APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 2 Contents 1. General Information ....................................................................................................... 9 1.1 Presentation of the Company ........................................................................................ 9 1.2 The basis for balance sheet compilation ........................................................................ 9 2. Accounting Policy ......................................................................................................... 10 2.1 Material Elements of the Accounting Policy ................................................................ 10 The basis of consolidation .................................................................................... 10 Reporting Currency and Foreign Currency Balances ........................................... 11 Sales Revenue....................................................................................................... 12 Land and Buildings, Machinery and Equipment .................................................. 14 Investment Properties .......................................................................................... 15 Impairment of Non-monetary Assets .................................................................. 16 Goodwill ............................................................................................................... 16 Financial Assets .................................................................................................... 17 Impairment of Receivables................................................................................... 19 Financial Liabilities ............................................................................................... 19 Fair value .............................................................................................................. 20 Affiliated Parties ................................................................................................... 21 Provisions ............................................................................................................. 21 Income Taxes ........................................................................................................ 22 Lease Transactions ............................................................................................... 23 Earnings Per Share (EPS) ...................................................................................... 25 Tenant Deposits.................................................................................................... 25 Inventories............................................................................................................ 25 State subsidy ........................................................................................................ 26 Off-balance Sheet Items ....................................................................................... 26 Repurchased Own Shares..................................................................................... 26 Dividend ............................................................................................................... 26 Profit and Loss of Financial Transactions ............................................................. 26 Events after the Balance Sheet Day ..................................................................... 26 2.2 Changes in the Accounting Policy................................................................................. 27 2.3 Substantial Accounting Estimations and Assumptions ................................................ 28 Functional Currency and Presentation Currency ................................................. 29 Classification of Real Estate Properties ................................................................ 29 Fair Value of Investment Properties .................................................................... 29 Depreciation and Amortisation ............................................................................ 29 Business Combinations ........................................................................................ 30 2.4 Details of the business combination, the enterprises included in the consolidation .. 31 3. Sales Revenue from Leased Property ........................................................................... 37 4. Direct Costs of Property Rental .................................................................................... 38 5. Administration costs ..................................................................................................... 38 6. Staff costs ..................................................................................................................... 38 7. Other operation expenditures and revenues ............................................................... 39 8. Profit (and loss) on sale of subsidiaries and investments ............................................ 40 9. Profit and loss on sale of investment properties ......................................................... 40
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 3 10. Profit and loss from fair value evaluation of revenue-generating investment properties ...................................................................................................................................... 40 11. Depreciation ................................................................................................................. 47 12. Other expenditure and revenue of financial transactions ........................................... 47 13. Balance of interest revenues and expenditures .......................................................... 47 14. Income Taxes ................................................................................................................ 48 15. Earnings per Share ........................................................................................................ 49 16. Net asset value per share ............................................................................................. 49 17. Revenue-generating Investment Properties ................................................................ 50 18. Tangible assets ............................................................................................................. 53 19. Right-of-use Asset......................................................................................................... 54 20. Deferred tax receivables .............................................................................................. 55 21. Goodwill ........................................................................................................................ 56 22. Equity in affiliate enterprise ......................................................................................... 57 23. Over-the-year receivables ............................................................................................ 58 24. Inventories .................................................................................................................... 58 25. Trade receivables.......................................................................................................... 58 26. Other short-term receivables ....................................................................................... 59 27. Short-term affiliated receivables.................................................................................. 59 28. Short-term loans granted ............................................................................................. 59 29. Accruals ........................................................................................................................ 60 30. income tax receivables and liabilities........................................................................... 60 31. Cash and cash equivalents ........................................................................................... 60 32. Issued Share Capital ..................................................................................................... 61 33. Repurchased Own Shares ............................................................................................. 62 34. Capital reserve .............................................................................................................. 62 35. Conversion reserve ....................................................................................................... 63 36. Retained earnings ......................................................................................................... 63 37. Non-controlling interest ............................................................................................... 64 38. Long-term and short-term credits and lease transactions .......................................... 64 39. Self-issued Corporate Bonds Debts .............................................................................. 67 40. Tenant Deposits ............................................................................................................ 67 41. Long-term and short-term liabilities through affiliated parties ................................... 67 42. Deferred tax assets and tax liabilities........................................................................... 68 43. Other short-term liabilities ........................................................................................... 70 44. Trade creditors and other accounts payable ............................................................... 70 45. Tax and duties liabilities ............................................................................................... 70 46. Accrued liabilities ......................................................................................................... 71 47. Transactions with affiliated parties .............................................................................. 71 48. Correcting errors from previous periods...................................................................... 72 49. Transaction through affiliated parties .......................................................................... 78 50. Segment information.................................................................................................... 79 51. Financial instruments ................................................................................................... 81 52. Risk management ......................................................................................................... 82 52.1 Capital Management .................................................................................................... 82 52.2 Credit Risk ..................................................................................................................... 83 52.3 Market Risk ................................................................................................................... 83 52.4 Interest Rate Risk.......................................................................................................... 83
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 4 52.5 Foreign Exchange Risk .................................................................................................. 84 52.6 Business Risk ................................................................................................................. 85 52.7 Liquidity Risk ................................................................................................................. 86 53. Change of liabilities related to financing activity ......................................................... 87 54. Contingent liabilities ..................................................................................................... 88 55. Events after the balance sheet day .............................................................................. 88 56. Effects of COVID-19 ...................................................................................................... 89 57. Information related to the compilation of the consolidated report ............................ 89 58. Auditing of the consolidated report, remuneration of the Auditor ............................. 89 59. Authorization of financial statements for publication ................................................. 90 60. Representations ........................................................................................................... 90
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 5 Consolidated statement on the financial position Note 31 December 2021 31 December 2020 amended (Note No. 48) 01 January 2020 amended (Note No. 48) Assets EUR EUR EUR Revenue-generating investment properties 17 185 662 961 165 740 000 140 970 000 Tangible assets 18 223 035 199 980 177 664 Right-of-use asset 19 3 530 247 3 460 822 1 952 433 Deferred tax assets 20 756 071 217 138 92 693 Goodwill 21 4 353 991 4 353 991 0 Equity in affiliate enterprise 22 39 701 39 701 0 Over-the-year receivables 23 346 982 557 486 0 Invested assets in total 194 912 988 174 569 118 143 192 790 Inventories 24 7 934 901 10 118 606 160 040 Trade receivables 25 492 449 811 322 409 083 Other short-term receivables 26 6 040 096 894 691 442 390 Affiliated receivables 27 1 154 916 1 578 0 Short-term loans granted 28 6 089 6 153 49 537 Accruals 29 741 635 331 266 255 653 Income tax receivables 30 23 729 92 767 296 583 Cash and cash equivalents 31 24 857 395 22 063 065 40 991 952 Current assets in total 41 251 210 34 319 448 42 605 238 Assets in total 236 164 198 208 888 566 185 798 028 Equity and liabilities Issued share capital 32 15 217 006 15 217 006 15 217 006 Repurchased own shares 33 (1 171 ) (1 171 ) (1 171 ) Capital reserve 34 25 645 230 25 645 230 25 645 230 Conversion reserve 35 (11 151 490 ) (10 876 235 ) (2 852 372 ) Retained earnings 36 44 355 386 47 358 839 34 925 192 Equity per shareholders of the Company 74 064 961 77 343 669 72 933 885 Non-controlling interests 37 112 307 2 888 383 730 936 Equity and reserves in total 74 177 268 80 232 052 73 664 821 Long-term bank credits and leasing liabilities 38 48 007 602 34 360 682 27 145 536 Corporate bonds debt 39 54 557 445 55 179 933 60 940 494 Tenant deposits 40 1 286 727 1 430 940 301 775 Long-term affiliated liabilities 41 4 603 285 4 503 061 10 503 256 Deferred tax liabilities 42 5 472 228 4 714 789 3 565 003 Long-term liabilities in total 113 927 287 100 189 405 102 456 064 Short-term bank credits and leasing liabilities 38 932 373 2 159 141 7 139 967 Other short-term liabilities 43 21 266 227 19 188 242 614 028 Short-term affiliated liabilities 44 955 566 994 102 36 003 Liabilities for trade creditors and other accounts 45 9 812 260 4 552 000 993 818 Taxes and duties liabilities 46 486 513 404 555 398 513 Iincome tax liabilities 30 229 225 39 106 140 089 Accrued liabilities 47 14 377 479 1 129 963 354 725 Short-term liabilities in total 48 059 643 28 467 109 9 677 143 Liabilities in total 161 986 930 128 656 514 112 133 207 Equity and liabilities in total 236 164 198 208 888 566 185 798 028 Annexes disclosed on pages 9 to 90 form an inseparable part of the herein consolidated report
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 6 Consolidated comprehensive income statement Note For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 amended (Note No. 48) EUR EUR Property rental revenue 3 7 474 392 7 536 560 Direct costs of property rental 4 (1 067 062 ) (1 317 573 ) Direct contribution from rental activities 6 407 330 6 218 987 Administration costs 5 (1 789 189 ) (974 838 ) Staff costs 6 (1 695 446 ) (1 181 590 ) Other revenues / (expenditures) 7 624 293 (11 503 ) Profit (and loss) on sale of subsidiaries and investments profit (and loss) on sale of subsidiaries and investments 8 0 305 220 Profit and loss of investment properties sale 9 (503 071 ) 0 Profit and loss of fair value evaluation of revenue-generating investment properties 10 (4 679 678 ) 15 912 830 Profit and loss before taxation, interests and depreciation (1 635 761 ) 20 269 106 Depreciation and amortisation 11 (248 217 ) (261 540 ) Other (expenditure) / revenue of financial transactions 12 (252 303 ) (2 726 838 ) Balance of interest revenues and (expenditures) 13 (2 860 223 ) (2 516 060 ) Lease interests 13 (48 544 ) (102 936 ) Profit before taxation (5 045 048 ) 14 661 732 Income taxes 14 (734 669 ) (1 460 061 ) Profits in the current year (5 779 717 ) 13 201 671 Other comprehensive income Other comprehensive income accountable in the consolidated profit and loss statement in the following period: Exchange rate differences arisen from currency translation of activities 35 (275 255 ) (8 023 863 ) Other comprehensive income of the current year, less with taxation (275 255 ) (8 023 863 ) COMPREHENSIVE INCOME OF THE CURRENT YEAR IN TOTAL (6 054 972 ) 5 177 808 From profit after tax: For non-controlling interests (2 776 264 ) 907 910 For the owners of the Company (3 003 453 ) 12 293 761 From total comprehensive income: For non-controlling interests (2 776 264 ) 907 910 For the owners of the Company (3 278 708 ) 4 269 898 Base earnings per share in EUR cent 15 (12.20 ) (27.87 ) Diluted earnings per share in EUR cent 16 (12.20 ) (27.87 ) Annexes disclosed on pages 9 to 90 form an inseparable part of the herein consolidated report
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 7 Consolidated own equity changes(data in EUR) Note Issued Share Capital Capital reserve Repurchased own shares Conversion reserve Retained earnings For the owners of the parent company Non- controlling interests Own equity in total Balance on 01 January 2020 originally disclosed 15 217 006 25 645 230 (1 171 ) (2 710 880 ) 34 925 192 73 075 377 730 936 73 806 313 Correction (see Note No. 48) (141 492 ) (141 492 ) (141 492 ) Balance on 01 January 2020 amended 15 217 006 25 645 230 (1 171 ) (2 852 372 ) 34 925 192 72 933 885 730 936 73 664 821 Comprehensive income of the current year Comprehensive income of the current year 37 (8 023 863 ) 12 293 761 4 269 898 907 910 5 177 808 Transactions with owners 0 0 0 0 139 886 139 886 1 249 537 1 389 423 Transaction with non-controlling interest upon controlling 37,38 139 886 139 886 696 674 836 560 Acquisition of subsidiary 38 552 863 552 863 Balance on 31 December 2020 amended 15 217 006 25 645 230 (1 171 ) (10 876 235 ) 47 358 839 77 343 669 2 888 383 80 232 052 Balance on 01 January 2021 15 217 006 25 645 230 (1 171 ) (10 876 235 ) 47 358 839 77 343 669 2 888 383 80 232 052 Comprehensive income of the current year Comprehensive income of the current year 37 (275 255 ) (3 003 453 ) (3 278 708 ) (2 776 264 ) (6 054 972 ) Transactions with owners 0 0 0 0 0 0 188 188 Acquisition of subsidiary 38 188 188 Balance on 31 December 2021 15 217 006 25 645 230 (1 171 ) (11 151 490 ) 44 355 386 74 064 961 112 307 74 177 268 Annexes disclosed on pages 9 to 90 form an inseparable part of the herein consolidated report
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 8 Consolidated Cash Flow statement Note For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 amended (Note No. 48) EUR EUR Profit before taxation (5 045 048 ) 14 661 732 Profit and loss of fair value evaluation of revenue- generating investment properties 10 4 679 678 (15 933 455 ) Profit and loss of real estate property sale 9 503 071 0 Depreciation 12 248 217 261 540 Negative goodwill 13 0 (199 106 ) Profit / (loss) of subsidiaries sale 8 0 (305 220 ) Interest revenues 14 (67 429 ) (122 832 ) Interest expenses 14 2 976 196 2 741 828 Changes in receivables and other current assets 26-28 (4 545 412 ) (2 344 181 ) Change in accrued and deferred assets 30 (410 369 ) (75 613 ) Change in inventories 25 2 183 705 (9 958 566 ) Change in liabilities and accruals 44-48 18 000 830 17 748 093 Change in tenant deposits 41 (144 213 ) (1 129 165 ) Income tax paid 15 (461 224 ) (324 025 ) Net cash flow from business activity 17 918 002 5 021 030 Revenue of sale and purchase of tangible assets 19 - - Cost of maintenance performed on real estate properties 10 (28 702 639 ) (20 625 ) Acquisition of subsidiary 2.4. 0 (8 115 033 ) Purchase of tangible assets 19 (2 108 062 ) (1 956 688 ) Change in loans granted 29 (1 154 852 ) 43 384 Interests received 14 67 429 122 832 Purchase of investment properties 18 0 - Realised revenue of properties sale 9 10 296 929 - Net cash flow from investment activities (21 601 195 ) (9 926 130 ) Borrowing credits, leases and loans 39 9 728 974 - Payment of credits 39 - (3 258 096 ) Interests paid 14 (2 976 196 ) (2 741 828 ) Net cash flow from financial activities 6 752 778 (5 999 924 ) Impacts of exchange rate fluctuation: 36 (275 255 ) (8 023 863 ) Change in liquid assets 32 2 794 330 (18 928 887 ) Liquid assets balances: Liquid assets at the beginning of the year 32 22 063 065 40 991 952 Yearend liquid assets 32 24 857 395 22 063 065 Annexes disclosed on pages 9 to 90 form an inseparable part of the herein consolidated report
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 9 1. General Information 1.1 Presentation of the Company Appeninn Vagyonkezelő Holding Nyrt. (in English: Appeninn Asset Management Plc.) (hereinafter referred to as: the “Company”) was established on 1 December 2009. The Company was registered under the company registration number of 01- 10-046538 by Cégbíróság (in English: Company Registry Court) on 07 December 2009. In the course of the merger, Rotux Zrt. (company registration number: 01-10-045553) was merged into Appeninn Nyrt. on 19 May 2011. Appeninn Vagyonkezelő Holding Nyrt. is one of Hungary 's fastest growing real estate investment and asset management companies. The Company is continuously expanding its real estate portfolio in Grade A office, retail and tourism properties in Hungary and the Central and Eastern European region through acquisitions and own developments. Founded in 2009 and listed on the Budapest Stock Exchange in 2010, the Company has an almost fully occupied portfolio of Grade B office and logistics properties. The Company's registered office is located in 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. Hungary . Shareholding of the Company exceeding 5% on 31 December 2021 as follows: Owner’s name Quantity of shares Equity (%) Avellino Zrt. 11 369 141 24.00% Zinventive Zrt. 8 684 268 18.33% OTP Ingatlanbefektetési Alap (in English: OTP Property Investment Fund) 2 410 372 5.09% Free float 27 076 638 52.58% Total 47 371 419 100.00% 1.2 The basis for balance sheet compilation i.) Adoption and statement of compliance with the International Financial Reporting Standards From the point of the management of the Corporate Group, the consolidated financial statements were compiled in accordance with the principle of continuity. The consolidated financial statements were adopted by the Board of Directors on 8 April 2022. The consolidated financial statements have been prepared in accordance with the International Financial Accounting Standards, and the standards adopted and published in the Official Journal of the European Union (EU) in the legal form of regulation. The IFRS comprises the standards and interpretations formulated by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC).
