic. This led – especially in the ﬁrst months of the year – to an ongoing shift in clients‘ focus towards reduced risk/return proﬁles. CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS At the end of December 2021, Corestate had total assets under management of € 27.4bn. Real estate AuMs stood at € 24.3bn, thereof € 12.4bn (2020: € 12.8bn) in real estate equity and € 6.6bn (2020: € 6.5bn) in real estate debt. This reﬂects our core business. The remaining € 5.4bn (2020: € 5.3bn) are based on third-party property management contracts. The slight reduction in real estate equity AuMs in 2021 is mainly driven by the planned maturity of a property management portfolio in the UK, the termination of a micro living fund and a commercial portfolio. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION At the same time the main transactions and investments affecting real estate debt and equity AuMs in the reporting period were as follows: − Corestate sold Warnow Park in Rostock from its Highstreet VIII retail fund – a hybrid shopping center with a net ﬂoor space of approx. 40,000 m² − Corestate Bank managed the complex project ﬁnancing for the purchase and development of the “FÜRST” project in Berlin – one of the largest real estate transactions of the year with a volume of more than € 1bn − The Group sold a top property, the Deutsche Bahn AG operations centre in Berlin, consisting of two building sections with a lettable area of 23,062 m2 − Corestate sold the Limes Park in Sulzbach near Frankfurt – an ensemble of six buildings with total of approximately 22,300 m² of rental space − STAM Europe acquired three residential buildings for its OPERA Fund in Paris totaling 4,800 m2 and three light industrial parks with more than 15,000 m2 in the Paris region on behalf of the Highlands II joint venture − Hannover Leasing markets Alter Domus head ofﬁce in Luxembourg to Generali − Hannover Leasing acquired the project development “Weitblick 1.7” in Augsburg Innovation Park for a special AIF − Corestate acquired the VISION ONE ofﬁce campus with a lettable area of 25,000 m2 in the Stuttgart metropolitan region (Leinfelden- Echterdingen), for a closed-end special AIF − Corestate set up the open-end special AIF “Stadtquartiere 1” – the ﬁrst of its kind in Germany for institutional investors − HFS launched the new senior fund Stratos VI. The AIF will ﬁnance high-return development and existing properties from the residential and commercial real estate segment in the DACH region. CORESTATE – ANNUAL REPORT 2021 59 € million 2021 9.7 20201 15.1 37.3 3.9 TO OUR SHAREHOLDERS RESULTS OF OPERATIONS Unless otherwise stated, only information on continuing operations is provided in the following sections. CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Revenue from Acquisition Fees Revenue from Asset Management Fees Revenue from Property Management Fees Revenue from Sales and Promote Fees Revenue from Development Fees Total Revenue from Real Estate Equity Segment Revenue from Underwriting and Structuring Fees Revenues from Performance Fees Income from Mezzanine Loans 37.0 5.3 CONSOLIDATED FINANCIAL STATEMENTS Generally, the real estate transaction market regained momentum in the second half of the year. Especially in the last couple of weeks, asset valuations have become more stable, including in those classes that were hit the most during the pandemic such as retail, micro living and hotels. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 23.0 2.5 4.9 ANNUAL ACCOUNTS 9.1 NOTES TO THE ANNUAL ACCOUNTS The total aggregated revenues and gains of Corestate including revenue from the discontinued operations of CRM and Capera in 2021 amounted to € 245.5m, a signiﬁcant increase of 28.3% (previous year: € 191.4m). 77.6 36.0 49.5 18.1 17.3 1.0 70.4 18.8 44.3 10.3 19.9 - FURTHER INFORMATION The Group’s aggregated revenue and gains from continuing operations (including the revenue from real estate equity, real estate debt and income from the Other Segment) grew considerably by 33.0% to € 215.4m (previous year: € 162.0m). Revenue from Asset Management Fees Income from Trading Activities Total Revenue from Real Estate Debt Segment Total Income from Other Segment Aggregated Revenue and Gains 121.9 15.9 215.4 93.3 (1.8) 162.0 1 The statement is adjusted in line with IFRS 5 Discontinued Operations for the ﬁnancial years 2021 and 2020. For further information see Note B.2.3 to the consolidated ﬁnancial statements. CORESTATE – ANNUAL REPORT 2021 60 TO OUR SHAREHOLDERS REAL ESTATE EQUITY EARNINGS POSITION CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The Real Estate Equity Segment generated revenue of € 77.6m, clearly above the prior year’s level of € 70.4m. The asset and property management fees in this segment were up slightly from 41.2 million euros to 42.3 million euros. Acquisition fees in this segment went down considerably from € 15.1m in 2020 to € 9.7m, due to the lower transaction volume on the purchase side and a slightly reduced fee rate. Revenue from sales and promote fees showed a signiﬁcant increase from € 4.9m to € 23.0m in the reporting period, which was mainly driven by an upswing of projects sold with an improved fee rate. The revenue from development fees came to € 2.5m, from € 9.1m in the previous year which is due in particular to the increased focus on forward purchases in cooperation with general contractors. G&A and other expenses in the reporting period went up to € 59.5m (previous year: € 45.4m), particularly due to one-off expenses in the context of the strategic acquisition of AFS and due to integration and transformation measures, provisioning for the planned efﬁciency enhancement programme as well as severance payments for management board members. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Despite the comprehensive risk provisioning and the corresponding impairments on ﬁnancial assets and receivables in particular, the Group EBITDA from continued operations of the reporting period showed an improvement and came to € 26.4m compared to € 16.2m in 2020. Adjusted by € 17.4m one-off effects split in € 7.7m direct M&A expenses, € 3.2m for integration and transformation measures and € 6.5m provisioning for the 2022 efﬁciency program. Thus, the adjusted EBITDA stood at € 43.8m. The adjusted EBITDA margin improved to 20.3% (previous year: 10.0%). NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION REAL ESTATE DEBT Depreciation and amortisation went up signiﬁcantly to € 214.3m from € 50.6m, mainly driven by impairment of the goodwill of the HFS in an amount of € 174.8m. Furthermore this position also includes purchase price allocations from acquisitions. The consolidation of Corestate Bank makes it more difﬁcult to compare the ﬁgures of the Real Estate Debt Segment with the previous year. Total revenue from real estate debt went up signiﬁcantly by 30.6% to € 121.9m (previous year: € 93.3m) underlining the leading position in a very prospering market. In 2021 revenue from underwriting and structuring fees almost doubled from € 18.8m to € 36.0m, mainly driven by the consolidation of Corestate Bank. Income from bridge loans grew to € 18.8m from € 10.3m, driven by the peak in lending over the year. Revenue from asset management fees slightly decreased from € 19.9m to € 17.3m. Revenue from performance fees, including coupon participation fees, was up at € 49.5m (previous year: € 44.3m). This increase was chieﬂy attributable to higher risk discounts in 2020 and the revaluation of individual funds in 2021. € million 2021 24.7 26.4 42.1 43.8 2020 16.6 16.2 16.6 16.2 EBITDA EBITDA from continued Operations Adjusted EBITDA Adjusted EBITDA from continued Operations Net Proﬁt (200.1) (192.8) 17.6 (68.9) (65.1) (47.5) (45.4) Net Proﬁt from continued Operations Adjusted Net Proﬁt Adjusted Net Proﬁt from continued Operations 23.7 CORESTATE – ANNUAL REPORT 2021 61 The ﬁnancial result came to minus € 18.3m (previous year: minus € 23.8m) and TO OUR SHAREHOLDERS ASSET POSITION Balance sheet the result from income tax were € 13.4m (previous year: expenses € 6.9m). CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Corestate’s net proﬁt from continued operations decreased from minus € 65.1m in the previous year to minus € 192.8m in the current reporting period, which translates into earnings per share of minus € 6.29 (previous year: minus € 2.87). Adjustments at net proﬁt level comprises € 174.8m impairment of goodwill, € 7.7m in direct M&A expenses, € 3.2m in transformation and integration measures, € 6.5m in provisioning for efﬁciency program, € 33.2m in effects from ‘Purchase Price Allocation’ and minus € 8.8m in deferred tax liabilities. Adjusted net proﬁt from continued operations ended up at € 23.7m (previous year: minus € 45.4m) . € million 2021 2020 CONSOLIDATED FINANCIAL STATEMENTS Non-Current Assets Current Assets 990.9 399.2 1,056.6 408.5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Total Assets 1,413.6 626.2 1,465.0 688.5 NOTES TO THE ANNUAL ACCOUNTS Total Equity FURTHER INFORMATION Earnings Development in €m, EPS in € (continued Operations) Non-Current Liabilities Current Liabilities Total Equity and Liabilities 349.1 548.8 429.4 227.6 1,413.6 1,465.0 Adjusted EBITDA Adjusted Net Proﬁt Earnings per Share As at 31 December 2021, total assets amounted to € 1,413.6m, a slight decrease of 3.5% compared to the previous year ﬁgure (2020: € 1,465.0m). 43.8 Total non-current assets amounted to € 990.9m (2020: € 1,056.6m), by far the largest component of which is the goodwill position created mainly in association with the acquisition of HFS, HL, STAM, CRM and Corestate Bank, standing at € 487.2m (2020: € 577.7m); the variation results from the impairment 23.7 16.2 of HFS with € 174.8m, the addition of AFS with € 94.6m and –2.87 -6.29 2020 2021 the reclassiﬁcation of CRM’s goodwill position in the amount of € 10.3m due to the intended disposal in accordance with IFRS 5. Investment in associates and joint ventures increased in the course of 2021 to € 145.9m (2020: € 120.8m). A signiﬁcant enhancement of € 22.5m results from the project Vision One in the Stuttgart metropolitan area. –45.4 CORESTATE – ANNUAL REPORT 2021 62 Total current assets were at € 399.2m versus € 408.5m as at 31 December 2020. Inventories, i.e. assets held for warehousing, went up from € 73.8m to € 100.0m in particular related to CAPEX measures at the Giessen property. Trade receivables were up by 42.8% from € 33.0m at the end 2020 to € 47.2m as at 31 December 2021, primarily related to sales and promote fees recognized at the year-end. TO OUR SHAREHOLDERS CASH FLOW ANALYSIS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Cash ﬂows from operating activities turned positive from minus € 63.4m in the previous year to € 31.0m in the reporting period. The operating cash ﬂow was primarily affected by higher depreciation and changes in working capital. In 2021, cash ﬂows from investing activities amounted to € 9.8m (previous year: minus € 30.1m). Over the reporting period 2020, they were still largely inﬂuenced by higher payments for acquisitions and the purchase of other ﬁnancial instruments. Cash ﬂows from ﬁnancing activities fell to minus € 56.2m in 2021 (previous year: € 79.4m). In 2020 the ﬁnancing cash ﬂow was mainly positive due to the proceeds from the capital increase and from loans and borrowings, while in 2021 Corestate showed higher repayments for loans and borrowings and fewer outﬂows for ﬁnance expenses. CONSOLIDATED FINANCIAL STATEMENTS Cash and cash equivalents as well as restricted cash decreased mainly due to the contractually committed capex expenditure for the warehousing asset (Giessen) from € 91.2m in 2020 to € 75.7m. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Total equity, driven by the capital increase contributed in kind as part of the Corestate Bank acquisition and against the backdrop of the negative earnings after tax, reduced to € 626.2m at the end of the reporting period (2020: € 688.5m). The equity ratio of Corestate therefore dropped to 44.3% at the end 2021, compared with 47.0% on 31 December 2020. FURTHER INFORMATION Due to higher cash ﬂows from operating activities before taxes, the free cash ﬂow came to € 58.0m (previous year: minus € 51.8m). The free cash ﬂow is calculated as the cash ﬂow from operating activities before payments for income tax in the amount of € 57.3m (previous year: minus € 48.3m), less capital expenditure in and income from the sale of PPE and intangible assets. Total liabilities were relatively stable at € 778.5m in comparison with prior year (2020: € 776.6m). While non-current liabilities went down by € 199.7m to € 349.1m, current liabilities increased by € 201.7m to € 429.4m. The main reason for this was solely the reclassiﬁcation of the ﬁnancial liabilities from bonds due to their maturity. Other non-current ﬁnancial liabilities were reduced from € 29.3m to € 19.9m, mainly due to the reassessment of an existing long-term ofﬁce lease agreement. The cash conversion rate (free cash ﬂow to EBITDA), adjusted for continued operations and for one-off effects and M&A-related expenses, came to 132.4%. Total ﬁnancial liabilities stood at € 622.0m at the end of the reporting period (2020: € 635.6m). Net ﬁnancial debt (including cash and cash equivalents as well as restricted cash and adjusted by lease liabilities) was slightly down at € 526.5m (2020: € 531.4m). This amounts to improved ﬁnancial leverage on 31 December 2021 of about 12.0 versus 32.8 at the end of the comparative period (adjusted EBITDA for continued operations). CORESTATE – ANNUAL REPORT 2021 63 TO OUR SHAREHOLDERS MATERIAL EVENTS AFTER THE REPORTING DATE CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT In connection with the changes in the shareholder base of Corestate at the end of 2021, Mr. Stavros Efremidis and Dr Bertrand Malmendier were appointed as new members of the Supervisory Board with effect from 01 January 2022. Mr. Friedrich Munsberg and Prof. Dr Hermann Wagner stepped down from the Supervisory Board correspondingly as at 31 December 2021. The former CEO René Parmantier left the Group’s Management Board to fully focus his activities on Corestate’s Real Estate Debt business, incl. HFS and Corestate Bank. In addition, the Group’s Management Board was extended to four members by Izabela Danner as Chief Operating Ofﬁcer (COO) and Ralf Struckmeyer as Chief Investment Ofﬁcer (CIO). The new members of the Management Board are appointed for a term of three years. On Supervisory Board level, the former Deputy Chairman Dr Bertrand Malmendier took over as Chairman of the Supervisory Board. As a new member Dr Roland Folz joined the Supervisory Board on 07 March 2022. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS The Supervisory Board of Corestate resolved on 07 February 2022 to remove Johannes Märklin and Sebastian Ernst from the Management Board of Corestate Capital Holding S.A. and all further group functions. On 08 February 2022, the Group announced that René Parmantier will assume full responsibility for the Real Estate Debt segment in addition to his role as CEO of Corestate, and thus also the management of Corestate Bank. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION On 04 February 2022, Hannover Leasing placed out an additional share amounting to € 12.5m (12.5%) in its project VISION ONE. By doing so, the investment of Hannover Leasing decreased to € 10.1m and is therefore reclassiﬁed from joint ventures and associates to other ﬁnancial instruments accordingly as at the aforementioned date. The invasion of Ukraine by the Russian Federation on 23 February 2022 and the resulting sanctions with regard to Russian state-owned companies and Russian individuals could also result in restrictions on investments in which Corestate is involved as a co-investor. Corestate has set up a task force to analyse and closely monitor both compliance with the sanction restrictions and their impact on Corestate‘s operating business. Risks would not directly concern the operating business of the underlying investment structures but potentially the restrictions on ﬁnancing and distributions of cash. A ﬁnal assessment of the consequences of this situation for the group is not yet possible at the time of ﬁnalisation of the ﬁnancial statements. On 07 March 2022 the Supervisory Board decided to strengthen the governance structure and resolved to appoint the former Chairman of the Supervisory Board Stavros Efremidis as CEO with immediate effect. CORESTATE – ANNUAL REPORT 2021 64 OUTLOOK TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT In 2020, Corestate took the decision not to pay a dividend to the shareholders. However, the future aim of the Management Board is not only to ﬁnance the continued growth of the Company but to also maintain the continuity of its dividend policy. Therefore, the Company intends to return to its regular dividend policy and would like to pay its shareholders a dividend of at least € 0.50 from the 2022 consolidated result in the ﬁnancial year 2023. In addition, the Management Board believes that it is crucial for the Company to maintain stable capital resources in order to achieve sustainable organic growth and increase enterprise value for its shareholders, while also exploiting opportunities for acquisitions. All the issues that were sources of uncertainty in the market in 2021, including coronavirus, supply bottlenecks, rising inﬂation, sustainability, and the future of work, remain unresolved in 2022. Overall, investors are continuing to focus on safe core properties in the face of high investment pressure and are taking ESG criteria into account. As a result, declining yields will contribute to a market revival in the non-core segment in the long term. At the same time, the European Central Bank is expected to change its policy of low interest rates, provided inﬂation remains at a permanently higher level. Nevertheless, the environment for real estate transactions is likely to remain positive. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION Corestate will continue to pursue its strategic agenda rigorously and sustainably. The Management Board’s focus remains on net debt reduction and proﬁtable growth in all segments. In addition to revenue growth, economies of scale and higher margins from an optimized product mix and improved cost discipline should lead to an increase in results. This will be aided by an improvement in the overall economic conditions, too. The Group expects organic AuM growth in the mid term between 5-10%. For 2022 the Management Board anticipates also aggregate revenue and gains, to come in between € 210m and € 230m in the ﬁnancial year 2022. The Real Estate Equity and Real Estate Debt Segments should contribute towards this growth in revenue during the current year. Although at the time of reporting there are no plans for larger acquisitions, smaller takeovers are not ruled out. Luxembourg, 20 April 2022 Stavros Efremidis Chief Executive Ofﬁcer Udo Giegerich Chief Financial Ofﬁcer Izabela Danner Chief Operating Ofﬁcer Ralf Struckmeyer Chief Investment Ofﬁcer Following a further improvement in the quality of earnings, the Group expects a normalised EBITDA of between € 90m and € 110m for 2022. CORESTATE – ANNUAL REPORT 2021 65 TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT NON-FINANCIAL STATEMENT1 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Through our business operations, we create long-term value while seeking to balance environmental, social and business aspects – for our Company, for our stakeholders and for society. Hence, sustainability is an essential component of our Group strategy. The mandatory non-ﬁnancial statement for the ﬁnancial year 2021 will be part of our ESG Report 2022, which will be available on our website www.corestate-capital.com from 30 June 2022. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION OUR UNDERSTANDING OF THE IMPORTANCE OF SUSTAINABILITY FOR OUR BUSINESS Our understanding of sustainability is based on the conviction that the holistic integration of environmental, social and governance aspects, so called ESG indicators, into the whole real estate investment cycle offers substantial beneﬁts for our clients and partners – as well as society as a whole. Long-term proﬁtability in the real estate sector will depend on responsible behaviour towards the environment and society in the future. Therefore, and in order to safeguard and enhance our growth prospects, the ESG department directly reports to the CEO and regularly informs the Management and Supervisory Boards. Every- day and operational tasks are coordinated through a monthly ESG Committee compromising the Management Board and senior management members with ESG-relevant responsibilities. 1 The mandatory non-ﬁnancial statement 2021 will be included in part of the ESG Report 2022. CORESTATE – ANNUAL REPORT 2021 66 TO OUR SHAREHOLDERS OUR ESG GOALS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Corestate is committed to maintaining high standards of ESG management across the portfolio. On this basis we have developed and committed to 12 corporate ESG targets that we report on annually to track our ESG management objectives. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION Reduce CO2 Emissions1 by Increase energy efﬁciency1 by Reduce water consumption1 by Reduce non-recyclable waste1 by 2% annually 20% by 2025 5% annually 30% by 2025 2% annually 20% by 2025 2% annually 20% by 2025 Increase ratio of female Management by Develop at least 5 ESG tenant partnerships Publish employee well-being policy Support Corestate charity incl. solidarity days 5% annually 30% by 2025 by 2025 review every 12 months annually from 2020 1 Based on metre data given for assets 2 Will address changes from the coronavirus crisis by including new work topics 3 Postponed until next year due to coronavirus crisis, not communicated as annual target Provide investor transparency Hold Conduct mandatory compliance & governance trainings Ensure that each employee signs an 12 ESG committees continuously to ensure set targets annually from 2019 for all employees, annually from 2019 Ethics Declaration annually from 2020 CORESTATE – ANNUAL REPORT 2021 67 EMPLOYEE NETWORKS TO OUR SHAREHOLDERS CORESTATE AS AN EMPLOYER CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Along with our ESG goals we were happy to introduce the Corestate Women network. Corestate Women, the women‘s network founded in November 2019 by Corestate Capital Holding S.A., promotes the exchange of experience, inspiration, cooperation and the fair participation of women, to foster personal potential and careers through professional development. Our key initiatives include regional and group-wide networking events – often with guest speakers from the real estate industry, a mentoring programme and regular updates via newsletters. Corestate is sponsoring the ”Fondsfrauen“ career network and has organized joint events with the network. Fondsfrauen is an association with over 2,000 women as members, many of them in management positions in the ﬁnancial sector. Our employees are one of the most valuable cornerstones and the key to the successful development of our Company. Consequently, we want our employees to be motivated and to ﬁnd themselves in a working environment that is constantly evolving. Our ambitious goals can only be achieved with employees who also set the highest standards of quality for themselves. At Corestate our aim is to support equal opportunities, motivate and develop our employees. Therefore, it is important that we provide a professional working environment that keeps work and life in balance. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION EQUAL OPPORTUNITIES We attach great importance to increasing the proportion of women in management positions. However, diversity encompasses much more than gender. For this reason, we have created the “Corestate Capital Pride Network” (CCPN), Corestate‘s LGBTQ+ diversity group. Our CCPN was launched on 28 June 2021 in celebration and recognition of international Pride day which marks the date of the Stonewall riots in 1970 (the riots are widely considered to constitute one of the most important events leading to the LGBTQ+ liberation movement). Our goal and commitment to this network is to encourage the recruitment, retention and recognition of talented, high performing LGBTQ+ individuals, raise awareness of social and professional challenges within the ﬁnancial community that impact LGBTQ+ individuals and build an inclusive community to promote networking, growth and cross-company collaboration. Corestate Capital Group is an equal opportunity employer and is proud to employ individuals from varying backgrounds and with different life experiences. We will not tolerate any discrimination whether based on colour, religion, sex, medical condition, age, national origin or ancestry, physical or mental disability, marital status, medical condition, sexual identity, military service status, gender identity, gender expression or any other consideration protected by applicable local laws. We understand that, as Corestate employees, we should behave in a discriminatory manner and that unlawful discrimination by any employee, regardless of their title and level, will not be tolerated. Corestate’s commitment to equal opportunity employment applies to all persons involved in any of the business areas of the organization. CORESTATE – ANNUAL REPORT 2021 68 We place great importance on workplace learning and a feedback culture. We are committed to providing all our employees with the opportunity to grow and to perform their roles to the highest standards, as well as encouraging them to develop to their future potential. PERSONAL CONDUCT TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT It is important that our employees represent the interests of the business at all times. This means that we always act in a professional and respectful matter towards our colleagues, clients and customers. We expected our staff to uphold the Company‘s values of integrity, team spirit, professionalism, respect and sustainability both during and outside working hours. CONSOLIDATED FINANCIAL STATEMENTS We recognize that learning and development activities take several individual forms. Therefore, it is our commitment to: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS HR SOFTWARE NOTES TO THE ANNUAL ACCOUNTS − Communicate the organization’s objectives and values With the launch of our People Software rexx HR we set the milestone for our group-wide digitalization strategy. The HR software allows our HR data to be connected group-wide. In addition, the changeover now enables the maintenance of a digital employee ﬁle, a better overview for time management and the rapid processing of sick leave and holiday requests. Furthermore, the new software helps us to signiﬁcantly harmonise and speed up our work processes at local and group level. FURTHER INFORMATION − Work with the employees to identify their developmental needs and link these to the Corestate Capital Group objectives − Work with employees to identify solutions to their learning needs − Encourage employees to undertake and make use of learning and development activities Workﬂows can now be displayed and performed by one tool. Recruitment, onboarding, management and offboarding can all be performed easily. − Evaluate the impact of learning and development for individuals and the organization SUCCESS MANAGEMENT Employees are encouraged to: Our success management was implemented in 2020 and has been rolled out group- wide. This holistic process is also mapped and executed via our HR software rexx. − Bring up learning and development needs and opportunities We have made a signiﬁcant step towards a more open and constructive conversation between managers and employees with the focus on strengths and areas of individual development. Our success management system provides a clear and comprehensive approach to the discussion and deﬁnition of annual goals. Biannual appraisals involving managers and employees have improved the performance management culture and expectation management. with their line manager − Participate in learning and development activities − Provide feedback on learning undertaken and its contribution to their personal development and that of the organization. Each Corestate Capital employee also has clear development objectives and will be supported in achieving these to improve and increase our retention rate on a group-wide basis. CORESTATE – ANNUAL REPORT 2021 69 COVID-19 ADVANCED LEADERSHIP TEAM TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Like many companies, Corestate was heavily affected by the COVID-19 pandemic in 2021. COVID-19 has presented us with completely new challenges also in terms of working together. The major steps we have taken in digitalising our daily tasks and projects within the entire group have helped us here tremendously. We complied at all times with the restrictions imposed at our operating locations to protect health and promote hygiene. Our employees were fully able to continue working despite various regulations and restrictions. In 2021, we began the second round of our Advanced Leadership Team (ALT) programme, which was launched in the previous year as an employee development project. We once again delivered this international programme virtually with around 20 participants and provided different training sessions (Leadership, Agile Work and Communication, Presentation) and development opportunities. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS This intense interactive programme for high performers and future senior employees has been designed for our highly motivated and committed employees to encourage their high work ethic and develop their professional and personal skills. NOTES TO THE ANNUAL ACCOUNTS The COVID-19 pandemic has underlined how important our employees are to us. The immediate adaptation of their working methods to the exceptional situation reinforces the commitment our employees put into their daily work. FURTHER INFORMATION As an employer, we see ourselves as having a duty of care. To this day, we have taken all necessary measures regarding hygiene and health regulations to protect our employees. We communicated all updates and news on a regular basis, issued face masks on several occasions, delivered tests and put up warning signs at all our business premises and supplied additional hygiene articles. In addition to receiving training, the members of the ALT worked in group-wide teams together and were mentored by a senior leader of the organization. In this programme, too, we pursue the approach of connecting our entities through joint tasks. The various projects carried out by the groups independently and the success of the output at the beginning of November 2021 showed the relevance of the program and the commitment of the participants. We continued with our virtual training courses to inform our employees on the latest hygiene measures and regulations and formed a Pandemic Risk Steering Committee comprising the responsible senior members of the Management Board, the Risk department HR and Communication. CORESTATE – ANNUAL REPORT 2021 70 CORE AWARD DEVELOPMENT OF EMPLOYEE NUMBERS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Our performance management system (success management) of the Group is based on four areas of success. With the CORE AWARD our aim is to recognize particularly outstanding achievements in one of the four dimensions. It is of great value to ensure our employees’ efforts are seen, appreciated and rewarded. EMPLOYEES BY REGION IN FTEs 2021 2020 583.3 21.0 1.0 CONSOLIDATED FINANCIAL STATEMENTS Germany France 622.6 21.0 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The CORE AWARD acknowledges the work of individual employees, teams as well as entire departments in a group-wide manner. Participants are nominated for their outstanding projects or achievements and ﬁnally reviewed and chosen by the Management Board. ANNUAL ACCOUNTS Italy NOTES TO THE ANNUAL ACCOUNTS Luxembourg Austria 21.0 11.4 3.0 18.1 7.0 FURTHER INFORMATION The nominations and winners were revealed in two virtual ceremonies which took place in spring and autumn of 2021 with a focus on the dimensions “Creation” and “Collaboration”. With the CORE AWARD we were able to underline the importance of transparency in our daily work. We are delighted with the number of nominations and the feedback we received from the entire organization. Poland 3.0 Switzerland Spain 16.0 7.7 6.8 7.7 United Kingdom Total 108.4 811.3 109.2 757.1 As at 30 December 2021, the number of full-time employees (FTEs) increased by 7.2% to 811.3 (31 December 2020: 757.1 FTEs). The increase is attributable to organic growth throughout the Group, the opening of our JOYN serviced apartments in Switzerland and Germany, and the acquisition of AFS (“Corestate Bank”). At the end of the year 2021, 188.5 FTEs were employed at the foreign locations (31 December 2020: 173.8 FTEs) and the Company had a total of 29 trainees (31 Dec 2020: 27 trainees). The total number of employees shown in the table above includes also the Capera Immobilien Service GmbH and CRM students Ltd. together with CRM Micro Living Italy S.r.l, which are held for sale and declared as discontinued operations in accordance with IFRS 5. These companies employed 268.7 and 106.4 FTEs respectively in the past ﬁnancial year. CORESTATE – ANNUAL REPORT 2021 71 GROUP AGE DISTRIBUTION IN % TO OUR SHAREHOLDERS 2021 15.9 33.6 25.8 20.3 4.4 2020 17.4 34.0 25.3 19.3 4.0 CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Under 30 30-39 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 40-49 50-59 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Over 60 FURTHER INFORMATION SHARE OF FEMALE MANAGEMENT POSITIONS IN % Management Level 2021 - 2020 - Top Management Level (Board of Directors) 1st Management Level (MD, ED & SLT Member) 2nd Management Level (Department Leader & ALT) 3rd Management Level (Team Leader) Total 14.8 39.3 58.6 40.3 13.9 40.9 63.3 44.3 CORESTATE – ANNUAL REPORT 2021 72 TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT RISK REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS RISK MANAGEMENT NOTES TO THE ANNUAL ACCOUNTS RISK MANAGEMENT SYSTEM FURTHER INFORMATION Corestate has established a risk management system at Group level which considers the risks of the holding company as well as the risks of the subsidiaries. For this purpose, Corestate has appointed a Group Chief Risk Ofﬁcer, to whom a team is assigned, but who can also draw on dedicated persons in all subsidiaries of Corestate. In accordance of the ”three lines of defense“ theory, the risk management department operates within the second line of defense. DEFINITION OF RISK Risks are related to speciﬁc causes and result from the uncertainty of future events and a mostly incomplete level of information. In terms of impact, a risk is (mostly) reﬂected in a negative deviation from a deﬁned target value. CORESTATE – ANNUAL REPORT 2021 73 CONCEPT, OBJECTIVE AND FUNDAMENTAL ORIENTATION OF RISK MANAGEMENT TO OUR SHAREHOLDERS These are in particular: CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Risk management is seen as the totality of all organizational regulations and measures for identifying and handling risks. The term risk management thus encompasses all methods, systems and systematic measures for identifying, analyzing, assessing, controlling and monitoring signiﬁcant risks that affect the objectivesandexpectationsoftheGroup. Italsoincludesthefurtherdevelopment of risk management instruments and cross-process monitoring and control. CONSOLIDATED FINANCIAL STATEMENTS − risks resulting from actions that violate applicable laws (laws, NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ordinances, regulations); ANNUAL ACCOUNTS − risks resulting from actions that violate the internal guidelines of the Group or, at the level of individual companies, also the internal guidelines of the respective individual subsidiary; NOTES TO THE ANNUAL ACCOUNTS The aim of risk management is, on the one hand, to sustainably secure or increase the value of the Company, to secure the strategic and operative corporate objectives, to secure the future success of the Company and to optimize the medium and long-term risk costs by dealing with risks appropriately. FURTHER INFORMATION − risks resulting from actions that cannot be reconciled with market practices in markets where Corestate operates and therefore entail a not inconsiderable reputational risk; Only by recording all the risks to which the Company is exposed can the necessary level of transparency be achieved. Prior to a business transaction or implementing any new process, all potentially inherent risks are assessed and evaluated. However, there are risks that are not acceptable to the Group as a matter of principle. − risks resulting from actions that could endanger the continued existence of Corestate or individual companies of Corestate. The Group ensures that all other risks are within the limits set by the Management Board of Corestate and, if applicable, by downstream management bodies. CORESTATE – ANNUAL REPORT 2021 74 RISK CONCENTRATIONS AND DIVERSIFICATION TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Concentrations of risk (e.g. concentration exclusively on the real estate market of a single city) are avoided at all levels wherever possible. Where this is not possible, special attention is paid to such concentrations, and measures to reduce such concentrations are continuously reviewed and – where appropriate – implemented. The main functions involved in this process are as follows: CONSOLIDATED FINANCIAL STATEMENTS Function Duty NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Identiﬁcation and assessment of risks Mitigation of risks ANNUAL ACCOUNTS Risk diversiﬁcation, e.g. spreading the investments across various asset classes, markets or addressing different groups of investors (family ofﬁces, institutional investors, investors from the DACH region, from Asia, Africa, the Americas), is implemented where possible to keep dependencies as low as possible. Process Owners NOTES TO THE ANNUAL ACCOUNTS Risk control FURTHER INFORMATION Risk monitoring Review and analysis of risks and risk assessments Risk reporting RISK MANAGEMENT AND CONTROLLING PROCESS Risk Management To ensure effective risk management, appropriate risk management and controlling processes have been set up in all individual companies to identify, assess, manage, monitor and communicate material risks and associated risk concentrations. Review of risk control and risk monitoring performed by risk owners Review on group risks and according mitigation measures Group Risk Committee The risk management and controlling processes ensure that the material risks – including those of outsourced activities and processes – are identiﬁed at an early stage, fully recorded and presented in an appropriate manner. Management Board Audit Committee Supervisory Board Final assessment of group risks Evaluation of material group risks The following sub-processes exist for Corestate in the area of risk management and risk controlling activities: Risk Risk Risk reporting/ communication Risk Risk indentiﬁcation assessment control monitoring CORESTATE – ANNUAL REPORT 2021 75 The risk management and controlling processes are adjusted promptly to changing conditions as required. Accordingly, the documentation specifying the risk process is updated at least annually, more frequently if necessary. Market price risks relate to the possibility of negative changes in value due to unexpected changes in the underlying market parameters. The term market price risk therefore covers risks that arise because investments initiated by Corestate do not develop as forecast. This directly affects investments made by a group company itself, i.e. separate investment funds are out of scope (see below). These investments can be used to be sold into an investment fund later (so-called warehousing). Risks of investments of investment funds do not affect individual companies or Corestate per se. These risks only have relevance beyond the investment assets if they radiate to the companies of Corestate, e.g. via damage to reputation or lost legal disputes. In these cases, the radiance to Corestate is usually accompanied by a previous product, system or process deﬁciency or by human error within Corestate. Consequently, such risks are included in the category “operational risk“. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Risks are also regularly reviewed to determine whether they are acceptable in the context of the respective business. In case of doubt, the responsible member of the management body or group risk management is consulted. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Risks that are within unacceptable limits are examined to see whether they can be reduced or whether the risk acceptance needs to be changed. If neither of these is the case, it is examined whether the transaction based on such a risk can be continued or should be terminated. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION RISK IDENTIFICATION Market price risks can comprise all investment classes (i.e. real estate, other real assets, equities, commodities, ﬁxed income and credit). They therefore include interest rate risks. Risk identiﬁcation is an ongoing process and deals with the question of what risks exist. Within market price risks, general market risk must be distinguished from investment-speciﬁc risks (speciﬁc market risk and event risk). General market risk is the risk arising from the development of the market in which Corestate operates. The following risk type scheme, which is based on the regulatory minimum requirements for the regulated subsidiaries and is therefore also applied at Group level, serves as the identiﬁcation grid. Accordingly, a distinction is made between the following types of risk, which are deﬁned for Corestate as shown below. All identiﬁed risks are meaningfully sorted into one of the following four risk categories. Speciﬁc market risk and event risk relates to developments in individual companies or assets or sub-groups of companies or assets. CORESTATE – ANNUAL REPORT 2021 76 Counterparty default risks are deﬁned as risks that involve the danger of partial or complete default of contractually agreed payments. They include counterparty risk. Operational risks (including compliance risks) are deﬁned as the risk of losses caused by the inadequacy or failure of technology and infrastructure, employees, internal processes or external inﬂuences. The deﬁnition includes legal risks, because the business activities of Corestate are subject to the general conditions of tax, environmental, investment, rental and construction law, among others. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT As with market price risks, counterparty default risks in the investment assets (e.g. default of tenants in commercial properties or lessees of moveable assets) do not affect Corestate per se for the time being. Only if there are suspected spillover effects on Corestate are corresponding risks included in this category CONSOLIDATED FINANCIAL STATEMENTS Operational risk generally consists of many possible risk scenarios that are attributable to very different failure aspects of individual risk causes, or several of those at the same time. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Liquidity risks are dangers that arise from the lack of sufﬁcient ﬁnancial resources. On the one hand, this includes liquidity risk in the narrower sense, which consists of the risk that Corestate companies will not be able to meet their current and future payment obligations in full or on time (e.g. due to the loss of existing sources of ﬁnancing). On the other hand, it contains risks resulting from the increase in the cost of ﬁnancing sources (funding risk). NOTES TO THE ANNUAL ACCOUNTS A sub-risk is so-called compliance risk. This involves the risk of violation or infringement of internal or external rules. Risk consequences can be: FURTHER INFORMATION − monetary losses resulting from inadequate procedures or processes (e.g. ﬁnes or loss of licenses and approvals) Here, too, a corresponding distinction is made between risks of the investment assets and risks of Corestate, as already mentioned. − damage to reputation (e.g. because companies of Corestate are subject of ofﬁcial investigation proceedings). RISK ASSESSMENT Risk assessment is of crucial importance for risk management measures. It describes the importance of the individual risks and is determined from the probability of occurrence (measure of the probability of the risk occurring), the impact (potential damage before measures are taken) and the measures already implemented and planned (control options). It thus represents the basis for planning and controlling risks. Procedure for identifying sub-risk types and individual risks – The existence and exact nature of the risk types described above and the sub-risks to be subsumed under them are checked by means of risk identiﬁcation. As part of risk identiﬁcation, the causes and effects of the risk are described in each case. Not only currently known but also potential future risks are considered. In addition, it is ensured that all material risks are fully recorded and appropriately presented. CORESTATE – ANNUAL REPORT 2021 77 Classiﬁcation of ESG risks – In accordance with various supervisory bodies that provide guidance on managing ESG risks, Corestate considers these risks within the framework of the existing risk landscape and risk inventory, as well as in case of new risks as a part of these. Only in those cases where the risks are purely ESG risks and there is no relation to existing risks are these risks newly and separately registered and integrated into the existing risk landscape using the existing risk categories. Corestate also manages a high number of malls and high street assets. During the pandemic, malls, shops, bars and restaurants were ordered to close several times, and sometimes for a longer period. In addition, access to such malls and shops was restricted by government measures (e.g. access only for vaccinated or recovered persons). The revenues of the malls and shops dropped accordingly, as tenants were not always able to pay full rents, or they terminated contracts partially or completely. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS This all led to the situation that the annual valuation of these assets was lower than before, which made it very difﬁcult (if not impossible) to sell them at the originally expected price. Investors refrained also from investing in such asset classes, resulting in less opportunities to initiate new projects. RISKS RELATED TO THE COVID-19 PANDEMIC NOTES TO THE ANNUAL ACCOUNTS Risks that relate to the COVID-19 pandemic are incorporated in the given risk framework either by considering such risks in existing risks or by adding newly identiﬁed risks to the risk inventory. FURTHER INFORMATION In addition, Corestate is usually remunerated based on the value of the assets managed. Therefore, the lower valuations resulted in lower fee income. The main risks due to the COVID-19 pandemic are on the market and on the liquidity side. While occupancies started to increase in summer 2021, and shops and malls were mainly allowed to stay open, having more turnover, it is expected that the next valuation will show higher values for such assets. Corestate is one of the main managers of student apartments and the temporary letting of micro-apartments, which are usually rented by long-distance commuting professionals and their employers. Loss event database – Incidents of damage that have occurred can provide a basis for identifying and assessing risks. Claims are therefore recorded. A loss event is the occurrence of an operational risk (no matter whether or not already registered) which is claimed in the form of a loss. During the COVID-19 pandemic, universities tend to offer mostly distance learning, which led to demand for student apartments falling sharply. Travel was restricted, so international students could not travel to their universities. In addition, the government in Germany, but also in other countries instructed people to work from home wherever possible to reduce contacts during commuting and in ofﬁces. Many countries also ordered the closure of hotels and similar accommodation. This caused demand for micro-apartments and other similar facilities to drop to nearly zero. Known loss events above a certain amount are considered when assessing operational risks. In addition to the costs incurred, opportunities in the form of additional internal expenses and measures to limit or avoid damage are also recorded. CORESTATE – ANNUAL REPORT 2021 78 Entry and update cycle – The initial recording of a risk is carried out ad hoc when it is identiﬁed. An update must be carried out no later than twelve months after the date of its entry or last update. If necessary, the data is entered or updated ad hoc. Quantitative risk assessment – The quantitative risk assessment requires precise ﬁgures for the amount of loss (impact) in the respective currency (e.g. €, USD) and the probability of occurrence in % for the basic data. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Individual risks are assessed based on their probability of occurrence and the impact/loss they cause. Wherever possible, historical values or planned ﬁgures and relevant indicators are used for this purpose. In cases where no corresponding data basis is available, the best educated guesses of the decentralized risk managers are used. If a single risk event can occur more than once or in several cases, this circumstance is appropriately considered in the probability of occurrence and the amount of loss, using the Poisson distribution. CONSOLIDATED FINANCIAL STATEMENTS In the event of a signiﬁcant change in the risk situation, a written ad hoc report is submitted to the risk management of Corestate. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS General valuation rules – Risks are assessed net, i.e. considering measures that have been implemented. To determine an expected loss, the formula NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION − Damage equals probability of occurrence Quantiﬁcation via qualitative risk assessment – Qualitative assessment is used if it is not possible to quantify a risk objectively or “subjectively“ in a reliable manner. A grid was developed for the probability of occurrence and extent of damage in these cases which enables those responsible for risk to determine appropriate quantitative values for this purpose. − multiplied by the expected loss frequency in the event of a loss according to the Poisson distribution − multiplied by the average amount of damage is applied. In the case of risks that can only occur individually, the factor for the expected frequency of losses in the event of a claim is always 1, in order to rule out overestimation of risks. Combination of quantitative and qualitative risks – If risks are assessed both qualitatively and quantitatively, the highest category of both assessments must be used for the overall risk categorization. CORESTATE – ANNUAL REPORT 2021 79 Control priorities – All risks are depicted on a 5x5 matrix in a standardized manner regarding the extent of damage and probability of occurrence. The matrix itself is structured as follows: This matrix reﬂects the following with regard to the management priorities of risks: TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Likelihood of occurrence: This is divided into class 1 to class 5 with the following CONSOLIDATED FINANCIAL STATEMENTS ranges: 5 4 3 2 1 Likelihood of occurrence NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Class Meaning very low low from more than up to including NOTES TO THE ANNUAL ACCOUNTS 1 2 3 4 5 0% 1% 1% 5% FURTHER INFORMATION medium high 5% 50% 95% 100% 50% 95% very high Impact: This is also divided into class 1 to class 5 with the following ranges: Class 1 2 3 4 5 amount of damage Likelihood of occurence Class Meaning very low low from € 1 up to including € 50 000 1 2 3 4 5 White ﬁelds represent negligible control priorities, light green ﬁelds low control priorities, medium green ﬁelds medium control priorities and dark green ﬁelds high control priorities. € 50 001 € 450 000 medium high € 450 001 1.5% of EBITDA 5% of EBITDA 1.5% of EBITDA 5% of EBITDA very high CORESTATE – ANNUAL REPORT 2021 80 RISK MANAGEMENT TO OUR SHAREHOLDERS RISK REPORTING CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Risk management comprises the timely, situation-dependent, appropriate and efﬁcient selection and implementation of risk management tools. REGULAR REPORTING CONSOLIDATED FINANCIAL STATEMENTS Corestate applies various management approaches in dealing with risks, namely avoiding, spreading, limiting, minimizing/reducing, passing on and accepting the respective risk. Reports on the risk situation are submitted to the Management Board at least quarterly. This includes the top risks as well as the signiﬁcant risks, for which a detailed risk description is provided, including changes to the last report. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS The Supervisory Board is informed about the risk situation at least every quarter. This report also includes the top risks as well as the signiﬁcant risks, for which a detailed risk description is provided, including changes to the last report. NOTES TO THE ANNUAL ACCOUNTS Major risks – At Group level, risks are considered material if they have a high control priority, although non-substantial risks are of course also included in the risk management process. FURTHER INFORMATION AD-HOC REPORTING MITIGATION OF RISKS Both signiﬁcant risks identiﬁed outside the reporting dates and known risks whose assessment changes after a reporting date in such a way that the risk is classiﬁed as “material“ are reported ad hoc to the Management Board and, if applicable, to the Supervisory Board. Risks are mitigated by way of: − risk avoidance, e.g. planned activities are ultimately not carried out because the risk/reward proﬁle is not positive; − risk reduction, e.g. on process level by automating processes or observing dual control principles; process changes are analyzed and implemented usually by the process owners; − risk transfer, usually by taking out appropriate insurance policies; this process is usually initiated by the relevant process owner in consultation with Group Corporate Insurance to ensure that similar policies are not taken out multiple times to avoid unnecessarily high prices, that insurance policies cover all relevant departments and companies and that such policies are in line with the Group‘s corporate insurance approach; − risk diversiﬁcation, e.g. by avoiding risk accumulations and not being dependent on only a few customers, markets, assets, etc., and by identifying new markets. This is usually done by the Management Board and division heads. CORESTATE – ANNUAL REPORT 2021 81 ORGANIZATIONAL MEASURES TO OUR SHAREHOLDERS DESCRIPTION OF THE MAIN FEATURES OF THE INTERNAL CONTROL SYSTEM CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Organizational security measures are carried out by automated facilities. They comprise error-preventing measures that are integrated into both the structural and procedural organization of the companies and are intended to guarantee a speciﬁed level of security (e.g. separation of functions, access restrictions in the IT area, payment guidelines). ELEMENTS OF THE CONTROL SYSTEM CONSOLIDATED FINANCIAL STATEMENTS The internal control system (ICS) consists of regulations for managing the activities of Corestate (internal management system) and regulations for monitoring compliance with these regulations (internal monitoring system). It is structured as required by management and set up by the responsible departments and process owners. Its functionality and effectiveness are periodically reviewed and adjusted. The internal monitoring system includes process-integrated (organizational security measures, controls) and process-independent monitoring measures, which are primarily carried out by Internal Audit. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS − When processing business transactions with the help of IT, signiﬁcant asset items can be accessed. In addition to access authorizations/restrictions and data protection measures, work instructions for data entry, input control and the handling of incorrect entries are necessary in the IT area. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION − Work instructions contain precise descriptions of the work, their assignment to the relevant staff (structure, function, role and position) and, if applicable, regulations for their execution. They ensure that operational processes that occur in large quantities are handled uniformly. By deﬁning objectives and controls to provide assurance, management can gradually explore the overall need for controls. − The internal document system, including the deﬁned process ﬂows, is used for the identical processing of similar business transactions and the complete recording of data in the operational accounting system. Its organization includes measures for the design of the documents, the organization of the document ﬂow and the securing of the document storage. Internal Control System Internal Management System Internal Monitoring System Process-integrated Monitoring System Process-integrated Control System Organizational Safeguards Controls Internal Audit Ofﬁcers and (pre, current, post) Line Managers CORESTATE – ANNUAL REPORT 2021 82 CONTROLS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Controls are carried out by means of measures that are embedded as a process in the work and operating procedures of the Corestate companies, i.e. integrated into the workﬂow, because operations involving the risk of loss of assets, information or value or the risk of errors when dealing with external parties (clients and suppliers) should not remain uncontrolled. Controls by managers and employees are intended to ensure that existing risks are identiﬁed and managed. They are also intended to ensure that the unit concerned (e.g. department, group, company in the group) achieves its objectives in the context of fulﬁlling its tasks. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION Checks may be carried out before, during or after the operation to be checked. They can be carried out both by process-dependent persons and by automatic facilities, especially by IT (e.g. plausibility checks). The control associated with the work process has the aim of ﬁnding and preventing errors, if possible before the work process (or parts of it) is completed. As far as possible, upstream controls should therefore be preferred to downstream controls. CORESTATE – ANNUAL REPORT 2021 83 BASIC ELEMENTS AND PRINCIPLES TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The basic elements of Corestate‘s ICS include: CONSOLIDATED FINANCIAL STATEMENTS − process descriptions that deﬁne standardized procedures and clear − dual control principle: No essential process is possible without counterchecking. These cross-checks are established through the implementation of the dual control principle, but also automatically, e.g. through IT-supported system checks. responsibilities for the core business processes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS − the documentation of processes and controls to make the actions ANNUAL ACCOUNTS traceable and veriﬁable NOTES TO THE ANNUAL ACCOUNTS − separation of functions: The separation of functions considers the incompatibility of functions and tasks or the subdivision of work processes. One and the same person or unit (e.g. job group or department) can never carry out and control all phases of a business transaction alone without another person or unit intervening in the business transaction. If the separation of functions is removed (e.g. in dialogue applications), an equivalent takes its place, e.g. an automatic sampling procedure and/or random downstream checks. − functional segregation, which ensures relevant and risk-oriented measures and that decision-making, execution and control are not exclusively in the hands of one person or sub-organizational unit; FURTHER INFORMATION − the dual control principle for sensitive transactions; as well as rules on bias and incompatibility; detailed rules for dealing with potential conﬂicts of interest are laid down in further Group guidelines. − updates and further development of the ICS to enable an analysis − minimum rights: The principle of minimum rights means that employees should only have access to the information they need for their work. This also includes the corresponding security measures for IT systems, i.e. access and access authorizations adequate to the tasks and responsibilities are adequately restricted. Furthermore, only those authorizations for sensitive data are granted that are necessary for the fulﬁlment of the tasks. of and reaction to deﬁciencies and the need for adjustments. − transparency: Target concepts have been deﬁned and set up for the processes, which contain clear, detailed and comprehensible regulations for the workﬂows (documents and activities) and are documented in written form. CORESTATE – ANNUAL REPORT 2021 84 DOCUMENTATION OF THE CONTROLS OVERALL RISK SITUATION OF THE GROUP TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The controls are deﬁned, established and documented in the processes. As part of risk management, the decentralized risk managers identify, record, assess, regularly review and update risks in a regular process and in cooperation with the respective specialist departments. The risks are regularly recorded by the decentralized risk managers. Regular reports on the risks are provided. The overall risk situation of the entire Group as at 31 December 2021 is “low-medium” (31 December 2020: “low-medium”). The following tables show the risk situation for Corestate’s boutiques and the Group. The risk positions for risks that do not belong to a speciﬁc boutique but to more than one are summarized under “Across Boutiques”. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS In 2018 Corestate Capital Holding S.A. initiated a project concerning the implementation of an efﬁcient and comprehensive group-wide Internal Audit function. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION This role is performed by the experienced and well-established Internal Audit function of HANNOVER LEASING GmbH & Co. KG. Throughout 2021, the group-wide Internal Audit function has served as a “third line of defense” and integral part of Corestate’s internal control system. Special focus has been put on the regulated entities of the Corestate Group while at the same time a best- practice risk-based audit plan for all entities has been worked out. CORESTATE – ANNUAL REPORT 2021 85 DETAILED TOP 10 RISK REPORTING TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT As at 31 December 2021, the top 10 risks were allocated as follows: Risk Category Description CONSOLIDATED 1 2 7 FINANCIAL STATEMENTS Liquidity Risk This reﬂects the risk of delayed returns from deinvestments 1 2 4 3 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5 4 3 2 This reﬂects the risk of delayed repayments of loans granted by Corestate 6 5 Liquidity Risk ANNUAL ACCOUNTS This reﬂects the risk of less turnover and revenues NOTES TO THE ANNUAL ACCOUNTS 3 Market Price Risk Counterparty Default Risk Operational Risk Operational Risk Operational Risk Operational Risk Operational Risk Operational Risk 8 due to changing market environments 9 FURTHER INFORMATION This reﬂects the risk of non-foreseeable counterparty default events This reﬂects a litigation risk 4 10 5 This reﬂects a placement risk of a fund due to the COVID-19 pandemic 6 This reﬂects a litigation risk 7 This reﬂects a risk of increased litigation due to underperformances of funds managed by Corestate caused by the COVID-19 pandemic 8 1 This reﬂects a litigation risk 9 Class 1 2 3 4 5 This reﬂects a risk related to a tax audit Likelihood of occurence 10 The risk inventory shows that all relevant risks have been properly identiﬁed and assessed. Risks are managed accordingly. Material risks are appropriately examined by both the Management Board and the Supervisory Board, and measures taken are reviewed regularly. The risk matrix shows that, in view of the current assessment and measures taken, there are no risks that endanger the continued existence of the Group. CORESTATE – ANNUAL REPORT 2021 191 BALANCE SHEET ASSETS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) - Current year - Previous year - CONSOLIDATED FINANCIAL STATEMENTS A. Subscribed capital unpaid NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Subscribed capital not called - - - II. Subscribed capital called but unpaid B. Formation expenses - - - ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS - - - C. Fixed assets - 1,133.3 1,018.4 FURTHER INFORMATION I. Intangible assets Note C.1 2.5 - 3.4 1. Costs of development - - 3.4 3.4 - 2. Concessions, patents, licences, trade marks and similar rights and assets, if they were a. acquired for valuable consideration and need not be shown under C.I.3 b. created by the undertaking itself - 2.5 2.5 - Note C.1 - 3. Goodwill, to the extent that it was acquired for valuable consideration 4. Payments on account and intangible assets under development II. Tangible assets - - - Note C.1 0.2 0.1 - - Note C.2 0.1 - 1. Land and buildings - 2. Plant and machinery - Note C.2 - - - 3. Other ﬁxtures and ﬁttings, tools and equipment 4. Payments on account and tangible assets in the course of construction 0.1 - 0.1 - CORESTATE – ANNUAL REPORT 2021 192 BALANCE SHEET ASSETS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED FINANCIAL STATEMENTS III. Financial assets Note C.3 1,130.6 1,014.8 NOTES TO THE CONSOLIDATED 1. Shares in afﬁliated undertakings Note C.3.1 966.7 52.4 44.0 3.8 48.6 15.1 78.7 - 751.7 139.1 45.5 5.3 54.9 18.3 118.2 - FINANCIAL STATEMENTS 2. Loans to afﬁliated undertakings Note C.3.2 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS 3. Participating interests Note C.3.3 4. Loans to undertakings with which the undertaking is linked by virtue of participating interests - FURTHER INFORMATION 5. Investments held as ﬁxed assets Note C.3.4 6. Other loans Note C.3.5 D. Current assets I. Stocks 1. Raw materials and consumables - - - - - 2. Work in progress - - - 3. Finished goods and goods for resale 4. Payments on account - - - - - - II. Debtors Note C.4 70.4 3.5 3.5 - 87.3 1.7 1.7 - 1. Trade debtors Note C.4 a. becoming due and payable within one year b. becoming due and payable after more than one year - - CORESTATE – ANNUAL REPORT 2021 193 BALANCE SHEET ASSETS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED FINANCIAL STATEMENTS 2. Amounts owed by afﬁliated undertakings Note C.4.1 53.1 65.5 NOTES TO THE CONSOLIDATED a. becoming due and payable within one year b. becoming due and payable after more than one year 3. Amounts owed by undertakings with which the undertaking is linked by virtue of participating interests a. becoming due and payable within one year - 53.1 65.5 FINANCIAL STATEMENTS - - - ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Note C.4.2 13.3 17.2 - 13.3 17.2 FURTHER INFORMATION b. becoming due and payable after more than one year 4. Other debtors - - - Note C.4.3 0.5 2.9 a. becoming due and payable within one year - 0.5 2.9 b. becoming due and payable after more than one year - - - III. Investments - 2.2 - 1. Shares in afﬁliated undertakings 2. Own shares - - - - - Note C4.4 - - - 3. Other investments IV. Cash at bank and in hand E. Prepayments 2.2 6.2 30.9 Note C.5 3.0 5.6 Total assets 1,215.0 1,142.1 CORESTATE – ANNUAL REPORT 2021 194 BALANCE SHEET TO OUR SHAREHOLDERS CAPITAL, RESERVES AND LIABILITIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED FINANCIAL STATEMENTS A. Capital and reserves Note C.6 663.0 590.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS I. Subscribed capital Note C.6.1 2.5 1.9 II. Share premium account III. Revaluation reserve Note C.6.3 561.5 400.7 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS - - - IV. Reserves Note C.7 0.3 0.2 FURTHER INFORMATION 1. Legal reserve Note C.7.1 0.3 0.2 2. Reserve for own shares 3. Reserves provided for by the articles of association 4. Other reserves, including the fair value reserve a. Other available reserves b. Other non available reserves V. Proﬁt or loss brought forward VI. Proﬁt or loss for the ﬁnancial year VII. Interim dividends Note C.7.2 - - - - - - - - - - - - - - - - - 187.8 (89.0) - - 116.6 71.2 - - VIII. Capital investment subsidies - CORESTATE – ANNUAL REPORT 2021 195 BALANCE SHEET TO OUR SHAREHOLDERS CAPITAL, RESERVES AND LIABILITIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED B. Provisions Note C.8 8.4 5.1 - FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Provisions for pensions and similar obligations 2. Provisions for taxation - - - - - ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS 3. Other provisions Note C.8.1 8.4 5.1 C. Creditors Note C.9 543.6 495.9 193.5 193.5 - 546.4 502.5 200.1 0.1 FURTHER INFORMATION 1. Debenture loans - a. Convertible loans Note C.9.1 i) becoming due and payable within one year ii) becoming due and payable after more than one year b. Non-convertible loans - - 200.0 302.4 2.4 Note C.9.2 302.4 2.4 i) becoming due and payable within one year ii) becoming due and payable after more than one year 2. Amounts owed to credit institutions a. becoming due and payable within one year b. becoming due and payable after more than one year - - - - - 300.0 - 300.0 - - - - - CORESTATE – ANNUAL REPORT 2021 196 BALANCE SHEET TO OUR SHAREHOLDERS CAPITAL, RESERVES AND LIABILITIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED 3. Payments received on account of orders in so far as they are shown separately as deductions from stocks a. becoming due and payable within one year - - - - - FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - b. becoming due and payable after more than one year 4. Trade creditors - - - ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Note C.9.3 2.6 2.6 - 1.1 1.1 - a. becoming due and payable within one year - FURTHER INFORMATION b. becoming due and payable after more than one year 5. Bills of exchange payable - - - - a. becoming due and payable within one year - - - b. becoming due and payable after more than one year 6. Amounts owed to afﬁliated undertakings - - - Note C.9.4 37.4 13.0 24.4 4.3 0.2 4.1 39.3 13.2 26.2 3.3 0.1 3.2 a. becoming due and payable within one year - b. becoming due and payable after more than one year 7. Amounts owed to undertakings with which the undertaking is linked by virtue of participating interests a. becoming due and payable within one year - Note C.9.5 - - b. becoming due and payable after more than one year CORESTATE – ANNUAL REPORT 2021 197 BALANCE SHEET TO OUR SHAREHOLDERS CAPITAL, RESERVES AND LIABILITIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Current year Previous year CONSOLIDATED 8. Other creditors Note C.9.6 3.4 1.9 - 0.2 0.0 - FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS a. Tax authorities - - - - - - b. Social security authorities c. Other creditors ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS 1.5 1.5 - 0.2 0.2 - i) becoming due and payable within one year ii) becoming due and payable after more than one year D. Deferred income FURTHER INFORMATION - - TOTAL (CAPITAL, RESERVES AND LIABILITIES) 1,215.0 1,142.1 CORESTATE – ANNUAL REPORT 2021 198 PROFIT AND LOSS ACCOUNT TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Note D.1 Current year 16.3 Previous year 23.1 1. Net turnover CONSOLIDATED FINANCIAL STATEMENTS 2. Variation in stocks of ﬁnished goods and work in progress 3. Work performed by the undertaking for its own purposes and capitalised 4. Other operating income - - - - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - - ANNUAL ACCOUNTS Note D.2 1.5 2.7 NOTES TO THE ANNUAL ACCOUNTS 5. Raw materials and consumables and other external expenses a. Raw materials and consumables b. Other external expenses - (37.8) (34.9) FURTHER INFORMATION - - - Note D.3 (37.8) (34.9) 6. Staff costs Note D.4 (4.8) (4.8) (0.0) - (2.7) a. Wages and salaries - (2.7) b. Social security costs - - i) relating to pensions - - - ii) Other social security costs - (0.0) - c. Other staff costs - - 7. Value adjustments - Note C.1; C.2 - (3.9) (1.1) (2.7) (3.1) (0.9) (0.9) - a. in respect of formation expenses and of tangible and intangible ﬁxed assets b. in respect of current assets 8. Other operating expenses Note D.5 (1.1) CORESTATE – ANNUAL REPORT 2021 199 PROFIT AND LOSS ACCOUNT TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million Reference(s) Note D.6 Current year 51.3 Previous year 101.6 9. Income from participating interests CONSOLIDATED FINANCIAL STATEMENTS a. derived from afﬁliated undertakings b. Other income from participating interests - 51.3 - 101.6 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - ANNUAL ACCOUNTS 10. Income from other investments and loans forming part of the ﬁxed assets a. derived from afﬁliated undertakings - - - NOTES TO THE ANNUAL ACCOUNTS - - - FURTHER INFORMATION b. Other income not included under a) - - - 11. Other interest receivable and similar income a. derived from afﬁliated undertakings Note D.7 6.5 5.8 5.017 0.8 - 4.8 b. Other interest and similar income - 1.8 12. Share of proﬁt or loss of undertakings accounted for under the equity method 13. Value adjustments in respect of ﬁnancial assets and of investments held as current assets 14. Interest payable and similar expenses - - - Note D.8 (97.8) (17.1) (1.4) (15.7) (0.3) (89.0) (0.0) (89.0) (3.4) (18.4) (3.5) (14.8) (0.8) 71.2 (0.0) 71.2 Note D.9 a. concerning afﬁliated undertakings - b. Other interest and similar expenses - 15. Tax on proﬁt or loss Note D.10 16. Proﬁt or loss after taxation - - - 17. Other taxes not shown under items 1 to 16 18. Proﬁt or loss for the ﬁnancial year CORESTATE – ANNUAL REPORT 2021 201 TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT A. CORPORATE INFORMATION CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Corestate Capital Holding S.A. (hereafter „CCH SA“ or the „Company“) is a public limited liability company (Société Anonyme) incorporated under Luxembourg law, with registered ofﬁce at 4, Rue Jean Monnet, L-2180 Luxembourg, Grand Duchy of Luxembourg. The Company was registered with the Luxembourg Register of Commerce and Companies (Registre de Commerce et des Sociétés) (the “Companies Register”) under number B 199 780 on 07 September 2015. Basic Share Data NOTES TO THE ANNUAL ACCOUNTS WKN / ISIN A141J3 / LU1296758029 CCAP FURTHER INFORMATION Ticker Symbol / Reuters Code Common Code 129675802 Trading Segment Stock Exchange Type of Stock Prime Standard Frankfurt CCH SA was established on 21 August 2015 for an unlimited period of time. The Company‘s ﬁnancial year starts on 01 January and ends on 31 December of each year. No-par value bearer shares The Company applied for the admission of its shares to trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse), and, simultaneously, to the sub-segment thereof with additional post-admission obligations (Prime Standard) on 30 October 2017. Commencement of trading (Notierungsaufnahme) of the shares on the regulated market segment (Regulierter Markt) of the Frankfurt Stock Exchange (Frankfurt Wertpapierbörse) took place on 02 November 2017. CORESTATE – ANNUAL REPORT 2021 202 The Company’s shares (31.12.2021: 34,193,808; 31.12.2020: 25,666,025 ordinary shares) are quoted on a European regulated stock exchange (as deﬁned by art. 4 paragraph (1) point 14 of the Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in ﬁnancial instruments), which essentially increased the reporting and publishing requirements. The Company may enter into any type of loan agreement, execute and deliver and perform any swaps, futures, forwards, derivatives, options, repurchase, stock lending and similar transactions. The Company may generally use any techniques and instruments relating to investments for the purpose of their efﬁcient management, including, but not limited to, techniques and instruments designed to protect it against credit, currency exchange, interest rate risks and other risks. The descriptions above are to be construed broadly and their enumeration is not limiting. TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS The Company also prepares consolidated ﬁnancial statements in accordance with the International Financial Reporting Standards (“IFRS”), as adopted by the European Union, which are published according to the provisions of the Luxembourg Law and the exchange rules of the Frankfurt Stock Exchange. The Company is included in its consolidated accounts. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS TheCompany’spurposeshallincludeanytransactionoragreementwhichisentered into by the Company, provided it is not inconsistent with the foregoing matters. In general, the Company may take any controlling and supervisory measures and carry out any operation or transaction which it considers necessary or useful in the accomplishment and development of its purpose. The Company may carry out any commercial, industrial, and ﬁnancial operations, which are directly or indirectly connected with its purpose or which may favour its development. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION The main activity of the Company is as following: Pursuant to article 4 of the Company’s Articles of Association, the purpose of the Company is (i) the acquisition, holding and disposal, in any form, by any means, whether directly or indirectly, of participations, rights and interests in, and obligations of, Luxembourg and foreign companies or other assets including but not limited to real estate assets, (ii) the acquisition by purchase, subscription, or in any other manner, as well as the transfer by sale, exchange or in any other manner of stock, bonds, debentures, notes and other securities or ﬁnancial instruments of any kind (including notes or parts or units issued by Luxembourg or foreign mutual funds or similar undertakings) and receivables, claims or loans or other credit facilities and agreements or contracts relating thereto, and (iii) the ownership, administration, development and management of a portfolio of assets (including, among other things, the assets referred to in (i) and (ii) above). The Company may borrow in any form. It may enter into any type of loan agreement and it may issue notes, bonds, debentures, certiﬁcates, shares, beneﬁciary parts, warrants and any kind of debt or equity securities including under one or more issuance programmes. The Company may lend funds including the proceeds of any borrowings and/or issues of securities to its subsidiaries, afﬁliated companies or any other company. The Company may also give guarantees and grant security interests over some or all of its assets including, without limitation, by way of pledge, transfer or encumbrance, in favour of or for the beneﬁt of third parties to secure its obligations or the obligations of its subsidiaries, afﬁliated companies or any other company. CORESTATE – ANNUAL REPORT 2021 203 TO OUR SHAREHOLDERS B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS Estimates and judgements 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. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS The annual accounts are presented in million Euros. All values in these notes are rounded to the nearest million Euros (€m), except where otherwise indicated. The use of automatic data processing can lead to rounding differences in the addition of rounded amounts or percentage rates, therefore some of the total sums disclosed in the accounts may not add up. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION B.1 BASIS OF PREPARATION The annual accounts have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention. Financial information presented in parentheses denotes the negative of such number presented. In respect of ﬁnancial data set out in these ﬁnancial statements a dash (“–”) indicates that the relevant ﬁgure is not available, while a zero (“0”) implies that the relevant ﬁgure is available, but has been rounded to or equals zero. Accounting policies and valuation rules are, besides the ones laid down by the law of 19 December 2002 (as amended), determined and applied by the Management Board. In this context, the new Luxembourg Law of 18 December 2015 was also considered. The new Luxembourg Law, which is applicable to ﬁnancial years beginning on or after 01 January 2016, had mainly an impact on the Company’s presentation of the annual accounts and amendments in the notes to the Company’s accounts. Furthermore, the materiality concept was introduced and deﬁned as the level of information whose omission or misstatement could reasonably be expected to inﬂuence decisions that users make on the basis of the Company’s annual accounts. The materiality of individual items must be assessed in the context of other similar items. The new Luxembourg Law clariﬁes that immaterial information should not be subject to the presentation and disclosure requirements enforced by the Accounting law. As at December 31, 2021, the Company‘s current liabilities exceed its current assets by € 144.8m. The ﬁnancial statements have been prepared on a going concern basis. In assessing the Company‘s ability to continue as a going concern, the Management Board has considered the expected future proceeds from divestments and freeing up capital initiatives as the basis for reﬁnancing the two major debt instruments. Accordingly, the reﬁnancing strategy is to initially repay the convertible bond amounting to € 193.5m as of 31 December 2021 from net operating cash ﬂows and from the repayment, settlement and placement of various balance sheet assets, while the senior bond amounting to € 300.0m as of 31 December 2021 maturing in April 2023 is to be reﬁnanced through the issuance of one or more new debt instruments. Together with investors and advising banks, it is also being considered to reﬁnance the convertible bond and the senior bond together in the course of 2022 by simultaneously issuing a new senior bond and using the accumulated cash. Management is conﬁdent in its ability to execute its reﬁnancing plan. However, the Company’s ability to complete its reﬁnancing strategy depends on the timing of and amounts from the realization of the balance sheet assets, the capital market situation and the performance of the Company which together indicate that a material uncertainty exists that may cast signiﬁcant doubt on the Company’s ability to continue as a going concern. The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the Management Board to exercise their judgment in the process of applying the accounting policies. Changes in assumptions may have a signiﬁcant impact on the annual accounts in the period in which the assumptions changed. The Management Board believes that the underlying assumptions are appropriate and that the annual accounts therefore present the ﬁnancial position and results fairly. The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next ﬁnancial year. CORESTATE – ANNUAL REPORT 2021 204 B.2.4 FINANCIAL ASSETS TO OUR SHAREHOLDERS B.2 SIGNIFICANT ACCOUNTING POLICIES B.2.1 FORMATION EXPENSES CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Shares in afﬁliated undertakings and participating interests are recorded at their acquisition price, including the expenses incidental thereto. They are subject to value adjustments in case of permanent impairment in value. These value adjustments are not maintained if the reasons for making them have ceased to exist. The formation expenses and subsequent share capital issue expenses of the Company are directly charged to the proﬁt and loss account of the period in which they incurred. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Long-term loans and claims held as ﬁxed assets are stated at acquisition costs plus capitalised interests less reimbursements received to date. A value adjustment is made when the net realisable value is lower than the net book value. These value adjustments are not maintained if the reasons for making them have ceased to exist. B.2.2 INTANGIBLE ASSETS NOTES TO THE ANNUAL ACCOUNTS Intangible assets are valued at purchase price including the expenses incidental thereto or at production costs, less cumulated depreciation and value adjustments. These value adjustments are not continued if the reasons for the value adjustments have ceased to apply. FURTHER INFORMATION B.2.5 DEBTORS The depreciation rates and methods applied are as follows: Debtors are measured at their nominal value. They are subject to value adjustments where their recovery is compromised. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply. Intangible assets Depreciation rate p.a. Depreciation method IT Software 33.333% linear, pro rata temporis Licence 20.000% linear, pro rata temporis B.2.6 CASH AT BANK AND CASH IN HAND B.2.3 TANGIBLE ASSETS Cash is measured at its nominal value. Tangible assets are measured at purchase price including the expenses incidental thereto or at production costs, less cumulated depreciation and value adjustments. Value adjustments are not continued if the reasons for the value adjustments have ceased to apply. The depreciation rates and methods applied are as follows: Tangible assets Depreciation rate p.a. Depreciation method IT Equipment 33.333% linear, pro rata temporis CORESTATE – ANNUAL REPORT 2021 205 B.2.7 FOREIGN CURRENCY TRANSLATION B.2.9 PROVISIONS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The Company maintains its postings in Euro. Transactions expressed in currencies other than Euro are translated into Euro at the exchange rate effective at the time of the transaction. Provisions are recognised to cover losses or debts, the nature of which is clearly deﬁned and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or the date on which they will arise. CONSOLIDATED FINANCIAL STATEMENTS Formation expenses and long-term assets expressed in currencies other than Euro are translated into Euro at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historical exchange rates. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Provisions may also be recorded to cover charges which have their origin in the ﬁnancial year under review or in a previous ﬁnancial year, the nature of which is clearly deﬁned and which, at the date of the balance sheet, are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise. ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the proﬁt and loss account of the year/period. FURTHER INFORMATION Provisions for taxation corresponding to the difference between the tax liability estimated by the Company and the advance payments for the ﬁnancial years are recorded under the caption „Tax authorities within other creditors“. Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historical exchange rate or the value determined based on the exchange rates effective at the balance sheet date. Unrealised exchange losses are recorded in the proﬁt and loss account; realised exchange gains and losses are recorded in the proﬁt and loss account at the moment of their realisation. B.2.10 DEBT Debt is recorded at its reimbursement value. Where the amount repayable is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt based on a linear/ actuarial method. Where there is an economic link between an asset and liability, these are valued in total according to the method described above and the net unrealised losses are recorded in the proﬁt and loss account whereas the net unrealised exchange gains are not recognised. B.2.11 NET TURNOVER The net turnover comprises the amounts derived from the sale of products and the delivery of services within the Company‘s ordinary activities, after deductions of sales rebates, value added tax, and other taxes directly linked to the turnover. B.2.8 PREPAYMENTS Prepayments include ﬁnancing fees and expenditures incurred during the ﬁnancial year but relating to a subsequent ﬁnancial year. Financing fees are amortised on a straight-line basis over the duration of the related debt. CORESTATE – ANNUAL REPORT 2021 206 TO OUR SHAREHOLDERS C. NOTES TO THE BALANCE SHEET CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS C.1 INTANGIBLE ASSETS ANNUAL ACCOUNTS The movements for the period are as follows: NOTES TO THE ANNUAL ACCOUNTS Ownership 01.01.21 Additions Transfers Disposals 31.12.21 01.01.21 Depreciation 31.12.21 31.12.21 31.12.20 FURTHER INFORMATION Intangible ﬁxed assets % € million € million € million € million € million € million € million € million € million € million 1 Research and development costs - - - - - - - - - - - 2 Concessions, patents, licences, trade marks and similar rights and assets - - - - - - - - - - - IT Software and Homepage - - 4.5 0.4 - - - - - - 4.5 0.4 1.9 0.2 0.9 0.1 2.7 0.3 1.7 0.1 2.6 0.2 Concessions, licences, industrial and similar rights and assets Internally generated intangible - - - 0.6 5.5 - 0.0 0.0 - - - - - - - 0.7 5.5 - - 2.1 - 0.1 1.1 - 0.1 3.1 - 0.5 2.4 - 0.6 3.4 - ﬁxed assets 3 Goodwill, to the extent that it was acquired for valuable consideration 4 Payments on account and intangible ﬁxed assets under development - - - - - - - - - - - Payments on account - - - - - 0.2 0.2 0.2 - - - - - - 0.2 0.2 5.7 - - - - - - 0.2 0.2 2.5 0.0 0.0 3.4 Total 5.5 2.1 1.1 3.1 CORESTATE – ANNUAL REPORT 2021 207 TO OUR SHAREHOLDERS C.2 TANGIBLE ASSETS The movements for the period are as follows: CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 01.01.2021 Additions Transfers Disposals 31.12.21 01.01.21 Depreciation 31.12.21 31.12.21 31.12.20 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Tangible ﬁxed assets € million € million € million € million € million € million € million € million € million € million NOTES TO THE ANNUAL ACCOUNTS Other ﬁxtures and ﬁttings, tools and equipment - - - - - - - - - - FURTHER INFORMATION IT Equipment Low-value assets Total 0.1 - - 0.0 0.0 - - - - - - 0.1 0.0 0.2 0.1 - 0.0 0.0 0.1 0.1 0.0 0.2 0.1 0.1 - 0.1 0.1 0.1 0.1 CORESTATE – ANNUAL REPORT 2021 208 TO OUR SHAREHOLDERS C.3 FINANCIAL ASSETS A detailed statement of changes is attached in appendix 1 of the Notes. The movements for the period are as follows: CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS Loans to afﬁliated undertakings held as ﬁxed assets Shares in undertakings Loans to undertakings with which the undertaking is linked by virtue of participating interests NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS with which the undertaking is linked by virtue of participating interests ANNUAL ACCOUNTS Shares in afﬁliated undertakings Investments held as ﬁxed assets Other loans held as ﬁxed assets NOTES TO THE ANNUAL ACCOUNTS € million Total - FURTHER INFORMATION Gross book value - 751.7 251.9 (6.7) - - 139.1 87.4 (112.5) - - 45.5 1.0 (0.8) - - 5.3 1.1 - - - Opening balance as at 01 January 2021 Additions for the period 54.9 18.3 1,014.8 342.0 (130.1) - - 0.5 Disposals for the period (6.3) (3.7) Transfers for the period - - - Currency translation effects for the period Closing balance as at 31 December 2021 Accumulated value adjustments Opening balance as at 01 January 2021 Depreciation charge for the year Closing balance as at 31 December 2021 Net book value - closing balance Net book value - opening balance - - - - - - - 996.9 - 114.0 - 45.7 - 6.4 - 48.6 15.1 1,226.6 - - - - - - - - - - - - (30.1) (30.1) 966.7 751.7 (61.6) (61.6) 52.4 139.1 (1.7) (1.7) 44.0 45.5 (2.7) (2.7) 3.7 5.3 (96.1) (96.1) 1,130.5 1,014.8 - - 48.6 54.9 15.1 18.3 CORESTATE – ANNUAL REPORT 2021 209 Undertakings in which the Company holds at least 50% of the share capital are as follows: TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Registered ofﬁce and Last balance sheet date Net equity at the balance sheet date of the company concerned (in €m) Proﬁt or loss for the last ﬁnancial year (in €m) Name of the undertaking Country of incorporation Ownership (in %) CONSOLIDATED FINANCIAL STATEMENTS € million 2021 108.1 54.0 42.0 37.6 35.6 31.2 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS HFS Helvetic Financial Services AG Corestate CAPITAL AG Corestate Capital Group GmbH Corestate Capital Services GmbH Ginova PropCo S.à r.l. Ginova AIF S.à r.l. Wollerau/Switzerland Baar/Switzerland 100.00 100.00 100.00 100.00 100.00 100.00 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 70.0 0.6 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Frankfurt on Main/Germany Wollerau/Switzerland Luxembourg (24.8) 14.2 1.1 FURTHER INFORMATION Luxembourg (0.0) Corestate Bank GmbH (vormals: Aggregate Financial Services GmbH) Frankfurt on Main/Germany 100.00 31.12.2021 28.5 10.0 BER REV HoldCo S.à r.l. Bego HoldCo S.à r.l. Luxembourg Luxembourg Madrid/Spain Madrid/Spain Paris/France 100.00 100.00 100.00 100.00 100.00 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 12.9 6.2 5.8 5.8 5.4 9.8 (0.0) (0.0) (0.1) (2.5) Bego HoldCo I S.L. Bego PropCo I S.L. Corestate Capital France HoldCo SAS Gabriela HoldCo S.à r.l. (prev. Corestate Shelf 18 S.à r.l.) Luxembourg 100.00 31.12.2021 5.1 (0.0) Gabriela HoldCo S.L. Madrid/Spain Madrid/Spain Leipzig/Germany Luxembourg 100.00 100.00 100.00 100.00 31.12.2021 31.12.2021 31.12.2021 31.12.2021 4.8 4.8 4.5 4.0 (0.2) (0.1) 0.0 Gabriela PropCo S.L. UPARTMENTS Real Estate GmbH DONALD HoldCo S.à r.l. 0.1 CORESTATE – ANNUAL REPORT 2021 210 Registered ofﬁce and Country of incorporation Last balance sheet date Net equity at the balance sheet date of the company concerned (in €m) Proﬁt or loss for the last ﬁnancial year (in €m) TO OUR SHAREHOLDERS Name of the undertaking Ownership (in %) CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 3.0 2.9 2.5 2.4 1.9 1.8 1.5 1.5 1.3 1.0 0.8 0.8 0.7 0.7 0.7 0.6 0.5 0.5 0.5 0.4 CONSOLIDATED Wallhalla HoldCo S.á r.l. Luxembourg 100.00 100.00 100.00 100.00 100.00 100.00 84.92 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 (0.0) 0.0 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Corestate Capital Advisors GmbH Echo HoldCo S.à r.l. Frankfurt on Main/Germany Luxembourg (0.0) 1.5 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS STAM Europe SAS Paris/France FURTHER INFORMATION Plutos HoldCo S.á r.l. Luxembourg (0.0) (1.4) (0.0) 0.0 Capera Immobilien Service GmbH PALMYRA Verwaltungs GmbH & Co. Verm. KG S.e.n.c PALMYRA Verwaltungs GmbH & Co. Vermietungs KG i.L. CRM Students Ltd Neu-Isenburg/Germany Luxembourg Pullach/Germany Oxford/United Kingdom Luxembourg 89.58 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 (1.9) (0.1) 0.0 HARBOUR AcquiCo 1 AIF S.à r.l. Hannover Leasing Verwaltungsgesellschaft mbH Iberian HoldCo II S.à r.l. Pullach/Germany Luxembourg (0.0) (0.4) (4.6) (0.1) (1.0) 0.0 STAM France Investment Managers SAS Stadttor Düsseldorf AcquiCo S.à r.l. Corestate Student Home Holding S.à r.l. Corestate CAPITAL Fund Management S.à r.l. GENOST Consulting GmbH Paris/France Luxembourg Luxembourg Luxembourg Leipzig/Germany Frankfurt on Main/Germany Lisbon/Portugal Frankfurt on Main/Germany Corestate CIV GmbH 0.0 Cisnes E Silhuettas 0.3 Corestate Capital Investors (Europe) GmbH (0.5) CORESTATE – ANNUAL REPORT 2021 211 Registered ofﬁce and Country of incorporation Last balance sheet date Net equity at the balance sheet date of the company concerned (in €m) Proﬁt or loss for the last ﬁnancial year (in €m) TO OUR SHAREHOLDERS Name of the undertaking Ownership (in %) CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 0.4 CONSOLIDATED FINANCIAL STATEMENTS Tempelhof Twins TopCo S.à r.l. ROSE HoldCo S.à r.l. Iberian Investments II HoldCo S.à r.l. Stam Co-Invest Luxembourg Luxembourg Luxembourg Luxembourg 100.00 100.00 100.00 77.67 31.12.2021 31.12.2021 31.12.2021 31.12.2021 (0.0) 0.1 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 0.4 0.3 (0.0) 0.1 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS 0.3 Corestate Capital International S.a r.l. (prev. CCIS Master HoldCo S.à r.l.) FURTHER INFORMATION Luxembourg 100.00 31.12.2021 0.3 (0.0) Dedan AIF S.à r.l. (prev. Dedan HoldCo S.à r.l.) STAM Property Management SAS Hartly Invest S.L.U. Luxembourg 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 (0.1) 0.0 Paris/France Madrid/Spain 0.0 AF ATHENA GmbH Frankfurt am Main/Germany Milan/Italy (0.0) (0.1) (0.0) (0.0) 0.1 Corestate Capital Italy S.R.L. Madison HoldCo S.à r.l. Luxembourg Bad Honnef OpCo GmbH Frankfurt am Main/Germany Vienna/Austria Urban Micro Estate Immobilienverwaltungs GmbH Potsdam Student Home AcquiCo II S.à r.l. Wallhalla PropCo S.á r.l. Luxembourg (0.2) (2.8) (2.1) (0.5) (0.0) (0.0) Luxembourg Court HoldCo GmbH Frankfurt am Main/Germany Frankfurt am Main/Germany Zug/Switzerland Luxembourg Corestate MCIF GmbH & Co. KG Urban Micro Estate Swiss Immobilienverwaltungs GmbH Corestate Shelf 15 S.à r.l. CORESTATE – ANNUAL REPORT 2021 212 Registered ofﬁce and Country of incorporation Last balance sheet date Net equity at the balance sheet date of the company concerned (in €m) Proﬁt or loss for the last ﬁnancial year (in €m) TO OUR SHAREHOLDERS Name of the undertaking Ownership (in %) CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 0.1 CONSOLIDATED FINANCIAL STATEMENTS Substantia KG Pullach/Germany Luxembourg 100.00 100.00 89.58 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 (0.0) (0.2) 0.0 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Frankfurt Student Home AcquiCo II S.