GTC - Globe Trade Centre S.A. — Audit Report / Information 2021

Apr 6, 2022

GLOBE TRADE CENTRE S.A. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021 TOGETHER WITH THE INDEPENDENT AUDITOR’S REPORT Globe Trade Centre S.A. Consolidated Statement of Financial Position as of 31 December 2021 (in thousands of Euro) 2 Note 31 December 2021 31 December 2020 ASSETS Non-current assets Investment property 17 2,240,660 2,125,128 Residential landbank 18 27,002 10,094 Property, plant and equipment 16 7,834 7,785 Blocked deposits 21 11,078 10,979 Deferred tax asset 15 3,786 616 Derivatives 19 826 - Other non-current assets 163 159 2,291,349 2,154,761 Loan granted to non-controlling interest partner 27 10,628 11,252 Total non-current assets 2,301,977 2,166,013 Current assets Accounts receivables 6,161 5,873 Accrued income 3,448 878 Receivables from shareholders 30 123,425 - VAT and other tax receivable 26 2,957 2,343 Income tax receivable 456 1,036 Prepayments and deferred expenses 33 11,515 3,604 Short-term blocked deposits 21 14,341 27,434 Cash and cash equivalents 22 87,468 271,996 249,771 313,164 Assets held for sale 32 292,001 1,580 TOTAL ASSETS 2,843,749 2,480,757 Globe Trade Centre S.A. Consolidated Statement of Financial Position as of 31 December 2021 (in thousands of Euro) 3 Note 31 December 2021 31 December 2020 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 30 11,007 11,007 Share premium 550,522 550,522 Unregistered share capital increase 30 120,295 - Capital reserve 30 (49,489) (49,489) Hedge reserve (30,903) (11,930) Foreign currency translation reserve (2,570) (2,553) Accumulated profit 501,704 460,053 1,100,566 957,610 Non-controlling interest 27 16,423 16,538 Total Equity 1,116,989 974,148 Non-current liabilities Long-term portion of long-term borrowing 28 1,255,114 1,067,867 Lease liability 29 38,767 42,891 Deposits from tenants 24 11,078 10,979 Long term payable 25 2,426 2,524 Provision for share based payment 31 1,410 977 Derivatives 19 38,743 15,895 Provision for deferred tax liability 15 140,145 133,230 1,487,683 1,274,363 Current liabilities Current portion of long-term borrowing 28 44,337 193,425 Current portion of lease liabilities 29 198 163 Trade payables and provisions 20 31,092 27,299 Deposits from tenants 24 1,932 1,790 VAT and other taxes payables 2,222 1,551 Income tax payables 1,000 4,220 Derivatives 19 2,681 3,365 Advances received 784 433 84,246 232,246 Liabilities related to assets held for sale 32 154,831 - TOTAL EQUITY AND LIABILITIES 2,843,749 2,480,757 Globe Trade Centre S.A. Consolidated Income Statement for the year ended 31 December 2021 (in thousands of Euro) 4 Note Year ended 31 December 2021 Year ended 31 December 2020 Rental revenue 10,14 130,289 120,652 Service charge revenue 10,14 41,662 39,469 Service charge costs 14 (44,356) (41,527) Gross margin from operations 127,595 118,594 Selling expenses 11 (1,652) (1,307) Administration expenses 12 (14,145) (11,712) Loss from revaluation / impairment of assets 17 (12,867) (142,721) Other income 1,432 776 Other expenses 23 (1,062) (1,622) Profit/(loss) from continuing operations before tax and finance income / expense 99,301 (37,992) Foreign exchange gain / (loss), net 196 (2,951) Finance income 13 304 331 Finance cost 13 (43,281) (35,244) Profit/(loss) before tax 56,520 (75,856) Taxation 15 (13,784) 4,995 Profit/(loss) for the year 42,736 (70,861) Attributable to: Equity holders of the Company 41,651 (70,189) Non-controlling interest 27 1,085 (672) Basic/diluted earnings (losses) per share (in Euro) 34 0.09 (0.14) Globe Trade Centre S.A. Consolidated Statement of Comprehensive Income for the year ended 31 December 2021 (In thousands of Euro) 5 Year ended 31 December 2021 Year ended 31 December 2020 Profit/(loss) for the period 42,736 (70,861) Net other comprehensive income for the period, net of tax not to be reclassified to profit or loss in subsequent periods - - Loss on hedge transactions (20,356) (7,748) Income tax 1,383 812 Net loss on hedge transactions (18,973) (6,936) Foreign currency translation (17) (3,496) Net other comprehensive income for the period, net of tax to be reclassified to profit or loss in subsequent periods (18,990) (10,432) Total comprehensive income/(loss) for the period, net of tax 23,746 (81,293) Attributable to: Equity holders of the Company 22,661 (80,621) Non-controlling interest 1,085 (672) Globe Trade Centre S.A. Consolidated Statement of Changes in Equity for the year ended 31 December 2021 (In thousands of Euro) 6 Share capital Share premium Unregistered share capital increase Capital reserve Hedge reserve Foreign currency translation reserve Accumulated profit Total Non-controlling interest Total Balance as of 1 January 2020 11,007 550,522 - (43,098) (4,994) 943 530,242 1,044,622 14,040 1,058,662 Other comprehensive income - - - - (6,936) (3,496) - (10,432) - (10,432) Loss for the year ended 31 December 2020 - - - - - - (70,189) (70,189) (672) (70,861) Total comprehensive income / (loss) for the period - - - - (6,936) (3,496) (70,189) (80,621) (672) (81,293) Acquisition of non-controlling interest - - - (6,391) - - - (6,391) 3,590 (2,801) Dividend distribution to non- controlling interest - - - - - - - - (420) (420) Balance as of 31 December 2020 11,007 550,522 (49,489) (11,930) (2,553) 460,053 957,610 16,538 974,148 11,007 550,522 - (49,489) (11,930) (2,553) 460,053 957,610 16,538 974,148 Share capital Share premium Unregistered share capital increase Capital reserve Hedge reserve Foreign currency translation reserve Accumulated profit Total Non- controlling interest Total Balance as of 1 January 2021 11,007 550,522 - (49,489) (11,930) (2,553) 460,053 957,610 16,538 974,148 Other comprehensive income - - - - (18,973) (17) - (18,990) - (18,990) Profit for the year ended 31 December 2021 - - - - - - 41,651 41,651 1,085 42,736 Total comprehensive income / (loss) for the period - - - - (18,973) (17) 41,651 22,661 1,085 23,746 Unregistered share capital increase (note 30) - - 120,295 - - - - 120,295 - 120,295 Dividend distribution to non-controlling interest - - - - - - - - (1,200) (1,200) Balance as of 31 December 2021 11,007 550,522 (49,489) (11,930) (2,553) 460,053 957,610 16,538 974,148 11,007 550,522 120,295 (49,489) (30,903) (2,570) 501,704 1,100,566 16,423 1,116,989 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (In thousands of Euro) 7 Note Year ended 31 December 2021 Year ended 31 December 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Profit/(loss) before tax 56,520 (75,856) Adjustments for: Loss from revaluation/impairment of assets and residential projects 12,867 142,721 Foreign exchange loss/(gain), net (196) 2,951 Finance income 13 (304) (331) Finance cost 13 43,281 35,244 Provision for share based payment loss/(profit) 12 432 (469) Depreciation 16 653 654 Operating cash before working capital changes 113,253 104,914 Decrease (increase) in accounts receivables and prepayments and other current assets (4,952) 2,469 Decrease in advances received 583 72 Increase in deposits from tenants 2,878 27 Increase (decrease) in trade and other payables 3,550 (800) Cash generated from operations 115,312 106,682 Tax paid in the period (8,885) (6,357) Net cash from operating activities 106,427 100,325 CASH FLOWS FROM INVESTING ACTIVITIES: Expenditure on investment property and property, plant and equipment 17 (92,784) (78,528) Purchase of completed assets and land 17 (262,937) (21,468) Purchase of residential landbank 18 (13,300) - Decrease in short term deposits designated for investment 1,150 5,923 Purchase of minority - (1,802) Sale of investment property - 64,569 Sale of subsidiary 595 - Advances received for assets held for sale 32 1,210 - VAT/tax on purchase/sale of investment property (614) 953 Interest received 28 55 Net cash used in investing activities (366,652) (30,298) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 28 706,070 286,807 Repayment of long-term borrowings 28 (585,323) (224,293) Interest paid and other financing breaking fees (32,786) (32,068) Repayment of lease liability 29 (516) (162) Loans origination payment (8,147) (1,983) Dividend paid to non-controlling interest 27 (300) (420) Decrease/(Increase) in short term deposits 5,908 (168) Net cash from financing activities 84,906 27,713 Net foreign exchange difference (44) (5,380) Net increase/ (decrease) in cash and cash equivalents (175,363) 92,360 Cash and cash equivalents at the beginning of the period 22 271,996 179,636 Cash and cash equivalents at the end of the period 22 96,633 271,996 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 8 1. Principal activities Globe Trade Centre S.A. (the “Company”, „GTC S.A.” or “GTC”) with its subsidiaries (“GTC Group” or “the Group”) is an international real estate developer and investor. The Company was registered in Warsaw on 19 December 1996. The Company’s registered office is in Warsaw (Poland) at Komitetu Obrony Robotników 45a. The Company owns, through its subsidiaries, commercial and residential real estate companies with a focus on Poland, Hungary, Bucharest, Belgrade, Zagreb and Sofia. There is no seasonality in the business of the Group companies. The Group’s main business activities are development and rental of office and retail space. As of 31 December 2021 and 31 December 2020, the number of full-time equivalent working employees in the Group companies was 211 and 209, respectively. GTC is primarily listed on the Warsaw Stock Exchange and inward listed on Johannesburg Stock Exchange. As of 31 December 2021, the majority shareholder of the Company is GTC Holding Zrt., which holds directly and indirectly 320,466,380 shares of GTC S.A., entitling to 320,466,380 votes in the Company, representing 66% of the share capital of GTC S.A. and carrying the right to 66% of the total number of votes in GTC S.A. GTC Holding Zrt. holds directly 21,891,289 shares of the Company, entitling to 21,891,289 votes in GTC S.A., representing 4.51% of the share capital of the Issuer and carrying the right to 4.51% of the total number of votes in GTC S.A. and indirectly (i.e. through GTC Dutch Holdings B.V.) holds 298,575,091 shares in the Company, entitling to 298,575,091 votes GTC S.A., representing 61.49% of the share capital of the Company and carrying the right to 61.49% of the total number of votes in the Company. 2. Functional and presentation currencies The functional currency of GTC S.A. and most of its subsidiaries is Euro. The functional currency of some of GTC’s subsidiaries is other than Euro. The financial statements of those companies prepared in their functional currencies are included in the consolidated financial statements by a translation into Euro using appropriate exchange rates outlined in IAS 21 The Effects of Changes in Foreign Exchange Rates. Assets and liabilities are translated at the period end exchange rate, while income and expenses are translated at average exchange rates for the period. All resulting exchange differences are classified in equity as “Foreign currency translation reserve” without affecting earnings for the period. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 9 3. Basis of preparation and statement of compliance The Company maintains its books of account in accordance with accounting principles and practices employed by enterprises in Poland as required by the Polish accounting regulations. The companies outside Poland maintain their books of account in accordance with local GAAP. The consolidated financial statements include a number of adjustments not included in the books of account of the Group entities, which were made in order to bring the financial statements of those entities to conformity with IFRS. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS”) as adopted by the EU („EU IFRS"). At the date of authorisation of these consolidated financial statements, taking into account the EU IFRS's ongoing process of IFRS endorsement and the nature of the Group's activities, there is no relevant difference between IFRS applying to these consolidated financial statements and IFRS endorsed by the European Union. 4. Going concern The Group’s policies and processes are aimed at managing the Group’s capital, financial and liquidity risks on a sound basis. The Group meets its day to day working capital requirements through the generation of operating cash-flows from rental income. Further details of liquidity risks and capital management processes are described in note 37. As of 31 December 2021, the Group’s net working capital (defined as current assets less current liabilities) was positive and amounted to Euro 165,525. The management has analysed the timing, nature and scale of potential financing needs of particular subsidiaries and believes that there are not risks for paying current financial liabilities and cash on hand, as well as, expected operating cash-flows will be sufficient to fund the Group’s anticipated cash requirements for working capital purposes, for at least the next twelve months from the balance sheet date. Consequently, the consolidated financial statements have been prepared on the assumption that the Group companies will continue as a going concern in the foreseeable future, for at least twelve months from the balance sheet date. Based on management’s analysis, the current cash liquidity of the Company and prepared cash flow budget assumptions, the management concluded that there is no material uncertainty as to the Company’s ability to continue as a going concern in the foreseeable future i.e. at least in the next 12 months. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 10 5. Accounting policies The accounting policies adopted in the preparation of the attached consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2020 except for the new standards, which are effective as at 1 January 2021 (see note 6). Also, there is no significant changes in accounting estimates used by the Group. For valuation of Serbian offices transaction approach was used. Asset deal approach was used for Winmark and G-Delta Adrssy transactions (please refer to note 9), as it is qualified in accordance with IFRS 3. 6. New standards and interpretations that have been issued STANDARDS ISSUED AND EFFECTIVE FOR FINANCIAL YEARS BEGINNING ON OR AFTER 1 JANUARY 2021: • Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (issued on 27 August 2020). These amendments complement those made in 2019 (‘IBOR – phase 1’) and focus on the effects on entities when an existing interest rate benchmark is replaced with a new benchmark rate as a result of the reform. • Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 (issued on 25 June 2020). The Company’s assessment is that the above changes (new standards/amendments) have no material impact. STANDARDS ISSUED BUT NOT YET EFFECTIVE: • Amendments to IFRS 16 Leases: Covid-19 Related Rent Concessions (issued on 31 March 2021) – effective for financial years beginning on or after 1 April 2021; • Amendments to IFRS 3, IAS 16, IAS 37 and annual improvements to standards 2018- 2020 (Annual improvements) - issued on 14 May 2020 and effective for financial years beginning on or after 1 January 2022; Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 11 6. New standards and interpretations that have been issued (continued) • Amendments to IAS 1 - Disclosure of accounting policies and IAS 8 - Definition of accounting estimates (issued on 12 February 2021) –– effective for financial years beginning on or after 1 January 2023; • IFRS 17 Insurance Contracts (issued on 18 May 2017 and amended on 25 June 2020) – effective for financial years beginning on or after 1 January 2023; • Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (issued on 23 January 2020 and amended 15 July 2020) – effective for financial years beginning on or after 1 January 2023; • Amendment to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information (issued on 9 December 2021) –– effective for financial years beginning on or after 1 April 2023; • Amendments to IAS 12: Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on 7 May 2021) –– effective for financial years beginning on or after 1 April 2023. The new standards are not yet endorsed by EU at the date of approval of these financial statements. The effective dates are dates provided by the International Accounting Standards Board. Effective dates in the European Union may differ from the effective dates provided in standards and are published when the standards are endorsed by the European Union. The Group plans to adopt all new standards on the required effective date and will not restate comparative information. The Group does not expect a significant impact on its statement of financial position and equity. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 12 7. Summary of significant accounting policies (a) BASIS OF ACCOUNTING The consolidated financial statements have been prepared on a historical cost basis, except for completed investment properties, investment property under construction (“IPUC”) if the certain condition described in note 7(c) ii are met, share based payments, and derivative financial instruments that have been measured at fair value. (b) PROPERTY, PLANT AND EQUIPMENT Plant and equipment consist of vehicles and equipment. Plant and equipment are recorded at cost less accumulated depreciation and impairment. Depreciation is provided using the straight-line method over the estimated useful life of the asset. Reassessment of the useful life and indications for impairment is performed each quarter. The following depreciation rates have been applied: Depreciation rates Equipment 7-20% Buildings 2% Vehicles 20% Assets under construction other than investment property are shown at cost. The direct costs paid to subcontractors for the improvement of the property are capitalised into construction in progress. Capitalised costs also include borrowing costs, planning, and design costs, construction overheads, and other related costs. Assets under construction are not depreciated. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 13 7. Summary of significant accounting policies (continued) (c) INVESTMENT PROPERTIES Investment property comprises a land plot or a building or a part of a building held to earn rental income and/or for capital appreciation and property that is being constructed or developed for future use as an investment property (investment property under construction). Investment properties are initially measured at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time the cost is incurred if the recognition criteria are met and excludes the costs of day-to- day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value. Any gain or loss arising from a change in the fair value of investment property is recognized in the profit or loss for the year in which it arose, after accounting for the related impact on deferred tax. (i) Completed Investment properties Investment properties are stated at fair value according to the fair value model, which reflects market conditions at the reporting date Completed investment properties were externally valued by independent appraisers as of 31 December 2021 and 31 December 2020 based on open market values (RICS Standards). Completed properties are either valued on the basis of discounted cash flow (DCF) or - as deemed appropriate – on the basis of the income capitalisation or yield method. The applied method is defined by the valuer. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use, and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 14 7. Summary of significant accounting policies (continued) Transfers are made to investment property only when there is a change in use, evidenced by the end of owner occupation or commencement of a lease. Transfers are made from investment property only when there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale. (ii) Investment property under construction The Group revalue IPUC based on its fair value, once a substantial part of the development risks has been eliminated. IPUC, which does not meet this condition, is presented at the lower of cost or recoverable amount. Recoverable amount is a fair value, externally valued by independent appraisers. The land is reclassified to IPUC at the moment, at which active development of this land begins (i.e. when construction works start). The Group has adopted the following criteria to assess whether the substantial risks are eliminated with regard to particular IPUC: • agreement with a general contractor is signed; • a building permit is obtained; • at least 20% of the rentable area is leased to tenants (based on the signed lease agreements and letters of intent); • external financing is secured. The fair values of IPUC were determined as at their development stage at the end of the reporting period. Valuations were performed in accordance with RICS and IVSC Valuation Standards using the residual method approach. The future assets’ value is estimated based on the expected future income from the project, using yields that are higher than the current yields of the similar completed property. The remaining expected costs to completion are deducted from the estimated future assets value. For projects where the completion is expected in the future, also a developer profit margin of unexecuted works was deducted from the value. The profit margin deducted is reduced when the construction is closer to completion. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 15 7. Summary of significant accounting policies (continued) (d) HIERARCHY OF INVESTMENT PROPERTY Fair value hierarchy is based on the sourced of input used to estimate the fair value: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities, Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly, Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. All investment properties are categorized in Level 2 or Level 3 of the fair value hierarchy. The Group considered all investment value under construction carried at fair value as properties categorized in Level 3. The Group considered completed investment properties as properties categorize in Level 2 or Level 3, based on the liquidity in the market it operates. The Group applied the simplified classification rules of the investment properties fair value hierarchy based on the two main criteria: the type of investment property (retail/office) and mainly its location. The fair value measurement of completed investment property is based on the market assumptions made by the independent appraisers. Those assumptions depend on the observable market transactions. For more mature and active markets – like e.g. Poland, Hungary, and Romania, with a relevant number of comparative transactions, properties are classified to level 2. The other markets provide few observable data, and the relevant properties are classified to level 3. (e) INVESTMENTS IN ASSOCIATES Investments in associates are accounted for under the equity method. The investment is carried in the statement of financial position at cost plus post acquisition changes in the Group share of net assets of the associate. (f) INVESTMENTS IN JOINT VENTURES Investments in joint ventures are accounted for under the equity method. The investment is carried in the statement of financial position at cost plus post acquisition changes in the Group share of net assets of the joint ventures. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 16 7. Summary of significant accounting policies (continued) (g) LEASE ORIGINATION COSTS The costs incurred to originate a lease (mainly brokers’ fees) for available rental space are added to the carrying value of investment property until the date of revaluation of the related investment property to its fair value. If as of the date of revaluation, the carrying value is higher than the fair value, the costs are recognized in the income statement. (h) NON-CURRENT ASSETS HELD FOR SALE Non-current assets and their disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This requirement can be fulfilled only if the occurrence of a sale transaction is highly probable and the item of assets is available for immediate sale in its present condition. The classification of an asset as held for sale assumes the intent of the entity’s management to realise the transaction of sale within one year from the moment of asset classification to the held for sale category. Non-current assets held for sale are measured at the lower of their carrying amount and fair value, less costs to sell. (i) ADVANCES RECEIVED Advances received (related to pre-sales of residential units) are deferred to the extent that they are not reflected as revenue as described below in note 7(j). (j) RENTAL REVENUE Rental revenues result from operating leases and are recognised as income over the lease term on a straight-line basis (according to IFRS 16 Leases). (k) INTEREST AND DIVIDEND INCOME Interest income is recognised on an accrual basis using the effective interest method that is the rate that exactly discounts estimated future cash flows through the expected life of financial instruments to the net carrying amount of the underlying financial asset or liability. Dividend income is recognised when the shareholders’ right to receive payments is established. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 17 7. Summary of significant accounting policies (continued) (l) CONTRACT REVENUE AND COSTS RECOGNITION Group has the following revenue streams: • Rental income. The main source of income of the Group, which is charged to tenants on a monthly basis, based on rent fee rate agreed in the contract. • Service charge represents fees paid by the tenants of the Group’s investment properties to cover the costs of the services provided by the Group in relation to their leases. Service charge is billed on a monthly basis, based on service fee rate agreed in the contract, which represents the best estimate for a particular project. Allocation of service charge to tenants is done based on the leased area. Heating, water, and sewage are billed separately on a monthly basis, based on leased area and rates agreed in the contract. Service charge revenue under IFRS 15 Revenue from Contracts with Customers Service charge revenue is recognised under IFRS 15 when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. Group recognizes two kinds of performance obligations in the Group: • Acting as an agent. Some tenants install counters for electricity. In this case, the invoices for electricity are billed through GTC entities and addressed to the tenants directly. The Group recognizes cost and corresponding income at the same amount. For financial statement purposes such income and expenses are disclosed on a net basis, as GTC acts as an agent. • Acting as a principal. In the other cases, all service charges are billed to GTC entities. The Group bills the tenants based on the rates in the contract on a monthly basis. By the end of the year, the Group does reconciliation of actual service charges costs vs. billed one, and then bill for deficit or return the overpayment to the tenant if it is required. For financial statement purposes such expenses are disclosed on a gross basis, as GTC acts as a principal. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 18 7. Summary of significant accounting policies (continued) (m) BORROWING COSTS Borrowing costs directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. The interest capitalised is calculated using the Group’s weighted average cost of borrowings after adjusting for borrowings associated with specific developments. Where borrowings are associated with specific developments, the amount capitalised is the gross interest incurred on those borrowings less any investment income arising on their temporary investment. Interest is capitalised from the commencement of the development work until the date of practical completion, i.e., when substantially all of the development work is completed. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted. Interest is also capitalised on the purchase cost of a site of property acquired specifically for redevelopment, but only where activities necessary to prepare the asset for redevelopment are in progress. (n) SHARE ISSUANCE EXPENSES Share issuance costs are deducted from equity (share premium), net of any related income tax benefits. (o) INCOME TAXES & OTHER TAXES The current provision for corporate income tax for the Group companies is calculated in accordance with tax regulations ruling in particular country of operations and is based on the profit or loss reported under relevant tax regulations. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 19 7. Summary of significant accounting policies (continued) Deferred tax liabilities are recognised for all taxable temporary differences, except: • where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss, • in respect of taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: • where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss, • in respect of deductible temporary differences associated with investments in subsidiaries, associates, and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are measured using the tax rates enacted to taxable income in the years in which these temporary differences are expected to be recovered or settled. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which each company of the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. At each reporting date, the Group companies re-assess unrecognised deferred tax assets and the carrying amount of deferred tax assets. The companies recognise a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 20 7. Summary of significant accounting policies (continued) The companies conversely reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset that might be utilised. Deferred tax relating to items recognised outside profit and loss is also recognized outside profit and loss: under other comprehensive income if relates to items recognised under other comprehensive income, or under equity – if relates to items recognized in equity. Deferred tax assets and deferred tax liabilities are offset if, and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities, and the deferred tax assets and deferred tax liabilities relate to income taxes that are levied by the same taxation authority. Revenues, expenses, assets and liabilities are recognized net of the amount of value added tax except: • where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case value added tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as applicable and • receivables and payables, which are stated with the amount of value added tax included. The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. If, according to the Group’s assessment, it is probable that the tax authorities will accept an uncertain tax treatment or a group of uncertain tax treatments, the Group determines taxable income (tax loss), tax base, unused tax losses and unused tax credits and tax rates, after considering in its tax return the applied or planned approach to taxation. If the Group ascertains that it is not probable that the tax authorities will accept an uncertain tax treatment or a group of uncertain tax treatments, the Group reflects the impact of this uncertainty in determining taxable income (tax loss), unused tax losses, unused tax credits or tax rates. The Group accounts for this effect using the following methods: • determining the most probable amount – it is a single amount from among possible results or • providing the expected amount – it is the sum of the amounts weighted by probability from among possible results. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 21 7. Summary of significant accounting policies (continued) (p) FOREIGN EXCHANGE DIFFERENCES For companies with Euro as a functional currency, transactions denominated in a foreign currency (including Polish Zloty) are recorded in Euro at the actual exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are revalued at period-end using period-end exchange rates. Foreign currency translation differences are charged to the income statement. The following exchange rates were used for valuation purposes in cases where a certain lease is denominated in local currency. 31 December 2021 31 December 2020 PLN/EUR 4.5994 4.6148 USD/EUR 1.1329 1.2279 HUF/EUR 369.01 365.13 (q) INTEREST BEARING LOANS AND BORROWINGS AND DEBT SECURITIES All loans and borrowings and debt securities are initially recognized at fair value, net of transaction costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings and debt securities are measured at amortised cost using the effective interest rate method, except for liabilities designated as hedged items, which are measured in accordance with hedge accounting policies, as described in note 7(w). Debt issuance expenses are deducted from the amount of debt originally recognised. These costs are amortised through the income statement over the estimated duration of the loan, except to the extent that they are directly attributable to construction. Debt issuance expenses represent an adjustment to effective interest rates. Amortised cost is calculated by taking into account any transaction costs, and any discount or premium on settlement. Gains and losses are recognised in profit or loss when the liabilities are derecognised. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 22 7. Summary of significant accounting policies (continued) (r) FINANCIAL INSTRUMENTS – INITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (“OCI”), and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15. Refer to the accounting policies in note 7(l) Contract revenue and costs recognition. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: • Financial assets at amortised cost (debt instruments); • Financial assets at fair value through OCI with the recycling of cumulative gains and losses (debt instruments); • Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); • Financial assets at fair value through profit or loss. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 23 7. Summary of significant accounting policies (continued) Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met: • The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost include trade receivables, loans to associate and short-term deposits under current financial assets. Financial assets at fair value through OCI (debt instruments) The Group measures debt instruments at fair value through OCI if both of the following conditions are met: • The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. For debt instruments at fair value through OCI, interest income, foreign exchange revaluation, and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss. The Group does not have such debt instruments. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 24 7. Summary of significant accounting policies (continued) Financial assets designated at fair value through OCI (equity instruments) Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. The Group does not have such equity instruments. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates or significantly reduces an accounting mismatch. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. The Group does not have such instruments. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 25 7. Summary of significant accounting policies (continued) Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans, and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings, including bank overdrafts and derivative financial instruments. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognized in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. Loans and borrowings This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 26 7. Summary of significant accounting policies (continued) Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit or loss. This category applies to interest-bearing loans and borrowings. Offsetting of financial instruments Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. The table below presents the categorisation of financial assets and liabilities: item, category, and measurement. Item Financial assets/liabilities category Measurement Cash and short-term deposits Financial assets at amortised cost Amortised cost Debtors Financial assets at amortised cost Amortised cost Trade and other payables Financial liabilities at amortised cost Amortised cost Long and short term borrowings Financial liabilities at amortised cost Amortised cost Deposits from tenants Financial liabilities at amortised cost Amortised cost Long term payables Financial liabilities at amortised cost Amortised cost Interest rate swaps Hedging (cash flow hedges) Fair value – adjusted to other comprehensive income (effective portion) / adjusted to profit or loss (ineffective portion) Cap Financial liabilities at fair value through profit or loss Fair value – adjusted to profit or loss Cross-currency interest swap Financial liabilities at fair value through other comprehensive income / profit or loss Fair value related to interest – adjusted to other comprehensive income Fair value related to currency – adjusted to profit or loss Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 27 7. Summary of significant accounting policies (continued) (s) CASH AND CASH EQUIVALENTS Cash comprises cash on hand and on-call deposits. Cash equivalents are short-term, highly liquid investments that readily convert to a known amount of cash and which are subject to an insignificant risk of changes in value. (t) ACCOUNTS RECEIVABLES A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section r) Financial instruments – initial recognition and subsequent measurement. The carrying amount of accounts receivables is equal to their fair value. (u) IMPAIRMENT OF NON-CURRENT ASSETS The carrying value of assets not measured at fair value is periodically reviewed by the Management Board to determine whether impairment may exist. In particular, the Management Board assessed whether the impairment indicators exist. Based upon its most recent analysis, management believes that there are no impairment indicators. (v) PURCHASE OF SHARES OF NON-CONTROLLING INTEREST If the Group increases its share in the net assets of its controlled subsidiaries, the difference between the consideration paid/payable and the carrying amount of non-controlling interest is recognised in equity attributable to equity holders of the parent. (w) DERIVATIVES FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING Initial recognition and subsequent measurement The Group uses derivative financial instruments, such as interest rate swaps and cap, to hedge its interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently premeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 28 7. Summary of significant accounting policies (continued) At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements: • There is ‘an economic relationship’ between the hedged item and the hedging instrument. • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship. • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item. Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below. Cash flow hedges The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit or loss. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 29 7. Summary of significant accounting policies (continued) Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point of time, any cumulative gain or loss recognised in equity is transferred to net profit or loss for the year. For derivatives that do not qualify for hedge accounting, any gain or losses arising from changes in fair value are recorded directly to net profit or loss of the year. The fair value of cross-currency interest swap, interest rate swaps and caps contracts is determined by reference to market values for similar instruments (fair value level hierarchy 2). (x) ACCOUNTING ESTIMATES The preparation of financial statements in accordance with International Financial Reporting Standards requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the balance date. The actual results may differ from these estimates. Investment property represents property held for long-term rental yields. Investment property is carried at fair value, which is established at least annually by an independent registered valuer based on discounted projected cash flows from the investment property using the discounts rates applicable for the local real estate market and updated by the Management judgment or - as deemed appropriate – on basis of the Income capitalisation or yield method. The applied method and main assumptions as defined in note 17 are defined by the valuer. The changes in the fair value of investment property are included in the profit or loss for the period in which it arises (note 17). The Group uses estimates in determining the amortization rates used (note 16, note 29). The fair value of financial instruments for which no active market exists is assessed by means of appropriate valuation methods. In selecting the appropriate methods and assumptions, the Group applies professional judgment (note 19). The Group recognises deferred tax asset based on the assumption that taxable profits will be available in the future against which the deferred tax asset can be utilised. Deterioration of future taxable profits might render this assumption unreasonable (note 15). Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 30 7. Summary of significant accounting policies (continued) (y) SIGNIFICANT ACCOUNTING JUDGEMENTS In the process of applying the Group's accounting policies, management has made the following judgments: The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out on such leases. Significant accounting judgements related to investment property are presented in note 7(c). Significant accounting judgements related to market liquidity of investment property are presented in note 7(d). The Group classifies its residential inventory to current or non-current assets, based on their development stage within the business operating cycle. The normal operating cycle in most cases falls within a period of 1-5 years. Residential projects, which are active, are classified as current inventory. Residential projects which are planned to be completed in a period longer than the operating cycle are classified as residential landbank under non-current assets. The Group determines whether a transaction or other event is a business combination by applying the definition of a business in IFRS 3. Deferred tax with respect to outside temporary differences relating to subsidiaries was calculated based on an estimated probability that these temporary differences will be realized in the foreseeable future. The Group also makes an assessment of the probability of realization of deferred tax asset. If necessary, the Group decreases deferred tax asset to the realizable value. The Group uses judgements in determining the settlement of share-based payment in cash. (z) BASIS OF CONSOLIDATION The consolidated financial statements comprise the financial statements of GTC and the financial statements of its subsidiaries for the year ended 31 December 2021. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 31 7. Summary of significant accounting policies (continued) The financial statements of the subsidiaries are prepared for the same reporting period as those of the parent company, using consistent accounting policies and based on the same accounting policies applied to similar business transactions and events. Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group, regardless of the nature of its involvement with an entity (the investee), shall determine whether it is a parent by assessing whether it controls the investee. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, the Group controls an investee if, and only if, it has all the following: • power over the investee; • exposure, or rights, to variable returns from its involvement with the investee; and • the ability to use its power over the investee to affect the amount of the investor's returns. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. All significant intercompany balances and transactions, including unrealised gains arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless they indicate impairment. (aa) PROVISIONS Provisions are recognised when the Group has present obligation, (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. (ab) SHARE-BASED PAYMENT TRANSACTIONS Amongst others, GTC remunerates key personnel by granting them rights for payments based on GTC’s share price performance in PLN, in exchanges for their services (“Phantom shares”). Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 32 7. Summary of significant accounting policies (continued) The cost of the phantom shares is measured initially at fair value at the grant date. The liability is re-measured to fair value at each reporting date up and including the settlement date, with changes in fair value recognised in administration expenses. Phantom shares are vested in annual tranches during the work/service period. Expenses are recognised in a straight-line basis over the vesting period. (ac) EARNINGS PER SHARE Earnings per share for each reporting period is calculated as quotient of the profit for the given reporting period and the weighted average number of shares outstanding in that period. (ad) SHORT TERM DEPOSITS Short-term deposits include deposits related to loan agreements and other contractual commitments and can be used only for certain operating activities as determined by underlying agreements. Deposits related to loan agreements can be used anytime (for the defined purposes upon approval of the lender), as so, they are presented within current assets. (ae) DEPOSITS FROM TENANTS Deposits from tenants include deposits received from tenants to secure the obligation of the tenants towards the landlord. The deposits are refundable at the end of the lease. (af) RESIDENTIAL INVENTORY AND RESIDENTIAL LANDBANK Inventory related to residential projects under construction is stated at the lower of cost and net realisable value. The realisable value is determined using the Discounted Cash Flow method or Comparison method by independent appraisers. Costs relating to the construction of a residential project are included in the inventory. Commissions paid to sales or marketing agents on the sale of real estate units, which are not refundable, are expensed in full when the contract to sell is secured. The Group classifies its residential inventory to current or non-current assets based on their development stage within the business operating cycle. The normal operating cycle, in most cases, falls within a period of 1-5 years. Residential projects, which are active, are classified as current inventory. Residential projects which are planned to be completed in a period longer than the operating cycle are classified as residential landbank under non-current assets. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 33 7. Summary of significant accounting policies (continued) (ag) LEASES Leases, where the Group does not transfer substantially all the risk and benefits of ownership of the asset, are classified as operating leases. There are two types of leases in GTC Group that are subject to IFRS 16 and affect the financial statements: • Leasing property rented to tenants - the primary activity of GTC Group. For this leasing activity, GTC Group acts as a Lessor. The Group has entered into leases on its property portfolio. • Leases of lands under perpetual usufruct where the Group acts as Lessee. Perpetual usage payments are payments, which are done in advance or in arrears on an annual or monthly basis within a define period (from 33 to 87 years). Perpetual usage payments are made in Poland, Croatia, Romania and Serbia. Due to the fact that perpetual usage payments, by substance, are treated as lease payments, which are accounted for under IFRS 16. In the consolidated financial position statements, the Group recognized a Right of Use and Lease Liabilities: a) Right of use of lands under perpetual usufruct is presented: • as part of the Investment Property, with separate disclosure in a separate note; • as part of the residential landbank. b) Lease Liabilities are presented separately, as part of the short-term and long-term liabilities, with a separate disclosure. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 34 7. Summary of significant accounting policies (continued) Under IFRS 16, the Group presents the amortization of Right of Use or the change in fair value of Right of Use within the profit (loss) on revaluations. Interest embedded within land leases is presented as finance expenses. The Right of Use of lands under perpetual usufruct is amortized over the lease period (for cost method) or valued using the fair value approach (for investment properties valued at fair value). The Group entered into several other leases (low value, short term), which are not treated in accordance with IFRS 16. Additionally, the Group has decided not to apply IFRS 16 guidelines to leases whose term will end within twelve months of the date of initial application. In such cases, the lease is expensed without balance sheet recognition. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 35 8. Investment in Subsidiaries The consolidated financial statements include the financial statements of the Company and its subsidiaries listed below together with direct and indirect ownership of these entities, and voting rights proportion as at the end of each period (the table presents the effective stake): Subsidiaries Name Holding Company Country of incorporation 31 December 2021 31 December 2020 GTC Konstancja Sp. z o.o. (1) GTC S.A. Poland 100% 100% GTC Korona S.A. GTC S.A. Poland 100% 100% Globis Poznań Sp. z o.o. GTC S.A. Poland 100% 100% GTC Aeropark Sp. z o.o. GTC S.A. Poland 100% 100% Globis Wrocław Sp. z o.o. GTC S.A. Poland 100% 100% GTC Satellite Sp. z o.o. GTC S.A. Poland 100% 100% GTC Sterlinga Sp. z o.o. GTC S.A. Poland 100% 100% GTC Karkonoska Sp. z o.o. (1) GTC S.A. Poland 100% 100% GTC Ortal Sp. z o.o. GTC S.A. Poland 100% 100% Diego Sp. z o.o. GTC S.A. Poland 100% 100% GTC Francuska Sp. z o.o. GTC S.A. Poland 100% 100% GTC UBP Sp. z o.o. GTC S.A. Poland 100% 100% GTC Pixel Sp. z o.o. GTC S.A. Poland 100% 100% GTC Moderna Sp. z o.o. GTC S.A. Poland 100% 100% Centrum Handlowe Wilanow Sp. z o.o. GTC S.A. Poland 100% 100% GTC Management Sp. z o.o. GTC S.A. Poland 100% 100% GTC Corius Sp. z o.o. GTC S.A. Poland 100% 100% Centrum Światowida Sp. z o.o. GTC S.A. Poland 100% 100% Glorine Investments Sp. z o.o. (2) GTC S.A. Poland - 100% Glorine Investments Sp. z o.o. SKA (2) GTC S.A. Poland - 100% GTC Galeria CTWA Sp. z o.o. GTC S.A. Poland 100% 100% Artico Sp. z o.o. GTC S.A. Poland 100% 100% GTC Hungary Real Estate Development Company Pltd. (“GTC Hungary”) GTC S.A. Hungary 100% 100% GTC Duna Kft. GTC Hungary Hungary 100% 100% Váci út 81-85. Kft. GTC Hungary Hungary 100% 100% Riverside Apartmanok Kft. (1) GTC Hungary Hungary 100% 100% Centre Point I. Kft. Váci út 81-85. Kft. Hungary 100% 100% Centre Point II. Kft. Váci út 81-85. Kft. Hungary 100% 100% Spiral I. Kft. GTC Hungary Hungary 100% 100% Albertfalva Üzletközpont Kft. GTC Hungary Hungary 100% 100% GTC Metro Kft. GTC Hungary Hungary 100% 100% Kompakt Land Kft. GTC Hungary Hungary 100% 100% (1) Under liquidation (2) Liquidated Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 36 8. Investment in Subsidiaries (continued) Name Holding Company Country of incorporation 31 December 2021 31 December 2020 GTC White House Kft. GTC Hungary Hungary 100% 100% VRK Tower Kft. GTC Hungary Hungary 100% 100% GTC Future Kft. GTC Hungary Hungary 100% 100% Globe Office Investments Kft. GTC Hungary Hungary 100% 100% Office Planet Kft. (3) GTC Hungary Hungary 100% - GTC Investments Sp. z o.o. (previously Halsey Investments Sp. z o.o.) (4) GTC Hungary Poland 100% - GTC Univerzum Projekt Kft. (previously Winmark Kft.) (4) GTC Hungary Hungary 100% - GTC Origine Investments Pltd. (“GTC Origine”) (3) GTC S.A. Hungary 100% - GTC HBK Project Kft. (3) GTC Origine Hungary 100% - GTC VI188 Property Kft. (3) GTC Origine Hungary 100% - GTC FOD Property Kft. (3) GTC Origine Hungary 100% - G-Delta Adrssy Kft. (4) GTC Origine Hungary 100% - GTC KLZ 7-10 Kft. (3) GTC Origine Hungary 100% - GTC Nekretnine Zagreb d.o.o. GTC S.A. Croatia 100% 100% Euro Structor d.o.o. GTC S.A. Croatia 70% 70% Marlera Golf LD d.o.o. GTC S.A. Croatia 100% 100% Nova Istra Idaeus d.o.o. Marlera Golf LD d.o.o. Croatia 100% 100% GTC Matrix d.o.o. GTC S.A. Croatia 100% 100% GTC Seven Gardens d.o.o. GTC S.A. Croatia 100% 100% Towers International Property S.R.L. GTC S.A. Romania 100% 100% Green Dream S.R.L. GTC S.A. Romania 100% 100% Aurora Business Complex S.R.L. GTC S.A. Romania 100% 100% Cascade Building S.R.L. GTC S.A. Romania 100% 100% City Gate Bucharest S.R.L. GTC S.A. Romania 100% 100% Venus Commercial Center S.R.L. GTC S.A. Romania 100% 100% Beaufort Invest S.R.L. (2) GTC S.A. Romania - 100% Fajos S.R.L. (2) GTC S.A. Romania - 100% City Gate S.R.L. GTC S.A. Romania 100% 100% City Rose Park S.R.L. GTC S.A. Romania 100% 100% Deco Intermed S.R.L. GTC S.A. Romania 66.7% 66.7% GML American Regency Pipera S.R.L. GTC S.A. Romania 66.7% 66.7% (1) Under liquidation (2) Liquidated (3) Newly established wholly owned subsidiary (4) Acquired Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 37 8. Investment in Subsidiaries (continued) (3) Newly established wholly owned subsidiary (5) GTC S.A. holds 100% shares through a wholly-owned subsidiary Office Planet Kft, which