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 10 The data provided in the consolidated financial statements in respect to the Corporate Group shall be interpreted in euro (EUR). Each and all sum(s)included in the statements are rounded to the nearest euro amount. ii) The basis of reporting The consolidated financial statements are made in compliance with the standards issued on the year ending as at 31 December 2021 and as well as with the IFRIC Interpretations. The herein financial year equals with the calendar year. iii) The basis of evaluation The preparation of IFRS-compliant financial statements requires the company’s management to apply professional judgment, estimations, and assumptions that influence the accounting policy, as well as the values of assets, liabilities, revenues, and expenditures listed in the financial report. The estimations and the related assumptions are based on past experiences and numerous other factors that are considered reasonable under the given circumstances, and the result of which serves as a basis to the evaluation of the book value of assets and liabilities, the value of which cannot be determined from other sources unambiguously. Actual results may differ from the estimations. The estimations and the base assumptions are revised on a regular basis. The modifications of accounting estimations are displayed in the period of the modification of the estimation if it affects the given year only, while, if a modification affects the current and the upcoming years as well, it’s displayed both in the period of the modification and the future periods. 2. Accounting Policy The major accounting policies applied in the preparation of the consolidated financial statements are presented hereunder, as follows. The accounting policies are applied consistently to the periods covered by the present consolidated financial statements. The major accounting principles applied in the compilation of the financial statements are the following: 2.1 Material Elements of the Accounting Policy The basis of consolidation Subsidiaries The consolidated annual financial statements include Appeninn Plc. and its controlled subsidiaries. Control is generally defined if the Corporate Group has, directly or indirectly, more than 50% of the voting rights of the company in question and it benefits from the company’s activities through the influence over its financial and operating activities.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 11 The Corporate Group exercises control over an investee when it is exposed to, or has rights to, variable returns from its involvement in the investee and has the power to affect those returns through its influence over the investee. Accordingly, the Corporate Group controls the investee if, and only if, the investor has all of the following: (a) power over the investee; (b) exposure to, or rights to, variable returns arising from its interest in the investee; and (c) the ability to use its power over the investee to influence the amount of returns to which the investor is exposed. The acquisition accounting method is applied to acquired business shares, which is based on the value at the time of acquisition, based on the market value of the assets and liabilities at the acquisition date, that is, the date of acquisition of control. The cost of an acquisition is the sum of the consideration and the non-controlling interest in the acquired business. Companies acquired or sold during the year are included in the consolidated financial statements from the date of the transaction until the date of the transaction. Transactions, balances and results between companies included in the consolidation, as well as unrealized results, are eliminated. In preparing the consolidated financial statements, similar transactions and events are recorded in accordance with uniform accounting principles by the Company. The share in the capital and in the profit due to the shareholders without controlling interest are indicated in different rows in the balance sheet and the profit and loss statement as well. In respect to business combinations, the value of shareholdings without controlling interest is set at either their fair values or as the share in the net asset value of the acquired Company due to the shareholders without controlling interest. The evaluation method is selected individually in respect to each business combination. Following the acquisition, the share of the shareholders without controlling interest has the value as being set originally, amended by the value of changes in the capital of the acquired Company, vested on the shareholder without controlling interest proportionally. The shareholders without controlling interest shall bear their shares in the given period’s accumulative revenue if that results in a negative balance on their sides. The changes in the Corporate Group's shareholding in the affiliates that do not result in the loss of control are accounted for as capital transactions. The shareholding of the Corporate Group and the shareholders without controlling interest shall be amended in a way to reflect the changes in their shareholdings in the subsidiaries. The difference between the value amending the shareholding of shareholders without controlling interest and the paid or received consideration is accounted for in the capital, as a value due to the Company's shareholders. Reporting Currency and Foreign Currency Balances In view of the substance and circumstances of the underlying economic events, the functional currency of the parent company and of all members of the Group is the forint, and the
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 12 presentation currency is the euro, due to the euro-based revenue structure of the real estate rental business. Originally, the foreign currency transactions are booked at their HUF equivalent upon the foreign currency exchange value valid on the day of the execution of the given transaction. Receivables and liabilities denominated in foreign currency are converted to Hungarian Forint on the exchange value valid on the balance sheet date. The differences arising from the currency conversion are booked as either revenue from or expenditures on financial transactions in the profit and loss account. The Corporate Group revaluates its foreign currency assets and liabilities at the foreign currency exchange rate published by Magyar Nemzeti Bank (in English: Hungarian National Bank) on the balance sheet date. Foreign exchange gains and losses arising from revaluation are recognized on a net basis in the profit and loss account of the currency year under other revenue / expenditure of financial transactions. The transactions performed in any foreign currency other than the Hungarian Forints are shown converted by using the foreign exchange rate between the given foreign currency and the reporting currency valid as of the date of the transaction. In the comprehensive income statement, the exchange rate differences that arise upon the settlement of monetary items, the period-opening initial display or from the use of a foreign exchange rate that differs from the exchange rate applied in the previous financial statements, are shown as either financial income or expenses in the period of the thereof arising. The monetary assets and liabilities denominated in any foreign currency are converted by using the currency exchange rate valid at the end of the reporting period. The fair value of items denominated in any foreign currency is converted to the functional currency by using the exchange rate applicable at the date of establishment of the fair value. The foreign exchange differences are shown as either revenue from or expenditures on financial transactions. The balance sheet data in the annual financial statements of the companies denominated in HUF are translated into Euro at the exchange rate valid on the balance sheet date (presentation currency). Data in the profit and loss account are translated at the average exchange rate during the reporting period. Individual equity values are converted at historical exchange rates. Exchange differences arising from the conversion of the individual companies’ financial statements into euros are shown in the Conversion Reserve (Own Equity) and are eliminated against profit or loss on disposal of the subsidiary. Sales Revenue Sales revenue from sales transactions is recognized upon the appropriate performance of the contractual terms. Sales revenue does not include value added tax. All revenue and expenditures are recognised on the basis of the principle of matching over the relevant period.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 13 Revenue is recognised to the extent that reflects the consideration that the Corporate Group is expected to be entitled to in return for the products or services. Sales revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount thereof can be measured reliably. Sales revenue is accounted when control of the goods and services passes to the customer. Performance Obligations When concluding the contract, the Corporate Group must identify which goods or services it has promised to provide to the buyer, namely, what performance obligation it has undertaken. The Corporate Group may recognise the income when it has fulfilled its performance obligations by delivering the promised goods or performing the promised service. We can speak of performance when the buyer has acquired control of the asset (service), the signs of which are as follows: - The Corporate Group has an existing right to receive consideration for the asset, - The legal title of ownership has passed to the buyer, - The Corporate Group has physically delivered the asset, - The buyer has significant risk and reward of ownership from possession of the asset, - The buyer has accepted the asset. Determining Transaction Price When the performance of the contract takes place, the Corporate Group is required to recognize the income related to the performance, which is nothing more than the transaction price assigned to the performance obligation. The transaction price is the amount the Corporate Group is expected to receive in exchange for the sale of goods and services. When determining the transaction price, the amounts of the variable consideration elements (rebates, discounts) are also taken into account. An expectable value is calculated to estimate variable consideration, which is weighted by the Corporate Group using probability factors. The main components of the Corporate Group’s revenue are as follows: • Rental revenue from real estate: the Company’s main source of income, which is mostly invoiced to its tenants on a monthly basis, based on the rate of the rental fee agreed in the lease contract, in accordance with the provisions of IFRS 16. • Operating fees: The Company invoices tenants for operating fees in addition to the thereof rent. Operating fees include cleaning and security costs, management fees and overheads, in accordance with the provisions of IFRS 15. Property rental revenue: Rental revenue is derived from operating leases and is recognised as revenue on a straight-line basis over the lease term in accordance with IFRS 16. The Corporate Group realizes its revenues from the sale of real estate properties by renting office and logistics properties. Sales revenue is recognised in a time-proportionate manner, from the time the right to collect rents opens by releasing the real estate properties into use. Operating fees: The Corporate Group has two types of contracts and recognises its income accordingly in accordance with IFRS 15:
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 14 • The Corporate Group acts as an agent for some of its lease contracts. In this case, the operating charges to the tenants are clearly identifiable and the overheads are invoiced directly to the tenants through the Corporate Group. The Corporate Group recognises the costs and the related revenues in the financial statements in the same amount on a net basis, as the Corporate Group acts as agent in these transactions. • For other lease contracts, the Corporate Group acts as principal. In these cases, the Corporate Group invoices its tenants for operating fees based on the flat rates included in the contracts. The Corporate Group has control over the devices - mechanical equipment - built into the real estate properties. The mechanical equipment - such as power supply, network consumption points, distribution points, water network points of use (kitchens, washrooms), heating network and boiler systems are the controlled assets of the subsidiaries. The Corporate Group establishes the right to use its controlled assets for the tenants, and the tenants reimburse the contribution of the use of these assets to the Group on the basis of use. The Corporate Group considers the purchased energy (gas, water, electricity) used for the equipment as a service procured in connection with the equipment and not as materials sold independently. The Corporate Group does not sell energy products to any customer on its own, without the use of real estate properties. The Company, through its subsidiary company, has all the knowledge, tools and management system necessary to perform the task of operating the real estate property, therefore it considers the operating income to be the Corporate Group's own income and performance. Revenues from real estate property operating costs are recognised by the Corporate Group in the period in which the Corporate Group's real estate property maintenance expenses are incurred. The Corporate Group accounts for these transactions on a gross basis in its financial statements as it acts as principal in these cases. Dividend and Interest Revenues Dividend on investments is recognised when the owner's right to receive payment is established (provided that it is probable that the benefits will flow to the Corporate Group and the amount of revenue can be measured reliably). Realised Revenues from other Financial Assets Interest revenue from a financial asset is recognised when it is probable that the economic benefits will flow to the Corporate Group and the amount of the revenue can be measured reliably. Interest revenue is recognised in a time-proportionate manner, by taking into account the principal amount outstanding, using the effective interest method, which is the interest rate that exactly discounts estimated future cash revenues through the expected life of the financial asset to the net registered value at the date of initial recognition. Land and Buildings, Machinery and Equipment The tangible assets are shown at their historical value, reduced by the accumulated depreciation. The accumulated depreciation includes the costs accounted for ordinary depreciation (that results from the continuous use and operation of the asset) and impairment
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 15 (that results from the unexpected, material damage, or injury of the asset, caused by an unforeseen, extraordinary event). The costs of tangible assets consist of the historical value of the asset or, in the case of own investment, the material-type costs, the wages, and salaries as well as other direct costs. The interest paid upon a credit taken out for the tangible asset investment shall increase the historical value of the given asset until it is brought to a condition when it is fit for its intended purpose. The book values of tangible assets are revised on a yearly basis in order to establish if the book value of any tangible asset exceeds the actual market value thereof. Should such a case occur, the difference (the amount on top of the actual market value) shall be accounted as impairment. The actual market value of an asset equals the higher amount of the asset’s sales price and useful value. The useful value of an asset equals the discounted value of the future cash flows generated by the asset. The discount rate consists of the interest rate before corporate income tax, considering the time-value of money and the effects of other risk factors related to the given asset as well. If no future cash flow can be assigned to a given asset, the cash flow generated by the unit of which the asset is a part shall be taken into consideration. The impairment determined pursuant to the hereinabove shall be shown in the profit and loss account. The costs of repair, maintenance, and replacement of spare parts of tangible assets shall be accounted for on the costs of repair and maintenance. The value-adding investments and renovations shall be capitalized. The historical value and the accumulated depreciation in respect of the assets sold is delisted. Any profit or loss resulting from the above shall be shown in the current year’s profit or loss. The Corporate Group uses the linear depreciation method to depreciate the value of its assets during the useful life thereof. The term of the useful life is the following in the different asset groups: Type of Assets Useful life Machinery and equipment 3-7 years Leased technical machinery 5 years Office furniture, fixtures and fittings 3-7 years The useful lives and the depreciation methods are revised on a yearly basis at least, on the basis of the actual economic benefits gained from a given asset. If necessary, modifications are measured to the current year’s profit or loss. Investment Properties Investment properties are properties held for rents and / or value-added purposes (including investment properties under development). Investment properties are initially valued at historical value, including transaction costs. Subsequent to initial recognition, investment
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 16 properties are assessed at fair value. Gains or losses arising from changes in the fair value of investment properties are recognized in the profit or loss of the relevant period in which they arise, in the row of profit or loss of the fair value of revenue-generating investment properties. To the extent that the investment property is transferred to an owner-occupied property then the thereof is to be reclassified to land and buildings, machinery and equipment. Investment properties are derecognised upon sale or when the investment property is permanently withdrawn from circulation and no future benefits are expected from its sale. The profit or loss on de-recognition of the property (defined as the difference between the consideration for the sale and the registered value of the asset) is recognized in the profit or loss of the sale of investment properties in the period in which the property is delisted. The criteria used in determining the fair value related to the assessment of investment properties are set out in Section 2.3. Impairment of Non-monetary Assets At the end of each reporting period, the Corporate Group shall examine if there are changes that imply the impairment in respect of any assets. To the extent that such a change is identified, the Corporate Group shall estimate the expected rate of return of the concerned asset. The expected rate of return of an asset or cash-generating unit equals to the higher amount of the fair value minus sales costs and the useful value. The Corporate Group accounts impairment against the profit or loss, if the expectable rate of return of the asset is lower than its book value. The Corporate Group’s calculations are based on the appropriate discounting of the future cash flow plans. Goodwill Goodwill is the positive difference between the procurement cost and the fair value of the identified net assets of an acquired subsidiary, associated company or entity under joint control, as of the day of acquisition. Goodwill is not depreciated, but the Corporate Group shall revise on a yearly basis whether there are any signs that imply the unlikelihood of the return of the book value. Goodwill is shown with the historical value, reduced by the impairment, if applicable. Business combinations are accounted for using the acquisition method. In the case of an acquisition, it should be examined whether a business combination has taken place or whether only assets have been acquired. Goodwill can only arise if there has been a business combination. The cost of the acquisition is calculated as the sum of the consideration transferred, evaluated at fair value at the acquisition date, and the non-controlling interests in the acquired company. The Corporate Group elects for each business combination whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and are included in administrative expenses. When the Corporate Group acquires a business, it evaluates financial assets and liabilities at the acquisition date in accordance with the contractual terms, economic conditions and
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 17 relevant terms and conditions for the appropriate classification and purpose. This includes the unbundling of embedded derivatives in the host contracts by the acquiree. The contingent consideration to be transferred by the acquirer shall be evaluated at fair value at the acquisition date. Contingent consideration classified as equity is not re-evaluated and subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability classified as a financial asset or liability and contingent consideration within the scope of IFRS 9 Financial Instruments shall be evaluated at fair value in the income statement at fair value as determined in accordance with IFRS 9. Other contingent consideration not within the scope of IFRS 9 shall be measured at fair value through profit or loss at each reporting date. Goodwill is initially evaluated at cost (the excess of the aggregate of the consideration transferred and the non-controlling interests plus the aggregate of the net identifiable assets acquired and any previous interest and assumed liabilities). If the fair value of the net assets acquired exceeds the aggregate consideration transferred, the Corporate Group reassesses whether it has correctly identified all the assets acquired and all the assumed liabilities and revises the procedures used to measure the amounts to be recognised at the acquisition date. If the re-evaluation continues to exceed the fair value of the net assets acquired for the aggregate consideration transferred, the gain is recognised in profit or loss. After the initial calculation, goodwill is evaluated at its value less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated from the acquisition date to each of the Corporate Group’s cash-generating units (CGUs) expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. If goodwill has been allocated to a CGU and part of it is disposed of within that CGU, the goodwill associated with the operation disposed of shall be included in the book value of the unit disposed of in determining the gain or loss on disposal. Goodwill disposed of in such circumstances shall be evaluated on the basis of the relative values of the disposed entity and the portion of the CGU. Financial Assets The consolidated statement on the financial position of the Corporate Group includes the following financial assets: trade receivables, loans granted, cash and cash equivalents. The financial assets falling in the scope of IFRS 9 standard are divided to three different evaluation categories: assets to be shown after the recognition at the depreciated cost, assets to be shown after the recognition at fair value through other comprehensive income (FVOCI) and the assets to be shown after the recognition at fair value through profit and loss (FVTPL).