à r.l. LOMBARDO Verwaltungsgesellschaft mbH Bayreuth Student Home AcquiCo II S.à r.l. Corestate FIF Portfolio Verwaltung GmbH Projekt AcquiCo III S.à r.l. 0.1 Pullach/Germany Luxembourg 0.1 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 0.1 (0.1) (0.0) (0.2) (0.3) (0.1) 0.0 FURTHER INFORMATION Hamburg/Germany Luxembourg 0.0 0.0 Corestate Capital Partners GmbH Grindel AcquiCo II S.à r.l. Pfäfﬁkon/Switzerland Luxembourg 0.0 0.0 Aggregate Debt GP Sarl Luxembourg 0.0 Urban Micro Estate Spain Madrid/Spain 0.0 (0.0) 0.0 Corestate Marketing GmbH Corestate Capital Beteiligungs Verwaltungs GmbH Aggregate Debt Advisory GmbH Aggregate Debt Fund S.C.A. SICAV-RAIF JOYN Vermietungsgesellschaft mbH Livision GmbH Frankfurt am Main/Germany Frankfurt am Main/Germany Frankfurt am Main/Germany Luxembourg 0.0 0.0 (0.0) (0.2) 0.0 0.0 0.0 Frankfurt am Main/Germany Frankfurt am Main/Germany Warsaw/Poland (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) Mariggo Investments sp. z o. o. Paolia Sp. z o.o. Warsaw/Poland Corestate Shelf 11 S.à r.l. Luxembourg CORESTATE – ANNUAL REPORT 2021 213 Registered ofﬁce and Country of incorporation Last balance sheet date Net equity at the balance sheet date of the company concerned (in €m) Proﬁt or loss for the last ﬁnancial year (in €m) TO OUR SHAREHOLDERS Name of the undertaking Ownership (in %) CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 (0.1) (0.1) (0.1) (0.1) (0.2) (0.2) (2.0) (2.6) (6.2) CONSOLIDATED FINANCIAL STATEMENTS Corestate MCIF Germany GmbH & Co. KG Corestate Ben HoldCo GmbH & Co. KG CRM Micro Living Services Italy S.R.L. Rewiana Sp. z o.o. (ehemals CRM Poland sp.z.o.o.) Mainz Student Home AcquiCo II S.à r.l. Tempelhof Twins HoldCo S.à r.l. Frankfurt am Main/Germany Frankfurt am Main/Germany Milan/Italy 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 31.12.2021 (0.0) (0.1) (0.2) (0.0) (0.0) (0.2) (0.2) (2.6) (1.4) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Warsaw/Poland FURTHER INFORMATION Luxembourg Luxembourg Corestate Capital Transactions AG Corestate Capital Sales Holding S.à r.l. Corestate Capital Partners UK Limited Baar/Switzerland Luxembourg London/United Kingdom C.3.1 SHARES IN AFFILIATED UNDERTAKINGS A detailed composition of shares in afﬁliated undertakings and a statement of changes are attached in appendix 1 of the Notes. In 2021, the acquisition of Corestate Bank GmbH (formerly known as ‘Aggregate Financial Services GmbH’) was the major addition to the shares in afﬁliated undertakings amounting to € 166.4m. CORESTATE – ANNUAL REPORT 2021 214 C.3.2 LOANS TO AFFILIATED UNDERTAKINGS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT A detailed composition of loans to afﬁliated undertakings and a statement of changes are attached in appendix 1 of the Notes. In October 2021, the loan to Corestate Capital Advisors GmbH amounting to € 80.0m was contributed into Corestate Capital Group GmbH as capital increase (see also changes in shares in afﬁliated undertakings). CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS € million Start date Maturity (years) interest rate collateral 31 Dec 2021 31 Dec 2020 NOTES TO THE ANNUAL ACCOUNTS Long-term loans to subsidiaries Corestate Capital Group GmbH Corestate Capital France HoldCo SAS Corestate Capital Advisors GmbH Corestate Capital Sales Holding S.à r.l. Tempelhof Twins TopCo S.à r.l. Corestate Capital Partners UK Ltd. Corestate Student Home Holding S. à r.l. STAM Co-Invest S.á r.l. FURTHER INFORMATION 01.08.2018 15.01.2021 04.10.2021 07.01.2019 23.09.2019 01.09.2018 08.02.2017 01.07.2020 04.08.2020 11.03.2021 23.06.2020 5 5 1.000% 0.500% 2.260% 3.000% 4.750% 5.500% 0.000% 0.000% 0.000% 1.000% 2.490% unsecured unsecured unsecured unsecured unsecured unsecured unsecured unsecured unsecured unsecured unsecured 3.8 28.3 4.1 69.9 - 5 55.4 5.6 2.8 3.9 0.8 0.6 0.1 - 5 5.6 5 2.9 5 5.5 5 0.7 10 5 1.1 Iberian HoldCo II S. à r.l. 0.1 Monet S.à r.l. 10 5 0.1 Urban Micro Estate Poland Sp. z o.o Total 0.2 - 52.4 139.1 CORESTATE – ANNUAL REPORT 2021 215 C.3.3 PARTICIPATING INTERESTS C.3.5 OTHER LOANS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT A detailed composition of participating interests and a statement of changes are attached in appendix 1 of the Notes. A detailed composition of other loans and a statement of changes are attached in appendix 1 of the Notes. CONSOLIDATED FINANCIAL STATEMENTS The Company typically invests between 5% and 10% in its investment products structured for its semi-institutional and private clients as alignment capital investment. Since CCH SA provides comprehensive real estate investment management services to and is acting as asset manager for such investment structures (also referred to as „Projects”), these investment structures qualify as a participating interest under Lux GAAP. On 18 July 2018, the Company as lender and WGS Private Equity Beteiligungs GmbH, WGS Management GmbH and WGS Verwaltung GmbH (all seated in Königstein/Germany) as borrowers entered into a loan agreement. The maximum available loan amount under the agreement is € 15.6m which is paid directly to WGS Private Equity Beteiligungs GmbH. In the previous year the loan was classiﬁed under other debtors as the loan was deemed to be repaid by the end of July 2020. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION On 21 July 2020, the Company as lender and Prime Partners GmbH, as borrowers superseding WGS Management GmbH as party to the initial loan agreement, entered into an extended loan agreement. The loan shall bear interest at a rate of 3.4% per annum. The loan will be repaid by December 31, 2026. To date, Prime Partners GmbH has met all contractual payment obligations without restriction. C.3.4 INVESTMENTS HELD AS FIXED ASSETS With the investment agreement dated 23 April 2018, CCH SA has advised HANSAINVEST Hanseatische Investment GmbH, Hamburg, to implement the real estate Alternative Investment Funds “Corestate Opportunity Deutschland I Fonds (Luxembourg)”. In 2019, CCH SA purchased additional shares of Corestate Opportunity Deutschland I Fonds (Luxembourg) amounting to € 44.9m increasing the total investment from € 10.0m to € 54.9m. At the end of 2021, the existing carrying amount of € 54.9m was revalued to the permanently reduced share value of the fund and thus a carrying amount of € 48.6m. CORESTATE – ANNUAL REPORT 2021 216 C.4.2 AMOUNTS OWED BY UNDERTAKINGS WITH WHICH THE UNDERTAKING IS LINKED BY VIRTUE OF PARTICIPATING INTERESTS C.4 DEBTORS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Debtors are mainly composed of: € million 31 Dec 2021 3.5 31 Dec 2020 € million 2021 0.3 0.5 0.3 3.2 - 2020 3.3 2.9 2.1 1.8 1.5 1.1 0.8 0.8 0.6 0.5 0.4 0.3 0.2 0.1 0.6 17.2 CONSOLIDATED FINANCIAL STATEMENTS Receivables from Project Iberian Receivables from Project Turicum Receivables from Project 4711 Receivables from Project HIGHSTREET VIII Receivables from Project CC SH Receivables from Project Tablas Receivables from Project Pallars Receivables from Project Echo Receivables from Project Olympic Receivables from Project HIGHSTREET Premium II Receivables from Project HIGHSTREET VI Receivables from Project BCC Receivables from Project LIVER Receivables from Project Rose Others Trade Debtors 1.7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Amounts owed by Afﬁliated Undertakings 53.1 65.5 ANNUAL ACCOUNTS Amounts owed by Undertakings with which the Undertaking is linked by Virtue of Participating Interests NOTES TO THE ANNUAL ACCOUNTS 13.3 17.2 FURTHER INFORMATION Other Debtors 0.5 2.9 Total 70.4 87.3 1.6 0.1 1.6 1.2 1.0 1.2 0.9 0.5 0.1 0.9 13.3 Trade debtors in the amount of € 3.5m (December 31, 2020: € 1.7m) include various fee income streams. The decrease of the other debtors results from reconciliation of the vat receivables and VAT payable. C.4.1 AMOUNTS OWED BY AFFILIATED UNDERTAKINGS € million 31 Dec 2021 53.0 31 Dec 2020 27.4 Receivables from Delivery and Service Relations Short-term Loans (including Accrued Interests) and Other Receivables 0.1 38.1 Corestate Capital France HoldCo SAS - 0.0 28.9 9.1 HFS Helvetic Financial Services AG Total Others 0.1 0.2 Total 53.1 65.5 In 2021, the Company was able to reduce the amounts owed by undertakings with which the undertaking is linked by virtue of participating interests by € 3.8m, which is primarily due to the fees received from project Turicum amounting to € 2.4m. In 2021, the receivables from delivery and service relations resulted from afﬁliated undertakings amounting to € 53.0m (December 31, 2020: € 27.4m). The increase of the receivables from delivery and service relations are mainly due to dividend distribution of € 42,6m of HFS Helvetic Financial Services AG. CORESTATE – ANNUAL REPORT 2021 217 C.4.3 OTHER DEBTORS C.5 PREPAYMENTS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 0.5 2020 2.8 0.0 - € million 31 Dec 2021 31 Dec 2020 VAT Receivables Transaction Costs Bonds 2.8 0.2 3.0 5.1 0.5 5.6 CONSOLIDATED FINANCIAL STATEMENTS Deposits 0.0 Others NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Wage and Church Taxes Receivables 0.0 Total ANNUAL ACCOUNTS Others 0.0 0.0 2.9 NOTES TO THE ANNUAL ACCOUNTS Total 0.5 The bond-related transaction costs result from the issuance of the two bonds (refer to Notes C.9.1 and C.9.2) and comprise mainly bank and advisory fees, commissions as well as registration costs. At issuance, these costs were capitalized as deferred charges and amortized over the bonds’ respective terms. FURTHER INFORMATION VAT receivables mainly result from transactions of the Company with third parties located in the EU zone (reverse charge). In consequence, CCH SA has input tax rebate claims against the Luxembourg tax authorities from value added taxes (“VAT”). In 2021, the VAT receivables and vat payables are reconciled. C.6 CAPITAL AND RESERVES C.6.1 SUBSCRIBED CAPITAL C.4.4 INVESTMENTS All shares are dematerialized shares without a par value (dematerialized shares are only represented by a record in a securities account; ownership in the shares is established by such inscription in a securities account). The shares are freely transferableinaccordancewiththelegalrequirementsforsharesindematerialized form, that is, through book-entry transfers. There are no prohibitions on disposals or restrictions with respect to the transferability of the shares. € million 31 Dec 2021 31 Dec 2020 Other Investments Total 2.2 - 2.2 - The increase in investments is due to the purchase of securities related to a real estate investment in Berlin. CORESTATE – ANNUAL REPORT 2021 218 Subscribed capital Share Premium Reserves for own shares Proﬁt and loss brought forward Proﬁt or loss for the ﬁnancial year TO OUR SHAREHOLDERS € million Reserves Total CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT As at 31 December 2019 1.6 - 316.2 6.7 0.2 36.0 80.6 441.2 - CONSOLIDATED FINANCIAL STATEMENTS Transfer of Proﬁt or Loss - - - 80.6 (80.6) NOTES TO THE CONSOLIDATED Increase of Subscribed Capital Issue of Subscribed Capital (from Exercise of Share Options) Conversion of reserves in share premium Capital Reserves 0.3 0.0 0.0 - 74.3 - - - - 74.6 0.0 FINANCIAL STATEMENTS - - - - - ANNUAL ACCOUNTS 6.7 (6.7) - - - - NOTES TO THE ANNUAL ACCOUNTS 3.6 - - - - 71.2 71.2 (71.2) - 3.6 FURTHER INFORMATION Proﬁt/(Loss) for the Period - - 400.7 - - - 0.2 - - 116.6 71.2 - 71.2 590.6 - As at 31 December 2020 1.9 - 0.0 Transfer of Proﬁt or Loss - Issue of Subscribed Capital (from Exercise of Share Options) Capital Reserves 0.6 - - - 0.6 160.8 - - - - - 160.8 - Additions to the Legal Reserve Proﬁt/(Loss) for the Period - - - 0.1 - (0.1) - - - - (89.0) (89.0) (89.0) 663.0 As at 31 December 2021 2.5 561.5 0.0 0.3 187.7 CORESTATE – ANNUAL REPORT 2021 219 Each share carries one vote at the Company’s shareholders’ meeting. There are no restrictions on voting rights. All shares carry the same dividend rights. In the event of the Company’s liquidation, any proceeds will be distributed to the holders of the shares in proportion to their interest in the Company’s share capital. C.6.2 AUTHORISED CAPITAL TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The Management Board may withdraw or limit the preferential subscription rights of the shareholders under the authorized capital in accordance with the Articles of Association. CONSOLIDATED FINANCIAL STATEMENTS At the end of ﬁrst half of 2021, the Company issued 8.500.00 new shares out of its 2021 authorized capital that have been transferred as part of the consideration transferred for the acquisition of Corestate Bank GmbH in a contribution in kind transaction. Hence, the share capital increased by € 637.500 to € 2.562.452. In 2020, 4,311,608 shares representing a share capital increase of € 336,493 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS have been issued by the Management Board out of the authorized capital. ANNUAL ACCOUNTS Additionally, 8,527,783 shares representing a share capital of € 639,584 have been issued by the Management Board out of the authorized capital in 2021. NOTES TO THE ANNUAL ACCOUNTS In July 2021, 27.783 shares were granted as part of the long-term incentive payments for several board members as well as for earn-out compensation payments due to an additional purchase price portion of the 2019 acquired UK located subsidiary CRM. FURTHER INFORMATION Since the annual general meeting on 26 June 2021, the authorized capital represented by a maximum of 30,000,000 shares without nominal value of in the Company in an amount of € 2,250,000 was given. Due to the changes during the year 2021, the Company’s share capital as at 31 December 2021 is set at € 2,562,452 (2020: € 1,924,953) represented by 34,193,808 (2020: 25,666,025) shares which are fully paid up. All Shares are dematerialized shares without a par value. The Management Board is authorized to determine the terms and conditions attaching to any subscription and issuance of shares pursuant to the authority granted under article 5.5 of the Articles of Association, including by setting the time and place of the issue or the successive issues of shares, the issue price, with or without a share premium, and the terms and conditions of payment for the shares under any documents and agreements including, without limitation, convertible loans, option agreements or stock option plans. The Management Board is also authorized to issue convertible bonds, or any other convertible debt instruments, bonds carrying subscription rights or any other instruments entitling their holders to subscribe for or be allocated with shares, such as, without limitation, warrants, under the authorized capital. The Management Board may withdraw or limit the preferential subscription rights of the shareholders under the authorized capital in accordance with the Articles of Association. CORESTATE – ANNUAL REPORT 2021 220 C.6.3 SHARE PREMIUM AND SIMILAR PREMIUMS C.7 RESERVES TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT The private placement dated 23 February 2017 results in a capital increase allocated to “Share premium account“ in an amount of € 22,641,326.14. On 28 April 2017, the Company’s annual general meeting resolved to pay a distribution for the ﬁnancial year ended 31 December 2016 amounting to € 13,606,999.00 (corresponding to € 1.00 per issued share) out of the freely distributable reserves of the Company to the existing shareholders. From the issuance of new shares in connection with the acquisition of HFS and the acquisition of ATOS Group result an increase of “Share premium account“ in an amount of € 330,884,125.80 respectively € 11,990,164.20. C.7.1 LEGAL RESERVE CONSOLIDATED FINANCIAL STATEMENTS The Company is required to allocate a minimum of 5% of its annual net income to a legal reserve until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS C.7.2 RESERVE FOR OWN SHARES FURTHER INFORMATION At the Company’s annual general meeting held on 27 April 2018, the shareholders of Corestate Capital Holding S.A. resolved a distribution out of the existing capital reserves in an aggregate amount of € 42,588,246.00 (corresponding to € 2.00 per issued share) to the shareholders. According to article 6.3 of the Articles of Association, the Company may, to the extent and under the terms permitted by law, repurchase its own shares. As at 31 December 2021 and 31 December 2020 the Company holds no own shares. At the Company’s annual general meeting held on 26 April 2019, the shareholders of Corestate Capital Holding S.A. resolved a distribution out of the existing capital reserves in an aggregate amount of € 52,936,042.50 (corresponding to € 2.50 per issued share) to the shareholders. C.8 PROVISIONS € million 31 Dec 2021 31 Dec 2020 On 22 April 2020, the Company withdrew its outlook for the ﬁnancial year 2020 due to the COVID-19 pandemic. In view of the signiﬁcant shift in investment decisions, transactions and valuation approaches in core markets and products, the Company considered it no longer likely that it would achieve its originally planned targets for this ﬁnancial year and revenues were likely to fall short of expectations, particularly in the areas of acquisition and performance-based fees as well as warehousing and alignment capital. Corestate shifted its focus from being on a sustainable growth path to preserving liquidity and further strengthening the company´s balance sheet. Accordingly, the Annual General Meeting, held for the ﬁrst time purely online, decided on 5 June that no dividend will be distributed for ﬁnancial year 2019. Other Provisions Total 8.4 5.1 8.4 5.1 In 2021, from the issuance of new shares in connection with the acquisition of Corestate Bank results an increase amounting to € 160,802,500. In addition, the Company proposed to its annual general meeting to not make a distribution of the proﬁt, with respect to the ﬁnancial year 2020 which was approved by the assembly. CORESTATE – ANNUAL REPORT 2021 221 C.8.1 OTHER PROVISIONS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Other provisions are composed of: CONSOLIDATED FINANCIAL STATEMENTS € million 01.01.21 Utlilization Reversals Additions 31.12.21 € million 01.01.20 Utlilization Reversals Additions 31.12.20 NOTES TO THE CONSOLIDATED Ancillary Costs from Share-Based Payments Ancillary Costs from Share-Based Payments FINANCIAL STATEMENTS 2.4 (0.2) (0.0) 4.1 6.4 0.7 (0.7) - 2.4 2.4 ANNUAL ACCOUNTS NOTES TO THE Legal Advice Fees 0.7 0.4 (0.0) (0.3) (0.7) (0.4) 0.1 0.8 0.1 0.5 Legal Advice Fees - - - 0.7 0.4 0.7 0.4 ANNUAL ACCOUNTS FURTHER INFORMATION Bonus Payments to Management Board Bonus Payments to Management Board 0.3 (0.2) (0.1) Audit and audit- related Fees Audit and audit- related Fees 0.4 0.4 (2.3) (0.8) (0.0) (0.0) 2.2 0.9 0.4 0.5 0.3 0.5 (1.1) (0.4) - - 1.2 0.3 0.4 0.4 Remuneration of the Supervisory Board Remuneration of the Supervisory Board Other Provisions 0.2 0.2 0.1 (0.4) (0.3) (1.1) (0.0) (0.1) (0.0) 0.2 0.5 1.1 0.0 0.2 0.1 Other Provisions 0.7 0.1 - (0.7) (0.0) (0.2) - - - 0.2 0.1 0.3 0.2 0.2 0.1 Preparation of Tax Declaration Preparation of Tax Declaration Vacation Vacation Annual Report and annual General Meeting Annual Report and annual General Meeting 0.1 (0.0) (0.0) 0.0 0.1 0.1 (0.1) - 0.1 0.1 Preparation of Financial Statements Preparation of Financial Statements 0.1 (0.5) (0.1) 0.5 0.1 0.1 (0.1) - 0.1 0.1 Total 5.1 (6.0) (1.2) 10.4 8.4 Total 2.8 (3.5) (0.1) 5.9 5.1 CORESTATE – ANNUAL REPORT 2021 222 C.9 CREDITORS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Amounts due and payable for the accounts shown under “Creditors“ are as follows: € million Within one year After one year and within ﬁve years After more than ﬁve years Total 31 Dec 2021 CONSOLIDATED FINANCIAL STATEMENTS Debenture Loans (convertible Loans) Debenture Loans (non-convertible Loans) Trade Creditors 193.5 2.4 - 300.0 - - - - - 193.5 302.4 2.