has 70% of shares and remaining 30% is held directly by GTC S.A. (6) Sold Name Holding Company Country of incorporation 31 December 2021 31 December 2020 NRL EAD GTC S.A. Bulgaria 100% 100% Advance Business Center EAD GTC S.A. Bulgaria 100% 100% GTC Yuzhen Park EAD GTC S.A. Bulgaria 100% 100% Dorado 1 EOOD GTC S.A. Bulgaria 100% 100% GOC EAD (3) GTC S.A. Bulgaria 100% - GTC Medj Razvoj Nekretnina d.o.o. Beograd (5) GTC S.A. Serbia 100% 100% GTC Business Park d.o.o. Beograd (5) GTC S.A. Serbia 100% 100% Commercial and Residential Ventures d.o.o. Beograd GTC S.A. Serbia 100% 100% Demo Invest d.o.o. Novi Beograd (5) GTC S.A. Serbia 100% 100% Atlas Centar d.o.o. Beograd (5) GTC S.A. Serbia 100% 100% Commercial Development d.o.o. Beograd GTC S.A. Serbia 100% 100% Glamp d.o.o. Beograd GTC S.A. Serbia 100% 100% GTC BBC d.o.o. (5) GTC S.A. Serbia 100% 100% GTC Aurora Luxembourg S.A. (3) GTC S.A. Luxembourg 100% - Europort Investment (Cyprus) 1 Limited GTC S.A. Cyprus 100% 100% Europort Ukraine Holdings 1 LLC (6) Europort Investment (Cyprus) 1 Limited Ukraine - 100% Europort Ukraine LLC (6) Europort Investment (Cyprus) 1 Limited Ukraine - 100% Europort Project Ukraine 1 LLC (6) Europort Investment (Cyprus) 1 Limited Ukraine - 100% Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 38 9. Events in the period MANAGEMENT BOARD CHANGES AND OTHER CORPORATE EVENTS On 29 June 2021, the Annual General Meeting adopted a resolution regarding the capital increase of up to 20% of the existing share capital. As per the Annual General Meeting authorization, the Management launched the capital increase via the accelerated book building in December 2021. The subscription agreements with the shareholders participating in the offer of O series bearer shares were signed on 20-21 December 2021. As a result the Company issued 88,700,000 series O bearer shares. The capital increase and new Articles of Association were registered by the National Court Register on 4 January 2022 and the funds were transferred to the Company’s account in January 2022. The O series bearer shares were admitted to trading on the respective stock exchange on 26 January 2022. On 27 October 2021, the Company and Mr. Robert Snow have mutually agreed to terminate his appointment as a member to the Management Board of the Company and other subsidiaries of the Company. The resignation was approved by the Supervisory Board on 28 October 2021. On 13 December 2021, the Supervisory Board of the Company appointed Pedja Petronijevic to the Management Board of the Company (Chief Development Officer) effective as at 15 January 2022 and János Gárdai to the Management Board of the Company (Chief Operating Officer) effective as at 1 February 2022. ACQUISITIONS On 11 March 2021, GTC Hungary Real Estate Development Company Pltd., a wholly-owned subsidiary of the Company, signed a sale purchase agreement to acquire a Napred company in Belgrade, holding a land plot of 19,537 sqm for a consideration of EUR 33.8 million from Groton Global Corp. The site has potential office development of ca 79,000 sqm. The transaction was completed on 11 February 2022. On 30 April 2021, Globe Office Investments Kft., an indirect wholly-owned subsidiary of the Company, acquired from a company related to the majority shareholder of the Company a 15,700 sqm Class A office building on Váci corridor (Váci Green D) in Budapest for a consideration of EUR 51 million. The transaction was partially financed by a bank facility in the amount of EUR 25 million. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 39 9. Events in the period (continued) On 12 May 2021, GTC Hungary Real Estate Development Company Pltd., a wholly-owned subsidiary of the Company, acquired 100% holding of Winmark Ingatlanfejlesztő Kft (“Winmark”), which owns the Ericsson Headquarter Office Building and the evosoft Hungary Headquarter (Siemens Group) Office Building two class A office buildings in Budapest from WING Real Estate Group for a consideration of EUR 160.3 million, which was financed partially by a bank facility in the amount of EUR 80 million. On 1 June 2021, GOC EAD, a wholly-owned subsidiary of the Company, acquired a land plot in Sofia with an area of 2,417 sqm for a total amount of EUR 4.7 million. The Group plans to develop an office building in Sofia, Bulgaria with a leasable area of 9,200 sqm. On 30 June 2021, GTC HBK Project Kft., an indirect wholly-owned subsidiary of the Company, acquired from a company related to the majority shareholder of the Company a 6,400 sqm mixed-used retail and office asset in Budapest for the total consideration of EUR 21 million. The acquisition was partially financed by a bank facility in the amount of EUR 10.8 million. On 30 June 2021, GTC VI188 Property Kft., an indirect wholly-owned subsidiary of the Company, acquired from a company related to the majority shareholder of the Company a 15,000 sqm Class A office building in Budapest for a consideration of EUR 31.2 million. The acquisition was partially financed by a bank facility in the amount of EUR 16.2 million. On 22 July 2021, GTC FOD Kft, an indirect wholly-owned subsidiary of the Company, acquired from a company related to the majority shareholder of the Company a 24,000 sqm Class A Office Building in Debrecen, the second-largest city in Hungary, for a consideration of EUR 46.7 million. On 21 September 2021, GTC KLZ 7-10 Kft., an indirect wholly owned subsidiary of the Company, acquired from an investment fund related to the majority shareholder of the Company a land plot of 3,750 sqm for the total consideration of EUR 12.8 million. The site has potential residential development ca. 17,000 sqm. On 21 September 2021, GTC Origine Investments Pltd., a wholly owned subsidiary of the Company, acquired 100% holding of G-Delta Adrssy Kft. from an investment fund related to the majority shareholder of the Company, which owns an existing office building for a future refurbishment with a GLA of 3,600 sqm for a consideration of EUR 10.8 million. The office building is located in the CBD of Budapest. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 40 9. Events in the period (continued) DISPOSAL OF ASSETS On 21 May 2021, GTC and GTC Hungary Real Estate Development Company Pltd., a wholly-owned subsidiary of the Company, signed a sale and purchase agreement, concerning the sale of the entire share capital of Serbian subsidiaries: Atlas Centar d.o.o. Beograd (“Atlas Centar”), Demo Invest d.o.o. Novi Beograd (“Demo Invest”), GTC BBC d.o.o. (“BBC”), GTC Business Park d.o.o. Beograd (“Business Park”), GTC Medjunarodni Razvoj Nekretnina d.o.o. Beograd (“GTC MRN”) and Commercial and Residential Ventures d.o.o. Beograd (“CRV”). The purchase price under the Agreement shall be calculated on an enterprise value basis, based on a property value of aggregate EUR 267.6 million. The transaction was successfully closed on 12 January 2022. GTC Group has received an amount of EUR 134.3 million net proceeds before tax. On 9 September 2021, Europort Investments (Cyprus) 1 Limited, a wholly-owned subsidiary of the Company, sold shares of all its subsidiaries holding two land plots in Ukraine (Odessa) for an amount of EUR 0.6 million. Subsequently to the sale, the Company no longer has any assets or holds any entities in Ukraine. On 2 December 2021, GTC Seven Gardens d.o.o., a wholly-owned subsidiary of the Company, entered into a preliminary sale agreement of land plot with an area of 3,406 sqm for a total amount of EUR 1.4 million. ISSUANCE OF BONDS, BANK LOAN REFINANCING AND OTHER CHANGES TO BANK LOAN AGREEMENTS On 8 January 2021, GTC Pixel and GTC Francuska signed a loan agreement with Santander Bank Polska, which refinanced the existing loans. GTC Pixel repaid the loan in PKO BP in the amount of EUR 19.2 million and obtained the new loan in Santander Bank Polska in the amount of EUR 19.7 million. GTC Francuska repaid the loan in ING in the amount of EUR 18.9 million and obtained the new loan in Santander Bank Polska in the amount of EUR 19.3 million. On 17 March 2021, GTC Hungary Real Estate Development Company Pltd., a wholly-owned subsidiary of the Company issued 10-year green bonds with a total nominal value of EUR 53.8 million denominated in HUF to finance real estate acquisitions, redevelopment, and constructions of eligible projects. The bonds are fully, and irrevocable guaranteed by the Company and were issued at a yield of 2.68% with an annual fixed coupon of 2.6%. The bonds are amortized 10% a year starting on the 7th year, with 70% of the value paid at the maturity on 17 March 2031. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 41 9. Events in the period (continued) On 17 March 2021, GTC Hungary Real Estate Development Company Pltd., a wholly-owned subsidiary of the Company, entered into cross-currency interest swap agreements with two different banks to hedge the total green bonds liability against foreign exchange fluctuations. The green bonds were fixed to the Euro, and the fixed annual coupon was swapped for an average annual interest fixed rate of 0.93%. On 18 March 2021, Erste Group Bank AG, Raiffeisenlandesbank Niederosterreich-Wien AG and GTC Galeria CTWA Sp. z o.o., a wholly-owned subsidiary of the Company, operating Galeria Jurajska shopping mall, signed a waiver letter, according to which the DSCR covenant was waived until the end of September 2022 and a prepayment of EUR 5 million was made at the end of March 2021. On 1 April 2021, GTC Corius Sp. z o.o., a wholly-owned subsidiary of the Company, signed a loan agreement prolongation with Berlin Hyp Bank for additional five years. On 7 May 2021, GTC Sterlinga Sp. z o.o., a wholly-owned subsidiary of the Company, signed a prolongation of the loan agreement with Pekao S.A. for additional five years. On 8 June 2021, two rating agencies assigned a corporate family rating (“CFR”) to GTC: Moody's Investors Service ("Moody's") – Ba1 and Fitch Ratings (“Fitch”) – BBB-. Outlook for the assigned ratings is positive (Moody's) and stable (Fitch). After the issue of EUR 500 million fixed-rate, senior unsecured green bonds due 2026, Moody's and Fitch assigned credit ratings for issued bonds on the same level as CFR. Bonds were issued by GTC Aurora Luxembourg S.A., a wholly-owned subsidiary of the Company, and guaranteed by the Company. On 23 June 2021, GTC Aurora Luxembourg S.A., a wholly-owned subsidiary of the Company, issued 5-year unsecured green bonds with the total nominal value of EUR 500 million denominated in EUR to primarily refinance existing secured debt on its projects whose activities meet the eligibility criteria detailed in the GTC's Green Bond Framework, as well as for general corporate purposes. The bonds are guaranteed by the Company and were issued at a yield of 2.375% with an annual fixed coupon of 2.25%. The bonds are paid at the maturity on 23 June 2026. On 29 October 2021, the Company signed the first unsecured revolving credit facility agreement in the amount of EUR 75 million with a club of four different banks. On 29 December 2021, Euro Structor d.o.o., a partially-owned subsidiary of the Company, signed a prolongation for the existing credit facility for another five years with Zagrebačka banka. The new prolonged loan shall bear a fixed interest of 1.9% and the outstanding amount of EUR 42.5 million shall be paid as a balloon at the maturity date. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 42 9. Events in the period (continued) BONDS AND LOANS REPAYMENTS On 5 March 2021, GTC S.A. repaid all bonds issued under ISIN code PLGTC0000276 (full redemption). The original nominal value was EUR 20,494. On 19 March 2021, Commercial Development d.o.o. Beograd, a wholly-owned subsidiary of the Company, operating Ada Mall, and Intesa Bank signed a restated loan agreement whereby the existing loan in the amount of EUR 58.3 million was early prepaid by 31 March 2021 in the amount of EUR 29 million and the margin reduced from 3.15% to 2.9%. Following the prepayment, the outstanding loan amount shall be payable in full at maturity in 2029. On 25 June 2021, GTC Metro Kft., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with CIB bank in the amount of EUR 13 million. On 30 June 2021, Centrum Światowida Sp. z o.o., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with Bank Polska Kasa Opieki S.A. and Commercial Bank of China (Europe) S.A. in the total amount of EUR 174.1 million. On 30 June 2021, GTC Korona S.A., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with Santander Bank Polska S.A. in the amount of EUR 41.6 million. On 30 June 2021, GTC Matrix d.o.o., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with Erste bank in the amount of EUR 23.5 million. On 30 June 2021, Advance Business Center EAD, a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with UniCredit bank in the amount of EUR 41.1 million. On 30 June 2021, City Gate Bucharest S.R.L. and City Gate S.R.L., a wholly-owned subsidiaries of the Company, repaid the full outstanding amount of the loan with Erste bank in the amount of EUR 62 million. On 30 June 2021, Venus Commercial Center S.R.L., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with Alpha bank in the amount of EUR 13.8 million. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 43 9. Events in the period (continued) On 15 July 2021, Cascade Building S.R.L., a wholly-owned subsidiary of the Company, repaid the full outstanding amount of the loan with Banca Transilvania S.A. in the total amount of EUR 3.6 million. On 31 August 2021, Dorado 1 EOOD, a wholly-owned subsidiary of the Company, operating Mall of Sofia, repaid the full outstanding amount of the loan with OTP Bank in the total amount of EUR 53.4 million. On 28 September 2021, Commercial Development d.o.o. Beograd, a wholly-owned subsidiary of the Company, operating Ada Mall, repaid the entire outstanding amount of the loan with Intesa Bank in the total amount of EUR 29.3 million. 10. Revenue from operations Rental income includes variable rental revenue based on tenants’ turnover for the year ended 31 December 2021 of Euro 4,976 (2020: Euro 2,657). The remaining revenue is based on fixed contractual rental fees. The Group has entered into various operational lease contracts on its property portfolio in Poland, Romania, Croatia, Serbia, Bulgaria, and Hungary. The commercial property leases typically include clauses to enable the periodic upward revision of the rental charge according to European Consumer Price Index (CPI). Future minimum rental revenue under operating leases from completed projects are, as follows (in millions of Euro): 31 December 2021 31 December 2020 Within 1 year 111 121 Within 2 year 88 100 Within 3 year 64 74 Within 4 year 45 52 Within 5 year 33 33 Within 6 year 18 22 More than 6 years 18 37 Total 377 439 Most of the revenue from operations is earned predominantly on the basis of amounts denominated in, directly linked to, or indexed by reference to the Euro. Service charge revenue includes income from charging maintenance costs to tenants. Service charge is billed on a monthly basis, based on the agreed rate from the contract. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 44 11. Selling expenses Selling expenses comprise of the following: Year ended 31 December 2021 Year ended 31 December 2020 Advertising and marketing 424 140 Payroll and related expenses 1,228 1,167 Total 1,652 1,307 12. Administration expenses Administration expenses comprise of the following: Year ended 31 December 2021 Year ended 31 December 2020 Remuneration and fees 9,002 8,396 Audit and valuations 755 852 Legal, tax, IT and other advisory 1,306 905 Office and insurance expenses 1,167 669 Travel expenses 242 285 Supervisory board remuneration fees 187 137 Depreciation 653 654 Investors relations and other expenses 401 283 Total before share based payment 13,713 12,181 Share based payment 432 (469) Total 14,145 11,712 13. Finance income and finance expense Finance income comprises of the following: Year ended 31 December 2021 Year ended 31 December 2020 Interest on deposits and other 28 55 Interest on loan granted to non-controlling interest 276 276 Total 304 331 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 45 13. Finance income and finance expense (continued) Finance expense comprises of the following: Year ended 31 December 2021 Year ended 31 December 2020 Interest expenses (on financial liabilities that are not fair valued through profit or loss) and other charges (31,841) (31,321) Finance costs related to lease liability (1,938) (2,010) Early prepayment costs (5,102) - Amortization of loan raising costs (4,400) (1,913) Total (43,281) (35,244) The weighted average interest rate (including hedges) on the Group’s loans (excluding loans related to assets held for sale) as of 31 December 2021 was 2.16% p.a. (2.3% p.a. as of 31 December 2020). 