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 18 The Corporate Group's financial assets are classified on initial assessment according to their nature and purpose. To determine the category of a financial asset, it must first be clarified whether the financial asset is a debt instrument or equity investment. Equity investments shall be measured at fair value through profit or loss, however, at initial recognition, an enterprise may elect to measure non-commercial equity investments at fair value through other comprehensive profit or loss. If the financial asset is a debt instrument, the following points shall be taken into account in determining the classification. Depreciated Historical Value Those debt instruments are evaluated at depreciated historical value that are held based on a business model designed to hold financial assets to collect contractual cash flows, and the contractual terms of the financial asset at certain times result in cash flows that are payments of interest solely on the principal and the amount of principal outstanding. Fair value through other comprehensive profit or loss Assets at fair value through other comprehensive profit or loss are the financial assets that are held in accordance with a business model that achieves its objective by collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset at certain times result in cash flows that are payments of interest solely on the principal and the amount of principal outstanding. Fair value through profit or loss The category of financial assets at fair value through profit or loss includes financial assets that do not fall into either of the above two categories of financial assets or have been designated as at fair value through profit or loss on initial recognition. When the SPPI requirement is met, the Corporate Group examines in the denominated currency of the financial asset whether the cash flows arising from the contract are consistent with the underlying loan agreements. To determine whether the contractual cash flows contain only principal and interest, the Corporate Group examines the contractual terms of the financial instrument. The examination also covers whether the financial asset contains contractual terms that would cause the amount or timing of the contractual cash flows to change so that the financial asset no longer meets the SPPI requirement. All other debt instruments are assessed at fair value through profit or loss (FVTPL). All equity instruments shall be assessed at fair value in the balance sheet, and the effect of the change in fair value shall be recognized directly in profit or loss account, except for equity instruments where the enterprise has selected the Other Comprehensive Income (FVOCI) option. The Corporate Group does not exercise the FVOCI option.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 19 The Corporate Group accounts financial assets and financial liabilities and recognizes their net amount in the balance sheet if, and only if, the Company has a legally enforceable right to set off the amounts and intends to net them or realize the asset and cash at the same time and fulfil the obligation. Impairment of Receivables The receivables shall be shown in the books at the nominal value minus the amount of depreciation allotted for the estimated losses. The simplified impairment model is applied for the impairment accounted for receivables by the Corporate Group. The simplified impairment model is a provisioning matrix that takes into account the past 2 years of non-payment experience rates and calculates impairment prospectively. Determination of further impairment shall take place, for example, the likelihood of insolvency or the significant financial difficulties of the debtor leading us to the conclusion that the Corporate Group will not be able to recover the full amount in accordance with the original conditions regarding the invoice. Delisting of the depreciated receivables shall be performed upon accounting the thereof unenforceable. In case of accounting the impairment of receivables the Company employees the hereinunder accounting policy as follows: Days of late payment Definitions Percentage of impairment 0-180 days The Partner is reliable and there did not occur non- payment in the past. All affiliated parties are classified as performing. no impairment 180-360 days Material late performance in case of external partner 50% over 360 days late performance over 360 days no payment 100% Financial Liabilities The consolidated financial statement on the financial status of the Corporate Group presents the following financial liabilities: trade creditors and other short-term liabilities, loans, credits, self-issued bonds, and bank overdrafts. These liabilities are described and evaluated in the relevant parts of notes to the financial statements attached to the report, as follows: Upon the initial recognition, the Corporate Group shall evaluate each financial liability at fair value. In the evaluation of credits and the issued corporate bonds, the transaction costs directly related to the obtaining of the financial liability shall also be taken into consideration. The financial liabilities falling in the scope of IFRS 9 are divided to two different evaluation categories: assets to be shown after the recognition at the depreciated cost, and the assets to
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 20 be shown after the recognition at fair value through profit and loss (FVTPL). Each financial liability shall be classified according to the above by the Corporate Group when obtained. The Corporate Group did not employ the FVTPL evaluation. Loans and credits, and the issued corporate bonds are shown in the statement on the financial status at depreciated historical value, calculated with the effective interest rate method. Profit and loss related to loans, credits and bonds are accounted for in the profit and loss statement as depreciated calculated with the effective interest rate method and upon the derecognition of the financial liability. The repayment is accounted for as a reduction of the financial liability, while the interest written off is recorded as a financial expenditure in the profit and loss statement. Fair value Fair value evaluation refers to an asset or liability. In determining fair value, the Corporate Group considers the characteristics of the asset or liability if market participants would take those characteristics into account in pricing the asset or liability at the date of evaluation. The unit of accounting for the asset or liability shall be determined in accordance with the IFRS that requires or permits fair value evaluation. Fair value is the price that would be received if the asset was to be sold or paid if a liability was to be transferred in an orderly transaction between market participants at the time of evaluation, whether that price is observable directly or has been estimated using other valuation techniques. Fair value hierarchy Financial instruments evaluated at fair value are classified into a three-level fair value hierarchy for disclosure purposes. The levels within the hierarchy reflect the significance of the inputs used in evaluating fair value: • Level 1: quoted prices in active markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly. • Level 3: inputs based on unobservable market data The Corporate Group uses Level 3 for fair value evaluations. Among financial assets, the Corporate Group evaluates loans and receivables and financial liabilities at amortised cost, but also discloses their fair value in the notes to the financial statements. The fair value of these assets and liabilities is determined based on Level 3 information. The fair value of financial instruments that are not quoted in an active market is determined using valuation techniques, typically the discounted cash flow method.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 21 Financial liabilities are evaluated at depreciated historical value and their book value approximates fair value. Affiliated Parties An enterprise is affiliated if it is a subsidiary, associate, joint venture, a key manager of the enterprise or parent company, a close relative of any of the above individuals, a subsidiary, associate, joint venture owned by the individual or his/her close relative. Related party transactions are any transactions between related parties, whether or not a price is charged. The Corporate Group identifies related parties in preparing its financial statements for each reporting date, which it reviews on 1 January each year. It identifies the receivables from and payables to identified related parties in its records and discloses them in the notes to the financial statements. Provisions The Corporate Group forms provisions for the (lawful or presumed) liabilities arising from past events that the Corporate Group is likely to be obliged to pay, provided that the amount of such liability can be accurately measured. The amount of the provision equals the best possible estimation of the expenditure required to settle the liability as of the balance sheet day, also considering the risks and uncertainties related to the liability. If the provision is evaluated on the basis of the cash flow expectably required to settle the liability, the book value of the provision shall be equal to the present value of such cash flow amount. If the expenditures required to settle the liability is expected to be reimbursed either in full or in part by the other party, the liability may be presented as an asset if the receipt of the reimbursement by the economic entity is basically assured and the amount of it is accurately measurable. The current liabilities resulting from onerous contracts are accounted as reserves. A contract is classified onerous by the Corporate Group if the inevitable costs of performance of the Company’s contractual obligations exceed the economic benefits expectedly gained from the same contract. Restructuring provisions shall be shown if the Corporate Group has a detailed, formal restructuring plan prepared and either by the commencement of the execution of the plan or by the disclosure of the main elements of the plan to the concerned parties raised reasonable expectations concerning the realization of the restructuring. The restructuring provisions shall cover only the direct costs of restructuring that are inevitably related to the restructuring and not related in any form to the continuing business operation of the economic entity.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 22 Income Taxes The amount of the corporate income tax is based on tax payment obligation set forth in the Act on the Corporate Income Tax and Dividend Tax and the Act on Local Taxes concerning the local business tax, to be modified by deferred taxes. The Corporate Group has identified corporate tax, local business tax and innovation levy as income taxes based on a taxable profit. The corporate income tax payment obligation covers tax obligations from the current year and deferred tax elements as well. The payment obligation for the current year is calculated upon the taxable profit gained in the given year. The amount of the taxable profit differs from the profit and loss before taxation shown in the consolidated report; the difference arises from the non-taxable profits and losses, as well as items allotted to the taxable profit of other years. The current tax payment obligation of the Corporate Group is calculated upon the tax rate valid and effective (or officially announced, if the date thereof is the effective date of the respective law) on or before the balance sheet day. The amount of the deferred tax is calculated upon the liability method. If a financial item is accounted for in the annual financial statements and the tax report at different times, deferred tax obligation arises. The amount of the deferred tax assets and liabilities is calculated with the tax rates applicable to the taxable income of the year when the time-related difference is expected to be recovered. The amount of the deferred tax assets and liabilities reflects the Corporate Group’s estimations concerning the method of realization of the tax assets and liabilities as of the balance sheet day. Deferred tax assets arising from deductible time-related differences, rolling tax allowances, and negative tax base may only be included in the balance sheet if the realization of a taxable profit (against which the deferred tax assets can be settled) by the Corporate Group in the future is expectable. On every balance sheet day, the Corporate Group shall revise the not recognized deferred tax assets included in the balance sheet and the book value of the recognized tax assets. The Corporate Group shall enter the former off-balance sheet receivables that are expected to be recovered to the stock, in order to reduce the amount of the future corporate income tax. On the contrary, the Corporate Group shall reduce the deferred tax receivables with the amount the recovery of which is expectably not covered by after-tax profit resources. The current and the deferred tax obligations are measured directly to the own equity, if the tax base is or was measured to the equity also either in the current or in a former reporting period. The deferred tax assets and liabilities may be settled against each other if a said Company is legally allowed to set off the tax obligations and the tax claims it has against the same tax authority, and the Corporate Group intends to have a net accounting of these assets and liabilities.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 23 Lease Transactions The Corporate Group as a Lessee A contract is a lease contract (or contains a lease) if it provides the right to manage the use of an underlying asset for a specified period of time for a consideration. IFRS 16 contains recognition exceptions for lessees for short-term leases and leases of low-value assets. At the Corporate Group’s option, it applies the short-term recognition exceptions to lease contracts. Such very short-term leases and related asset classes are expensed as incurred. Estimates of the lease term at the inception date are based on the period for which the Corporate Group has a reasonable certainty of continuing the lease under the terms originally agreed. The initial lease term is determined at the commencement date of the lease. In determining the lease term, the shortest reasonable and justifiable lease term possible shall always be used in case of doubt. The determination of the lease term is essentially a matter of management judgement, and the Corporate Group generally uses estimates or assumptions at the asset-group level (in particular for options and indefinite term arrangements). The commencement date of a lease is the date on which the lessor makes a specific asset (e.g. the leased property, plant or equipment) available for use by the lessee. The commencement date is the date on which the lease term commences and the lease obligation and right-of-use the asset are recognised. In determining whether a lessee is reasonably certain whether to exercise its option to extend a lease or not to exercise its option to terminate a lease, lessees and lessors consider all relevant facts and circumstances that may create an economic interest in the lessee and that provide a basis for exercising the option to extend the lease or not to exercise the option to terminate the lease. The definition of lease payments is the same for both lessee and lessor. Lease payments are payments made by the lessee to the lessor in exchange for the right-of-use of a specified asset during the lease term. A modification of a lease is a change in the scope of the lease or in the lease consideration that was not included in the original lease terms (for example, the addition or termination of the right to use one or more underlying assets or an extension or shortening of the contractual lease term). A modification may result only from a change in the consideration. The effective date of the modification is the date on which both parties accept the lease modification. The lessee shall account for the lease modification as a separate lease if both of the following conditions are met: the modification extends the scope of the lease by adding the right to use one or more underlying assets and the lease consideration is increased by an amount equal to the specific price of the extension of scope or by any appropriate adjustment to the specific price, as specified in the terms of the specific agreement. If these conditions are met, the modification shall be considered a new lease separate from the original lease. An arrangement for the right to use one or more additional assets is accounted for as a separate lease (or leases) for which the requirements of IFRS 16 apply, irrespective of the original lease.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 24 When a lease transaction is modified, revised lease payments are always discounted using a revised discount rate. At the Corporate Group’s option, the right-of-use asset is recognised as a separate row item in the statement of the consolidated financial status. Subleases A sublease is a transaction in which an underlying asset is subleased by the lessee (as an intermediate lessor) to a third party while the existing lease between the lessor and lessee (’the main lease’) remains in force. The Corporate Group, as an intermediate lessor, classifies subleases as finance or operating leases in a manner similar to that for any other lease under IFRS 16.61. At the commencement date of the sublease, if the Corporate Group cannot clearly determine the implicit interest rate for the sublease, the discount rate applied to the principal lease is used in accounting for the sublease, adjusted for any direct costs associated with the sublease. The Corporate Group as a lessor Financial lease A finance lease is a transaction that transfers substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee. The nature of a finance lease is similar to the financing of the sale of an asset. Its recognition in the financial statements is not based on the legal form of the transaction but on its true economic substance (i.e. as if the underlying asset were sold by the lessor to the lessee). Operating lease An operating lease is a transaction that does not transfer substantially all the risks and rewards of ownership of the subjected asset. It is generally a simple short-term rental arrangement (operating lease) where the rental income is recognised in the income statement and its primary balance sheet impact is related to the timing of lease payments. Subleases A sublease, in accordance with its definition, is a transaction in which an underlying asset is subleased by the lessee (as an intermediate lessor) to a third party while the existing lease between the lessor and lessee (’the main lease’) remains in force. The Corporate Group, as an intermediate lessor, classifies subleases as finance or operating leases in a manner similar to that for any other lease. At the commencement date of the sublease, if the Corporate Group cannot clearly determine the implicit interest rate for the sublease, the discount rate applied to the principal lease is used in accounting for the sublease, adjusted for any direct costs associated with the sublease.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 25 Recognition and disclosure of subleases For subleases, there are no specific provisions governing the disclosure of subleases in the balance sheet and income statement. The Corporate Group applies the disclosure rules that apply to other finance and operating leases. The Corporate Group does not offset assets and liabilities arising from a main lease or a sublease on the same underlying asset unless the requirements for offsetting financial instruments are met. The same applies to lease revenue and lease expense arising from a finance lease and a sublease on the same underlying asset unless the offsetting criteria in IAS 1 are met. Under IFRS 16, a finance lease and a sublease are two separate contracts accounted for under the lessee and lessor models respectively. The general disclosure rules apply to both the principal and subleases and to lessors of finance or operating subleases. The Corporate Group holds real estate property lease. Earnings Per Share (EPS) The earning per share is calculated by considering the Corporate Group’s result and the share stock, reduced by the average number of own shares repurchased in the given reporting period. The value of the diluted earnings per share is calculated similarly to the earning per share calculation. However, in this calculation all dilutable shares on the market are taken into consideration, increasing the profit distributable on the ordinary shares by the output and dividend payable on the convertible shares in the given period, amending the value by the conversion revenues and expenditures, increasing the weighted average number of the shares on the market by the weighted average number of the shares which were on the market if all convertible shares were converted. There were no such transactions which would dilute the value of EPS rate, nor in the year ending as of 31 December 2020 or as of 31 December 2021. Tenant Deposits Deposits from tenants are accounted at initial fair value and are subsequently assessed at depreciated historical value using the effective interest method. Those tenant deposits which are related to over-the-year lease contracts are accounted for the items of long-term liabilities, and the remaining tenant deposits are calculated for the other liabilities in the consolidated financial status statement. Inventories Inventories are stated at the lower of historical value and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 26 State subsidy The state subsidies are recognized when the amount of the subsidy is likely to be received, and the criteria of disbursement are met. When the subsidy is intended to cover costs and expenses, it shall be accounted for among the revenues (in row ‘other revenues’) in the period when the relevant costs and expenses occur. When the subsidy is intended to cover the purchase price of assets, it shall be shown as deferred income and credited to the profit in equal amounts during the purchased asset’s useful life. Off-balance Sheet Items Off-balance sheet items are not included in the parts of consolidated annual financial statement, in the balance sheet and the profit and loss account, unless acquired upon business combinations. The off-balance sheet items are presented in the notes to the financial statements, except if the possibility of an outflow of the sources of economic benefit is minimal. Off-balance sheet items are not included in the consolidated financial statements but may be presented in the notes to the financial statements if the inflow of economic benefits is likely. Repurchased Own Shares The value of repurchased own shares is deducted from equity. The difference between nominal value and historical value is recognized directly in the accumulated profit reserve on sale. Dividend The amount of dividend is accounted by the Corporate Group for the year when it is approved by the shareholders. Profit and Loss of Financial Transactions The financial profit and loss consists of income from interests calculated by the effective interest rate method and dividends, the amount of negative goodwill, payable interests calculated by the effective interest rate method, and other financial expenditures; the profit gained/loss suffered from the fair evaluation of financial instruments, and the realized and unrealized exchange rate differences. Events after the Balance Sheet Day The events that provide additional information concerning the circumstances at the end of the Corporate Group’s reporting period shall be included in the financial report, even if such events occur after the end of the reporting period. The post reporting period events that do not modify the data of the financial report are included in the notes to the financial statements, to the extent that the thereof are substantial.