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS 2.6 NOTES TO THE ANNUAL ACCOUNTS Amounts owed to Afﬁliated Undertakings 13.0 24.4 37.4 Amounts owed to Undertakings with which the Undertaking is linked by Virtue of Participating Interests FURTHER INFORMATION 0.2 4.1 - 4.3 Other Creditors 3.4 - - 3.4 Total 215.1 328.5 - 543.6 The Company will be able to settle its current liabilities amounting to € 215.1m (2020: € 17.1m) with the cash and cash equivalents available in 2022. € million Within one year After one year and within ﬁve years After more than ﬁve years Total 31 Dec 2020 Debenture Loans (convertible Loans) Debenture Loans (non-convertible Loans) Amounts owed to Credit Institutions 0.1 2.4 0.0 200.0 300.0 0.0 - - 200.1 302.4 0.0 0.0 Payments received on Account of Orders as far as they are not deducted distinctly from Inventories 0.0 0.0 0.0 0.0 Trade Creditors 1.1 0.0 - 0.0 - 0.0 - 1.1 0.0 Bills of Exchange Payable Amounts owed to afﬁliated Undertakings 13.1 26.2 39.3 Amounts owed to Undertakings with which the Undertaking is linked by Virtue of Participating Interests 0.1 3.2 - 3.3 Other Creditors 0.2 - - 0.2 Total 17.1 529.3 - 546.4 CORESTATE – ANNUAL REPORT 2021 223 C.9.1 DEBENTURE LOANS (CONVERTIBLE LOANS) TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 193.4 0.1 2020 200.0 0.1 Key facts of the convertible bonds Non-convertible Bonds Interests from non-convertible Bonds Total ISIN DE000A19SPK4 CONSOLIDATED FINANCIAL STATEMENTS WKN A19SPK NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 193.5 200.1 Issue Volume (in €) Maturity 200.000.000.00 ANNUAL ACCOUNTS 28.11.22 In 2017 the Company issued unsubordinated and unsecured convertible bonds in the aggregate principal amount of € 200.0m. The bonds are issued in bearer form with a principal amount of € 100,000.00 each, which rank pari passu among themselves. The Company used the net proceeds for the reﬁnancing of existing debt as well as for general corporate purposes. NOTES TO THE ANNUAL ACCOUNTS Coupon 1.38% FURTHER INFORMATION Rating S&P: BB+ Issue Price 100.00% Next Interest Payment Day Nominal (in €) Underlying April 2022 100.000.00 Shares of Corestate Capital Holding S.A. Conversion Price (in €) Initial Conversion Premium Conversion Period Issue date 55.321 27.50% 08.01.2018-10.10.2022 21.11.17 Clearing House Clearstream Frankfurt CORESTATE – ANNUAL REPORT 2021 224 The Bonds with an initial maturity of 5 years were issued at 100% and will be redeemed at 100% of their principal amount, unless previously converted or repurchased and cancelled. The Bonds were placed with a coupon of 1.375% per annum, payable semi-annually in arrear and the conversion price was set to € 61.9580, representing a premium of 27.5% above the reference share price at the bond issue date. The settlement of the bonds took place around 28 November 2017. C.9.2 DEBENTURE LOANS (NON-CONVERTIBLE LOANS) TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 300.0 2.4 2020 300 CONSOLIDATED FINANCIAL STATEMENTS Non-convertible Bonds Interests from non-convertible Bonds Total NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2.4 302.4 302.4 ANNUAL ACCOUNTS The issuer grants to each bondholder the right (the “onversion right“) to convert each bond in whole, but not in part, at the conversion price into settlement shares on any business day during the conversion period (period from 8 January 2018 to the earlier of the following days: the 35th Business Day prior to the maturity date or if the bonds are redeemed by the issuer the 10th Business Day prior to the redemption date). NOTES TO THE ANNUAL ACCOUNTS In March 2018, the Company issued a non-convertible bond with a volume of € 300m. The non-convertible bond is placed with institutional investors. The key facts are as follows: FURTHER INFORMATION The bonds bear interest on their principal amount at a rate of 1.375% p.a. as from 28 November 2017. Each bond will cease to bear interest when the bondholder exercises the conversion right in respect of any bond or a bond is redeemed. Key facts of the non-convertible bonds ISIN DE000A19YDA9 A19YDA At year-end 2021, pro-rata redemptions of the convertible bond were made under par, resulting in a reduction of the outstanding amount of € 6.5m and interest income of € 0.2m. WKN Issue Volume (Principal Amount) (in €) Issue price (in €) Date of Issuance Maturity 300.000.000.00 98.857 % of the principal amount 23.03.18 15.04.23 Coupon 3.5 % per annum 15.10.18 First Coupon Date Denomination (in €) 100.000.00 CORESTATE – ANNUAL REPORT 2021 225 C.9.3 TRADE CREDITORS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT As at 31 December 2021, trade creditors in the amount of € 2.6m mainly consist of liabilities to external service providers (31 December 2020: € 1.1m). CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS C.9.4 AMOUNTS OWED TO AFFILIATED UNDERTAKINGS ANNUAL ACCOUNTS The liabilities from delivery and services relations result mainly from cost recharges and the transfer pricing agreements. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION € million Start date Maturity (years) interest rate collateral 31 Dec 2021 31 Dec 2020 Long-term Loans to Subsidiaries Corestate Capital AG 24.4 17.3 4.2 26.2 17.2 4.2 - 26.04.19 31.01.18 27.06.17 28.06.17 31.01.18 13.06.19 5 5 5 5 5 5 1.000% 3.000% 3.000% 1.000% 1.000% 3.750% unsecured unsecured unsecured unsecured unsecured unsecured Donald HoldCo S.à r.l. Iberian Investments II HoldCo S.à r.l. Corestate CAPITAL Fund Management S.à r.l. Rose HoldCo S.à r.l. 1.9 0.5 4.3 0.5 - 0.4 HFS Helvetic Financial Services AG Short-term Liabilities owed to Subsidiaries Liabilities from delivery and services relations Loan Interest to afﬁliated companies Dedan AIF S.à r.l. 0.2 13.0 11.7 1.1 13.2 10.9 0.5 - unsecured unsecured unsecured unsecured 29.09.21 16.11.18 1 1 1.360% 1.000% 0.1 CRM Students Limited - 1.8 39.3 Total 37.4 CORESTATE – ANNUAL REPORT 2021 226 C.9.5 AMOUNTS OWED TO UNDERTAKINGS WITH WHICH THE UNDERTAKING IS LINKED BY VIRTUE OF PARTICIPATING INTERESTS C.9.6 OTHER CREDITORS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 31 Dec 2021 31 Dec 2020 € million 31 Dec 2021 31 Dec 2020 CONSOLIDATED FINANCIAL STATEMENTS Tax Authorities VAT liabilities 1.9 1.9 1.5 1.5 - 0.0 0.0 0.2 - Long-term Loans owed from Associates Iberian HoldCo III S.à r.l. 4.1 4.1 0.0 0.2 0.1 0.1 4.3 3.2 3.1 0.0 0.1 0.1 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS Other Creditors Payables to CC SH PropCo 01 S.à r.l Others Tempelhof Twins TopCo AIF S.à r.l. Short-term Liabilities owed to Associates Liabilities owed to Project HIGHSTREET VI Liabilities owed to Project Iberian HoldCo Total NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION 0.2 0.2 Total 3.4 3.3 CORESTATE – ANNUAL REPORT 2021 227 TO OUR SHAREHOLDERS D. NOTES TO THE PROFIT AND LOSS ACCOUNT CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS D.1 NET TURNOVER ANNUAL ACCOUNTS The revenues generated with Associates (see Note C.3.3) are based on market- standard Joint-Venture and Co-Investments Agreements (JVCIA) as well as Asset Management Agreements (AMA) and are entered into with and approved by its clients. The revenue is mainly classiﬁed into following categories: Net turnover is broken down by category of activity and geographical markets as follows: NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION € million 2021 2020 Delivery of services intra-group, acquisition related fee, onboarding fee, developing fee, asset management fee, termination fee and others. The decrease in delivery of services intra-group is primarily caused by a recalculation of the cost allocation. Categories of Activity Revenue from Delivery of Services intra-group 8.2 5.4 13.2 4.9 3.7 1.1 - Revenue from Asset Management Fees Revenue from Development Fee 1.9 D.2 OTHER OPERATING INCOME Other Revenues 0.6 € million 2021 1.3 0.2 - 2020 0.0 - Revenue from other Acquisition Related Fees 0.1 Reversal of Provisions and Staff Costs Currency Translation Adjustments Other / Miscellaneous / Sundry Income Total Total 16.3 23.0 Geographical Markets Germany Luxembourg Switzerland Spain 2.6 2.7 6.5 5.6 1.2 1.2 0.7 0.6 0.2 0.2 0.1 16.3 7.9 7.9 4.6 1.0 0.0 1.2 0.2 - 1.5 Income of reversal of the provision mainly results from the legal fee and the bonus provisions from the year 2020. Due to Covid-19-Pandemic it was not utilised as calculated. Guernsey Poland Austria France United Kingdom Total - 23.0 CORESTATE – ANNUAL REPORT 2021 228 D.3 OTHER EXTERNAL EXPENSES D.4 STAFF AND STAFF COSTS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Within the classiﬁcation of other external expenses, the risk provisions depict the inevitable costs, which exceed the expected economic beneﬁts of fulﬁlling the obligations. In 2021 they consisted of the bad debt allowances of € 3.3m, which derived mainly from waiver of intercompany loans and its interest, and of statute-barred fees. € million 2021 2020 Salaries and Wages CONSOLIDATED FINANCIAL STATEMENTS Share-based Remunerations Management Board's Bonus Salaries paid to Management Board Total (4.0) (0.7) (0.1) (4.8) (1.5) (0.3) (0.9) (2.7) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS € million 2021 (11.5) (11.2) (3.6) (3.3) (3.3) (1.8) (0.7) (0.6) (0.6) (0.5) (0.3) (0.1) (0.1) (0.1) (0.0) (0.0) (37.8) 2020 (14.1) (9.0) (3.9) (0.2) (2.3) (1.0) (0.3) (0.9) (1.2) (0.2) (0.3) (0.2) (0.8) (0.1) - NOTES TO THE ANNUAL ACCOUNTS Recharges intra-group Costs Legal and Consultancy Fees Ofﬁce Supplies and IT Expenses Other Miscellaneous Expenses Risk Provions Expense FURTHER INFORMATION As in prior years, the Company has no employees of its own. Therefore, the staff costs comprise only the remunerations of the members of the Management Board. The share-based remuneration increased by € 2.1m in line with the Management Board extension. Insurance Costs Tax Advisory and other Professional Fees Audit and Accounting-related Advisory Fee Personnel Recruitment D.5 OTHER OPERATING EXPENSES € million 2021 2020 Currency Translation Adjustments Public Relation and Stock Exchange Aborted Deals Other Miscellaneous Expenses Licence Fees (1.8) (0.7) (0.5) - (0.3) (0.8) Financing Fees Remuneration of the Supervisory Board Travelling Expenses Total (3.1) (1.1) Contribution Fees Accounting and Financial Statement Preparation Total (0.2) (34.9) CORESTATE – ANNUAL REPORT 2021 229 D.6 INCOME FROM PARTICIPATING INTERESTS D.7 OTHER INTERESTS RECEIVABLE AND SIMILAR INCOME TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT € million 2021 2020 € million 2021 2020 Dividend Payments Received CONSOLIDATED FINANCIAL STATEMENTS a) Derived from Afﬁliated Undertakings Corestate Capital Advisors GmbH (interests) Corestate Capital France HoldCo SAS Corestate Capital Group GmbH (interests) Corestate Capital Partners UK Ltd. (interests) Corestate Capital Sales Holding S.à r.l. (interests) Tempelhof Twins TopCo S.à r.l. 4.8 2.7 0.7 0.7 0.2 0.2 0.1 0.1 1.8 0.9 0.5 0.2 - 5.0 2.4 1.5 0.7 0.1 0.1 0.1 0.0 0.8 - Dividend Payment Received from HFS 50.6 73.1 2.3 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Dividend Payment received from HANSAINVEST Corestate Opportunity 0.7 ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Dividend Payment received from RECAP FinCo IV S.à r.l. - - 1.8 FURTHER INFORMATION Dividend Payment received from Stadttor Düsseldorf Acqui S.à r.l. 12.2 Dividend Payment received from RECAP FinCo II S.à r.l. Other / Miscellaneous / Sundry Income - - 12.0 0.2 HFS Helvetic Financial Services AG (interest) b) Other Interest and similar Financial Income Debt securities / Bond (interest) Total 51.3 101.6 PRIME Capital AG - Lux Fund Management Services S.à r.l. (interest) WGS Private Equity Beteiligungs GmbH (interest) Total 0.0 0.7 5.8 6.5 CORESTATE – ANNUAL REPORT 2021 230 D.8 VALUE ADJUSTMENTS IN RESPECT OF FINANCIAL ASSETS AND OF INVESTMENTS HELD AS CURRENT ASSETS € million 2021 (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (15.7) (15.5) (0.1) (0.1) (17.1) 2020 - TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Interest from Loan of Corestate Bank GmbH Interest from Loan of HFS Helvetic Financial Services AG Interest from Loan of Iberian Investments II HoldCo S.à r Interest from Loan of CRM Signiﬁcant companies where CCH SA is able, directly or indirectly, to signiﬁcantly inﬂuence ﬁnancial and operating policy decisions, or that are directly or indirectly jointly controlled are accounted at their acquisition costs, taking into account any impairments of ﬁnancial assets and investments. (1.7) - CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - ANNUAL ACCOUNTS Impairment on ﬁnancial assets and participations mainly comprise the devaluation of the Corestate Opportunity Deutschland I Fund and the impairment of afﬁliated companies of HFS Helvetic Financial Services AG, CRM Students Ltd., Dedan AIF S.à r.l. and Court HoldCo GmbH Interest from Loan of Rose HoldCo S.à r.l. Interest from Loan of RECAP FinCo II S.à r.l. Interest from Loan of PALMYRA Verwaltungsges. mbH Interest from Loan of Stadttor Düsseldorf AcquiCo S.à r.l. Others - NOTES TO THE ANNUAL ACCOUNTS (0.6) (0.1) (0.1) (0.1) (14.8) (13.1) (0.5) (1.3) (18.4) FURTHER INFORMATION Impairment of loans of Corestate Capital Group GmbH is made under prudence principle, due to obligations assumed under loss absorption agreements as of the balance sheet date. Other Interest and Similar Expenses Interests from Debenture Loans Impairment of investments in associates is recognized due to permanent impairment at King AIF 1 S.à r.l., King AIF 2 S.à r.l., Venloer AIF 1 S.à r.l., Venloer AIF 2 S.à r.l., BCC Investments S.à r.l.. Interests from Bank Loans The adequacy of the impairment is reviewed regularly. Interests from Third Party Loans Total D.9 INTERESTS PAYABLE AND SIMILAR EXPENSES € million 2021 (1.4) 2020 (3.5) Concerning afﬁliated undertakings D.10 TAXES ON PROFIT AND LOSS Book Value of Participating Interests sold Interest from Loan of Corestate CAPITAL AG Interest from Loan of DONALD HoldCo S.à r.l. Book Value of afﬁliated Undertakings Sold (0.8) (0.2) (0.1) (0.1) - (0.1) (0.1) (0.6) € million 2021 (0.3) (0.3) (0.0) (0.3) 2020 (0.8) (0.8) - Current Income Tax Capital Gains Tax Corporate Income Tax (Luxembourg) Total Interest from Loan of Corestate CAPITAL Fund Management S.à r.l. (0.8) (0.0) - CORESTATE – ANNUAL REPORT 2021 231 TO OUR SHAREHOLDERS E. OTHER CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT INFORMATION CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS E.1 MANAGEMENT BOARD ANNUAL ACCOUNTS Stavros Efremidis Chief Executive Ofﬁcer – since 07 Mar 2022 The members of the Management Board were appointed by the Supervisory NOTES TO THE ANNUAL ACCOUNTS Board for the following terms: FURTHER INFORMATION Ralf Struckmeyer In addition to the individually agreed base salary and annual bonus payments, under their service agreements, the Management Board members are entitled to ancillary beneﬁts that include, among other things, payment of remuneration in case of sickness or death for a certain period, contributions to private health insurance as well as D&O and E&O insurance coverage at usual market terms. The Company reimburses all travelling costs and incidental expenses. Chief Investment Ofﬁcer – since 07 Mar 2022 Izabela Danner Chief Operating Ofﬁcer – since 07 Mar 2022 Udo Giegerich Chief Financial Ofﬁcer – since 01 Aug 2021 René Parmantier Chief Executive Ofﬁcer - 01 Dec 2020 until 07 Mar 2022 Sebastian Ernst Chief Debt Investment Ofﬁcer – 14 Jan 2021 until 07 Feb 2022 Johannes Märklin Chief Debt Financing Ofﬁcer – 14 Jan 2021 until 07 Feb 2022 Nils Hübener Chief Investment Ofﬁcer – 01 April 2020 until 31 July 2021 Daniel Löhken Chief Legal & HR Ofﬁcer – 01 Nov 2020 until 31 July 2021 Lars Schnidrig Chief Financial Ofﬁcer – 01 Dec 2020 until 31 May 2021 CORESTATE – ANNUAL REPORT 2021 232 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT An LTI-Share Programme for Senior Management and Key People of the Corestate Group has been implemented effective 01 January 2019. The ﬁve-year program is based on certain KPIs with respect to the development of the share price of CCHSA. The programme details are described in legal plan conditions and not limited to current employees but also open for new hires. If the service agreement starts or ends during the course of a ﬁnancial year, the amount shall be calculated on a pro-rata basis. From this point on, the shares are subject to a contractual holding period of four years. CONSOLIDATED FINANCIAL STATEMENTS − René Parmantier is entitled to an amount of € 2,400,000 in LTI options that NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS are granted in three tranches of shares in an amount of € 800,000 each. ANNUAL ACCOUNTS In 2021, the Management Board was reduced to four members. All Management Board Members have been granted long-term equity-settled share-based payment awards which will be transferred after a vesting period of four years: − Johannes Märklin and Sebastian Ernst, both each are entitled to an amount of € 2,430,000 in LTI options that are distributed in three tranches of € 810,000 shares. NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION Equity-settled LTI-Plans − Udo Giegerich is entitled to an amount of € 1,470,000 in LTI options that are distributed in three tranches of € 490,000 shares each. René Parmantier, Johannes Märklin, Sebastian Ernst and Udo Giegerich are granted equity-settled long-term incentive (LTI) options. Each of the four board members are granted LTI options in three tranches, one third each year of being appointed to the Group’s Management Board. The number of share-based payments for each tranche depends on the individual achievement of the board members’ agreed targets. Therefor the targets are not only based on ﬁnancial KPIs but also on non-ﬁnancial aspects (e.g. ESG). If a board member achieves 50% or less of annual targets no LTI shares are transferred. If a board member achieves between 51% and 100% of targets, this leads to a proportional allocation of the yearly LTI options and the calculated number of LTI shares (gross) will immediately be transferred, if necessary, after issuing new shares, at the end of the respective performance period to the deposit of the board member. From the date of transfer, each annual tranche of LTI shares is subject to a contractual holding period of four years. The former board member Daniel Löhken, who left the Management Board of Corestate Capital Holding S.A. as at July 2021, contractually received a share package for the years 2021-2023. This contractual payment claim was settled in cash with the compensation at the end of his contractual agreement with the Group. In 2021, the expenses recognized for the share packages of the board members amounted to € 3.9m (2020: € 0.2m). CORESTATE – ANNUAL REPORT 2021 233 Share-based payments Valuation model and input parameters TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Members of the Management Board receive remuneration in the form of share- based payments, whereby the members render services as consideration for equity instruments. Some members of the Management Board are granted so called phantom stocks, which are settled in cash. The fair value of the synthetic stock options is measured using a Monte Carlo option pricing model taking into account the terms and conditions upon which the options were granted. CONSOLIDATED FINANCIAL STATEMENTS The beneﬁciary may exercise the options between the end of the waiting period and the end of the term of the option on the condition that the employment contract has not been terminated and neither the beneﬁciary nor the company has notiﬁed in writing the termination of the employment contract by that date. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In 2019 Corestate started a Performance Share Programme to important Senior Managers and High Performers (Key People) as well as for new hires who are joining the Group after the 01 January 2019. At the beginning of the performance periods in 2019 and 2020 the participants receive an individualized delivery letter in which the individual target value of the performance shares in Euros (“target value”) is recorded. The letter of allocation shall contain the number of virtual performance shares granted. Performance shares are not linked to any administrative, voting or dividend rights or rights to other distributions. They merely represent a calculation item for determining the future conditional entitlement to Corestate shares to be issued and transferred (real shares). ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS Forthestockoptionvaluation, thecontractuallifeoftheoptionsandthepossibility of early exercise were considered in the Monte Carlo model. The risk-free interest rate is the implied yield currently available on Luxembourg government issues with a remaining term equal to the term of the options. The future volatility for the lives of the options was estimated based on historical volatilities also considering the management’s expectation of future market trends. FURTHER INFORMATION The expense resulting from the share-based payment transactions is recognized during the vesting period on a pro-rata basis with a corresponding increase in provision. Furthermore, the amount recognized is based on the best available estimate of the number of options expected to vest and is revised if subsequent information indicates that the number of options expected to vest differs from previous estimates. Performance shares are transferred to the participants in annual tranches in the form of real shares from the third year onwards (requires a waiting period of two years in which no real shares are transferred). The transfer is to take place in four equivalent tranches (25% of the total number of performance shares each) – subject to the achievement of the relevant performance targets, which is an annual increase of the share price of 10% each. The increase in the stock market price as the key performance target is calculated by dividing the “transfer price” by the closing price. The transfer price is deﬁned as the arithmetic mean of the closing prices of the last 30 trading days prior to 31 December of the respective year of the performance period. As said, the performance target is deemed to have been achieved if the cumulative transfer price increased by at least 10% each year compared with the closing rate (annual performance target). The former board members Lars Schnidrig and Nils Hübener, who left the Management Board of Corestate Capital Holding S.A., contractually received a share package for the years 2021-2023 as cash-settled LTI-plans. With their severance payments all contractual payment claims were settled. In 2021, the total of € 0.5m expenses were recognized up to the date of termination of the contracts. Currently, the Group no longer has any active LTI-plans which could be cash- settled. CORESTATE – ANNUAL REPORT 2021 234 Related Parties as at 31 Dec 2021 Friedrich Munsberg related to/as E.2 SUPERVISORY BOARD TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Supervisory Board The Supervisory Board must be composed of at least three individuals, and currently consists of the following members: Prof. Dr Hermann Wagner Dr Friedrich Oelrich Supervisory Board CONSOLIDATED FINANCIAL STATEMENTS − Friedrich Munsberg (Chairman) – since 30 November 2020 – until 31 Supervisory Board December 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS René Parmantier Management Board ANNUAL ACCOUNTS − Prof. Dr Hermann Wagner (Deputy Chairman) – since 30 November Johannes Märklin Management Board 2020 – until 31 December 2021 NOTES TO THE ANNUAL ACCOUNTS Sebastian Ernst Management Board − Dr Friedrich Oelrich (Member) – since 30 November 2020 FURTHER INFORMATION Udo Giegerich Management Board Friedrich Munsberg and Hermann Wagner stepped down from the Board on 31 December 2021 in the light of the change in the Group’s shareholder base at the end of November 2021. Stavros Efremidis and Dr Bernard Malmendier were appointed as new members of the Supervisory Board, effective as at 01 January 2022. Mr Efremidis was elected Chairman at the ﬁrst constitutional Supervisory Board meeting on 05 January 2022, and Dr Malmendier was elected as his deputy. With effect of 07 March 2022 Stavros Efremidis succeed René Parmantier as CEO of the Group and Dr Bernard Malmendier took over as Chairman of the Supervisory Board. As a new member Dr Roland Folz joined the Supervisory Board on 07 March 2022. Dr Friedrich Oelrich will remain member of the Supervisory Board (for further information see Note E.6). Leonis Capital Management GmbH Leonis Real Estate GmbH DACH Finance GmbH Management Board (J. Märklin) Management Board (J. Märklin) Management Board (J. Märklin & S. Ernst) Management Board (J. Märklin & S. Ernst) Management Board (S. Ernst) Management Board (R. Parmantier) Management Board (R. Parmantier) Management Board (R. Parmantier) DACH Real Estate GmbH Feldmannhof Capital GmbH RP Verwaltungsgesellschaft mbH RP Vermögensverwaltungsgesellschaft mbH Meiyo Capital Partners AG In 2021, a total fee of € 0.5m (2020: € 0.9m) is recognised. Former Related Parties as at 31 Dec 2021 Lars Schnidrig related to/as E.3 RELATED PARTIES TRANSACTIONS Management Board until 2021 Management Board until 2021 Management Board until 2021 Parties are generally considered to be related if one party has the ability to control the other party or exercise signiﬁcant inﬂuence over the other party in making ﬁnancial or operational decisions. The Company has identiﬁed the following related parties: Nils Hübener Daniel Löhken CORESTATE – ANNUAL REPORT 2021 235 E.4 AUDITOR‘S FEES TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT Ernst & Young S.A., 35E, avenue John F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg audited the local ﬁnancial statements as well as the consolidated ﬁnancial statements of the Company as at and for the year ended 31 December 2021 and issued an unqualiﬁed auditors’ report. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At the Company’s annual general meeting held on 28 June 2021, Ernst & Young S.A. was also appointed as auditor for the Company and the Group for the ﬁnancial year 2021. ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS The total fees expensed by the Company and due for the current ﬁnancial period to the audit ﬁrm are presented as follows: FURTHER INFORMATION € million 2021 2020 Audit Fees 0.3 0.3 - 0.4 0.1 0.0 0.6 Audit-realated Fees Other non-audit related Services Total 0.6 E.5 OFF-BALANCE SHEET COMMITMENTS There were no ﬁnancial commitments of the Company as per 31 December 2021. CORESTATE – ANNUAL REPORT 2021 236 E.6 SUBSEQUENT EVENTS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT In connection with the changes in the shareholder base of Corestate Capital Holding S.A. (“Corestate”) at the end of 2021, Mr. Stavros Efremidis and Dr Bertrand Malmendier were appointed as new members of the Supervisory Board with effect from 01 January 2022. Mr. Friedrich Munsberg and Prof. Dr Hermann Wagner stepped down from the Supervisory Board correspondingly as at 31 December 2021. On 07 March 2022 the Supervisory Board decided to strengthen the governance structure and resolved to appoint the former Chairman of the Supervisory Board Stavros Efremidis as CEO with immediate effect. The former CEO René Parmantier left the Group’s Management Board to fully focus his activities on Corestate’s Real Estate Debt business, incl. HFS and Corestate Bank. In addition, the Group’s Management Board was extended to four members by Izabela Danner as Chief Operating Ofﬁcer (COO) and Ralf Struckmeyer as Chief Investment Ofﬁcer (CIO). The new members of the Management Board are appointed for a term of three years. CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS The Supervisory Board of Corestate Capital Holding S.A. resolved on 07 February 2022 to remove Johannes Märklin and Sebastian Ernst from the Management Board of Corestate Capital Holding S.A. and all further group functions. On 08 February 2022, the Group announced that René Parmantier will assume full responsibility for the Real Estate Debt segment in addition to his role as CEO of Corestate, and thus also the management of Corestate Bank. FURTHER INFORMATION The Supervisory Board of CORESTATE Capital Holding S.A. resolved the following personnel matters on 07 March 2022: Stavros Efremidis, previously Chairman of the Supervisory Board, will join the Management Board as CEO. Izabela Danner will also join the Management Board as COO from within Corestate itself, while Ralf Struckmeyer will join as CIO. René Parmantier will immediately take over the management of the real estate ﬁnancing business. He is leaving the Group’s Management Board for regulatory and supervisory reasons. The invasion of Ukraine by the Russian Federation on 23 February 2022 and the resulting sanctions with regard to Russian state-owned companies and Russian individuals could also result in restrictions on investments in which Corestate is involved as a co-investor. Corestate has set up a task force to analyse and closely monitor both compliance with the sanction restrictions and their impact on Corestate‘s operating business. Risks would not directly concern the operating business of the underlying investment structures but potentially the restrictions on ﬁnancing and distributions of cash. A ﬁnal assessment of the consequences of this situation for the company is not yet possible at the time of ﬁnalisation of the ﬁnancial statements. Save for the matters set out above, there have been no events since the reporting date which could have a signiﬁcant effect on the net assets, ﬁnancial position or results of operations of CCH SA. Luxembourg, 20 April 2022 Stavros Efremidis Chief Executive Ofﬁcer Udo Giegerich Chief Financial Ofﬁcer Izabela Danner Chief Operating Ofﬁcer Ralf Struckmeyer Chief Investment Ofﬁcer CORESTATE – ANNUAL REPORT 2021 237 APPENDIX 1 TO THE NOTES: STATEMENT OF CHANGES IN FIXED ASSETS TO OUR SHAREHOLDERS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CONSOLIDATED FINANCIAL STATEMENTS 1 Shares in afﬁliated undertakings NOTES TO THE CONSOLIDATED Corestate Bank GmbH (formerly Aggregate Financial Services GmbH) FINANCIAL STATEMENTS 100.00% - 166.4 - - 166.4 - - - 166.4 - ANNUAL ACCOUNTS HFS Helvetic Financial Services AG Corestate Capital Group GmbH 100.00% 100.00% 576.6 47.6 - - - - - 576.6 127.5 - - (19.5) - - - 557.2 127.5 576.6 47.6 NOTES TO THE ANNUAL ACCOUNTS 80.0 FURTHER INFORMATION Ginova AIF S.à r.l (formerly Highstreet Gießen HoldCo S.à r.l.) 100.00% 31.3 0.0 - - 31.4 - - - 31.4 31.3 Corestate CAPITAL AG 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 29.6 18.2 8.6 - - - - - - - - - 29.6 18.2 8.6 - - - - - - - - - - - - - 29.6 10.5 8.6 29.6 18.2 8.6 CRM Students Ltd. - (7.7) Corestate CAPITAL FRANCE HOLD CO SAS Stadttor Düsseldorf AcquiCo S.à r.l. Dedan AIF S.à r.l. - - - 6.9 - - (5.8) - 6.9 - (0.8) - 6.9 6.9 6.8 0.1 0.3 1.1 0.3 6.8 Bego HoldCo S.à r.l. (formerly Dalia HoldCo AIF S.à r.l.) 6.3 6.4 6.4 6.3 Gabriela HoldCo S.à.r.l. (formerly Corestate Shelf 18 S.à r.l.) 100.00% 5.1 - - - 5.1 - - - 5.1 5.1 Wallhalla HoldCo Sarl (formerly Corestate Shelf 5 S.à r.l.) BER REV HOLDCO S. R.L. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 3.2 3.0 - - 0.1 2.2 - - - - - - - - - - - 3.2 3.0 2.2 1.7 1.6 1.0 0.4 0.8 0.6 - - - - - - - - - - - - - - - - - - - - - - - - - - - 3.2 3.0 2.2 1.7 1.6 1.0 0.4 0.8 0.6 3.2 3.0 - - Iberian Invetsments II HoldCo S.à r.l. Echo HoldCo S.à r.l. (formerly Projekt AcquiCo I S.à r.l.) Harbour AcquiCo 1 S.à r.l. - 1.7 1.6 1.1 0.9 0.8 0.6 - 1.7 1.6 1.1 0.9 0.8 0.6 - - (0.4) (0.5) - Plutos HoldCo S.à r.l. (formerly Corestate Shelf 3 S.à r.l.) Projekt AcquiCo III S.à r.l. - - Iberian HoldCo II S.à r.l. (formerly Corestate Shelf II S.à r.l.) Tempelhof Twins TopCo S.à r.l 0.1 0.1 - CORESTATE – ANNUAL REPORT 2021 238 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 TO OUR SHAREHOLDERS FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 1 Shares in afﬁliated undertakings Corestate Capital Fund Management S.à r.l. Corestate Student Home Holding S.à r.l. Corestate Capital Sales Holding S.à r.l. Court HoldCo GmbH CONSOLIDATED FINANCIAL STATEMENTS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 0.6 0.5 - - - - - - - - - - - - - - 0.6 0.5 0.3 2.3 0.1 0.2 - - - - - - - - - - - - - - - - - - - - - - - - - - 0.6 0.5 0.3 0.2 0.1 0.2 - 0.6 0.5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - - - 0.3 - 2.2 - - - 0.3 ANNUAL ACCOUNTS 0.2 . (2.1) 0.2 NOTES TO THE ANNUAL ACCOUNTS ROSE HoldCo S.à r.l. 0.1 - - 0.1 FURTHER INFORMATION Madison HoldCo S.à r.l. 0.1 0.1 - - (0.0) (0.1) - - 0.1 Design Center AIF S.à r.l. 0.0 - 0.0 Corestate ZGE Feeder GmbH & Co. KG CCIS Master HoldCo S.à r.l 0.1 - - - - 0.1 0.0 0.3 0.0 0.1 251.9 0.4 0.0 0.1 996.8 - 0.4 0.0 0.1 966.7 0.0 Corestate Shelf 11 S.à r.l. 0.0 - - - 0.0 Corestate SHELF 15 S.à r.l. 0.0 - 0.0 751.7 (6.7) (30.1) 751.7 CORESTATE – ANNUAL REPORT 2021 239 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 TO OUR SHAREHOLDERS FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 2 Loans to afﬁliated undertakings CONSOLIDATED Corestate Capital Group GmbH (loan and accrued interests) FINANCIAL STATEMENTS 69.9 - 14.4 28.3 30.9 - - - (22.1) - 62.2 28.3 4.1 - - - (58.5) - - - 3.8 28.3 4.1 69.9 - NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Corestate Capital France HoldCo SAS - - ANNUAL ACCOUNTS Corestate Capital Advisors GmbH (loan and accrued interests) 55.4 (82.3) 55.4 NOTES TO THE ANNUAL ACCOUNTS Corestate Capital Sales Holding S.à r.l. (loan and accrued interests) 5.6 11.1 - (8.0) 8.7 - (3.1) - 5.6 5.6 FURTHER INFORMATION Corestate Capital Partners UK Ltd. 3.9 2.8 0.8 1.6 0.1 0.0 - - - - (0.1) (0.1) 5.5 2.8 0.7 - - - - - - - - - 5.5 2.8 0.7 3.9 2.8 0.8 (loan and accrued interests) Tempelhof Twins TopCo S.à r.l. Corestate Student Home Holding S.à r.l. (loan and accrued interests) STAM Co-Invest S.à r.l. 0.6 0.1 - 0.5 0.0 0.1 - - - - - - 1.1 0.1 0.1 - - - - - - - - - 1.1 0.1 0.1 0.6 0.1 0.0 Iberian HoldCo II S.à r.l. (loan and accrued interests) Monet S.à r.l. Urban Micro Estate Poland Sp. z o.o - 0.2 - 0.2 - - - 0.2 - 139.1 87.4 - (112.5) 114.0 - (61.6) - 52.4 139.1 CORESTATE – ANNUAL REPORT 2021 240 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 TO OUR SHAREHOLDERS FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 3 Shares in undertakings with which the undertaking is linked by virtue of participating interests CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED Moviestar Zweitmarkt Management GmbH Echo HoldCo 2 AIF S.à r.l. Tablas HoldCo AIF S.à r.l. Pallars AIF HoldCo S.a.r.l. TURICUM AIF S.à r.l. 18.00% 31.10% 42.74% 42.38% 5.48% 9.6 7.3 6.1 4.5 2.7 2.4 1.9 1.6 1.4 1.3 1.3 1.2 1.0 1.0 0.7 0.7 0.2 0.1 0.1 0.1 - - - - - - - - - - - - - - - - - - - - - - 9.6 7.3 6.1 4.5 2.7 2.8 2.0 1.6 1.6 1.3 1.2 1.4 1.2 0.2 0.7 0.7 0.2 0.1 0.0 0.1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9.6 7.3 6.1 4.5 2.7 2.7 2.0 1.6 1.6 0.6 1.2 1.4 1.0 0.2 - 9.6 7.3 6.1 4.5 2.7 2.4 1.9 1.6 1.4 1.3 1.3 1.2 1.0 1.0 0.7 0.7 0.2 0.1 0.1 0.1 FINANCIAL STATEMENTS - - - ANNUAL ACCOUNTS - - - NOTES TO THE ANNUAL ACCOUNTS - - - FURTHER INFORMATION - - - BCC Investments S.à r.l. Olympic AIF 2 S.à r.l. 10.00% 10.00% 10.10% 10.00% 10.05% 10.77% 10.47% 10.01% 10.00% 10.00% 2.61% 0.5 - (0.1) 0.1 - - Tablas HoldCo S.L.U. - (0.0) - Con 2 AIF S. à r.l. 0.2 - - Venloer4711 AIF 2 S.à r.l. Pallars HoldCo S.L. - - (0.7) - (0.0) - Cassandra HoldCo S.L.U. Bochum PropCo S.à r.l. Across TopCo 2 S.à r.l. King AIF 2 S.à r.l. - (0.0) - 0.2 - - - - - - - - - (0.8) - - (0.7) Corestate Capital Investments Solutions Olympic AIF 1 S.à r.l. - - 0.7 0.2 - 10.00% 10.05% 10.00% 10.27% - - Venloer4711 AIF 1 S.à r.l. Across TopCo 1 S.à r.l. Iberian HoldCo III, S.L. - (0.0) - (0.1) - - 0.1 0.1 CORESTATE – ANNUAL REPORT 2021 241 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 TO OUR SHAREHOLDERS FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 3 Shares in undertakings with which the undertaking is linked by virtue of participating interests CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED King AIF 1 S.à r.l. 10.00% 1.00% 1.00% 50.00% 0.00% 0.1 0.0 0.0 0.0 0.0 - - - - - - - - - - - - - - - 0.1 0.0 0.0 0.0 0.0 - - - - - (0.1) - - - - - - 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 FINANCIAL STATEMENTS Tempelhof Twins TopCo AIF S.à r.l. Plutos HoldCo AIF S.à r.l. SCORE S.à r.l. - - - - ANNUAL ACCOUNTS NOTES TO THE ANNUAL ACCOUNTS FURTHER INFORMATION Corestate Residential Germany Fund III 45.5 1.0 - (0.8) 45.7 - (1.7) - 44.0 45.5 4 Loans to undertakings with which the undertaking is linked by virtue of participating interests Pallars AIF HoldCo S.à r.l. 1.9 1.8 0.7 0.6 0.3 - - 0.0 0.0 - - - - - - - - - - - - - - - - - - - 1.9 1.8 0.8 0.6 0.3 0.2 0.0 0.8 6.4 - - - - - - - - - - - - - - - - - - - 1.9 - 1.9 1.8 0.7 0.6 0.3 King AIF 2 S.à r.l. (1.8) T6 HoldCo S.à r.l. - (0.6) (0.3) - 0.8 - King PropCp S.à r.l. (loan and accrued interests) King AIF 1 S.à r.l. 0.0 0.2 0.0 0.8 1.1 - BCC Investments S.à r.l. 0.2 0.0 0.8 3.7 Con 2 AIF S.à.r.l. (loan and accrued interests) Raw-Ost HC S.à r.l. (loan and accrued interests) - - - - - - 5.3 (2.7) 5.3 CORESTATE – ANNUAL REPORT 2021 242 01 Jan 2021 31 Dec 2021 01 Jan 2021 31 Dec 2021 31 Dec 2021 31 Dec 2020 TO OUR SHAREHOLDERS FINANCIAL FIXED ASSETS Ownership Additions Transfers Disposals Depreciation CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT 5 Investments held as ﬁxed assets CONSOLIDATED Corestate Opportunity Deutschland I Fonds (Luxembourg) FINANCIAL STATEMENTS 20.00% 54.9 - - (6) 48.6 - - - 48.6 54.9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 54.9 - - (6) 48.6 - - - 48.6 54.9 ANNUAL ACCOUNTS 6 Other loans NOTES TO THE ANNUAL ACCOUNTS PRIME Capital AG 14.0 1.8 - - - - (1.5) (1.8) 12.5 - - - - - - - 12.5 - 14.0 1.8 FURTHER INFORMATION HIGHSTREET PREMIUM I PropCo II S.à r.l. (loan and accrued interests) WGS Private Equity Beteiligungs GmbH (loan and accrued interests) 1.1 - - - 1.1 - - - 1.1 1.1 Isabela HoldCo AIF I S.à r.l. VITU TOPCO Ltd. 0.9 0.2 0.2 0.0 - - - - - - 0.0 (0.2) (0.2) - 0.9 - - - - - - - - - - - - - 0.9 - 0.9 0.2 0.2 0.0 Sechep Investments Holding S.à r.l. ECP LUX Holding S.A. - - - 0.0 0.1 0.1 Lux Fund Management Services S.à r.l. (loan and accrued interests) 0.0 - - (0.0) - - - - - 0.0 Corestate Highstreet II HoldCo S.à r.l. Highstreet Premium I HoldCo S.à r.l. Highstreet FinCo II S.à r.l. 0.0 - - - - - - - - - (0.0) - - - - - - - - - - - - - - - - - - - 0.0 0.0 - - (0.0) - - - 0.0 0.0 (0.0) - 0.1 - - 0.1 0.0 CC Investment Solutions - 0.1 0.4 - - - - DIANTHUS Verwaltungsgesellschaft Jade Investment Ltd. - - - - 0.4 - 0.4 - - - - - - 18.3 0.5 342.0 (3.7) 15.1 1,226.6 15.1 1,130.5 18.3 Total 1.014.8 (130.1) (96.1) 1,014.8 CORESTATE – ANNUAL REPORT 2021

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