14. Segmental analysis The operating segments are aggregated into reportable segments, taking into consideration the nature of the business, operating markets, and other factors. GTC operates in six core markets: Poland, Hungary, Bucharest, Belgrade, Sofia, and Zagreb. Segment Hungary includes Budapest and Debrecen, in the financial statements for 2020 only Budapest. Operating segments are divided into geographical zones, which have common characteristics and reflect the nature of management reporting structure: a. Poland b. Belgrade c. Hungary d. Bucharest e. Zagreb f. Sofia g. Other (including Luxembourg) Year ended 31 December 2021 Year ended 31 December 2020 Rental income from office sector 117,315 108,537 Rental income from retail sector 54,636 51,584 TOTAL 171,951 160,121 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 46 14. Segmental analysis (continued) Segment analysis of rental income and costs for the year ended 31 December 2021 and 31 December 2020 is presented below: Year ended 31 December 2021 Year ended 31 December 2020 Portfolio Revenues Costs Gross margin Revenues Costs Gross margin Poland 63,818 (17,959) 45,859 65,227 (19,218) 46,009 Belgrade 33,555 (8,139) 25,416 33,806 (8,485) 25,321 Hungary 33,691 (7,762) 25,929 21,926 (4,900) 17,026 Bucharest 15,019 (3,100) 11,919 17,229 (2,969) 14,260 Zagreb 13,225 (4,209) 9,016 11,004 (3,684) 7,320 Sofia 12,643 (3,187) 9,456 10,929 (2,271) 8,658 Total 171,951 (44,356) 127,595 160,121 (41,527) 118,594 Segment analysis of assets and liabilities as of 31 December 2021 is presented below: Real estate Cash and deposits Other Total assets Loans, bonds and leases Deferred tax liability Other Total liabilities Poland 898,827 43,450 7,456 949,733 299,946 59,706 15,244 374,896 Belgrade () 381,875 18,702 3,861 404,438 146,093 3,000 9,156 158,249 Hungary 699,036 28,207 15,302 742,545 267,243 20,057 11,269 298,569 Bucharest 187,047 10,745 1,249 199,041 15,406 13,062 3,925 32,393 Zagreb 163,020 6,243 11,385 180,648 43,704 16,992 4,271 64,967 Sofia 190,516 4,477 1,589 196,582 31 8,528 3,147 11,706 Other 29,835 464 - 30,299 - - - - Non allocated () - 15,700 124,763 140,463 722,410 21,800 41,770 785,980 Total 2,550,156 127,988 165,605 2,843,749 1,494,833 143,145 88,782 1,726,760 () Includes assets held for sale and liabilities related to assets held for sale. For details please refer to note 32. () In other assets are presented receivables from shareholders in the amount of EUR 123,425. Loans, bonds and leases comprise mainly of bonds issued by GTC S.A., GTC Hungary and GTC Aurora Luxembourg S.A. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 47 14. Segmental analysis (continued) Segment analysis of assets and liabilities as of 31 December 2020 is presented below: Real estate Cash and deposits Other Total assets Loans, bonds and leases Deferred tax liability Other Total liabilities Poland 906,313 44,939 3,872 955,124 532,127 59,536 14,005 605,668 Belgrade 370,123 13,316 3,711 387,150 211,497 10,373 8,628 230,498 Hungary 321,704 149,239 4,680 475,623 223,862 12,240 17,617 253,719 Bucharest 197,247 13,527 1,119 211,893 104,974 11,816 3,103 119,893 Zagreb 159,319 5,905 12,305 177,529 67,142 16,728 4,383 88,253 Sofia 179,109 11,609 1,087 191,805 93,212 8,337 6,850 108,399 Other 9,521 17 18 9,556 - - 1,141 1,141 Non allocated - 71,857 220 72,077 78,370 14,200 6,468 99,038 Total 2,143,336 310,409 27,012 2,480,757 1,311,184 133,230 62,195 1,506,609 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 48 15. Taxation The major components of tax expense are as follows: Year ended 31 December 2021 Year ended 31 December 2020 Current corporate and capital gain tax expense 5,656 8,811 Deferred tax expense / (income) 8,128 (13,806) Total 13,784 (4,995) The Group companies are subject to taxes in the following jurisdictions: Poland, Serbia, Romania, Hungary, Bulgaria, Cyprus, Croatia and Luxembourg. The Group does not constitute a tax group under local legislation. Therefore, every company in the Group is a separate taxpayer. The reconciliation between tax expense and accounting profit multiplied by the applicable tax rates is presented below: Year ended 31 December 2021 Year ended 31 December 2020 Accounting profit / (loss) before tax 56,520 (75,856) Taxable expenses at the applicable tax rate in each country of activity 7,756 (14,818) Tax effect of expenses that are not deductible in determining taxable profit 2,095 772 Commercial property tax 46 (416) Tax effect of foreign currency differences 211 5,975 Withholding tax 584 604 Unrecognised deferred tax asset on losses in current year 3,092 2,888 Tax expense / (income) 13,784 (4,995) Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (In thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 49 15. Taxation (continued) The components of the deferred tax balance were calculated at a rate applicable when the Group expects to recover or settle the carrying amount of the asset or liability. Net deferred tax assets comprise the following: As of 1 January 2020 Credit / (charge) to income statement As of 31 December 2020 Credit / (charge) to income statement As of 31 December 2021 Financial instruments () 5,300 9,085 14,385 3,105 17,490 Tax loss carried forwards 10,197 (3,515) 6,682 (2,629) 4,053 Basis differences in non-current assets 1,024 (59) 965 643 1,608 Accruals 789 257 1,046 535 1,581 Netting () (17,310) (5,152) (22,462) 1,516 (20,946) Net deferred tax assets - 616 616 3,170 3,786 Net deferred tax liability comprises of the following: As of 1 January 2020 Credit / (charge) to income statement Credit / (charge) to equity As of 31 December 2020 Credit / (charge) to income statement Credit / (charge) to equity Reclassified to liabilities related to assets held for sale As of 31 December 2021 Financial instruments (*) (14,775) (5,523) 812 (19,486) (6,297) 1,383 3,000 (21,400) Basis differences in non-current assets (149,748) 13,542 - (136,206) (3,485) - - (139,691) Other (19) 19 - - - - - - Netting () 17,310 5,152 - 22,462 (1,516) - - 20,946 Net deferred tax liability (147,232) 13,190 812 (133,230) (11,298) 1,383 3,000 (140,145) () Mostly unrealized interest and foreign exchange differences. () Within a particular company, deferred tax assets are accounted separately from deferred tax liabilities as they are independent in their nature. However, as they represent a future settlement between the same parties, they are netted off for the purpose of the presentation in financial statements. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (In thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 50 15.Taxation (continued) The enacted tax rates in the various countries were as follows: Tax rate Year ended 31 December 2021 Year ended 31 December 2020 Poland 19% 19% Hungary 9% 9% Ukraine 18% 18% Bulgaria 10% 10% Serbia 15% 15% Croatia 18% 18% Romania 16% 16% Cyprus 12.5% 12.5% Luxembourg 24.94% - Future benefit for deferred tax assets has been reflected in these consolidated financial statements only if it is probable that taxable profits will be available when timing differences that gave rise to such deferred tax asset reverse. Regulations regarding VAT, corporate income tax and social security contributions are subject to frequent changes. These frequent changes result in there being little point of reference, inconsistent interpretations not consistent, and few established precedents that may be followed. The binding regulations also contain uncertainties, resulting in differences in opinion regarding the legal interpretation of tax regulations both between government bodies and between government bodies and companies. Tax settlements and other areas of activity (e.g., customs or foreign currency related issues) may be subject to inspection by administrative bodies authorised to impose high penalties and fines, and any additional taxation liabilities calculated as a result must be paid together with high interest. On 15 July 2016, amendments were made to the Polish Tax Ordinance to introduce the provisions of the General Anti-Avoidance Rule (GAAR). GAAR are targeted to prevent origination and use of factitious legal structures made to avoid payment of tax in Poland. GAAR define tax evasion as an activity performed mainly with a view to realizing tax gains, which is contrary, under given circumstances, to the subject and objective of the tax law. In accordance with GAAR, an activity does not bring about tax gains if its modus operandi was false. Any instances of (i) unreasonable division of an operation (ii) involvement of agents despite lack of economic rationale for such involvement, (iii) mutually exclusive or mutually compensating elements, as well as (iv) other activities similar to those referred to earlier may be treated as a hint of artificial activities subject to GAAR. New regulations require considerably greater judgment in assessing the tax effects of individual transactions. The GAAR clause should be applied to the transactions performed after the clause effective date and to the transactions which were performed prior to GAAR clause effective date, but for which after the clause effective date tax gains were realized or continue to be realised. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 51 15.Taxation (continued) The implementation of the above provisions will enable Polish tax authority to challenge such arrangements realized by tax remitters as restructuring or reorganization. Tax settlements may be subject to inspections by tax authorities. Accordingly, the amounts shown in the financial statements may change at a later date as a result of the final decision of the tax authorities. Main tax changes to the Polish Corporate Income Tax effective from 1 January 2022 Withholding tax (WHT) The package of changes introduced to the Polish tax law regulations starting from January 2022 has limited the original scope of the application of pay and refund mechanism (settlement of WHT in relation to payments exceeding PLN 2 million (EUR 0,4 million) per annum for each taxpayer). Under new rules, the conditional exemption from WHT or application of the reduced tax rate stipulated in the applicable double tax treaty (DTT) is restricted in terms of the passive payments (i.e. dividends, interest, license fees) in the amount exceeding PLN 2 million per annum made with respect to foreign related entities. In such cases the tax remitter is obliged to automatically collect the tax at a statutory domestic rate (19% or 20%) regardless of the fulfilment of the conditions allowing the application of the exemption or the reduced rate on the basis of the local law or DTT. Group does not expect significant impact of above change on consolidated financial statements. Limitation of tax depreciation of commercial buildings According to general tax regulations depreciation expenses on fixed assets (buildings classified as investment property) can be tax deductible. However, from 1 January 2022 in the case of real estate companies, tax-deductible depreciation expenses rates cannot be greater than the current applied accounting depreciation expenses rates applied to the same fixed assets in a given year. Group is in the process of assessing the tax impact of above change on consolidated financial statements. The Group companies have tax losses carried forward as of 31 December 2021 available in the amount of Euro 249 million (Euro 260 million as of 31 December 2020). The expiry dates of these tax losses as of 31 December 2021 are as follows: within one year - Euro 35 million, between 2-5 years - Euro 133 million, afterwards – Euro 81 million. As of 31 December 2021, the Group has not recognized deferred tax assets for tax losses carried forward in amount of Euro 217 million (Euro 212 million as of 31 December 2020), as the Group believes that these losses will not be utilized within claim period. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 52 16. Property, Plant, and Equipment The movement in property, plant, and equipment for the year ended 31 December 2021 was as follows: Buildings and related improvements Right of use Equipment and software Vehicles Total Gross carrying amount As of 1 January 2021 7,599 302 1,909 900 10,710 Additions 1,864 - 192 223 2,279 Reclassified to assets held for sale (819) - (31) (9) (859) Disposals, impairments and other decreases (489) (131) (230) (335) (1,185) As of 31 December 2021 8,155 171 1,840 779 10,945 Accumulated Depreciation As of 1 January 2021 1,057 97 1,345 426 2,925 Charge for the period 295 93 162 103 653 Reclassified to assets held for sale (82) - (11) (8) (101) Disposals, impairments and other decreases (37) (61) (134) (134) (366) As of 31 December 2021 1,233 129 1,362 387 3,111 Net book value as of 31 December 2021 6,922 42 478 392 7,834 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 53 16. Property, Plant, and Equipment The movement in property, plant, and equipment for the year ended 31 December 2020 was as follows: Buildings and related improvements Right of use Equipment and software Vehicles Total Gross carrying amount As of 1 January 2020 7,551 286 1,801 934 10,572 Additions 48 - 133 67 248 Foreign exchange differences - 16 11 16 43 Disposals, impairments and other decreases - - (36) (117) (153) As of 31 December 2020 7,599 302 1,909 900 10,710 Accumulated Depreciation As of 1 January 2020 786 37 1,208 382 2,413 Charge for the period 271 60 171 152 654 Foreign exchange differences - - (7) - (7) Disposals, impairments and other decreases - - (27) (108) (135) As of 31 December 2020 1,057 97 1,345 426 2,925 Net book value as of 31 December 2020 6,542 205 564 474 7,785 17. Investment Property Investment properties that are owned by the Group are office and commercial space, including property under construction: Investment property can be split up as follows: 31 December 2021 31 December 2020 Completed investment property 1,929,979 1,879,173 Investment property under construction 132,410 62,909 Investment property landbank at cost 139,843 140,367 Right of use of lands under perpetual usufruct 38,428 42,679 Total 2,240,660 2,125,128 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 54 17. Investment Property (continued) The movement in investment property for the periods ended 31 December 2021 and 31 December 2020 was as follows: Right of Use of land Level 2 Level 3 at fair value Level 3 at Cost Total Carrying amount as of 1 January 2020 44,485 1,346,097 741,172 115,276 2,247,030 Reclassification - (7,799) - 7,799 - Capitalised subsequent expenditure - 11,446 48,184 8,065 67,695 Purchase of completed assets and land - 5,600 - 16,502 22,102 Adjustment to fair value / (impairment) - (84,904) (52,844) (3,165) (140,913) Amortization of right of use of lands under perpetual usufruct (440) - - - (440) Increase 96 - - - 96 Reclassified to assets held for sale - - - (900) (900) Disposals - (62,649) - (500) (63,149) Foreign exchange differences (1,462) (4,830) - (101) (6,393) Carrying amount as of 31 December 2020 42,679 1,202,961 736,512 142,976 2,125,128 Capitalised expenditure - 16,091 44,070 20,471 80,632 Purchase of completed assets and land - 310,627 - 15,457 326,084 Adjustment to fair value / (impairment) - (12,765) 3,399 (2,105) (11,471) Amortization of right of use of lands under perpetual usufruct (416) - - - (416) Reclassified to assets held for sale (1) (3,724) - (266,763) (1,352) (271,839) Reclassified to residential landbank (2) - - - (5,500) (5,500) Classified to assets for own use, net - (1,252) - - (1,252) Disposal of land - - - (595) (595) Decrease (745) - - - (745) Foreign exchange differences 634 - - - 634 Carrying amount as of 31 December 2021 38,428 1,515,662 517,218 169,352 2,240,660 (1) Mainly relates to sale of Serbian assets and sale of land in Croatia (note 32). (2) Mainly relates to reclassification of part of the land which is expected to use for residential project in Romania. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 55 17. Investment Property (continued) Reconciliation between capitalized subsequent expenditure and paid subsequent expenditure is presented below: Year ended 31 December 2021 Year ended 31 December 2020 Capitalized expenditure (including purchase of completed assets and land) 406,716 89,797 Change in trade payables and provisions 56 11,713 Change in trade receivables 6,758 (1,762) Loan on acquisition GTC Univerzum Projekt Kft. (previously: Winmark Kft.) (58,000) - Purchase of property, plant and equipment 191 248 Paid expenditures in line with cash flow statement 355,721 99,996 Fair value and impairment adjustment consists of the following: Year ended 31 December 2021 Year ended 31 December 2020 Adjustment to fair value of completed investment properties () (17,305) (144,126) Adjustment to the fair value of investment properties under construction 7,860 6,378 Reversal of impairment/(Impairment) adjustment (2,026) (3,165) Total adjustment to fair value / (impairment) of investment property (11,471) (140,913) Reversal of impairment/(Impairment) of assets held for sale (941) (172) Amortization of right of use of lands under perpetual usufruct (including on residential landbank) (455) (478) Impairment of residential landbank - (1,158) Total recognised in profit or loss (12,867) (142,721) () During the financial year end 31 December 2020, the Covid-19 pandemic has triggered a wave of strong negative effects on the markets that the Group operates. As a result of this, the valuations prepared by independent appraisers over the completed investment properties has been negatively affected primarily driven by the group retail assets. For further information on the COVID-19 pandemic impact over the business of the Group please see note 38. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 56 17. Investment Property (continued) Segment analysis of adjustment to fair value of completed investment properties is presented below: Year ended 31 December 2021 Year ended 31 December 2020 Poland (16,637) (77,153) Belgrade (444) (42,818) Hungary 5,470 12,610 Bucharest (1,599) (19,362) Zagreb 92 (6,353) Sofia (4,187) (11,050) Total adjustment to fair value of completed assets (17,305) (144,126) Assumptions used in the fair value valuations of completed assets as of 31 December 2021 are presented below: Portfolio Book value GLA thousand Average Occupancy Actual Average rent Average ERV Fair Value Hierarchy Level Average Yield ‘000 Euro sqm % Euro/ sqm/m Euro/ sqm/m % Poland retail 443,000 113 94% 20.8 20.7 2 6.0% Poland office 373,639 196 87% 14.2 14.2 2 7.7% Belgrade office - - - - - - - Belgrade retail 90,700 35 96% 18.0 22.3 3 7.9% Hungary office 505,437 192 97% 15.5 15.5 2 6.7% Hungary retail 21,600 6 90% 17.4 18.4 2 5.6% Bucharest office 171,985 67 66% 18.2 17.9 2 5.6% Zagreb retail 85,400 28 99% 21.3 21.7 3 8.2% Zagreb office 61,918 28 92% 14.6 14.7 3 7.3% Sofia office 95,800 44 84% 14.5 14.8 3 6.7% Sofia retail 80,500 23 96% 19.7 23.4 3 6.4% Total 1,929,979 732 90% 16.5 16.9 6.7% () ERV- Estimated Rent Value (the open market rent value that a property can be reasonably expected to attain based on characteristics such as a condition of the property, amenities, location, and local market conditions) () Reclassified to assets held for sale (please refer to note 32). There are no significant changes in valuation assumptions used (please refer to note 5). () As of 31 December 2021, office part of shopping malls in Croatia and Bulgaria was separated for presentation purpose. () Average yield is calculated as in-place rent divided by fair value of asset. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 57 17. Investment Property (continued) Assumptions used in the fair value valuations of completed assets as of 31 December 2020 are presented below: Portfolio Book value GLA thousand Average Occupancy Actual Average rent Average ERV Fair Value Hierarchy Level Average Yield ‘000 Euro sqm % Euro/ sqm/m Euro/ sqm/m % Poland retail 443,000 113 93% 20.9 20.8 2 5.9% Poland office 381,738 196 88% 14.6 14.3 2 7.8% Belgrade office 264,781 122 93% 16.7 16.2 3 8.6% Belgrade retail 90,700 35 97% 17.9 19.6 3 7.9% Hungary office 206,138 97 95% 14.2 13.8 2 7.5% Bucharest office 172,085 67 93% 20.5 17.7 2 8.3% Zagreb retail 99,512 35 97% 20.2 20.6 3 8.2% Zagreb office 44,719 21 76% 14.3 14.6 3 6.2% Sofia office 75,800 34 79% 14.6 14.6 3 6.2% Sofia retail 100,700 33 98% 18.8 20.8 3 7.0% Total 1,879,173 753 91% 17.0 16.7 7.4% () Average yield is calculated as in-place rent divided by fair value of asset. Method of calculation was changed comparing to financial statements for 2020 year. Information regarding investment properties under construction as of 31 December 2021 is presented below: Book value Estimated area (GLA) ‘000 Euro thousand sqm Budapest (Pillar) 102,900 29 Belgrade (GTC X) 19,951 17 Sofia (Sofia Tower 2) 9,559 8 Total 132,410 54 Information regarding investment properties under construction as of 31 December 2020 is presented below: Book value Estimated area (GLA) ‘000 Euro thousand sqm Budapest (Pillar) 60,300 29 Sofia (Sofia Tower 2) 2,609 8 Total 62,909 37 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 58 17. Investment Property (continued) Information regarding book value of investment property landbank for construction as of 31 December 2021 and 31 December 2020 is presented below: 31 December 2021 31 December 2020 Poland 39,007 37,961 Serbia - 10,164 Hungary 62,496 49,895 Romania 7,200 15,500 Bulgaria 4,657 - Croatia 13,614 14,638 Total 126,974 128,158 Information regarding book value of investment property landbank (long term pipeline – with no current plan for construction) as of 31 December 2021 and 31 December 2020 is presented below: 31 December 2021 31 December 2020 Poland 9,519 8,859 Hungary 3,350 3,350 Total 12,869 12,209 GRAND TOTAL 139,843 140,367 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 59 18. Residential landbank The movement in residential landbank for the year ended 31 December 2020 and 31 December 2021 was as follows: Residential landbank Total Carrying amount as of 1 January 2020 13,388 13,388 Amortization of right of use of lands under perpetual usufruct (36) (36) Disposal (1,420) (1,420) Reclassified to assets held for sale (680) (680) Impairment of residential landbank (1,158) (1,158) Carrying amount as of 31 December 2020 10,094 10,094 Amortization of right of use of lands under perpetual usufruct (39) (39) Capitalized expenditure 300 300 Acquisition 13,300 13,300 Reclassified to assets held for sale (2,153) (2,153) Reclassified from investment properties (note 17) 5,500 5,500 Carrying amount as of 31 December 2021 27,002 27,002 The carrying amount of residential landbank as of 31 December 2021 refers to non-core land plots designated for residential development in Croatia, Hungary and Romania. 19. Derivatives The Group holds instruments (IRS, CAP, currency SWAP and cross-currency interest rate SWAP) that hedge the risk involved in fluctuations of interest rate and currencies rates. The instruments hedge interest on loans for a period of 2-5 years The movement in derivatives for the years ended 31 December 2021 and 31 December 2020 was as follows: 31 December 2021 31 December 2020 Fair value as of the beginning of the year (19,260) (6,085) Charged to other comprehensive income () (20,356) (7,748) Charged to profit or loss () (1,841) (5,427) Reclassified to liabilities related to assets held for sale 859 - Fair value as of the end of the year (40,598) (19,260) () Increase is mainly attributable to the new cross-currency swap for bonds in HUF () This loss mainly offset a foreign exchange gain on bonds denominated in PLN and HUF. For more information regarding derivatives, see note 37. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 60 20. Trade payables and provisions The balance of trade and other payables increased from Euro 27,299 to Euro 31,092 in the year ended 31 December 2021. The majority of the payables relate to development activity. 21. Blocked deposits Blocked deposits include deposits related to loan agreements and other contractual commitments and can be used only for certain operating activities as determined by underlying agreements. Blocked deposits related to contractual commitments include mostly tenants’ deposit account, security account, capex accounts, and deposits in order to settle contractual commitments related to the construction of this project. 22. Cash and cash equivalents Cash balance consists of cash in banks and cash in hand. Cash at banks earns interest at floating rates based on periodical bank deposit rates. Except for minor amounts, all cash is deposited in banks. All cash and cash equivalents are available for use by the Group. For the purpose of the statement of cash flows, cash and cash equivalents comprise the following at 31 December 2021 and 31 December 2020: 31 December 2021 31 December 2020 Cash at banks and on hand 87,468 271,996 Cash at banks related to assets held for sale 9,165 - Cash and cash equivalents at the end of the period 96,633 271,996 23. Other expenses Other expenses relate mainly to one-off expenses as well as unrecoverable VAT and maintenance costs related to undeveloped land. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 61 24. Deposits from tenants Deposits from tenants represent amounts deposited by tenants to guarantee their performance of their obligations under tenancy agreements. Deposits from tenants that shall be returned within a year are presented within current liabilities. 25. Long term payables Long term payables consist long term commitments related to the purchase of office building and development of infrastructure. 26. VAT and other tax receivable VAT and other tax receivable represent VAT receivable on the purchase of assets and due to development activity. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 62 27. Non-controlling interest Summarized financial information of the material non-controlling interest as of 31 December 2021 is presented below: Avenue Mall Non-core projects Total Non-current assets 135,878 2,833 138,711 Current assets 4,155 380 4,535 Total assets 140,033 3,213 143,246 Equity 79,722 (22,483) 57,239 Non-current liabilities 59,204 24,612 83,816 Current liabilities 1,107 1,084 2,191 Total equity and liabilities 140,033 3,213 143,246 Revenue 10,182 - 10,182 Profit /(loss) for the year 4,374 (683) 3,691 NCI share in equity 23,917 (7,494) 16,423 Loan granted to NCI (10,628) - (10,628) Loan received from NCI - 8,760 8,760 NCI share in profit / (loss) 1,312 (227) 1,085 Dividend distributed to non-controlling interest in amount of EUR 900 for 2021 was set-off against loan granted to NCI. Remaining amount of EUR 300 was paid. Summarized financial information of the material non-controlling interest as of 31 December 2020 is presented below: Dividend paid to non-controlling interest was amounted to EUR 420. Avenue Mall Non-core projects Total Non-current assets 138,366 2,153 140,519 Current assets 3,338 721 4,059 Total assets 141,704 2,874 144,578 Equity 79,347 (21,799) 57,548 Non-current liabilities 58,869 24,670 83,539 Current liabilities 3,488 3 3,491 Total equity and liabilities 141,704 2,874 144,578 Revenue 9,280 - 9,280 Profit /(loss) for the year (290) (1,755) (2,045) NCI share in equity 23,804 (7,266) 16,538 Loan granted to NCI (11,252) - (11,252) Loan received from NCI - 8,529 8,529 NCI share in profit / (loss) (87) (585) (672) Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 63 28. Long-term loans and bonds Reclassified to liabilities related to assets held for sale. 31 December 2021 31 December 2020 Bonds mature in 2022-2023 (Poland) (PLGTC0000318) 48,166 48,117 Green bonds mature in 2027-2030 (HU0000360102) 107,389 108,614 Green bonds mature in 2028-2031 (HU0000360284) 54,056 - Green bonds mature in 2026 (XS2356039268) 503,263 - Bonds 0321 (PLGTC0000276) - 20,737 Bonds 0422 (PLGTC0000292) 9,520 9,515 Loan from Santander (Globis Poznan) 16,323 16,951 Loan from Santander (Korona Business Park) - 41,966 Loan from Santander (Pixel) 19,011 - Loan from PKO BP (Pixel) - 19,224 Loan from Santander (Globis Wroclaw) 20,675 21,368 Loan from Berlin Hyp (Corius) 9,500 10,036 Loan from Pekao (Sterlinga) 14,613 15,138 Loan from Pekao (Galeria Polnocna) - 175,404 Loan from PKO BP (Artico) 13,338 13,848 Loan from Erste and Raiffeisen (Galeria Jurajska) 115,250 125,125 Loan from Berlin Hyp (UBP) 41,543 42,413 Loan from Santander (Francuska) 18,625 - Loan from ING (Francuska) - 18,929 Loan from OTP (Centre Point) 47,862 49,669 Loan from CIB (Metro) - 13,277 Loan from UniCredit Bank (Pillar) 50,827 13,718 Loan from OTP (Duna) 37,116 38,518 Loan from Erste (HBK) 10,775 - Loan from Erste (Váci Greens D) 24,438 - Loan from OTP (Ericsson/evosoft Hungary) 80,000 - Loan from Erste (V188) 16,225 - Loan from Erste (GTC House) - 14,820 Loan from Erste (19 Avenue) * - 21,510 Loan from OTP (BBC) - 20,985 Loan from Intesa Bank (Green Heart) - 55,907 Loan from Raiffeisen Bank (Forty one) - 36,295 Loan from Intesa Bank (Ada) - 58,256 Loan from Erste (City Gate) - 71,951 Loan from Banca Transilvania (Cascade) - 3,797 Loan from Alpha Bank (Premium) - 14,486 Loan from OTP (Mall of Sofia) - 54,668 Loan from UniCredit (ABC I) - 18,816 Loan from UniCredit (ABC II) - 19,622 Loan from Erste (Matrix) - 21,921 Loan from Zagrabecka Banka (Avenue Mall Zagreb) 42,500 44,000 Loans from NCI 8,760 8,529 Deferred issuance debt expenses (10,324) (6,838) Total 1,299,451 1,261,292 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 64 28. Long-term loans and bonds (continued) Long-term loans and bonds have been separated into the current portion and the long-term portion as disclosed below: Reclassified to liabilities related to assets held for sale. 31 December 2021 31 December 2020 Current portion of long-term loans and bonds: Bonds mature in 2022-2023 (Poland) (PLGTC0000318) 16,278 442 Green bonds mature in 2027-2030 (HU0000360102) 72 - Green bonds mature in 2028-2031 (HU0000360284) 397 - Green bonds mature in 2026 (XS2356039268) 5,918 - Bonds 0321 (PLGTC0000276) - 20,737 Bonds 0422 (PLGTC0000292) 9,520 75 Loan from Santander (Globis Poznan) 629 629 Loan from Santander (Korona Business Park) - 1,395 Loan from Santander (Pixel) 690 - Loan from PKO BP (Pixel) - 19,224 Loan from Berlin Hyp (UBP) 870 870 Loan from Erste and Raiffeisen (Galeria Jurajska) 4,875 4,875 Loan from Santander (Globis Wroclaw) 693 693 Loan from Berlin Hyp (Corius) - 10,036 Loan from Pekao (Sterlinga) 525 15,138 Loan from PKO BP (Artico) 510 510 Loan from Pekao (Galeria Polnocna) - 5,000 Loan from Santander (Francuska) 676 - Loan from ING (Francuska) - 18,929 Loan from OTP (Centre Point) 1,807 1,807 Loan from OTP (Duna) 1,401 1,401 Loan from Erste (Váci Greens D) 750 - Loan from CIB (Metro) - 1,172 Loan from Erste (GTC House) - 624 Loan from Erste (19 Avenue) - 994 Loan from Intesa Bank (Green Heart) - 2,873 Loan from OTP (BBC) - 805 Loan from Raiffeisen Bank (Forty one) - 1,853 Loan from Intesa Bank (Ada) - 3,473 Loan from OTP (Mall of Sofia) - 2,457 Loan from UniCredit (ABC I) - 816 Loan from UniCredit (ABC II) - 801 Loan from Zagrabecka Banka (Avenue Mall Zagreb) - 2,000 Loan from Erste (Matrix) - 580 Loan from Alpha Bank (Premium) - 1,025 Loan from Banca Transilvania (Cascade) - 240 Loan from Erste (City Gate) - 71,951 Deferred issuance debt expenses (1,274) - Total 44,337 193,425 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 65 28. Long-term loans and bonds (continued) Reclassified to liabilities related to assets held for sale. 31 December 2021 31 December 2020 Long term portion of long-term loans and bonds: Bonds mature in 2022-2023 (Poland) (PLGTC0000318) 31,888 47,675 Bonds 0422 (PLGTC0000292) - 9,440 Green bonds mature in 2027-2030 (HU0000360102) 107,317 108,614 Green bonds mature in 2028-2031 (HU0000360284) 53,659 - Green bonds mature in 2026 (XS2356039268) 497,345 - Loan from Santander (Globis Poznan) 15,694 16,322 Loan from Santander (Korona Business Park) - 40,571 Loan from Santander (Pixel) 18,321 - Loan from Santander (Globis Wroclaw) 19,982 20,675 Loan from Berlin Hyp (Corius) 9,500 - Loan from Pekao (Sterlinga) 14,088 - Loan from Pekao (Galeria Polnocna) - 170,404 Loan from PKO BP (Artico) 12,828 13,338 Loan from Erste and Raiffeisen (Galeria Jurajska) 110,375 120,250 Loan from Berlin Hyp (UBP) 40,673 41,543 Loan from Santander (Francuska) 17,949 - Loan from OTP (Centre Point) 46,055 47,862 Loan from CIB (Metro) - 12,105 Loan from OTP (Duna) 35,715 37,117 Loan from Erste (HBK) 10,775 - Loan from Erste (Váci Greens D) 23,688 - Loan from OTP (Ericsson/evosoft Hungary) 80,000 - Loan from Erste (V188) 16,225 - Loan from UniCredit Bank (Pillar) 50,827 13,718 Loan from Erste (GTC House) - 14,196 Loan from Erste (19 Avenue) - 20,516 Loan from Intesa Bank (Green Heart) - 53,034 Loan from Intesa Bank (Ada) - 54,783 Loan from OTP (BBC) - 20,180 Loan from Raiffeisen Bank (Forty one) - 34,442 Loan from Banca Transilvania (Cascade) - 3,557 Loan from Alpha Bank (Premium) - 13,461 Loan from OTP (Mall of Sofia) - 52,211 Loan from UniCredit (ABC I) - 18,000 Loan from UniCredit (ABC II) - 18,821 Loan from Zagrabecka Banka (Avenue Mall Zagreb) 42,500 42,000 Loan from Erste (Matrix) - 21,341 Loans from NCI 8,760 8,529 Deferred issuance debt expenses (9,050) (6,838) Total 1,255,114 1,067,867 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 66 28. Long-term loans and bonds (continued) As securities for the bank loans, the banks have mortgage over the assets and security deposits together with assignment of the associated receivables and insurance rights. In its financing agreements with banks, the Group undertakes to comply with certain financial covenants that are listed in those agreements. The main covenants are: maintaining a Loan- to-Value and Debt Service Coverage ratios in the company that holds the project. In addition, substantially, all investment properties and IPUC that were financed by a lender have been pledged to secure the long-term loans from banks. Unless otherwise stated, fair value of the pledged assets exceeds the carrying value of the related loans. Bonds (series maturing in 2022-2023) are denominated in PLN. Green Bonds (series maturing in 2027-2030) and green bonds (series maturing in 2028-2031) are denominated in HUF. All other bank loans and bonds are denominated in Euro. In its financing agreements with banks, the Company undertakes to comply with certain financial covenants that are listed in those agreement. The main covenants are: maintaining a Loan-to-Value and Debt Service Coverage ratios in the company that holds the project. As at 31 December 2021, the Group continue to comply with the financial covenants set out in their loan agreements and bonds’ terms and conditions. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 67 28. Long-term loans and bonds (continued) The movement in long term loans and bonds for the years ended 31 December 2021 and 31 December 2020 was as follows: 31 December 2021 31 December 2020 Balance as of the beginning of the year (excluding deferred debt expenses) 1,268,130 1,212,990 Drawdowns 706,070 286,807 Repayments (585,323) (224,293) Reclassified to liabilities related to assets held for sale (note 32) (142,369) - Loan on acquisition of GTC Univerzum Projekt Kft. (previously Winmark Kft.) 58,000 - Change in accrued interest 6,531 (73) Foreign exchange differences (1,264) (7,301) Balance as of end of the year (excluding deferred debt expenses) 1,309,775 1,268,130 () Includes bonds issued by GTC Aurora Luxembourg S.A. in amount of EUR 497 million (for more detail please refer to note 9). 29. Lease liability and Right of Use of land Lease liabilities include mostly lease payments for land subject to perpetual usufruct payments and classified as land under investment property (completed, under construction, and landbank) and residential landbank. The balance of Right of Use as of 31 December 2021 was as follows: Country Completed investment property Investment property landbank at cost Residential landbank Property, plant and equipment Total Poland 10,730 21,052 - - 31,782 Romania 6,646 - - - 6,646 Serbia - - - - - Croatia - - 1,102 - 1,102 Bulgaria - - - 5 5 Hungary - - - 37 37 Balance as of 31 December 2021 17,376 21,052 1,102 42 39,572 () Reclassified to assets held for sale. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 68 29. Lease liability and Right of Use of land (continued) The balance of Right of Use as of 31 December 2020 was as follows: Country Completed investment property Investment property landbank at cost Residential landbank Property, plant and equipment Total Poland 10,722 22,021 - - 32,743 Romania 6,211 - - - 6,211 Serbia 3,725 - - - 3,725 Croatia - - 1,140 - 1,140 Bulgaria - - - 131 131 Hungary - - - 74 74 Balance as of 31 December 2020 20,658 22,021 1,140 205 44,024 The balance of lease liability as of 31 December 2021 was as follows: () Reclassified to liabilities related to assets held for sale. Country Completed investment property Investment property landbank at cost Residential landbank Property, plant and equipment Total Discount rate Poland 10,730 20,339 - - 31,069 4.2% Romania 6,646 - - - 6,646 5.7% Serbia () - - - - - 7.6% Croatia - - 1,204 - 1,204 4.4% Bulgaria - - - 30 30 4.5% Hungary - - - 16 16 3.9% Balance as of 31 December 2021 17,376 20,339 1,204 46 38,965 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 69 29. Lease liability and Right of Use of land (continued) The balance of lease liability as of 31 December 2020 was as follows: Country Completed investment property Investment property landbank at cost Residential landbank Property, plant and equipment Total Discount rate Poland 10,722 21,003 - - 31,725 4.2% Romania 6,211 - - - 6,211 5.7% Serbia 3,724 - - - 3,724 7.6% Croatia - - 1,222 - 1,222 4.4% Bulgaria 106 106 4.5% Hungary - - - 66 66 3.9% Balance as of 31 December 2020 20,657 21,003 1,222 172 43,054 The lease liabilities were discounted using discount rates applicable to long-term borrowing in local currencies in the countries of where the assets are located. The movement in Right of Use of land for the year ended 31 December 2021 and 31 December 2020 was as follows: 2021 2020 Balance as of 1 January 44,024 45,931 Recognition / (derecognition) of Right of Use asset for lands under perpetual usufruct (745) 96 Amortization of right of use (531) (556) Reclassification to assets held for sale (3,724) - Foreign exchange differences 548 (1,447) Balance as of 31 December 39,572 44,024 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 70 29. Lease liability and Right of Use of land (continued) The movement in lease liability for the year ended 31 December 2021 and 31 December 2020 was as follows: 2021 2020 Balance as of 1 January 43,054 46,430 Recognition / (derecognition) of lease liability for lands under perpetual usufruct (745) 96 Payments of leases (516) (162) Change in provision 970 (1,350) Change in accrued interest (658) 1,336 Reclassification to liabilities related to assets held for sale (3,724) - Foreign exchange differences 584 (3,296) Balance as of 31 December 38,965 43,054 The group pays an annual amount of EUR 2,120 (EUR 2,300 in 2020) as lease payment (principal and interest) for lands under perpetual usufruct. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 71 30. Capital and Reserves SHARE CAPITAL As at 31 December 2021, the shares structure was as follows: Number of Shares Share series Total value Total value in PLN in Euro 139,286,210 A 13,928,621 3,153,995 1,152,240 B 115,224 20,253 235,440 B1 23,544 4,443 8,356,540 C 835,654 139,648 9,961,620 D 996,162 187,998 39,689,150 E 3,968,915 749,022 3,571,790 F 357,179 86,949 17,120,000 G 1,712,000 398,742 100,000,000 I 10,000,000 2,341,372 31,937,298 J 3,193,729 766,525 108,906,190 K 10,890,619 2,561,293 10,087,026 L 1,008,703 240,855 13,233,492 M 1,323,349 309,049 2,018,126 N 201,813 47,329 485,555,122 48,555,512 11,007,473 All shares are entitled to the same rights. Shareholders who as at 31 December 2021, held above 5% of the Company shares were as follows: • GTC Dutch Holdings B.V • OFE PZU Zlota Jesien • OFE AVIVA Santander CAPITAL RESERVE Capital reserve represents a loss attributed to non-controlling partners of the Group, which crystalized once the Group acquired the non-controlling interest in the subsidiaries of the Group. RETAINED EARNING On 29 June 2021, the Company held an ordinary shareholders meeting. It was decided that the loss for the year 2020 presented in the financial statements of Globe Trade Centre S.A. prepared in accordance with the International Financial Reporting Standards in the amount of PLN 325.6 million shall be covered from profits generated in previous years. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 72 30. Capital and Reserves (continued) SHARE ISSUE On 29 June 2021, the Annual General Meeting adopted a resolution regarding the capital increase of up to 20% of the existing share capital. As per the Annual General Meeting authorization, the Management launched the capital increase via the accelerated book building in December 2021. The subscription agreements with the shareholders participating in the offer of O series bearer shares were signed on 20-21 December 2021. As a result the Company issued 88,700,000 series O bearer shares. The capital increase and new Articles of Association were registered by the National Court Register on 4 January 2022 and the funds were transferred to the Company’s account. The O series bearer shares were admitted to trading on the respective stock exchange on 26 January 2022. As of December 31, 2021 the Group recognized receivables from shareholders in the amount of EUR 123,425 and unregistered share capital increase in the amount of EUR 120,295. Unregistered share capital increase represents value of share capital increase at the moment of signing the subscription agreements, decreased by corresponding share issue costs. 31. Provision for share based payments PHANTOM SHARES Certain key management personnel of the Group is entitled to specific cash payments resulting from phantom shares in the Group (the “Phantom Shares”). The company uses binomial model to evaluate the fair value of the phantom shares. The input data includes date of valuation, strike price, and expiry date. The Phantom shares (as presented in below mentioned table) have been accounted for based on future cash settlement. Strike (PLN) Blocked Vested Total 6.03 - 827,416 827,416 6.11 - 100,000 100,000 6.23 2,891,000 1,292,100 4,183,100 6.31 - 250,000 250,000 Total 2,891,000 2,469,516 5,360,516 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 73 31. Provision for share based payments (continued) As at 31 December 2021 phantom shares issued were as follows: Last year of exercise date Number of phantom shares 2023 5,006,516 2025 354,000 Total 5,360,516 As at 31 December 2020 phantom shares issued were as follows: Last year of exercise date Number of phantom shares 2021 500,000 2022 220,000 2023 4,426,200 Total 5,146,200 The number of phantom shares were changed as follows: Number of phantom shares as of 1 January 2021 5,146,200 Granted during the period 1,139,316 Expired (875,000) Exercised during the year (50,000) Number of phantom shares as of 31 December 2021 5,360,516 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 74 32. Assets held for sale and liabilities related to assets held for sale The balance of assets held for sale increased significantly due to the planned disposal of Serbian entities (for details please refer to note 9). It was also reclassification of residential land in Romania in amount of EUR 2,153 (Advance for this land in amount of EUR 1,080 was received on 23 March 2021 and was reclassified as liabilities related to assets held for sale as of 31 December 2021) and part of land in Croatia in amount of EUR 1,352 (advance for this land in amount of EUR 130 was reclassified to liabilities related to assets held for sale as of 31 December 2021). The balance of assets held for sale (disposal group of Serbian entities) as of 31 December 2021 was as follows: The balance of assets held for sale as of 31 December 2021 includes Serbian assets of EUR 287,816, part of land plot in Croatia of EUR 1,352 and residential landbank in Romania of EUR 2,833, including EUR 680, which were reclassified on 31 December 2020. The balance of liabilities related to assets held for sale (disposal group of Serbian entities) as of 31 December 2021 was as follows: Sale of Serbian entities took place on 12 January 2022, for details please refer to note 9 Events in the period and note 39 Subsequent events. Company Real estate Cash and deposits Other assets Total Atlas Centar 106,924 5,407 549 112,880 Demo Invest 62,044 3,500 384 65,928 BBC 38,714 1,525 244 40,483 Business Park 37,860 2,358 105 40,323 GTC MRN 25,682 1,921 167 27,770 CRV - 390 42 432 Balance as of 31 December 2021 271,224 15,101 1,491 287,816 Company Lease liability Loans Deferred tax liability Other liabilities Total Atlas Centar 924 52,920 922 1,934 56,700 Demo Invest 1,126 34,296 623 1,366 37,411 BBC 714 20,125 67 426 21,332 Business Park 960 20,467 779 668 22,874 GTC MRN - 14,144 609 346 15,099 CRV - - - 205 205 Balance as of 31 December 2021 3,724 141,952 3,000 4,945 153,621 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 75 33. Prepayment and deferred expenses The balance of prepayment and deferred expenses increased from EUR 3,604 to EUR 11,515 in the year ended 31 December 2021. The majority of the increase relates to advances to the constructor for the development activity in Pillar project. 34. Earnings per share Basic earnings per share were calculated as follows: Year ended 31 December 2021 Year ended 31 December 2020 Profit/(loss) for the period attributable to equity holders (Euro) 41,651,000 (70,189,000) Weighted average number of shares for calculating basic earnings per share 487,742,245 485,555,122 Basic earnings per share (Euro) 0.09 (0.14) There have been no potentially dilutive instruments as at 31 December 2021 and 31 December 2020. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 76 35. Related party transactions Transactions with the related parties are arm’s length transactions. The transactions and balances with related parties are presented below: In 2021, Group acquired several assets for the total consideration of EUR 173.5 million from a company related to the majority shareholder of the Company. For further details please refer to note 9 Events in the period. Year ended 31 December 2021 Year ended 31 December 2020 Transactions Rental revenue 1,869 - Service charge revenue 418 - Balances Accounts receivables 795 - Receivables from shareholders 123,425 - Accrued income 1,250 - Long term payable 1,027 - Trade payables and provisions 959 - () Rental revenue and Service charge revenue in relation to rental guarantees provided by sellers, an entities related to the majority shareholder. () In relation to purchase price retention from the seller, an entity related to the majority shareholder. Other related parties transactions Year ended 31 December 2021 Year ended 31 December 2020 Transactions Financial arrangement fee - 88 Management and Supervisory Board GTC S.A. remuneration for the year ended 31 December 2021 amounted to EUR 2 million and 260,000 phantom shares were vested. Management and Supervisory Board GTC S.A. remuneration for the year ended 31 December 2020 amounted to EUR 2.2 million and 1,100,000 phantom shares were vested. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 77 36. Commitments, contingent liabilities and guarantees COMMITMENTS As of 31 December 2021 (and as at 31 December 2020), the Group had commitments contracted for in relation to future building construction without specified date, amounting to Euro 29.7 million (Euro 40 million as at 31 December 2020). These commitments are expected to be financed from available cash and current financing facilities, other external financing or future instalments under already contracted sale agreements and yet to be contracted sale agreements. GUARANTEES As of 31 December 2021 and 31 December 2020 there were no guarantees given to third parties. Additionally, the Company gave typical warranties in connection with the sale of its assets under the sale agreements and construction completion and cost-overruns guarantee to secure construction loans. The risk involved in the above warranties and guarantees is very low. CROATIA In relation to the Marlera Golf project in Croatia, part of the land is held on a lease basis from the State. There is furthermore a Consortium agreement with the Ministry of Tourism of Croatia (Ministry) which includes a deadline for the completion of a golf course that has expired in 2014. If the deadline is not met, then the Ministry has the right to terminate the Consortium agreement which might automatically trigger the termination of the Land Acquisition Agreements, as well as collateral activation and damages claims. Prior to 2014, the Company has taken active steps to achieve an extension of the period for completing the project. In February 2014, the Company received a draft amendment from the Ministry expressing its good faith and intentions to prolong the abovementioned timeline however, the amendment was not formalized since then. Since formalization of the amendment is not at the sole discretion of the Group, the Management has decided to revalue the freehold asset in assuming no development of the golf course project. Furthermore, as a prudential measure, the Management has also written off the related collateral in the amount of Euro 1 million provided to the Ministry as a guarantee for completing the golf course. As of 31 December 2021 the book value of the investment in Marlera Golf project was assessed by an independent valuer at EUR 6.8 million. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 78 37. Financial instruments and risk management The Group’s principal financial instruments comprise bank and shareholders’ loans, bonds, hedging instruments, trade payables, and other long-term financial liabilities. The main purpose of these financial instruments is to finance the Group’s operations. The Group has various financial assets such as trade receivables, loans granted, derivatives, cash and short-term deposits. The main risks arising from the Group’s financial instruments are cash flow interest risk, liquidity risk, foreign currency risk and credit risk. INTEREST RATE RISK The Group exposure to changes in interest rates that are not offset by hedge relates primarily to the Group's long-term debt obligations and loans granted. The Group’s policy is to obtain finance bearing variable interest rates. To manage the interest rate risk in a cost-efficient manner, the Group enters into interest rate swaps, swap currency or cap transactions. The majority of the Group’s loans are nominated or swapped into Euro. As at 31 December 2021, 94% of the Group’s borrowings are hedged (as at 31 December 2020 – 95%). A 50bp increase in EURIBOR rate would lead to EUR 486 change in result before tax. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 79 37. Financial instruments and risk management (continued) FOREIGN CURRENCY RISK The Group enters into transactions in currencies other than the Group's functional currency. Therefore, it hedges the currency risk by either matching the currency of the inflow, outflow and cash and cash equivalent with that of the expenditures. Exchange rates as of 31 December 2021 and 2020 were as following: 31 December 2021 31 December 2020 PLN/EUR 4.5994 4.6148 HUF/EUR 369.01 365.13 The table below presents the sensitivity of profit (loss) before tax due to changes in foreign exchange rates: 2021 2020 PLN/Euro PLN/Euro Rate/Percentage of change 5.0593 (+10%) 4.8294 (+5%) 4.3694 (-5%) 4.1395 (-10%) 5.0763 (+10%) 4.8455 (+5%) 4.3841 (-5%) 4.1533 (-10%) Cash and blocked deposits (3,709) (1,855) 1,855 3,709 (4,303) (2,151) 2,151 4,303 Trade and other receivables (1,006) (503) 503 1,006 (353) (176) 176 353 Trade and other payables 1,608 804 (804) (1,608) 1,052 526 (526) (1,052) Land leases 3,107 1,553 (1,553) (3,107) 3,172 1,586 (1,586) (3,172) The Group does not see any currency risk related to bonds denominated in PLN and HUF. Exposure to other currencies and other positions in the statement of financial position is not material. CREDIT RISK Credit risk is the risk that a party to a financial instrument will fail to discharge an obligation. To manage this risk, the Group periodically assesses the financial viability of its customers. The Group does not expect any counter parties to fail in meeting their obligations. The Group has no significant concentration of credit risk with any single counterparty or Group counterparties. With respect to trade receivables and other receivables that are neither impaired nor past due, there are no indications as of the reporting date that those will not meet their payment obligations. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 80 37. Financial instruments and risk management (continued) With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, and blocked deposits, the Group’s exposure to credit risk equals the carrying amount of these instruments. The maximum exposure to credit risk as of the reporting date is the full amount presented. There are no material financial assets as of the reporting dates, which are overdue and not impaired. There are no significant financial assets impaired. LIQUIDITY RISK As at 31 December 2021, the Group holds cash and cash equivalents (as defined in IFRS) in the amount of approximately EUR 87 million. As described above, the Group attempts to efficiently manage all its liabilities and is currently reviewing its funding plans related to: (i) debt servicing of its existing assets portfolio; (ii) capex; and (iii) development of commercial properties. Such funding will be sourced through available cash, operating income, sales of assets and refinancing. The Management Board believes that based on its current assumptions, the Group will be able to settle all its liabilities for at least the next twelve months. Repayments of long-term debt and interest are scheduled as follows (Euro million) (the amounts are not discounted): 31 December 2021 31 December 2020 First year 127 () 218 Second year 148 211 Third year 99 204 Fourth year 144 272 Fifth year 821 155 Thereafter 236 292 Total 1,575 1,352 () Including EUR 54m liabilities related to assets held for sale The above table does not contain payments relating to the market value of derivative instruments. The Group hedges significant parts of the interest risk related to floating interests rate with derivative instruments. Management plans to refinance some of the repayment amounts. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 81 37. Financial instruments and risk management (continued) All derivative instruments mature within 1-10 years from the balance sheet date. Maturity dates of current financial liabilities as of 31 December 2021 were as following: Total Overdue Up to a month 1-3 months 3 months – 1 year Trade payables and provisions 31,092 521 6,476 17,386 6,709 Current portion of long- term borrowing 44,337 - - 3,824 40,512 VAT and other taxes payables 2,222 - 2,222 - - Deposits from tenants 1,932 - 161 483 1,288 Current portion of lease liabilities 198 - 21 127 50 Income tax payable 1,000 - 156 - 844 Derivatives 2,681 - - 654 2,027 Total 83,462 521 9,036 22,475 51,429 Maturity dates of current financial liabilities as of 31 December 2020 were as following: Total Overdue Up to a month 1-3 months 3 months – 1 year Trade payables and provisions 27,299 - 6,289 5,905 15,105 Current portion of long- term borrowing 193,425 - 19,284 49,874 124,267 VAT and other taxes payables 1,551 - 1,551 - - Deposits from tenants 1,790 - 149 448 1,193 Current portion of lease liabilities 163 - - 41 122 Income tax payable 4,220 - 76 11 4,133 Derivatives 3,365 - - 841 2,524 Total 231,813 - 27,349 57,120 147,344 Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 82 37. Financial instruments and risk management (continued) FAIR VALUE As of 31 December 2021, 91% of all bank loans bears floating interest rate (100% as of 31 December 2020). However, as of 31 December 2021, 94% of these loans are hedged (95% as of 31 December 2020). The fair value of the loans which is related to the floating component of the interest equals to the market rate. Fair value of all other financial assets/liabilities is close to the carrying value. For the fair value of investment property, please refer to note 17. FAIR VALUE HIERARCHY As at 31 December 2021 and 2020, the Group held several hedge instruments carried at fair value in the statement of financial position. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities, Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly, Level 3: techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. Valuations of hedges are considered as level 2 fair value measurements. During the year ended 31 December 2021 and 31 December 2020, there were no transfers among Level 1, Level 2 and Level 3 fair value measurements. PRICE RISK The Group is exposed to fluctuations in the real estate markets in which it operates. These can have an effect on the Group’s results (due to changes in the market rent rates and in occupancy of the leased properties). Further risks are described in the Management Report as of 31 December 2021. CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to provide for operational and value growth while prudently managing the capital and maintaining healthy capital ratios in order to support its business and maximise shareholder value. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 83 37. Financial instruments and risk management (continued) The Group manages its capital structure and adjusts it to dynamic economic conditions. While observing the capital structure, the Group decides on leverage policy, loans raising and repayments, investment or divestment of assets, dividend policy, and capital raise, if needed. No changes were made in the objectives, policies, or processes during the years ended 31 December 2021 and 31 December 2020. The Group monitors its gearing ratio, which is Gross Project and Corporate Debt less Cash & Deposits, (as defined in IFRS) divided by its real estate investment value. The Group’s long-term strategy is to keep its loan-to-value ratio (“LTV”) at a level of 40 per cent., however in case of acquisitions the Company may deviate temporarily. As of 31 December 2021, LTV was temporary deviated. However, in January 2022 LTV improved significantly (decrease below 50%) as a result of disposal of Serbian entities in Serbia and cash received from share capital increase. 31 December 2021 31 December 2020 (1) Loans, net of cash and deposits () 1,315,395 949,192 (2) Investment properties (exc. land leases), residential landbank, assets held for sale and buildings for own use 2,506,778 2,099,300 LTV [(1)/(2)] 52.5% 45.2% (*) Excluding loans from non-controlling interest and deferred issuance debt expense, but including loans related to assets held for sale. 38. COVID-19 The COVID-19 pandemic has triggered a wave of substantial adverse effects on the global economy. The lockdowns brought a large part of the world’s economic activity to an unparalleled standstill: consumers stayed home, companies lost revenue, and terminated employees – which, consequently, led to a rise in unemployment. Rescue packages by national governments and the EU, as well as supporting monetary policies by the European Central Bank have been implemented to moderate the economic impact of the pandemic. During 2020 and 2021, the economic disruptions caused by the Covid-19 virus and the increased market uncertainty combined with increased volatility in the financial markets led to a decrease in rental revenues, a decrease in the Company assets’ values, as well as impacted on the Company’s compliance with financial covenants. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 84 38. COVID-19 (continued) CLOSING AND REOPENING OF THE GROUP’S SHOPPING CENTRES Following the outbreak of the COVID-19 pandemic, the authorities in many of the markets the Group operates in, imposed restrictions on the opening of its shopping centres. Except for select “essential” retailers, or those able to offer curb side pickup or fulfil delivery orders from the store. The tenants in the Group’s centres were unable to trade between three up to five months during 2020 subject to each country’s restriction and around and average of three months during 2021(only in the period between January and May 2021). Measures taken by the government affected and may continue to affect our business, however the potential future impact may be limited as more and more countries, including Poland, are lifting most of the restrictions. RENT DISCOUNTS AND COLLECTION In several countries of our operations, governments adopted tenant support packages, such as a rental payments holiday in Poland for the period of lockdown or rent support through subsidizing part of any rental discounts. Upon the re-opening of its shopping centres, the Group engaged tenants in discussions about collecting rent and service charges as well as the terms of any support by the Group. The Group implemented multi-pronged measures to support tenants and encourage consumer spending, such as reducing rent, allowing rent payment in instalments, waiving late payment interest and service charges. The Group has agreed to rental holidays or discounts in certain cases which together with levied rental rate payment in Poland during the lockdown of shopping centres had a negative impact of EUR 14,700 on the Group’s operating margin in the year ended 31 December 2020. The impact on gross margin for the year ended 31 December 2021 was significantly lower and amounted to EUR 10,500. The amendment to the Act on special solutions connected with prevention, counteraction and combating of COVID-19 and other infectious diseases and caused by them crisis situations (art. 15ze), which regulates the relations between tenants and landlords regarding settlements for the period of lockdowns (introducing a new settlement between tenants and landlords in which tenants will pay 20% of the rent in the lockdown period and 50% for the three months following the lockdown) came into force in Poland on 23 July 2021. Based on the Management’s assessment the impact of the new regulation on prior periods will be immaterial. The new law provides a roadmap for any future lockdowns and as a result could significantly impact the Group’s revenue derived from shopping malls located in Poland in case of any potential lockdowns are implemented. However, as the date of this financial statement the risk of potential lockdowns in Poland is limited as country is lifting most of its Covid-19 related restrictions. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 85 38. COVID-19 (continued) VALUATION OF INVESTMENT PROPERTIES The increased uncertainty and increased volatility in the financial markets had negatively affected the investment properties of the Group during 2020 and might have an effect in the future asset valuations, as well as impact on the Company’s compliance with financial covenants. Notwithstanding the above, as at 31 December 2021, the Company received valuations from its external appraisers and there are no significant differences in the value or properties as compared to values as at 31 December 2020. There is no significant uncertainty regarding the fair value of investment properties. While the exact effect of the coronavirus is unknown and unknowable, it is clear that it may pose substantial risks of reduction of income, increasing yields, increasing collection costs, and FX volatility. LIQUIDITY POSITION During the COVID-19 pandemic, the Group took immediate steps to preserve its strong liquidity position in light of the uncertain impact of the pandemic. These steps included cost and CAPEX measures, as well as the decision to retain profit for the year ended 31 December 2019 in the Company as well as recommendation to suspend dividend for the year ended 31 December 2020. As of 31 December 2021, the Group holds cash in the amount of EUR 87,468. The Group runs stress tests, which indicated that the going concern assumption remains valid for at least 12 months from the financial statement publication date. The Group is continuously assessing the situation and undertakes mitigating steps to reduce the impact that may be caused by the adverse market situation. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 86 39. Subsequent events On 4 January 2022, National Court Register registered the amendment to the Company’s articles of association regarding the increase of the Company’s share capital through the issuance of ordinary series O bearer shares. On 10 January 2022, the Company received notifications from GTC Holding Zrt and GTC Dutch Holdings B.V regarding a change in the total number of votes in the Company resulting from issue of 88,700,000 ordinary O series shares and registration of the increase in the Company’s share capital. Before the abovementioned change, GTC Holding Zrt jointly held 320,466,380 shares in the Company, entitling to 320,466,380 votes in the Company, representing 66% of the share capital of the Company and carried the right to 66% of the total number of votes in the Company. After the abovementioned change, GTC Holding Zrt jointly holds 359,528,880 shares in the Company, entitling to 359,528,880 votes in the Company, representing 62.61% of the share capital of the Company and carrying the right to 62.61% of the total number of votes in the Company. On 21 January 2022, the management board of the Warsaw Stock Exchange (WSE) adopted resolution regarding the admission and introduction to stock exchange trading on the main market of the WSE of 88,700,000 ordinary bearer series O shares in the Company with a nominal value of PLN 0.10 each, according to which the management board of the WSE stated that the series O shares are admitted to trading on the main market and resolved to introduce them to stock exchange trading on 26 January 2022. On 12 January 2022, GTC Group finalized sale of the entire share capital of Serbian subsidiaries: Atlas Centar d.o.o. Beograd (“Atlas Centar”), Demo Invest d.o.o. Novi Beograd (“Demo Invest”), GTC BBC d.o.o. (“BBC”), GTC Business Park d.o.o. Beograd (“Business Park”), GTC Medjunarodni Razvoj Nekretnina d.o.o. Beograd (“GTC MRN”) and Commercial and Residential Ventures d.o.o. Beograd (“CRV”), following the satisfaction of customary conditions precedent. On 13 January 2022, GTC Origine Investments Pltd, a wholly-owned subsidiary of the Company, acquired 100% holding of G-Zeta DBRNT Kft. from a company related to the majority shareholder of the Company, which owns an existing office building on the Danube riverbank with GLA of 2,540 sqm for a consideration of EUR 7.7 million. On 14 January 2022, GTC entered into a mutual employment contract termination agreement with Mr. Yovav Carmi, former President of the Management Board. Subsequently, Mr Carmi resigned from his seat on the Management Board of the Company and other subsidiaries. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 87 39. Subsequent events (continued) On 28 January 2022, Mr. Gyula Nagy resigned from his seat on the Management Board of the Company. On 4 February 2022, GTC Origine Investments Pltd, a wholly-owned subsidiary of the Company, acquired 100% holding of G-Epsilon PSZTSZR Kft. from a company related to the majority shareholder of the Company, which owns a land plot of 25,330 sqm in Budapest with existing six old buildings for a consideration of EUR 9.9 million. The Group plans to refurbish the existing buildings and provide a 14,000 sqm new green certified Class A office campus. On 11 February 2022, GTC Origine Investments Pltd., a wholly-owned subsidiary of the Company, acquired from Groton Global Corp Napred company in Belgrade holding a land plot of 19,537 sqm for a consideration of EUR 33.8 million (see details in note 9). On 19 February 2022, the Company received notification from GTC Dutch Holdings B.V. with its registered office in Amsterdam, the Netherlands (the “Seller”) and Icona Securitization Opportunities Group S.à r.l. acting on behalf of its compartment Central European Investments with its registered office in Luxembourg, Grand Duchy of Luxembourg (the “Buyer”) that the Seller and the Buyer entered into a preliminary share purchase agreement relating to the acquisition by the Buyer from the Seller of 15.7% of the shares in the Company. However, pursuant to the notification, the Buyer and the Seller agreed that the shareholders’ agreement will constitute an acting in concert agreement within the meaning of Articles 87(1)(5) and 87(1)(6) in connection with Article 87(3) of the Act of 29 July 2005 on Public Offerings and the Conditions for the Introduction of Financial Instruments to the Organised Trading System and Public Companies (the “Act on Public Offering”) on joint policy towards the Company and exercising of voting rights on selected matters in an agreed manner. Also, pursuant to the assignment agreement, the Buyer will, among others, transfer to the Seller its voting rights attached to the Shares and grant the power of attorney to exercise voting rights attached to the shares. The assignment agreement expires in case either call or put option under the call and put option agreement is exercised and/or in case of a material default under the transaction documentation. On 1 March 2022, the Company received notification that the transaction was completed, and the Buyer acquired 15.7% of the shares in the Company. As a result of execution of the transaction, Icona Securitization Opportunities Group S.à r.l. holds 90,176,000 ordinary bearer shares in the Company which constitute 15.7% of total votes at GTC's general meeting, with reservations that (i) all the voting rights were transferred to the Seller and that (ii) Buyer granted the Power of Attorney to Buyer’s Voting Rights to the Seller. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 88 39. Subsequent events (continued) As a result of execution of the Transaction GTC Holding Zrt holds jointly 269,352,880 shares of the Company, entitling to 269,352,880 votes in the Company, representing 46.9% of the share capital of the Company and carrying the right to 46.9% of the total number of votes in the Company, including: • directly holds 21,891,289 shares of the Company, entitling to 21,891,289 votes in the Company, representing 3.8% of the share capital of the Company and carrying the right to 3.8% of the total number of votes in the Company; and • indirectly (i.e. through GTC Dutch Holdings B.V.) holds 247,461,591 shares of the Company, entitling to 247,461,591 votes in the Company, representing 43.1% of the share capital of the Company and carrying the right to 43.1% of the total number of votes in the Company. In addition, GTC Holding Zrt also holds indirectly, through GTC Dutch Holdings B.V., the Buyer’s Voting Rights, i.e. the right to exercise 90,176,000 votes in the Company, entitling to 15.7% of the total number of votes in the Company. Since 1 March 2022, GTC Holding Zrt, GTC Dutch Holdings B.V. and Icona Securitization Opportunities Group S.à r.l. are acting in concert based on the agreement concerning joint policy towards the Company and exercising of voting rights on selected matters at the general meeting of the Company in an agreed manner. On 17 March 2022, the supervisory board of the Company appointed Zoltán Fekete as the President of the Management Board of the Company, effective immediately. Impact of the situation in Ukraine on GTC Group On 24 February 2022, Russian forces entered Ukraine and military conflict ensued. At the time this financial statements were prepared the extent of the conflict and its longer-term impact are unknown. The conflict caused immediate volatility in global stock markets and uncertainties are anticipated in relation to the cost and availability of energy and natural resources, particularly within Europe. Significant economic sanctions have been imposed against Russia by the European Union. The direct impact on the real estate markets where the Company operates is yet unknown. At this stage, there is no evidence that transaction activity within the Markets that the Company operates and the sentiment of buyers or sellers has changed. Globe Trade Centre S.A. Notes to the Consolidated Financial Statements for the year ended 31 December 2021 (in thousands of Euro) The accompanying notes are an integral part of this Consolidated Financial Statements 89 40. Approval of the financial statements The financial statements were authorised for issue by the Management Board on 5 April 2022.