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 27 2.2 Changes in the Accounting Policy The Company’s financial report relevant to the reporting period ending on 31 December 2021 is compiled in accordance with the standards and interpretations entered into force. The accounting policy of the Corporate Group is in consistent with that of the previous years’. The impact of the amendments to IFRSs effective from 1 January 2021 and the introduction of new standards on the financial statements: Reference Interest Rate Reform - Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 in the Reference Rate Reform – Phase 2 – provide temporary relief to address the financial reporting implications of replacing the interbank offered rate (IBOR) with an alternative, near-risk-free rate (RFR). The amendments have the following practical objectives: • Contractual changes or changes in cash flows directly required by the reform are treated as changes in the variable rate, which is equivalent to a change in the market rate. • IBOR reform for hedge designations and hedge documentation without breaking the hedging relationship • Provide entities with a temporary exemption from meeting a separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component. The amendments require disclosure of IBOR exposures pending transition to RFR. Lease concessions related to Covid-19 beyond 30 June 2021: Amendments to IFRS 16 (effective from 1 April 2021) The amendment applies to annual reporting periods beginning on or after 1 April 2021. Because the amendments to IFRS 16 described above do not apply to lessors, lessor accounting is based on the current guidance in IFRS 16. As lessors, real estate owners have identified the following issues in applying the guidance to current circumstances: • Collectability: many lessees may face financial difficulties as a result of government- imposed business closures. This could cause a significant deterioration in the recoverability of lease payments from some lessees. IFRS 16 does not refer to collectability to determine whether (and when) lease income should be recognised. • Waiving past lease payments: the interaction between the impairment and derecognition requirements for lease receivables under IFRS 9 and the guidance in IFRS 16. The aforementioned standards and amendments did not have a material impact on the Corporate Group’s consolidated results.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 28 New and amended standards and interpretations issued by IASB and adopted by the EU but not yet effective IFRS 17 Insurance Contracts (issued on 18 May 2017, the EU has endorsed the new standard) References of the framework for the Preparation and Presentation of Financial Statements - Amendments to IFRS 3 Business Combinations (issued on 14 May 2020, effective for financial years starting from 1 January 2022, the EU has endorsed the amendments) Treatment of yields arising before proceeds before intended use - Amendment to IAS 16 (issued on 14 May 2020, effective for financial years starting from 1 January 2022, the EU has endorsed the amendments) Onerous Contracts: Cost of Fulfilling a Contract - Amendments to IAS 37 (issued on 14 May 2020, effective for financial years starting from 1 January 2022, the EU has endorsed the amendments) Annual Improvements to IFRSs - 2018-2020 (issued on 14 May 2020, effective for financial years starting from 1 January 2022, the EU has endorsed the amendments) The adoption of the above amendments will not have a material impact on the Corporate Group’ consolidated financial statements. In respect of 2021, the Corporate Group has applied every IFRS standard, amendment, and the interpretations prevailing as of 1 January 2021, that are relevant from the aspect of the Corporate Group’s operation. 2.3 Substantial Accounting Estimations and Assumptions The application of the accounting policy described in Section 2.1. herein requires the application of estimations and assumptions in the determination of the value on any given day of those assets and liabilities, the values of which are not identifiable from other sources. The estimation process considers the relevant factors and decisions based on available information. These significant estimations and assumptions influence the values of the assets and liabilities, revenues, and expenditures presented in the financial statements, and the presentation of the pending assets and liabilities in the notes to the financial statements. Actual results may differ from the estimated data. The estimation processes are continuously updated. Any change in the accounting estimations shall be considered in the time period when such change occurred if that affects the given period only. If such change affects the current and future reporting periods as well, it shall be considered in the period when the change occurred and in the future reporting periods as well.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 29 The main areas of critical decisions adopted in relation to uncertainties in estimations and the accounting policy that have the most significant effect on the amounts presented in the consolidated financial statements are the following: Functional Currency and Presentation Currency Based on the economic events and circumstances specific to the Corporate Group's operations, the functional currency is the Hungarian Forint and the reporting currency is the euro. As a result, the figures in the consolidated financial statements are presented in euros, unless other relevant information is provided. The following MNB HUF - EUR exchange rates were applied to the 2021 financial statements when converting the non-euro accounting data of the group members with respect to the balance sheet date: Exchange rate type 31 December 2021 31 DECEMBER 2020 31 DECEMBER 2019 Closing 369 365.13 330.52 Average 358.52 351.17 321.51 Difference between closing and average 10.48 13.96 5.17 Classification of Real Estate Properties Upon acquisition, the properties owned by the Corporate Group are classified as investment properties and development properties as follows: • Those are classified as investment properties that are typically purchased by the Corporate Group for the purpose of benefiting from leasing and increase in value of the property. The Company do not use these properties (typically office buildings, warehouses and factory buildings) for its own purposes. • Development properties include properties in which the Corporate Group intends to invest and develop and then sell in the near future. • Property, plant and equipment used by the Corporate Group for its own purposes are classified as tangible assets. Fair Value of Investment Properties The determination of the fair value of investment properties is largely based on estimates and assumptions, therefore the actual value may differ materially from the value obtained as a result of the estimation. The fair value of investment properties has been determined based on the Corporate Group's own evaluations and valuations performed by independent appraisers. The evaluation principles and parameters used are set out in Note No. 10. Depreciation and Amortisation The lands and buildings, machinery, and equipment, right-of-use asset as well as the intangible assets, are recognized at their historical value and their applied depreciation method is linear
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 30 depreciation throughout the useful life of the assets. The useful life of the assets is determined on the basis of past experience in respect of similar assets, the expectable development of technology, and the expectable changes affecting the wider economic or industrial factors. The estimations concerning the useful lives are revised on a yearly basis. Business Combinations In addition to the above, there were several business combinations or asset acquisitions in acquisition transactions in 2021 and 2020, where management also used significant estimates in the purchase price allocation. The management's judgment includes assessing whether a particular acquisition is a business combination or an acquisition of assets. Management performs the optional concentration test for new acquisitions in order to identify a business combination or asset acquisition.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 31 2.4 Details of the business combination, the enterprises included in the consolidation The Corporate Group has equity in the hereinunder subsidiaries (voting and ownership rights) as follows: Name of the subsidiary Parent company Capital ownership and voting ratio Address 2021 2020 Appeninn BLT Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appeninn E-Office Vagyonkezelő Zrt. Appeninn Plc. 100% 100% 1026 Budapest, Pasaréti út 122- 124. Hellnarik Hospitality Kft. Appeninn Plc. 24% 24% 1025 Budapest, Csévi út 11/B. Appeninn Project-EGRV Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appeninn Project-MSKC Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appeninn Property Vagyonkezelő Zrt. (in English: Appeninn Property Asset Management Private Limited Company) Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appeninn Üzemeltető Zrt. (in English: Appeninn Maintenance Private Limited Company) Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appeninn-Bp 1047 Zrt. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Appen-Retail Kft. Appeninn Property Vagyonkezelő Zrt. (in English: Appeninn Property Asset Management Private Limited Company) 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Bertex Ingatlanforgalmazó Zrt. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Curlington Ingatlanfejlesztési Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Felhévíz-Appen Kft. Appeninn Property Vagyonkezelő Zrt. (in English: Appeninn Property Asset Management Private Limited Company) 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Sectura Ingatlankezelő Kft. (in English: Secture Real Property Management Private Limited Liability Company) Szent László téri Szolgáltatóház Kft. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Szent László Téri Szolgáltató Ház Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. PRO-MOT Hungária Ingatlanfejlesztő Kft. (in English: PRO-MOT Hungária Property Developer Private Limited Liability Company) Appeninn BLT Kft. 74.99% 74.99% 8171 Balatonvilágos, Aligai utca 1.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 32 Alagút Investment Kft. Appeninn Plc. 100% 100% 1118 Budapest, Kelenhegyi út 43. B. ép. 5. em. (floor) 1. Solum-Invest Kft. Appeninn Plc. 51% 51% 8230 Lake Balaton, Zákonyi Ferenc utca 8. Dreamland Holding Zrt. Appeninn Plc. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02. DLHG Invest Zrt. Dreamland Holding Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02. Szántód BalaLand Family Kft. DLHG Invest Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02. Tokaj Csurgó Völgy Kft. DLHG Invest Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02. Tokaj Kelep Zrt. TATK Kft. 75% - 1022 Budapest, Bimbó út 7. fszt. 02.. SZRH Kft. DLHG Invest Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02.. TATK Kft. DLHG Invest Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02.. Visegrád Lepence Völgy Strandfürdő Kft. DLHG Invest Zrt. 75% 75% 1022 Budapest, Bimbó út 7. fszt. 02.. Changes in the members of the Corporate Group in 2021: - In 2021, TATK Kft. (in English: TATK Ltd.) acquired 100% stake in Tokaj Kelep Zrt. The Corporate Group assessed the transaction and evaluated it as an asset acquisition, as the acquisition of the stake did not qualify as a business combination. - In 2021, Bertex Zrt. (in English: Bertex Plc.) transferred its real estate to M2C Kft. (in English: M2C Ltd.), in which it acquired a 100% stake. After the transfer, its interest in M2C Ltd. was sold. Changes in the members of the Corporate Group in 2020: - In 2020, the business shares of Appeninn A59 Kft. and Appeninn 105 Realty Project Kft. were sold. - During 2020, the 76% share in Hellnarik Hospitality Ingatlankezelő és Ingatlanforgalmazó Kft. was sold. - On 9 January 2020, the Company acquired a 76% of business shares in Solumn-Invest Kft., of which a 25% of business shares was sold in the first half of 2020. - In June 2020, the Company acquired 75% of the block of shares in Dreamland Holding Zrt., 100% of the business shares in Alagút Investment Kft. The acquisition of Tokaj Kelep Zrt. On 20 October 2021, the Group acquired the 75% stake in Tokaj Kelep Zrt. A significant property was acquired in the acquired company, however, there are no existing management
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 33 functions and related processes, therefore the Group has assessed the transaction and identified it as an asset purchase, which was evaluated by performing a concentration test. Information related to the acquisition of Tokaj Kelep Zrt.: data in EUR Fair value upon the day of acquisition Assets Revenue-generating real estate properties 862 961 Cash and cash equivalents 2 205 Deferred tax assets 39 123 Other assets 1 951 Assets in total 906 240 Liabilities Credits and financial liabilities 154 664 Liabilities in total 154 664 Fair value of identifiable net assets 751 576 Non-controlling interest 187 894 Loss on acquisition (accounted in profit and loss) 273 802 Purchase consideration 813 008 Acquisition of Alagút Investments Kft. On 28 February 2020, the Corporate Group acquired 100% of the shares of Alagút Investment Kft. (in English: Alagút Investment Ltd.). Alagút Investment Kft. is engaged in the rental of office space. Together with the property, the existing management functions and related processes were acquired, therefore the Corporate Group has reviewed the transaction and identified it as a business combination. Information related to the acquisition of Alagút Investment Kft.: data in EUR Fair value upon the day of acquisition Assets Revenue-generating real estate properties 1 506 136 Cash and cash equivalents 228 084 Other assets 434 Assets in total 1 734 654 Liabilities Credits and financial liabilities 541 559 Deferred tax liabilities 26 507
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 34 Other liabilities 955 071 Liabilities in total 663 475 Fair value of identifiable net assets 1 071 178 Non-controlling interest - Negative goodwill upon acquisition (199 106) Purchase consideration 811 766 The consideration given for the acquired company amounted to 811,766,-EUR and the net cash flow paid amounted to 583,682,-EUR. At the acquisition of Alagút Investment Kft., the Company converted the net assets to fair value. The fair value adjustment is related to the property acquired by the Corporate Group. The business combination generated negative goodwill of 199,106,-EUR which was recognized in revenue from financial transactions.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 35 The Acquisition of Dreamland Group In June 2020, the Corporate Group acquired 75% business share of Dreamland Holding Zrt. The direct and indirect subsidiaries of Dreamland Holding Zrt. (hereinafter referred to as: the “Dreamland Group”) are DLHG Invest Kft. (in English: DLHG Invest Ltd.), Szántód Balaland Family Kft. (Szántód Balaland Family Ltd.), Tokaj Csurgó Völgy Kft., SZRH Kft. (in English: SZRH Ltd.), TATK Kft. (in English: TATK Ltd.) and Visegrád Lepence Völgy Strandfürdő Kft. (in English: Visegrád Lepence Völgy Strandfürdő Ltd.). The companies of Dreamland Group carry out tourism investments on the property they own. Together with the properties, the existing management functions and related processes were acquired and therefore the Corporate Group has identified the transaction as a business combination. Information related to the acquisition of Dreamland Group: data in EUR Fair value upon the day of acquisition Assets Revenue-generating real estate properties 19 651 979 Cash and cash equivalents 6 572 201 Deferred tax receivables 103 560 Other assets 1 428 049 Assets in total 27 755 789 Liabilities Credits and financial liabilities 3 628 845 Long-term affiliated liabilities 11 128 204 Deferred tax liabilities 622 341 Other liabilities 12 424 156 Liabilities in total 27 803 546 Fair value of identifiable net assets (47 757) Non-controlling interest 11 939 Goodwill for acquisition 4 280 881 Purchase consideration 4 245 063 The consideration given for the acquired company amounts to 4 245 063,- EUR and the net cash inflow is 2 327 138,- EUR. Upon the acquisition of Dreamland Holding Zrt., the Corporate Group converted the net assets to fair value. The fair value adjustment is related to the properties acquired by the Corporate Group. The business combination generated goodwill of 4,280,881,-EUR. Detailed notes on this are provided in Note No. 21 Goodwill.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 36 The Acquisition of Solum-Invest Kft. In February 2020, the Corporate Group acquired a 76% stake in Solum-Invest Kft. (in English: Solum-Invest Ltd.), which also invests in tourism. Together with the property, the existing management functions and related processes were acquired and therefore the Corporate Group has identified the transaction as a business combination. Information related to the acquisition of Solum-Invest Kft.: data in EUR Fair value upon the day of acquisition Assets Revenue-generating real estate properties 3 128 329 Cash and cash equivalents 47 243 Other assets 52 894 Assets in total 3 228 466 Liabilities Deferred tax liabilities 231 051 Other liabilities 210 717 Liabilities in total 441 768 Fair value of identifiable net assets 2 786 698 Non-controlling interest (668 808) Goodwill for acquisition 73 110 Purchase consideration 2 191 000 The consideration for the acquired company amounts 2,191,000,-EUR, and the net cash flow paid measures 2,143,757,-EUR. Upon the acquisition of Solum-Invest Kft., the Corporate Group converted the net assets to fair value. The fair value adjustment is related to the properties acquired by the Corporate Group. The business combination generated goodwill of 73,110,-EUR. Detailed notes on this are provided in Note No. 21 Goodwill. During the year, the Corporate Group sold a 25% stake in this business, the proceeds of which were recognised in the profit and loss reserve in the amount of 139,886,-EUR as control was retained. -
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 37 Notes to the Consolidated Comprehensive Income Statement 3. Sales Revenue from Leased Property The Corporate Group realizes its income from the sale of real estate properties by renting office, logistics and commercial properties and related maintenance services. The Corporate Group's properties are characterized by short tenant-vacancy times and, due to the good positioning of the properties, the high-quality - solvent - tenant portfolio. Turnover was accounted for the following activities: data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Income from office area rental 1 119 029 3 062 558 Logistics properties rental 4 521 036 2 601 272 Commercial real estate rental 1 834 327 1 872 730 Total 7 474 392 7 536 560 In 2020, office rental revenue includes 593,300,- HUF in thousands of revenue from finance leases. The Company has no contractual assets or contractual obligations. The future minimum rents related to the lease contracts for a specified term for the following 31 December 2021: Data in EUR for the year ending on 31 December 2021 for the year ending on 31 December 2020 Withing-the-year 3 054 555 2 266 145 Within 1-5 year 1 075 778 3 007 573 due over 5 years 3 750 050 2 482 433 Total 7 880 383 7 756 151
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 38 4. Direct Costs of Property Rental data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Property maintenance charges (202 301) (754 087) Taxes on buildings and land (511 303) (438 840) Repair and maintenance (156 285) (50 107) Expenses of properties insurance (37 531) (27 106) Guarding and protection (159 642) (47 433) Total (1 067 062) (1 317 573) 5. Administration costs data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Fees of accounting and auditing (306 182) (249 737) Bank charges (415 732) (161 360) Attorney-at-law and legal expenses (164 055) (284 444) Business consultancy and PR (248 323) (97 084) Properties appraisal and evaluation (71 109) (52 960) Stock exchange fees of publicly listed company (24 311) (29 128) IT services (25 671) (20 934) Telephone and Internet charges (18 514) (15 793) Charges and duties payable to authorities (17 765) (44 328) Stationery and material costs (5 607) (19 070) Maintenance costs (27 940) 0 Other expenses (463 981) 0 Total (1 789 189) (974 838) 6. Staff costs data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Wages and salaries (1 363 764) (959 664) Contributions on wages and salaries (214 724) (177 952) Other staff benefits (116 958) (43 974) Total (1 695 446) (1 181 590)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 39 Data on the number of employees For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Average statistical number of employees (person) 59.00 37.00 Closing number of employees (person) 59.00 37.00 of which: Appeninn Üzemeltető Zrt. (in English: Appeninn Maintenance Private Limited Company) 32.00 20.00 Appeninn Vagyonkezelő Holding Nyrt. 13.00 8.00 Solumn-Invest Kft. 8.00 - Dreamland Holding Zrt. 6.00 9.00 7. Other operation expenditures and revenues The Corporate Group presents other income, that is, revenue not from the rental and operation of real estate properties, as other revenues (as expenditures). If an item was outstandingly high in the profit or loss for the period, it was of a value or type that determined the total profit for the period, then that item (or items) is (or are) presented separately in the main statement. Items not elsewhere classified or excluded from other types of revenue are presented in this section. The sale of PRO-MOT stock to Hellnarik Hospitality was performed during 2021. data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Other revenues Default interest received 195 70 Revenue related to loss event 13 975 374 Other revenues 137 271 83 851 Pro-mot Kft. stocks sale income 2 942 254 - Pro-mot Kft. stocks sale overhead (2 138 930) 954 765 84 295 Other expenditures Penalty and liquidated damage (13 139) (5 030) Debt consolidation profit and loss - (18 583) Profit and loss of Tokaj Kelep Zrt. acquisition (273 082) Other expenditures (44 251) (72 185) (330 472) (95 798) Other revenues / (expenditures) in total 624 293 (11 503)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 40 8. Profit (and loss) on sale of subsidiaries and investments data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Appeninn 105 Realty Project Kft. – 100% of business shares - (505 499) Appeninn A59 Kft. – 100% of business shares - 712 437 VCT78 Kft. – 100% of business shares - 212 256 Hellnarik Hospitality Kft – 76% of business shares - (113 974) Total - 305 220 The detailed presentation of the business combinations is included in Section 2.4. 9. Profit and loss on sale of investment properties data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Price of investment properties sale 10 296 929 1 247 285 Derecognition of investment properties fair value (10 800 000) (1 100 000) Total (503 071) 147 285 In 2021, the Corporate Group sold its real estate property located at 1037 Budapest, Montevideo út 2/C., on which accounted 503,071,-EUR profit. Prior to the sale, the Group had contributed the property to a company which it sold, so in substance a sale of property has taken place and the result is recognised on this line. 10. Profit and loss from fair value evaluation of revenue-generating investment properties The fair values of the Corporate Group's assets are assessed annually. Based on fair valuations, the Corporate Group recognized all changes through profit or loss. Option rights established on real estate properties, if they remain below the fair value and the title holder has paid the owner the charges of the option right, the lower of the fair value and the purchase price belonging to the option right is the value recognised in the Corporate Group's balance sheet.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 41 The Corporate Group prepares the definition of the fair value of the real estate properties each year. In addition to the value assessment prepared by the Corporate Group, the Corporate Group also had the value of its real estate properties portfolio reviewed by an independent appraiser. The value determined by the independent appraiser is in line with the values in the financial statements. The independent expert appointed to perform the evaluation from 2014 to 2021 was Jones Lang LaSalle Kft. (Széchenyi tér 7-8., 1051 Budapest, hereinafter referred to as: “JLL Kft.”). The analyses prepared by JLL Kft. is as follows: • the valuation methods used and their application correspond to the approaches commonly used in national and international practice • the rents applied correspond to actual market rents • the investor’s “return expectation” of each real estate property - the Rates included in the Capitalization Rate and Discount Rate valuation are in line with the publicly published data on the investment transactions made in the last 12 months for each type of real estate property. Assessment Principles: For completed investment properties and for investment properties under development where fair value can be measured accurately fair value is determined based on a market-based valuation. For investment properties under development where fair value cannot be measured reliably (due to low readiness, the individual nature of the property and / or the complete absence of market transactions), the book value is the historical value less with any impairment. Assessment Methods: Valuations are made using the income approach (the discounted cash flow method) and the comparative (market) method. The income approach method is based on the estimation of periodic cash flows from real estate properties. The present value of cash flows from real estate is determined using a market-based discount rate that reflects the expectations of investors. Periodic cash flow is income without unused land less with costs associated with operating and maintaining the property. The amount of periodic cash flows and the residual value determined at the end of the assessment period discounted to present value is the fair value of the property. The variables used in the evaluations based on the market method approach in 2020 and 2021 were average rent, market rent, occupancy, “exit Yield”, and discount rate. These values are based on market observations, which are adjusted for the local situation of the real estate property. Due to these corrections, all variables used are classified as “level 3”. The evaluation methods remained unchanged compared to 2020-2021. The valuation methodology used complied with the valuation techniques described in IFRS 13. The assessment covered the determination of spot market prices, which were reported as “Comparative” prices. Sensitivity Test:
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 42 The values per real estate property took the defined value based on the variables presented in the previous table. The displacement of the model variables was tested. The summation of the DCF model variables ends in the exit yield. Another sensitive variable in model value is the annual rent. The effect of the negative 5% and positive 5% displacement of the model variables on real assessment, and fair value per real estate property is presented from the matrix of the displacement of these two model variables. data in EUR 2021 2020 +5% 194 652 109 174 027 000 -5% 176 113 813 157 530 000
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 43 Revaluation of 2021 data in EUR Fair value increase Fair value decrease 1149 Budapest, Várna u. 12-14. (5 302) 1047 Budapest, Schweidel utca 3. 100 000 1023 Budapest, Bég u. 3-5. 287 502 1022 Budapest, Bég u. 4. (Törökvész u. 30.) (146 224) 1094 Budapest, Páva utca 8. (10 392) 1118 Budapest, Kelenhegyi út 43. (357 296) 1133 Budapest, Visegrád u. 110-112. 197 629 18 SPAR üzlet 280 000 6000 Kecskemét, Kiskőrösi utca 30. 100 000 1082 Budapest, Üllői út 48. 100 000 1147 Budapest, Egyenes u. 4. (101 135) 1105 Budapest, Bánya utca 100 000 1023 Budapest, Felhévízi u. 24. 100 000 1139 Budapest, Frangepán u. 19. 77 686 1105 Budapest, Bánya utca (20 000) 3525 Miskolc, Szűcs Sámuel u. 5. 100 000 H-8171 Balatonvilágos, Aligai út 1. (2 276 871) 1013 Budapest, Pauler utca 2. 100 000 Lepence, Strandfürdő Visegrád (159 909) Port and Hotel Balatonfüred (3 446 582) Grand Hotel Tokaj, Tokaj Csurgó-völgy (3 133 127) Active Tourist Center, Tokaj Csurgó-völgy 44 826 BALALAND Family Hotel & Resort and Familypark, Szántód (669 974) Csárda és Rév Szántód 100 790 Change in fair value in total 1 688 433 (10 392 337) Exchange rate fluctuations in total 4 024 226 Change in fair value in total (4 679 678)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 44 Revaluation of 2020 data in EUR Fair value increase Fair value decrease 1047 Budapest, Schweidel utca 3. 200 000 1015 Budapest, Hattyú utca 14. (1 800 000) 1118 Budapest, Kelenhegyi út 43. (400 000) 1133 Budapest, Visegrád u. 110-112. (400 000) 18 SPAR üzlet 2 000 000 6000 Kecskemét, Kiskőrösi utca 30. 200 000 1082 Budapest, Üllői út 48. (2 400 000) 1037 Budapest, Montevideo út 2/C. 2 180 534 1147 Budapest, Egyenes u. 4. (100 000) 1105 Budapest, Bánya utca (10 000) 3525 Miskolc, Szűcs Sámuel u. 5. 100 000 H-8171 Balatonvilágos, Aligai út 1. 2 918 606 1013 Budapest, Pauler utca 2. 100 000 Lepence, Strandfürdő Visegrád 33 107 Port and Hotel Balatonfüred 27 222 Grand Hotel Tokaj, Tokaj Csurgó-völgy 88 442 Active Tourist Center, Tokaj Csurgó-völgy 4 828 BALALAND Family Hotel & Resort and Familypark, Szántód 123 470 Csárda és Rév Szántód (7 267) Change in fair value in total 7 976 209 (5 117 267) Exchange rate fluctuations in total 13 053 888 Change in fair value in total 15 912 830
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 45 Ssz. típus Összehasonlító ár DCF modell érték Fordulónapi érték Értékelési módszer Kilépéskori hozam Bérleti díj EUR/m2/hó, 1 1149 Budapest, Várna u. 12-14. iroda-üzem 2.500.000 2.200.000 2.200.000 DCF modell 8,00% iroda: 7,5, raktár: 4 2.090.000 2.310.000 8,50% van 2 1047 Schweidel utca 3. raktár 2.800.000 3.500.000 2.800.000 összehasonlító 9,00% raktár: 3,3 3.325.000 3.675.000 9,25% nem 3 1023 Budapest, Bég u. 3-5. iroda 10.000.000 10.600.000 10.600.000 DCF modell 7,25% iroda: 12, raktár: 6 10.070.000 11.130.000 7,50% van 4 1022 Budapest, Bég u. 4. (Törökvész u. 30.) iroda 3.300.000 3.400.000 3.400.000 DCF modell 7,25% iroda: 11 3.230.000 3.570.000 7,50% van 5 1094 Budapest, Páva u. 8. iroda 5.200.000 5.100.000 5.100.000 DCF modell 8,00% iroda:: 9,5, raktár: 6 4.845.000 5.355.000 8,25% van 6 1015 Budapest, Hattyú utca 14. iroda 14.200.000 14.200.000 14.200.000 DCF modell 7,25% iroda: 11,5, raktár: 6 13.490.000 14.910.000 7,50% nem 7 1118 Budapest, Kelenhegyi út 43. iroda-lakó 5.100.000 4.200.000 5.100.000 összehasonlító 12,50% iroda: 12,5, lakás: 14 3.990.000 4.410.000 8,00% van 8 1133 Budapest, Visegrádi u. 110-112. iroda 5.400.000 5.100.000 5.100.000 DCF modell 7,40% iroda: 10, raktár: 4,5 4.845.000 5.355.000 7,65% van 9 18 SPAR üzlet kereskedelmi 21.930.000 22.380.000 22.380.000 DCF modell 21.261.000 23.499.000 8,75%-10% van 10 6000 Kecskemét, Kiskőrösi utca 30. telephely 4.200.000 4.200.000 4.200.000 DCF modell 11,00% iroda: 4, raktár: 2 3.990.000 4.410.000 11,50% van 11 1082 Budapest, Üllői út 48. iroda 20.300.000 20.400.000 20.400.000 DCF modell 19.380.000 21.420.000 van 12 1037 Budapest, Montevideo út 2/C. iroda - - - - - 13 1147 Budapest, Egyenes u. 4. műhely 1.000.000 700.000 700.000 DCF modell raktár: 4,75 665.000 735.000 van 14 1105 Budapest, Bánya utca vegyes 3.100.000 2.400.000 2.400.000 DCF modell 8,75% iroda: 4, raktár: 3,5 2.280.000 2.520.000 9,00% van 15 1023 Budapest, Felhévízi u. 24. iroda 1.500.000 1.400.000 1.500.000 összehasonlító 8,00% iroda: 10 1.330.000 1.470.000 8,25% van 16 1139 Budapest, Frangepán u. 19. iroda 3.400.000 3.100.000 3.100.000 DCF modell 8,00% iroda: 7 2.945.000 3.255.000 8,50% van 17 1105 Budapest, Bánya utca iroda 310.000 340.000 340.000 DCF modell 9,25% iroda: 6,5 323.000 357.000 9,75% nincs 18 3525 Miskolc, Szűcs Sámuel u. 5. iroda 2.200.000 2.600.000 2.600.000 DCF modell 8,00% 16,90 2.470.000 2.730.000 8,00% nincs 19 8171 Balatonvilágos, Aligai út 1. üdülő 12.730.000 12.730.000 12.730.000 DCF modell 12.093.500 13.366.500 7,00% van 20 1013 Budapest, Pauler utca 2. iroda 1.720.000 1.700.000 1.700.000 DCF modell 1.634.000 1.806.000 21 Lepence, Strandfürdő Visegrád üdülő 900.000 DCF és összehasonlító 855.000 945.000 22 Kikötő és Szálloda Balatonfüred üdülő 10.300.000 DCF és összehasonlító 9.785.000 10.815.000 23 Grand Hotel Tokaj, Tokaj Csurgó-völgy üdülő 16.300.000 DCF és összehasonlító 15.485.000 17.115.000 24 Aktív Turisztikai Központ, Tokaj Csurgó-völgy üdülő 1.400.000 DCF és összehasonlító 1.330.000 1.470.000 25 BALALAND Family Hotel & Resort és Familypark, Szántód üdülő 34.300.000 DCF és összehasonlító 32.585.000 36.015.000 26 Csárda és Rév Szántód üdülő 1.050.000 DCF és összehasonlító 997.500 1.102.500 27 Tokaj Kelep üdülő 862.961 DCF és összehasonlító 819.813 906.109 185.662.961 2021 Modell változó középértékek a DCF modellben Kilépési hozam változás teszt: (-5%), Bérleti díj változás teszt (-5%) Diszkontráta Jelzálog Kilépési hozam változás teszt (+5%), Bérleti díj változás teszt (+5%)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 46 Comparative data of 2020: Ssz. típus Összehasonlító ár DCF modell érték Fordulónapi érték Értékelési módszer Kilépéskori hozam Bérleti díj EUR/m2/hó, 1 1149 Budapest, Várna u. 12-14. iroda-üzem 2.300.000 2.200.000 2.200.000 DCF modell 8,00% iroda: 7,5, raktár: 4 2.090.000 2.310.000 8,50% van 2 1047 Schweidel utca 3. raktár 2.500.000 2.100.000 2.700.000 összehasonlító 9,00% raktár: 3,3 1.995.000 2.205.000 9,25% nem 3 1023 Budapest, Bég u. 3-5. iroda 9.700.000 10.300.000 10.300.000 DCF modell 7,25% iroda: 12, raktár: 6 9.785.000 10.815.000 7,50% van 4 1022 Budapest, Bég u. 4. (Törökvész u. 30.) iroda 3.000.000 3.300.000 3.300.000 DCF modell 7,25% iroda: 11 3.135.000 3.465.000 7,50% van 5 1094 Budapest, Páva u. 8. iroda 5.500.000 5.100.000 5.100.000 DCF modell 8,00% iroda:: 9,5, raktár: 6 4.845.000 5.355.000 8,25% van 6 1015 Budapest, Hattyú utca 14. iroda 15.600.000 14.200.000 14.200.000 DCF modell 7,25% iroda: 11,5, raktár: 6 13.490.000 14.910.000 7,50% nem 7 1118 Budapest, Kelenhegyi út 43. iroda-lakó 5.300.000 4.300.000 5.300.000 összehasonlító 12,50% iroda: 12,5, lakás: 14 4.085.000 4.515.000 8,00% van 8 1133 Budapest, Visegrádi u. 110-112. iroda 4.900.000 4.900.000 4.900.000 DCF modell 7,40% iroda: 10, raktár: 4,5 4.655.000 5.145.000 7,65% van 9 18 SPAR üzlet kereskedelmi 20.600.000 22.100.000 22.100.000 DCF modell 20.995.000 23.205.000 8,75%-10% van 10 6000 Kecskemét, Kiskőrösi utca 30. telephely 3.900.000 4.100.000 4.100.000 DCF modell 11,00% iroda: 4, raktár: 2 3.895.000 4.305.000 11,50% van 11 1082 Budapest, Üllői út 48. iroda 21.600.000 20.300.000 20.300.000 DCF modell 19.285.000 21.315.000 van 12 1037 Budapest, Montevideo út 2/C. iroda 13.300.000 10.800.000 10.800.000 10.260.000 11.340.000 13 1147 Budapest, Egyenes u. 4. műhely 800.000 900.000 800.000 összehasonlító raktár: 4,75 855.000 945.000 van 14 1105 Budapest, Bánya utca vegyes 2.500.000 2.300.000 2.300.000 DCF modell 8,75% iroda: 4, raktár: 3,5 2.185.000 2.415.000 9,00% van 15 1023 Budapest, Felhévízi u. 24. iroda 1.400.000 1.300.000 1.400.000 összehasonlító 8,00% iroda: 10 1.235.000 1.365.000 8,25% van 16 1139 Budapest, Frangepán u. 19. iroda 3.200.000 3.000.000 3.000.000 DCF modell 8,00% iroda: 7 2.850.000 3.150.000 8,50% van 17 1105 Budapest, Bánya utca iroda 330.000 360.000 360.000 összehasonlító 9,25% iroda: 6,5 342.000 378.000 9,75% nincs 18 3525 Miskolc, Szűcs Sámuel u. 5. iroda 2.100.000 2.500.000 2.500.000 DCF modell 8,00% 16,90 2.375.000 2.625.000 8,00% nincs 19 8171 Balatonvilágos, Aligai út 1. üdülő 13.400.000 13.400.000 13.400.000 DCF modell 12.730.000 14.070.000 7,00% van 20 1013 Budapest, Pauler utca 2. iroda 1.730.000 1.600.000 1.600.000 DCF modell 1.643.500 1.816.500 21 Lepence, Strandfürdő Visegrád üdülő 680.000 DCF és összehasonlító 646.000 714.000 22 Kikötő és Szálloda Balatonfüred üdülő 5.800.000 DCF és összehasonlító 5.510.000 6.090.000 23 Grand Hotel Tokaj, Tokaj Csurgó-völgy üdülő 8.000.000 DCF és összehasonlító 7.600.000 8.400.000 24 Aktív Turisztikai Központ, Tokaj Csurgó-völgy üdülő 60.000 DCF és összehasonlító 57.000 63.000 25 BALALAND Family Hotel & Resort és Familypark, Szántód üdülő 19.620.000 DCF és összehasonlító 18.639.000 20.601.000 26 Csárda és Rév Szántód üdülő 920.000 DCF és összehasonlító 874.000 966.000 165.740.000 2020 Modell változó középértékek a DCF modellben Kilépési hozam változás teszt: (-5%), Bérleti díj változás teszt (-5%) Diszkontráta Jelzálog Kilépési hozam változás teszt (+5%), Bérleti díj változás teszt (+5%)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 47 11. Depreciation data in thousands of Hungarian Forints for the business year ending 31 December 2021 for the business year ending 31 December 2020 Depreciation of tangible assets (248 217) (261 540) Total (248 217) (261 540) In 2021, small-value asset depreciation was 8 368,-HUF in thousands. 12. Other expenditure and revenue of financial transactions data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Exchange gain 1 952 647 2 129 871 Negative goodwill – Note 2.4 0 199 106 Loss on exchange (2 204 950) (5 055 815) Total (252 303) (2 726 838) In 2020, the Corporate Group recognised negative goodwill of 199,106,-EUR on the acquisition of Alagút Investment Kft. 13. Balance of interest revenues and expenditures data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Interest revenues Interests of deposit and interest-bearing deposits 55 050 7 637 Other interests received / due 12 379 115 195 67 429 122 832 Interest expenses Interests of bank credits (990 088) (562 164) Interest payable for Konzum PE 0 (66 860) Self-issued and traded bond interests (1 937 564) (2 009 868) (2 927 652) (2 638 892) Balance of interest revenues and interest expenses (2 860 223) (2 516 060)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 48 data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Lease interests (48 544) (102 936) Lease interests (48 544) (102 936) 14. Income Taxes Expenditures related to income taxes include the following: data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Corporate income tax (291 211) (140 697) Deferred tax liabilities (273 445) (1 136 036) Business tax (170 013) (183 328) Total (734 669) (1 460 061) The tax breakdown was carried out as follows: data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Profit before taxation (5 045 048) 14 661 732 Tax liability calculated on the basis of the current tax rate of 9% 454 054 (1 319 556) Business tax (170 013) (183 816) Delisting of deferred tax liabilities (826 396) - Constant differences (192 314) 43 310 Income taxes in total (734 669) (1 460 061) Effective tax rate -14.56% 9.96% In 2019, the Corporate Group recognized the amounts of deferred tax assets from accrued and deferred loss, the recovery of which is ensured, as it is offset by the balance of deferred tax liabilities within a given subsidiary. As of 31 December 2021, 826,396,-EUR of Appeninn E-Office Zrt.’s accrued and deferred loss was delisted based on future tax plans. Employed tax rates For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Local business tax 2% 2% Corporate income tax 9% 9%
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 49 15. Earnings per Share When calculating the earnings per share, the profit after tax distributable among the shareholders and the average annual number of ordinary shares issued shall be taken into consideration without own shares. for the business year ending 31 December 2021 for the business year ending 31 December 2020 Profit after tax (EUR) (5 779 717) 13 201 671 Weighted average number of the ordinary shares issued (quantity) 47 369 571 47 369 571 Earnings per share (base) (in EUR cent) (12.20) (27.87) There are no factors existing at the Company which would dilute the profit and loss per share in 2020 or in 2021. 16. Net asset value per share for the business year ending 31 December 2021 for the business year ending 31 December 2020 amended Net asset value 74 064 961 77 343 668 Quantity of ordinary shares on the reporting day (quantity) 47 369 571 47 369 571 Net asset value per share (EUR) 1.56 1.63
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 50 Consolidated comments on the financial position 17. Revenue-generating Investment Properties Changes calculated with regard to the opening and closing value of investment properties of the Corporate Group were the hereinunder as follows (also see Notes No. 10): data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Opening value 165 740 000 140 970 000 annual changes: Reclassification for inventories: 0 (10 118 04) H-8171 Balatonvilágos, Aligai út 1. 0 (10 118 604) Derecognition of properties upon subsidiary sale (10 800 000) (12 900 000) 1062 Budapest, Andrássy út 105. 0 (3 900 000) 1044 Budapest, Váci út 76-80. 0 (2 000 000) 1062 Budapest, Andrássy út 59. 0 (7 000 000) 1037 Budapest, Montevideo út 2/C. (10 800 000) 0 Properties purchased in the period under review 862 961 44 929 664 1037 Budapest, Montevideo út 2/C. 0 8 619 466 1013 Budapest, Pauler utca 2. 0 1 500 000 Lepence, Strandfürdő Visegrád 0 646 893 Port and Hotel Balatonfüred 0 5 772 779 Grand Hotel Tokaj, Tokaj Csurgó-völgy 0 7 911 558 Active Tourist Center, Tokaj Csurgó-völgy 0 55 172 BALALAND Family Hotel & Resort and Familypark, Szántód 0 19 496 530 Csárda és Rév Szántód 0 927 267 Tokaj Kelep 862 961 0 Recapitalisation of the period under review 38 563 903 0 1149 Budapest, Várna u. 12-14. 5 302 0 1023 Budapest, Bég u. 3-5. 12 498 0 1022 Budapest, Bég u. 4. (Törökvész u. 30.) 246 224 0 1094 Budapest, Páva utca 8. 10 392 0 1015 Budapest, Hattyú utca 14. 65 524 0 1118 Budapest, Kelenhegyi út 43. 157 296 0 1133 Budapest, Visegrád u. 110-112. 2 371 0 1147 Budapest, Egyenes u. 4. 1 135 0 1139 Budapest, Frangepán u. 19. 22 314 0 H-8171 Balatonvilágos, Aligai út 1. 1 606 871 0 Lepence, Strandfürdő Visegrád 379 909 0 Port and Hotel Balatonfüred 7 946 582 0 Grand Hotel Tokaj, Tokaj Csurgó-völgy 11 433 127 0 Active Tourist Center, Tokaj Csurgó-völgy 1 295 174 0 BALALAND Family Hotel & Resort and Familypark, Szántód 15 349 974 0 Csárda és Rév Szántód 29 210 0 Change of fair value (8 703 903) 2 858 942 of which: Fair value inrease 1 688 433 7 976 209 Fair value decrease (10 392 337) (5 117 267) Changes in total 19 922 961 24 770 000 Closing value 185 662 961 165 740 000
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 51 The derivation of the change in the real estate portfolio by real estate property compared to 31 December 2021 and 31 December 2020 is presented in the following tables: 31 DECEMBER 2020 Recapitalisa tion Acquisi tion Sale Market price increase Market price decrease 31 December 2021 1149 Budapest, Várna u. 12-14. 2 200 000 5 302 (5 302) 2 200 000 1047 Budapest, Schweidel utca 3. 2 700 000 100 000 2 800 000 1023 Budapest, Bég u. 3-5. 10 300 000 12 498 287 502 10 600 000 1022 Budapest, Bég u. 4. (Törökvész u. 30.) 3 300 000 246 224 (146 224) 3 400 000 1094 Budapest, Páva utca 8. 5 100 000 10 392 (10 392) 5 100 000 1015 Budapest, Hattyú utca 14. 14 200 000 65 524 (65 524) 14 200 000 1118 Budapest, Kelenhegyi út 43. 5 300 000 157 296 (357 296) 5 100 000 1133 Budapest, Visegrád u. 110-112. 4 900 000 2 371 197 629 5 100 000 18 SPAR üzlet 22 100 000 280 000 22 380 000 6000 Kecskemét, Kiskőrösi utca 30. 4 100 000 100 000 4 200 000 1082 Budapest, Üllői út 48. 20 300 000 100 000 20 400 000 1037 Budapest, Montevideo út 2/C. 10 800 000 (10 800 000) - 1147 Budapest, Egyenes u. 4. 800 000 1 135 (101 135) 700 000 1105 Budapest, Bánya utca 2 300 000 100 000 2 400 000 1023 Budapest, Felhévízi u. 24. 1 400 000 100 000 1 500 000 1139 Budapest, Frangepán u. 19. 3 000 000 22 314 77 686 3 100 000 1105 Budapest, Bánya utca 360 000 (20 000) 340 000 3525 Miskolc, Szűcs Sámuel u. 5. 2 500 000 100 000 2 600 000 H-8171 Balatonvilágos, Aligai út 1. 13 400 000 1 606 871 (2 276 871) 12 730 000 1013 Budapest, Pauler utca 2. 1 600 000 100 000 1 700 000 Lepence, Strandfürdő Visegrád 680 000 379 909 (159 909) 900 000 Port and Hotel Balatonfüred 5 800 000 7 946 582 (3 446 582) 10 300 000 Grand Hotel Tokaj, Tokaj Csurgó-völgy 8 000 000 11 433 127 (3 133 127) 16 300 000 Active Tourist Center, Tokaj Csurgó-völgy 60 000 1 295 174 44 826 1 400 000 BALALAND Family Hotel & Resort and Familypark, Szántód 19 620 000 15 349 974 (669 974) 34 300 000 Csárda és Rév Szántód 920 000 29 210 100 790 1 050 000 Tokaj Kelep 862 961 862 961 Total 165 740 000 38 563 903 862 961 (10 800 000) 1 688 433 (10 392 337) 185 662 961
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 52 The derivation of the change in the real estate portfolio by real estate property compared to 31 December 2020 and 31 December 2019 is presented in the following tables: Amended 31 DECEMBER 2019 Acquisition Sale Reclassification for sale Market price increase Market price decrease 31 DECEMBER 2020 1149 Budapest, Várna u. 12- 14. 2 200 000 - 2 200 000 1047 Budapest, Schweidel utca 3. 2 500 000 200 000 2 700 000 1023 Budapest, Bég u. 3-5. 10 300 000 - 10 300 000 1022 Budapest, Bég u. 4. (Törökvész u. 30.) 3 300 000 - 3 300 000 1094 Budapest, Páva utca 8. 5 100 000 - 5 100 000 1015 Budapest, Hattyú utca 14. 16 000 000 - (1 800 000) 14 200 000 1118 Budapest, Kelenhegyi út 43. 5 700 000 (400 000) 5 300 000 1133 Budapest, Visegrád u. 110-112. 5 300 000 (400 000) 4 900 000 18 SPAR üzlet 20 100 000 2 000 000 22 100 000 6000 Kecskemét, Kiskőrösi utca 30. 3 900 000 200 000 4 100 000 1062 Budapest, Andrássy út 105. 3 900 000 (3 900 000) - - 1082 Budapest, Üllői út 48. 22 700 000 - (2 400 000) 20 300 000 1037 Budapest, Montevideo út 2/C. - 8 619 466 2 180 534 10 800 000 1147 Budapest, Egyenes u. 4. 900 000 (100 000) 800 000 1105 Budapest, Bánya utca 2 300 000 - 2 300 000 1023 Budapest, Felhévízi u. 24. 1 400 000 - 1 400 000 1139 Budapest, Frangepán u. 19. 3 000 000 3 000 000 1105 Budapest, Bánya utca 370 000 (10 000) 360 000 1044 Budapest, Váci út 76-80. 2 000 000 (2 000 000) - - 1062 Budapest, Andrássy út 59. 7 000 000 (7 000 000) - 3525 Miskolc, Szűcs Sámuel u. 5. 2 400 000 100 000 2 500 000 H-8171 Balatonvilágos, Aligai út 1. 20 600 000 (10 118 606) 2 918 606 13 400 000 1013 Budapest, Pauler utca 2. 1 500 000 100 000 1 600 000 Lepence, Strandfürdő Visegrád 646 893 33 107 680 000 Port and Hotel Balatonfüred 5 772 779 27 221 5 800 000 Grand Hotel Tokaj, Tokaj Csurgó-völgy 7 911 558 88 442 8 000 000 Active Tourist Center, Tokaj Csurgó-völgy 55 172 4 828 60 000 BALALAND Family Hotel & Resort and Familypark, Szántód 19 496 530 123 470 19 620 000 Csárda és Rév Szántód 927 266 (7 266) 920 000 Total 140 970 000 44 929 663 (23 018 606) 7 976 208 (5 117 266) 165 740 000
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 53 18. Tangible assets Tangible assets include the Corporate Group’s own vehicles and office equipment purchased for the Corporate Group’s operations. The Corporate Group's leased cars cover the obligations arising from the lease agreement. data in EUR Total Gross value on 31 December 2019 252 694 Increase and reclassification 155 186 Decrease and reclassification (86 099) on 31 December 2020 321 781 Increase and reclassification 331 664 Decrease and reclassification (243 134) on 31 December 2021 410 311 Accrued depreciation on 31 December 2019 75 030 Depreciation in the current year 48 368 Decrease (1 597) on 31 December 2020 121 801 Depreciation in the current year 154 740 Decrease (89 265) on 31 December 2021 187 276 Net book value on 31 December 2019 177 664 on 31 December 2020 199 980 on 31 December 2021 223 035 The gross value of assets written off to zero as at 31 December 2021 and 2020 is 15,762,-EUR. No impairment was accounted for tangible assets. The Corporate Group has no intangible assets.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 54 19. Right-of-use Asset Right-of-use of land In 2020, the Corporate Group included the right to use of the port of Balatonfüred of Solum- Invest Kft. among the right-of-use assets, which is calculated on the basis of an annuity based on the fee to be paid. The useful life of the asset cannot be defined, so the Corporate Group performs an annual impairment test. Right-of-use of plot In 2019, the Group retroactively corrected the right to use the land of Pro-mot Hungária Kft., including it in the right to use assets, which has a remaining useful life of 37 years. Right-of-use of lakebed Based on the agreement with the Hungarian State, SOLUM Invest Kft. has the right-of-use of lakebed with regard to the water surface areas of Lake Balaton connected to the port until 2037. After the transitional construction period, as soon as the new port building is completed and has received the permit for use, the Hungarian State may only terminate the contract in cases of force majeure, provided that it is used for its intended purpose. SOLUM Invest Kft. will record the lakebed right of use as an asset under IFRS 16 for the first time in 2021 at 12 months BUBOR and a general market interest rate of 2%. Real estate property rental In 2020, the Corporate Group entered into a property lease agreement, from which the right- of-use assets have been recognised. The Corporate Group has entered into a sublease agreement for the leased property, which has been identified as a financial lease and the related right of asset use has been derecognised. The lease expires on 16 March 2025.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 55 data in EUR Plot right-of- use Land right-of- use Lakebed right-of-use Property rental Total Gross value modify on 31 December 2019 1 952 433 0 0 0 1 952 433 Increase and reclassification 1 311 022 1 187 252 2 498 274 Decrease and reclassification (185 068) (591 645) (776 713) on 31 December 2020 1 767 365 1 311 022 0 595 607 3 673 994 Increase and reclassification 9 033 29 060 126 164 164 257 Decrease and reclassification (1 355) (1 355) on 31 December 2021 1 776 398 1 340 082 126 164 594 252 3 836 896 Accrued depreciation on 31 December 2019 0 0 0 0 0 Depreciation in the current year 213 172 213 172 Decrease on 31 December 2020 0 0 0 213 172 213 172 Depreciation in the current year 93 477 93 477 Decrease on 31 December 2021 0 0 0 306 649 306 649 Net book value on 31 December 2019 1 952 433 0 0 0 1 952 433 on 31 December 2020 1 767 365 1 311 022 0 382 435 3 460 822 on 31 December 2021 1 776 398 1 340 082 126 164 287 603 3 530 247 20. Deferred tax receivables Upon calculating deferred tax, the Corporate Group compares the amount recognisable for tax purposes with the book value, per asset and liability. If the spread is a temporary difference, that is, the difference is settled within a reasonable time, deferred tax liability or asset is recognized, according to its sign. When the asset is taken into account, the return is examined separately by the Corporate Group. The Corporate Group's accumulated deferred negative tax base as at 31 December 2021 was used to reduce the deferred tax liabilities to be recognized on investment properties in the deferred tax calculation. The possibility of using accrued negative tax bases according to the rule in force in the year of their occurrence, the order of utilization is FIFO. The deadline for the utilization of accrued and deferred loss is 31 December 2030.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 56 Balance of accrued and deferred loss per company data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Appeninn Property Zrt. 217 341 179 333 Appeninn-Bp 1047 Zrt. 203 005 181 478 Appeninn E-Office Plc. 12 652 295 19 188 237 Appeninn Üzemeltető Zrt. (in English: Appeninn Maintenance Private Limited Company) 60 133 77 953 Appeninn Vagyonkezelő Holding Nyrt. 1 585 629 1 851 828 Curlington Kft. 229 396 140 104 Szent László Téri Szolgáltató Ház Kft. 222 946 125 591 Dreamland Holding Zrt. 500 404 0 Szántód BalaLand Family Kft. 15 564 0 Appeninn Retail Kft. 144 217 93 487 Sectura Ingatlankezelő Kft. (in English: Secture Real Property Management Private Limited Liability Company) 74 894 58 891 SZRH Kft. 166 328 0 TATK Kft. 5 816 0 Tokaj Csurgó Völgy Kft. 16 263 0 Visegrád Lepence Völgy Kft. 160 699 0 Appeninn Project-EGRV Kft. 77 680 76 621 Appeninn Project-MSKC Kft. 68 772 118 100 Base of deferred tax assets from accrued and deferred loss 16 401 381 22 087 624 The amount of deferred tax assets from accrued and deferred loss 1 476 124 1 987 886 Of which decreasing of deferred tax liabilities accounted in the balance sheet 720 053 1 770 748 Of which deferred tax assets accounted 756 071 217 138 As of 31 December 2021, 826,396,-EUR of Appeninn E-Office Zrt.’s accrued and deferred loss was impaired based on future tax plans. 21. Goodwill data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Dreamland Group acquisition (Point 2.4) 4 280 881 4 280 881 Solum-Invest Kft. (Point 2.4) 73 110 73 110 Total 4 353 991 4 353 991
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 57 Goodwill arose on the acquisition of Dreamland Group and Solum-Invest Kft. (see Note No. 2.4) and has been allocated to the relevant CGUs. data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Balaland CGU 2 242 371 2 242 371 Tokaj CGU 1 478 888 1 478 888 Lepence CGU 559 622 559 622 Dreamland Corporate Group 4 280 881 4 280 881 As at 31 December 2021, the Corporate Group performed its annual impairment tests in accordance with the requirements of IAS 36 standard. The recoverable amount of the CGUs was determined based on value in use, which was determined based on 15-year cash flow projections and financial budgets forecast by senior management, which assume the realisation of current developments. The pre-tax discount rate applied to the CGUs for discounting cash flows is 10.4%. The recoverable amount exceeds the above book value and exceeds the carrying amount for each CGU. As a result of the goodwill impairment test and sensitivity analysis, the management concluded that no impairment should be recognised for CGUs. 22. Equity in affiliate enterprise data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Hellnarik Hospitality Kft. 24% equity 39 701 39 701 Total 39 701 39 701
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 58 The equity in associated enterprise was accounted at historical value. Main data of the associated undertakings as of 31 December in 2020 and 2021 are as follows: Data in EUR in thousands 31 December 2021 31 December 2020 Current assets 10 908 10 465 Invested assets 3 069 0 Own Equity 343 392 Long-term liabilities 3 664 - Short-term liabilities 9 970 10 073 Sales Revenue 0 0 Profit after tax (45) (141) 23. Over-the-year receivables data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 G.B. Bohemia 0 60 252 Franklin Ház 0 1 849 BDPST Group 346 982 495 385 Total 346 982 557 486 24. Inventories data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Properties made for sale 7 934 901 10 118 606 Total 7 934 901 10 118 606 In 2020, the Corporate Group reclassified the Balatonaliga real estate properties for sale from revenue-generating properties to inventories. Inventory of 2 183 705,- EUR of properties held for sale was sold in 2021. 25. Trade receivables data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 59 Gross value of trade receivables 533 003 865 267 Opening balance of impairment of customers (53 945) (87 764) Impairment accounted in the period under review 0 0 Impairment derecognized in the period under review 13 391 33 819 Closing balance of impairment of customers (40 554) (53 945) Net trade receivables in total 492 449 811 322 The Corporate Group employed the expected impairment for trade impairment. Expected losses have been calculated from the average of the last two years' experience. 26. Other short-term receivables data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Balance of tax receivables (VAT, local business taxes) 410 939 425 250 Advance payments 3 057 088 114 704 Tender receivables 1 812 848 0 Short term part of financial leasing claims 147 929 143 205 Other 611 292 211 532 Total 6 040 096 894 691 27. Short-term affiliated receivables data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Hellnarik Hospitality KFt. 1 154 916 1 578 Total 1 154 916 1 578 28. Short-term loans granted
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 60 data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Mikepércsi út 132 Kft. 105 827 105 827 Impairment of Mikepércsi út 132 Kft. (105 827) (105 827) Hattyúház Társasház Közösség 6 089 6 153 Total 6 089 6 153 29. Accruals data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020 Accrual of non-invoiced, due rents income 274 353 - Accrual of invoiced costs un-due in the current period 467 282 331 266 Total 741 635 331 266 30. income tax receivables and liabilities data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Iincome tax receivables 23 729 92 767 Iincome tax liabilities 229 225 39 106 31. Cash and cash equivalents data in EUR for the business year ending 31 December 2021 for the business year ending 31 December 2020
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 61 Cash on hand HUF 13 192 14 311 Bank account in HUF 9 650 326 19 592 342 Bank account in EUR 2 727 752 2 456 412 Fixed-term cash on deposit of short-term 12 466 125 - Total 24 857 395 22 063 065 A short-term bank deposit is a deposit with a maturity of 1 month. The Group has undrawn credit lines of 17 024,- EUR in thousands at 31 December 2021. See also Note No. 53. After the turnaround date, the situation at Sberbank was dealt with by the Dreamland Group through a set-off request. The Group's account balance with Sberbank prior to the suspension of the Bank's activities amounted to 4 242,- EUR in thousands, with a total repayment of 505 000,- EUR per entity before publication of the amount of 100,000,- EUR guaranteed by OBA (in English: the National Deposit Insurance Fund of Hungary). With regard to the remaining amount of money, assignments were made within the Group, where the Company requested the liquidator to set off against the loan of Tokaj Csurgó Völgy Kft. - as an entity credited by Sberbank - for 5 210,- EUR in thousands. 32. Issued Share Capital The shares of Appeninn Vagyonkezelő Holding Nyrt. were initiated at Budapest Stock Exchange on 02 July 2010 upon public trading. Appeninn Nyrt. share data nominal value 100 currency HUF ISIN identification number HU0000102132 Place of trading Budapest Stock Exchange share section start of trading 02 July 2010 share register keeping Board of Directors of Appeninn Nyrt., 1118 Budapest, Kelenhegyi út 43. Number of shares kept in trading on 31 December 2021 (quantity) 47 371 419 Number of shares kept in trading on 31 December 2020 (quantity) 47 371 419 Issued Share Capital For the business year ending on 31 December 2021 For the business year ending on 31 December 2020
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 62 Ordinary shares issued and paid by the owners at nominal value: Opening value on 01 January (EUR) 15 217 006 15 217 006 Closing issued capital value on 31 December (in EUR) 15 217 006 15 217 006 The quantity of shares issued at the nominal value of 100,-HUF (quantity): Opening value (quantity) 47 371 419 47 371 419 Issuance (quantity) - - Closing value (quantity) 47 371 419 47 371 419 Translation for presentation currency: HUF-EUR exchange rates: Opening issued capital average exchange rate value: 311.32 311.32 Issuance - - Closing issued capital average exchange rate value 311.32 311.32 Issued capital value in the foreign currency as of company registration (HUF in thousands) Opening value on 01 January: 4 737 142 4 737 142 Issuance - - Closing value on 31 December: 4 737 142 4 737 142 The issued capital of the Company is 4,737,142,- HUF in thousands, which consists of 47,371,419,- quantity of shares with a nominal value of HUF 100,- HUF per each. 33. Repurchased Own Shares For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 EUR quantity EUR quantity Opening value 1 171 1 848 1 171 1 848 Own share purchase Own share sale Closing value 1 171 1 848 1 171 1 848 34. Capital reserve data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 63 Opening value of premium capital (ázsió) share issuance 25 645 230 25 645 230 Closing value 25 645 230 25 645 230 35. Conversion reserve data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 amended Opening value (10 876 235) (2 852 372) annual changes: Other comprehensive income of the current year (275 255) (8 023 863) Closing value (11 151 490) (10 876 235) In 2020, the HUF/EUR exchange rates changed significantly, resulting in a significant increase in the “gap” between the value of the equity items held at the historical exchange rate and the equity items calculated at the exchange rate at the balance sheet date, and a decrease in the conversion reserve of 8,023,863,-EUR. The corrections of previous mistakes are shown in Note No. 48. 36. Retained earnings data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Opening value 47 358 839 34 925 192 annual changes: Profits in the current year (3 003 453) 12 293 761 Transaction with non-controlling interest upon control keeping 0 139 886 Closing value 44 355 386 47 358 839
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 64 37. Non-controlling interest The balance of non-controlling interests relates to the acquisition of Dreamland Group and Solum- Invest Ltd. in 2020 and Tokaj Kelep Zrt. in 2021, see Note No. 2.4. data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Opening value 2 888 383 730 936 annual changes: Acquisition of new subsidiaries 188 552 863 Profit item in the current year (2 776 264) 907 910 Transaction with non-controlling interest upon control keeping 0 696 674 Closing value 112 307 2 888 383 38. Long-term and short-term credits and lease transactions Lease transactions data in EUR Minimum value of leasing fees Present value of leasing fees 31 December 2021 31 December 2020 amended 31 December 2021 31 December 2020 amended Due within one year 329 079 319 810 308 677 288 520 Due within two and five years 446 352 1 197 138 425 492 985 013 Due over five years 145 624 172 542 145 624 172 541 921 055 1 516 949 879 793 1 446 074 Financing costs (41 262) (70 875) Present value 879 793 1 446 074 879 793 1 446 074 Presenetation in the balance sheet per liability: Short-term leasing liabilities 308 677 288 520 Long-term leasing liabilities 571 116 1 157 554 879 793 1 446 074 The member company of the Corporate Group – Appeninn Üzemeltető Zrt. – acquired the vehicles necessary for its activities within the framework of a leasing contract. The term of the contracts shall not exceed five years. Appeninn Plc. is leasing an office building for a fixed term which is less than 5 years. In the case of both leased asset groups, the leased asset serves as collateral for the liabilities arising here from the lease. The related right-of-use asset is depreciated on a straight-line basis over the lease term. The Company recognizes interest expense on the lease using the effective interest method.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 65 The Company subleases part of the leased property. The related right-of-use asset has been derecognised, while the value of the lease liability continues to be recognised for the entire property. data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Net value of leased vehicles 101 054 132 770 Current year depreciation of leased vehicles 31 716 31 716 Net value of leased properties 732 536 1 693 457 Current year depreciation of leased properties 238 089 213 172 Accounted lease transaction interest and loss on exchange 48 544 102 936 Loss on exchange 8 811 6 089 Long-term and short-term credits On 17 December 2021, Appeninn E-Office Zrt. (in English: Appeninn E-Office Plc.), a subsidiary of Appeninn Nyrt., refinanced its previous Erste and Erste-MFB loan of 19 January 2018 in the amount of 24,068,776,-EUR and, moreover, Appeninn E-Office Zrt acquired Appeninn’s subsidiary Alagút Investment Zrt. (in English: Alagút Investment Plc.) using a credit facility of 1,500,000,-EUR. The financing bank for both of these loans was MFB Zrt. (in English: MFB Plc.). The previous bullet-type short-term financing was replaced by an annuity-type financing structure with a 20-year maturity. Upon refinancing, until 31 December 2022, the amount of 15,000,000,-EUR uncommitted credit line was available for Appeninn E-Office to expand its domestic retail or office building portfolio. The details of the credits and leases are presented in the following table:
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 66 Financing partners Primary tax company 31 December 2021 due within-the- year 31 December 2021 due over-the- year 31 December 2020 due within-the- year 31 December 2020 due over-the- year Financing foreign currency Interest margin Original expiration Collaterals EUR EUR EUR EUR Magyar Takarékszövetkezeti Bank Zrt. Szent László Téri Szolgáltató Ház 0 0 40 090 59 530 HUF 3-month EURIBOR+RKV+1.9 %, 3-month BUBOR + 3% 17 May 2021 31 March 2021 Purchase right, mortgage (350 million), option right, claim-based lien, assignment contract, 6- month debt service, insurance, pledge, power-of- attorney, assignment Magyar Takarékszövetkezeti Bank Zrt. Szántód BalaLand Family Kft. 0 7 408 898 0 0 Magyar Takarékszövetkezeti Bank Zrt. Appeninn-Bp 1047 Zrt. 10 864 610 902 16 755 617 377 HUF 3-month EURIBOR + 2.5% 30 April 2033 Real estate lien in 1st rank; Prohibition of alienation and encumbrance; Pledge on claims on receivables from the utilization of collateral property; Right to collect on the debtor's bank accounts with another bank; Pledge agreement to establish a lien on claims; Security deposit block based on rental income; Top up 3 months DSRA on a blocked account; - exclusive account traffic Magyar Takarékszövetkezeti Bank Zrt. Appeninn Property Vagyonkezelő Zrt. (in English: Appeninn Property Asset Management Private Limited Company) 29 008 487 480 13 935 512 788 HUF 31 December 2032 Magyar Takarékszövetkezeti Bank Zrt. Appen-Retail Kft. 66 244 1 129 984 53 031 1 166 763 HUF 31 December 2032 Magyar Takarékszövetkezeti Bank Zrt. Curlington Kft. 3 805 60 507 3 681 60 940 HUF 31 December 2032 Magyar Takarékszövetkezeti Bank Zrt. Felhévíz-Appen Kft. 7 675 123 879 4 305 130 015 HUF 31 December 2032 MFB-Erste consortium credit Appeninn E-Office Plc. 506 100 25 062 686 1 741 305 22 327 471 EUR 3-month EURIBOR +2% 30 June 2025 Real estate mortgage; Right to purchase real estate; bail; Mortgages; Mortgage encumbering rights and claims; Appeninn Plc guarantee; Security deposit lock on rental income; Top up DSRA on a blocked account; - exclusive account traffic Magyar Takarékszövetkezeti Bank Zrt. Tokaj Csurgó Völgy Kft. 0 3 509 684 0 0 HUF Szepard Kft. Dreamland Holding Zrt. 0 6 050 136 0 765 398 HUF 30 November 2030 Sokorai István Solumn-Invest Kft. 0 757 370 0 134 199 HUF 3.5% 25 June 2023 DH Invest Kft. Solumn-Invest Kft. 0 757 370 40 090 59 530 HUF Bank credits in total 623 696 45 958 896 1 870 621 31 892 106 Telekadó - Visegrád 0 11 343 0 0 Lease liability in total 308 677 571 116 288 520 1 157 554 Solumn Invest Kft. lease liability Solum-Invest Kft. 0 1 466 246 0 1 311 022 Total 932 373 48 007 602 2 159 141 34 360 682
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 67 39. Self-issued Corporate Bonds Debts On 22 November 2019, the Company issued bonds in the quantity of 60,510,710,-EUR (20,000,000,-HUF in thousands) through the Növekedési Kötvényprogram (in English: Growth Debenture Programme) launched by Magyar Nemzeti Bank (in English: Hungarian National Bank), which was subscribed for at an additional exchange gain in the value of 327,100,-EUR (108,113,-HUF in thousands). The consideration for the bond was paid to the Company. The maturity date of the bond is 22 November 2029, when the principal amount of the bond (20,000,000,-HUF in thousands) is payable in one amount. A fixed annual interest rate of 3.5% is payable on the bond. The bond was registered at depreciated historical value, with an effective interest rate of 3.459%. 40. Tenant Deposits data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Opening 1 430 940 301 775 New rental event / new subsidiary 1 129 165 Reclassification for short-term liabilities 0 Items accounted by rental relationship cessation (144 213) 0 Closing value 1 286 727 1 430 940 41. Long-term and short-term liabilities through affiliated parties By acquiring the majority ownership of PRO-MOT Hungária Kft., the Corporate Group has undertaken the value of the long-term liability payable to Lexan Aliga Kft. data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 EUR EUR Lexan Aliga Kft. 4 603 285 4 503 061 Affiliated long-term liabilities in total 4 603 285 4 503 061 Hellnarik Hospitality Kft. 0 390 016 Lexan Aliga Kft. 578 323 467 376 Szepard Kft. 346 153 104 224 Dividend liability 29 851 31 233 Appeninn Credit Zrt. 1 239 1 253 Affiliated short-term liabilities in total 955 566 994 102
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 68 42. Deferred tax assets and tax liabilities The development of the Corporate Group's deferred tax liabilities is presented in the table. The main components of deferred tax liability are: • Difference between the fair value evaluation of revenue-generating investments (difference between profit and cost as interpreted in accordance with tax law (cost depreciated for tax purposes)) • For tangible assets, the difference between the cost depreciated using the depreciation method according to tax law and the book value depreciated using the depreciation method according to accounting policy. • Impairment recognized on trade receivables for customers. • The amount taken into account in the retained earnings from the negative tax base determined in accordance with the tax law in previous years to the extent that the company's results - balance sheet items - cover, taking into account that the tax law allows to record up to 50% of profits.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 69 2021 2020 Deferred Tax Liabilities Balance according to the report Balance according to taxation Deferred tax liabilities base Deferred tax liabilities Balance according to the report Balance according to taxation Deferred tax liabilities base Deferred tax liabilities EUR EUR EUR EUR Revenue- generating investment properties 185 662 961 120 354 442 (65 308 519) (5 877 767) 172 440 000 95 565 591 (76 874 409) (6 918 697) Tangible assets 223 035 95 494 (127 541) (11 479) 199 980 215 551 15 571 1 401 Trade and other receivables 41 251 210 43 647 866 2 396 656 215 699 34 317 870 92 279 053 57 961 183 5 216 506 Receivables from accrued and deferred loss 16 401 381 16 401 381 1 476 124 22 087 624 22 087 624 1 987 886 Credits 48 939 975 50 979 763 2 039 788 (183 581) 40 689 297 38 296 805 (2 392 492) 215 324 Trade creditors and other accounts payable 93 197 249 93 198 270 1 021 (92) 86 291 939 141 355 433 55 063 494 (4 955 714) Accrued liabilities and provisions 14 377 479 14 637 670 260 191 (23 418) 1 129 963 1 622 821 492 858 (44 358) Net deferred tax position in total (4 404 513) (4 497 651) Deferred tax receivables in the balance sheet 756 071 217 138 Deferred tax liabilities in the balance sheet 5 472 228 4 714 789 Net deferred tax position (4 716 157) (4 497 651) Change in the deferred tax balance (218 506) (1 025 341) Of which: Accounted for profit and loss (273 445) (1 136 036) By recognition of new subsidiary - (772 770) By de- recognition of new subsidiary - 531 191 Exchange rate fluctuation 54 939 352 274
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 70 43. Other short-term liabilities data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Income debt 14 760 13 205 Advance payment for subsidy received for accounting 9 660 053 0 Tender advance payment port – Solum 2 709 927 0 Liability related to purchased claim 0 31 252 Kisfaludy 2030 subsidy advance payment 8 699 896 19 008 199 Other short-term liabilities 181 591 135 586 Closing value 21 266 227 19 188 242 44. Trade creditors and other accounts payable data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Liabilities for trade creditors 9 812 260 4 552 000 Due as: 0-30 days 6 751 104 2 813 466 31-60 days 586 440 59 348 61-90 days 81 014 137 332 91-180 days 1 172 127 792 971 181-360 days 659 597 445 361- days 1 220 917 151 438 Closing value 9 812 260 4 552 000 45. Tax and duties liabilities data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 VAT liabilities 41 379 163 308 Taxes on buildings liabilities 22 515 1 425 Taxes and contribution related to wages and salaries 83 747 65 779 Other taxes, duties 338 872 174 043 Closing value 486 513 404 555
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 71 46. Accrued liabilities data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Deferral of costs and expenses 176 592 617 164 Accrued liabilities of revenues 429 490 512 799 Subsidy received 13 771 398 0 Closing value 14 377 479 1 129 963 In 2021, the Group received government grants for tourism, which it accounts for in accordance with the requirements of IAS 20. 47. Transactions with affiliated parties Transactions with consolidated companies have been eliminated. Transactions with non-consolidated but related parties are disclosed in the notes to the relevant balance sheet items. data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Lexan Aliga Kft. 5 181 609 4 970 437 Hellnarik Hospitality Kft. 0 390 016 Szepard Kft. 346 153 104 224 Dividend liability 29 851 31 233 Appeninn Credit Zrt. 1 239 0 Liabilities in total 5 558 852 5 495 910 Interest payable for Konzum PE Magántőkealap 0 66 860 Interest payable for Konzum Lexan Aliga Kft. 173 668 154 938 Expenditures in total 173 668 221 798 Transactions with other affiliated parties The Corporate Group has identified Bayer Construct Zrt. as an indirectly affiliated party, which, as an investment supplier, generated sales of approximately EUR 1.5 million to the Corporate Group at market conditions in 2020 and 1.86 million EUR in 2021.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 72 48. Correcting errors from previous periods In 2019 and 2020, the Group incorrectly classified the value of assets held in trust and related liabilities. The value of assets held in trust was derecognised against the amount of liabilities arising from the trust and the amount of the trust fee payable was included as a right to use the asset against the liability at the balance sheet date. The correction of the error has affected the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the consolidated balance sheet, where the opening balance of the previous period has been corrected in accordance with IAS 8. Consolidated balance sheet 31 December 2019 originally Reclassifications of managed assets 31 December 2019 amended Assets EUR EUR Revenue-generating investment properties 147 670 000 (6 700 000) 140 970 000 Tangible assets 177 664 177 664 Right-of-use asset 0 1 952 433 1 952 433 Deferred tax assets 92 693 92 693 Goodwill 0 0 Equity in affiliate enterprise 0 0 Long-term affiliated receivables 0 0 Invested assets in total 147 940 357 (4 747 567) 143 192 790 Inventories 160 040 160 040 Trade receivables 409 083 409 083 Other short-term receivables 442 390 442 390 Affiliated receivables 0 0 Short-term loans granted 49 537 49 537 Accruals 255 653 255 653 Income tax receivables 296 583 296 583 Cash and cash equivalents 40 991 952 40 991 952 Current assets in total 42 605 238 0 42 605 238 Assets in total 190 545 595 (4 747 567) 185 798 028 Consolidated balance sheet 31 December 2019 originally Reclassifications of managed assets 31 December 2019 amended
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 73 Equity and liabilities EUR EUR Issued share capital 15 217 006 15 217 006 Repurchased own shares (1 171) (1 171) Reserves 25 645 230 25 645 230 Conversion reserve -2 710 880 (141 492) (2 852 372) Retained earnings 34 925 192 34 925 192 Equity per shareholders of the Company 73 075 377 (141 492) 72 933 885 Non-controlling interests 730 936 730 936 Equity and reserves in total 73 806 313 (141 492) 73 664 821 Long-term bank credits and leasing liabilities 31 751 611 (4 606 075) 27 145 536 Corporate bonds debt 60 940 494 60 940 494 Tenant deposits 301 775 301 775 Long-term affiliated liabilities 10 503 256 10 503 256 Deferred tax liabilities 3 565 003 3 565 003 Long-term liabilities in total 107 062 139 (4 606 075) 102 456 064 Short-term bank credits and leasing liabilities 7 139 967 7 139 967 Other short-term liabilities 614 028 614 028 Short-term affiliated liabilities 36 003 36 003 Liabilities for trade creditors and other accounts 993 818 993 818 Taxes and duties liabilities 398 513 398 513 Income tax liabilities 140 089 140 089 Accrued liabilities and provisions 354 725 354 725 Short-term liabilities in total 9 677 143 0 9 677 143 Liabilities in total 116 739 282 (4 606 075) 112 133 207 Equity and liabilities in total 190 545 595 (4 747 567) 185 939 520
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 74 Consolidated balance sheet 31 December 2020 originally Reclassifications of managed assets 31 December 2020 originally Assets EUR EUR Revenue-generating investment properties 172 440 000 (6 700 000) 165 740 000 Tangible assets 199 980 199 980 Right-of-use asset 1 693 457 1 767 365 3 460 822 Deferred tax assets 217 138 217 138 Goodwill 4 353 991 4 353 991 Equity in affiliate enterprise 39 701 39 701 Long-term affiliated receivables 557 486 557 486 Invested assets in total 179 501 753 (4 932 635) 174 569 118 Inventories 10 118 606 10 118 606 Trade receivables 811 322 811 322 Other short-term receivables 894 691 894 691 Affiliated receivables 1 578 1 578 Short-term loans granted 6 153 6 153 Accruals 331 266 331 266 Iincome tax receivables 92 767 92 767 Cash and cash equivalents 22 063 065 22 063 065 Current assets in total 34 319 448 0 34 319 448 Assets in total 213 821 201 (4 932 635) 208 888 566
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 75 Consolidated balance sheet 31 December 2020 originally Reclassifications of managed assets 31 December 2020 originally Equity and liabilities EUR EUR Issued share capital 15 217 006 15 217 006 Repurchased own shares (1 171) (1 171) Reserves 25 645 230 25 645 230 Conversion reserve (10 113 074) (763 161) (10 876 235) Retained earnings 47 358 839 47 358 839 Equity per shareholders of the Company 78 106 830 (763 161) 77 343 669 Non-controlling interests 2 888 383 2 888 383 Equity and reserves in total 80 995 213 (763 141) 80 232 052 Long-term bank credits and leasing liabilities 38 530 156 (4 169 474) 34 360 682 Corporate bonds debt 55 179 933 55 179 933 Tenant deposits 1 430 940 1 430 940 Long-term affiliated liabilities 4 503 061 4 503 061 Deferred tax liabilities 4 714 789 4 714 789 Long-term liabilities in total 104 358 879 (4 169 474) 100 189 405 Short-term bank credits and leasing liabilities 2 159 141 2 159 141 Other short-term liabilities 19 188 242 19 188 242 Short-term affiliated liabilities 994 102 994 102 Liabilities for trade creditors and other accounts 4 552 000 4 552 000 Taxes and duties liabilities 404 555 404 555 Income tax liabilities 39 106 39 106 Accrued liabilities and provisions 1 129 963 1 129 963 Short-term liabilities in total 28 467 109 0 28 467 109 Liabilities in total 132 825 988 (4 169 474) 128 656 514 Equity and liabilities in total 213 821 201 (4 932 635) 209 651 728
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 76 Consolidated comprehensive income statement 31 December 2020 originally Reclassifications of managed assets 31 December 2020 originally EUR EUR EUR Property rental revenue 7 536 560 7 536 560 Direct costs of property rental (1 317 573) (1 317 573) Direct contribution from rental activities 6 218 987 0 6 218 987 Administration costs (974 838) (974 838) Staff costs (1 181 590) (1 181 590) Other revenues / (expenditures) (11 503) (11 503) Profit (and loss) on sale of subsidiaries and investments profit (and loss) on sale of subsidiaries and investments 305 220 305 220 Profit and loss of investment properties sale 0 0 Profit and loss from revaluation of revenue- generating investment properties 15 912 830 15 912 830 Loss accounted for equity - 0 Profit and loss before taxation, interests and depreciation 20 269 106 0 20 269 106 Depreciation and amortisation (261 540) (261 540) Other (expenditure) / revenue of financial transactions (2 726 838) (2 726 838) Balance of interest revenue and (expenditures) (2 618 996) (2 618 996) Profit before taxation 14 661 732 0 14 661 732 Income taxes (1 460 061) (1 460 061) Profit after tax 13 201 671 0 13 201 671 Other comprehensive income Exchange rate differences arisen from currency translation of activities (7 402 194) (621 669) (8 023 863) Other comprehensive income of the current year, less with taxation (7 402 194) (621 669) (8 023 863)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 77 COMPREHENSIVE INCOME OF THE CURRENT YEAR IN TOTAL 5 799 477 (621 669) 5 177 808 From profit after tax: For non-controlling interests 907 910 907 910 For the owners of the Company 12 293 761 12 293 761 From total comprehensive income: For non-controlling interests 907 910 907 910 For the owners of the Company 4 891 567 (621 669) 4 269 898 Consolidated Cash Flow statement For the business year ending on 31 December 2020 originally Exchange rate effect of conversion of managed assets For the business year ending on 31 December 2020 amended EUR EUR EUR Profit before taxation 14 661 732 - 14 661 732 Profit and loss of fair value evaluation of revenue- generating investment properties (15 933 455) (15 933 455) Profit and loss of real estate property sale 0 0 Depreciation 261 540 261 540 Negative goodwill (199 106) (199 106) Profit / (loss) of subsidiaries sale (305 220) (305 220) Interest revenues (122 832) (122 832) Interest expenses 2 741 828 2 741 828 Changes in receivables and other current assets (2 344 181) (2 344 181) Change in accrued and deferred assets (75 613) (75 613) Change in inventories (9 958 566) (9 958 566) Change in liabilities and accruals 17 126 424 621 669 17 748 093 Change in tenant deposits (1 129 165) (1 129 165) Income tax paid (324 025) (324 025) Net cash flow from business activity 4 399 361 621 669 5 021 030 Revenue of sale and purchase of tangible assets - - Cost of maintenance performed on real estate properties (20 625) (20 625) Acquisition of subsidiary (8 115 033) (8 115 033) Purchase of tangible assets (1 956 688) (1 956 688) Change in loans granted 43 384 43 384 Interests received 122 832 122 832 Purchase of investment properties - - Realised revenue of properties sale - - Net cash flow from investment activities (9 926 130) - (9 926 130) Borrowing credits, leases and loans - - Payment of credits (3 258 096) (3 258 096)
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 78 Interests paid (2 741 828) (2 741 828) Net cash flow from financial activities (5 999 924) - (5 999 924) Impacts of exchange rate fluctuation: (7 402 194) (621 669) (8 023 863) Change in liquid assets (18 928 887) - (18 928 887) Liquid assets balances: Liquid assets at the beginning of the year 40 991 952 40 991 952 Yearend liquid assets 22 063 065 22 063 065 49. Transaction through affiliated parties Remuneration of Key Executives In 2020, the members of the Board of Directors each received a remuneration of 300,- HUF in thousands / person, and the members of the Audit Committee received an additional 100,- HUF thousands / person. In 2021, the members of the Board of Directors received a remuneration of 200,- HUF in thousands / person. The Company does not have any contracts with the executive officers that would create future obligations for the Company by changing their contracts. 2021 (HUF in thousands/year/person) 2020 (HUF in thousands/year/person) Honoraria of the members of the Board of Directors on assignment relationship (5 persons) 200 300 Honoraria of the members of the Audit Committee on assignment relationship (3 persons) - 100 No loans were granted to the members of the Board of Directors or the Supervisory Board. Benefits for key senior and middle management data in EUR For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 Wages and wage-type disbursements 372 243 319 638
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 79 50. Segment information The information provided to the Corporate Group's chief decision maker, the Company's Board of Directors, focuses on the services provided in order to allocate resources and measure segment performance. The Corporate Group's reportable segments under IFRS 8 are as follows: • Office rental service • Logistics, industrial and • commercial real estate rental service • maintenance service Consolidated segment income statement for 2021 For the business year ending on 31 December 2021 Office rental Logistics properties rental Maintenance Retail Items not classified into segment Total EUR Property rental revenue 1 119 029 2 909 294 1 611 743 1 834 327 (0) 7 474 392 Direct costs of property rental (483 428) 244 802 (828 435) (0) (1 067 062) Direct contribution from rental activities 635 601 3 154 095 783 308 1 834 327 (1) 6 407 330 General costs and income 2 509 655 (9 151 272) (518 709) (4 292 052) (11 452 379) Profit before taxation 3 145 255 (5 997 177) 264 599 1 834 327 (4 292 053) (5 045 049) Income taxes (795 132) 327 388 (4 329) (165 089) (97 507) (734 669) Profits in the current year 2 350 124 (5 669 789) 260 270 1 669 237 (4 389 560) (5 779 718) Items for segment 63 777 089 297 273 649 3 106 326 22 380 000 (150 372 865) 236 164 198 Liabilities for segment 32 243 955 162 297 642 884 083 - (33 438 749) 161 986 931
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 80 Consolidated segment income statement for 2020 (amended) For the business year ending on 31 December 2020 Office rental Logistics properties rental Maintenance Retail Items not classified into segment Total EUR Property rental revenue 1 505 741 3 039 090 1 118 999 1 872 730 0 7 536 560 Direct costs of property rental (897 751) (139 049) (280 773) 0 (1 317 573) Direct contribution from rental activities 607 991 2 900 041 838 226 1 872 730 0 6 218 987 General costs and income 8 013 477 7 824 237 (303 434) (7 091 535) 8 442 745 Profit before taxation 8 621 468 10 724 278 534 791 1 872 730 (7 091 535) 14 661 732 Income taxes (549 505) (949 414) (39 173) (168 546) 246 576 (1 460 061) Profits in the current year 8 071 964 9 774 864 495 619 1 704 184 (6 844 959) 13 201 671 Items for segment 61 515 564 264 255 676 2 873 264 22 100 000 (133 516 990) 208 888 566 Liabilities for segment 29 129 297 141 521 953 876 830 - (34 532 618) 128 656 514
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 81 51. Financial instruments Trade receivables, loans granted and financial instruments, credits received, loans and trade creditors and other accounts payable are accounted for financial instruments. 31 December 2021 Book value Fair value Financial assets Depreciated historical value accounted loans and receivables Trade receivables 492 449 492 449 Affiliated receivables - - Short-term loans granted 1 161 005 1 161 005 Cash and cash equivalents 24 857 395 24 857 395 Financial Liabilities Depreciated historical value accounted liabilities Long-term credits 48 007 602 48 007 602 Bond liabilities 54 557 445 54 557 445 Short-term credits and loans 932 373 932 373 Liabilities through affiliated undertaking 955 566 955 566 Trade creditors and other accounts payable 9 812 260 9 812 260 31 December 2020 amended Book value Fair value Financial assets Depreciated historical value accounted loans and receivables Trade receivables 811 322 811 322 Affiliated receivables 557 486 557 486 Short-term loans granted 6 153 6 153 Cash and cash equivalents 22 063 065 22 063 065 Financial Liabilities Depreciated historical value accounted liabilities Long-term credits 34 360 682 34 360 682 Bond liabilities 55 179 933 55 179 933 Short-term credits and loans 2 159 141 2 159 141 Liabilities through affiliated undertaking 5 497 163 5 497 163 Trade creditors and other accounts payable 4 552 000 4 552 000 Fair value of financial instruments evaluated at depreciated historical value is close to book value in both years. The measurement of fair value in respect of both years was performed at fair value equivalent to the 3rd level.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 82 52. Risk management The Corporate Group's financial instruments include liquid assets, loans, trade and other receivables, and other assets – excluding taxes. The Corporate Group's financial liabilities include credits and loans, trade creditors and other accounts payables, excluding taxes and gains or losses arising from the revaluation of financial liabilities at fair value. The Corporate Group is exposed to the following financial risks: • credit risk • liquidity risk • market risk • business risk This chapter presents the Corporate Group’s above risks, the Corporate Group’s objectives, policies, process measurement and risk management, and the Corporate Group’s capital management. The Board of Directors has overall responsibility for the establishment, supervision and risk management of the Corporate Group. The purpose of the Corporate Group's risk management policy is to filter and investigate the risks faced by the Corporate Group and to set up appropriate controls and to monitor the risks. The risk management policy and system are reviewed to reflect changed market conditions and the Corporate Group's activities. 52.1 Capital Management It is the policy of the Corporate Group to preserve the share capital that is sufficient to maintain investor and creditor confidence in the future development of the Corporate Group. The capital structure of the Corporate Group consists of net outside capital and the Corporate Group's own equity (the latter includes issued capital and reserves and equity of non- controlling owners). In capital management, the Corporate Group seeks to ensure that the Corporate Group can continue to operate while maximizing returns for owners through an optimal balance of loan capital and own equity and maintaining an optimal capital structure for the benefit of reducing the cost of capital. The Corporate Group also monitors whether the capital structure of its subsidiary companies complies with local legal requirements.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 83 52.2 Credit Risk Credit risk is the risk that a debtor or counterparty will default on its contractual obligations, resulting in a financial loss to the Corporate Group. Financial assets that are exposed to credit risk may include long-term or short-term placements, cash and cash equivalents, trade receivables and other receivables. The book value of financial assets shows the maximum risk exposure. The table below shows the Corporate Group's maximum exposure to credit risk as at 31 December 2020 and 31 December 2021. Maximum exposure to receivables For the business year ending on 31 December 2021 For the business year ending on 31 December 2020 EUR EUR Trade receivables 492 449 811 322 Other short-term receivables 6 040 096 894 691 Affiliated receivables 1 154 916 1 578 Short-term loans granted 6 089 6 153 Accruals 741 635 331 266 Cash and cash equivalents 24 857 395 22 063 065 33 292 580 24 108 075 The Group's exposure to credit risk has increased compared to the previous year, but the credit risk of financial instruments has not increased significantly since initial recognition and the Group classifies financial instruments as low credit risk. See also Note No. 53. 52.3 Market Risk Market risk is the risk that changes in market prices, such as exchange rates, interest rates and the prices of investments in mutual funds, will affect the Corporate Group's results or the value of its investments in financial instruments. The purpose of market risk management is to manage and control market risk exposures within an acceptable framework while optimizing returns. 52.4 Interest Rate Risk Interest rate risk is the risk that the future cash flows of certain financial assets and liabilities will fluctuate because of changes in market interest rates. Changes in the market interest rate represent exposures to the Corporate Group in the case of floating rate loans and liabilities arising from bond issues. The Corporate Group pays an average lending rate of 8.55% / 6.4% on its credits. A 50-basis point shift in the interest rate environment would result in the following change in the Corporate Group's profitability:
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 84 Calculation of average interest EUR interest % +0.5% (interest) EUR impact Bank/equity: 01 January 2021 18 626 232 Bank/equity: 31 December 2021 24 082 580 Bank/equity average stock 21 354 406 4.86% 5.36% 12-month interest for Bank 1 038 633 1 145 405 Annual growth of interest 106 772 Calculation of average interest amended EUR interest % +0.5% (interest) EUR impact Bank/equity: 01 January 2020 (2 100 374) Bank/equity: 31 December 2020 14 456 758 Bank/equity average stock 6 178 192 10.77% 11.27% 12-month interest for Bank 665 100 695 991 Annual growth of interest 30 891 52.5 Foreign Exchange Risk The Corporate Group has determined that its results are fundamentally dependent on two key financial variables, interest rate risk and foreign exchange risk, and has therefore performed sensitivity analyses for these key variables. As the Corporate Group's functional currency is the HUF, the currency risk arose from EUR and CHF based loans and liabilities. Appeninn Plc.'s foreign currency investment loans were denominated in EUR, following the successful restructuring of the loan portfolio completed in 2018. The Corporate Group translated the HUF items used in the preparation of the financial statements at the following exchange rates. The Corporate Group applied the closing MNB exchange rate to the balance sheet items and the Average Daily MNB exchange rate to the profit and loss items. The range of transaction currencies is HUF, and the Corporate Group’s exchange rate exposure was examined by quantifying changes in foreign currencies. The sensitivity of the Company’s balance sheet to changes in EUR-HUF is presented based on the amount of exposure. The EUR value serving as the base of the change in the balance sheet of 2020 was 148.5 million EUR and in the balance sheet of 2021 it was 167.2 million EUR. The test was performed for a shift of 0.5-1%. The Company has an exposure to the change in foreign currencies of up to 1,567,-EUR in thousands in 2020 and in 2021 1,760,-EUR in thousands until the 1% changeover.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 85 52.6 Business Risk The Corporate Group sets consistent, predictable and competitive rents for its tenants. Current rents are in line with the environment and quality of the properties. However, given the current global economic environment and the demand-supply situation in the Budapest office market, there is no certainty that current rents and conditions will be sustainable in the future. With its Decree No. 40/2020. (III.11.), the Hungarian Government declared the case of emergency in Hungary as of 11 March 2020. Subsequently, in order to slow down the spread of COVID-19, the Hungarian Government restricted cross-border traffic and the opening hours of non-vital stores in government decrees. In parallel, the Government has decided on economic stimulus measures, the most significant of which include the imposition of a debt service moratorium until 31 December 2020. The operation of Appeninn Vagyonkezelő Holding Nyrt. and its subsidiaries is significantly but not critically affected by the measures caused by the epidemic. Approximately 5-15% of the current tenant population falls under the lines of business that had to close due to government decrees, so a temporary loss of revenue is expected. Some of these tenants have notified Appeninn Holding of their request for a reduction in the temporary rent, but this was not significant enough to require a change in the Corporate Group's revenue recognition under IFRS 16. The four most significant tenants are not affected by the loss of income caused by COVID-19 or only to a lesser extent. Appeninn Holding has a current vacancy rate of 7% and an average maturity period of 4.5 years. Appeninn Holding holds a significant liquidity reserve and, presumably, even in the cases of temporary loss/rearrangement of income, the Company is able to fulfil its financial liabilities in medium term. In the interest of the protection of the tenants, the Corporate Group shall do every backstop measure to slow the expansion of the epidemic down and to maintain continuous operation.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 86 52.7 Liquidity Risk Liquidity risk is the risk that the Corporate Group will be unable to meet its financial obligations as they fall due. The Corporate Group’s liquidity management approach is to provide, as far as possible, adequate liquidity to meet its obligations as they fall due, under both normal and stressed circumstances, without incurring unacceptable losses or risking the Corporate Group’s reputation. The maturity structure of financial liabilities contracted and actually payable (not discounted) is summarized in the table below for the years as of 31 December 2020 and 2021 as follows: 31 December 2021 Due within 1 year Due within 2-5 years Due over 5 years Total Financial assets Trade receivables 492 449 492 449 Over-the-year receivables 346 982 346 982 Other short-term receivables 6 040 096 6 040 096 Affiliated receivables 1 154 916 1 154 916 Short-term loans granted 6 089 6 089 Cash equivalents 24 857 395 24 857 395 Financial assets 32 550 945 346 982 - 32 897 927 Financial Liabilities Credits and lease transactions 972 373 39 484 988 7 550 241 48 007 602 Corporate bonds debt 700 000 2 800 000 56 657 445 60 157 445 Tenant deposits 1 286 727 1 286 727 Affiliated liabilities 955 566 4 603 285 5 558 851 Other short-term liabilities 21 266 228 21 266 228 Liabilities for trade creditors and other accounts 9 812 260 9 812 260 Accrued liabilities 606 081 13 771 398 14 377 479 Financial liabilities 34 312 508 61 946 398 64 207 686 160 466 592 See also Note No. 53.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 87 31 December 2020 amended Due within 1 year Due within 2-5 years Due over 5 years Total Financial assets Trade receivables 811 322 811 322 Affiliated receivables 557 486 557 486 Short-term loans granted 6 153 6 153 Cash equivalents 22 063 065 22 063 065 Financial assets 22 880 540 557 486 - 23 438 026 Financial Liabilities Credits and lease transactions 2 159 141 26 524 957 5 676 584 34 360 682 Corporate bonds debt 55 179 933 55 179 933 Tenant deposits 1 430 940 1 430 940 Affiliated liabilities 994 102 4 503 061 5 497 163 Other short-term liabilities 19 188 242 19 188 242 Liabilities for trade creditors and other accounts 4 552 000 4 552 000 Accrued liabilities 1 129 963 1 129 963 Financial liabilities 28 023 448 32 458 958 60 856 517 121 338 923 53. Change of liabilities related to financing activity 01 January 2021 Money flows Exchange rate fluctuation 31 December 2021 Bank credits and lease liabilities short-term 2 159 141 (1 226 768) 932 373 Bank credits and lease liabilities long-term 34 360 682 13 646 920 48 007 602 Corporate bonds debt 55 179 933 (622 488) 54 557 445 Total 91 699 756 12 420 152 (622 488) 103 497 420 01 January 2020 Money flows Exchange rate fluctuation 31 DECEMBER 2020 Bank credits and lease liabilities short-term 7 139 967 (4 980 826) 2 159 141 Bank credits and lease liabilities long-term 27 145 536 7 215 146 34 360 682 Corporate bonds debt 60 940 494 (5 760 561) 55 179 933 Total 95 225 997 2 234 320 (5 760 561) 91 699 756
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 88 54. Contingent liabilities Appeninn Nyrt., as the owner, under its previous name of Appeninn Logisztika Zrt. (present name of the thereof is VÁR- Logisztika Zrt.) undertook first demand guarantor and pledge obligation for Orgovány és Vidéke Takarékszövetkezet (in English: Orgovány and Vidéke Mutual Savings Bank) as of 27 June 2013. As of 06 December 2017, the owners of VÁR- Logisztika Zrt. undertook full and complete guarantee for each and all existing obligation(s) of Appeninn Nyrt. towards Takarékszövetkezet upon a performance assume agreement. The guarantee of the Company shall last until 15 June 2023, and respectively until the performance of the obligation. The Company’s exposure as of the reporting day is 240 EUR in thousands. The Company has examined the ability of the obligors to meet their obligations at the present balance sheet date of these financial statements; the management of the Company assigned a zero probability of insolvency to the liability from the guarantee, the amount shown in the balance sheet in connection with the guarantee is zero EUR. The Corporate Group did not account other contingent liability on 31 December 2021. 55. Events after the balance sheet day On 17 March 2022, Appeninn BLT Kft. (in English: Appeninn BLT. Ltd.), a subsidiary of the Company, signed a share sale and purchase agreement with BAYER Property Ingatlanfejlesztő Zártkörűen Működő Részvénytársaság (in English: BAYER Property Real Estate Development Private Limited Company) (registered office: 2038 Sóskút, Bolyai János utca 15; company registration number: 13-10-041948) for the sale of 74.99% of the ordinary shares of PRO-MOT HUNGÁRIA Kft. (in English: PRO-MOT HUNGÁRIA Ltd.).The Parties are planning to perform the closure of the transaction within four months following signing herein contract. Following the reporting day, Dreamland Corporate Group handled the situation at Sberbank with set-offs application. The balance of the Corporate Group’s bank account held at Sberband was 4,242,-EUR in thousands before the suspension of the Bank’s activity, herewith the gurarenteed amount 100,-EUR in thousands by OBA (in English: National Deposit Insurance Fund) meand 505,-EUR in thousands refund per entity. In view to the remaining amount there have been an assignment within the Corporate Group, where Tokaj Csurgó Völgy Kft. – as an entity credited by Sberbank – asked set-offs of the amount 5,210,-EUR in thousands of its credit from the receiver Company. After the balance sheet day, other important events did not occur.
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 89 56. Effects of COVID-19 The epidemic did not have a major impact on the operations of Appeninn Vagyonkezelő Holding Nyrt. and its subsidiaries in 2021. While 15-20 tenants experienced difficulties in 2020, some of which resulted in termination and others in temporary discounts, there were no tenant movements in 2021 due to COVID19. In 2021, the post-COVID19 effects caused market difficulties to resume normal operations for one tenant. This tenant received a 3-month discount during 2021 Q3, which will be paid between 2021 Q4 and 2022 Q1. The said tenant has a lease of over 5 years in the subsidiary’s property. 57. Information related to the compilation of the consolidated report The consolidated financial statements for the financial year ending on 31 December 2021, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, have been prepared on the basis of the individually audited parent company and subsidiary accounts prepared in accordance with the Hungarian Accounting Act. The accounting service company responsible for compiling these reports is NewEdition Számviteli Szolgáltató Kft. (in English: New Edition Accounting Service Provider Private Limited Liability Company), the name and registration number of the certified public accountant is Fazakas Hajnal (registration number: 153273). In order to comply with the IFRS standards of the financial statements prepared in compliance with the Hungarian Accounting Act, the Group has appointed an accounting expert with IFRS registration. Personally responsible for the preparation of the IFRS report is Rózsa Ildikó (registration number: 207258). The mandate of the expert entrusted with the preparation of the IFRS report covered only the identification of the differences between the Hungarian accounting regulations and the IFRS regulations, as well as the preparation of the consolidated report in accordance with the requirements of the IFRS adopted by the EU. 58. Auditing of the consolidated report, remuneration of the Auditor The Corporate Group performing the audit of the Company and the personally responsible auditor are elected by the General Meeting of the Company. The auditor entrusted by the General Meeting of the Corporate Group with the audit of the 2021 management data is as follows: • Ernst & Young Könyvvizsgáló Korlátolt Felelősségű Társaság (personally responsible auditor: Bartha Zsuzsanna Éva), registration number: 005268 Remuneration of the auditor: • The audit fee for Appeninn Plc.'s individual annual report prepared in accordance with the International Financial Reporting Standards adopted by the European Union and in
APPENINN HOLDING PLC. 31 DECEMBER 2021 CONSOLIDATED ANNUAL FINANCIAL STATEMENTS 90 accordance with the provisions of IFRS, and Appeninn Plc.'s consolidated IFRS report is 15,986-HUF in thousands + VAT altogether. • The fees for other accounting services provided by the auditor amounted to 2 900,-EUR. Other assurance services, tax advisory services and non-audit services were not provided to the Corporate Group by the auditors. 59. Authorization of financial statements for publication At the meeting of the Board of Directors of Appeninn Vagyonkezelő Holding Nyrt. held on 8 April 2022, the Corporate Group approved the consolidated annual financial statement of 2021 prepared in accordance with the International Financial Reporting Standards (IFRS) adopted by the EU. The Board of Directors of the Corporate Group has approved the issuance of these consolidated report of the Corporate Group, but the Annual General Meeting of Owners, which is authorized to approve the financial statements, may request amendments prior to the adoption. 60. Representations Please note that there are a number of important factors that could cause actual results to differ materially from those expressed in the forward-looking statements. Disclaimer - The Consolidated Annual Report, based on the applicable accounting standards, prepared to the best of our knowledge, provides a true and fair view of the assets, liabilities, financial position and results, position, development and performance of Appeninn Vagyonkezelő Holding Nyrt. and the subsidiaries of the thereof and included in the consolidation, describing the main risks and uncertainty factors. Dated as of 8 April 2022 in Budapest Dr. Bihari Tamás Chairperson of the Board of Directors