EUROCASTLE INVESTMENT LIMITED is a publicly traded closed-
ended investment company. The Company previously focused on
investing in Italian performing and non-performing loans, Italian NPL
servicing platforms and other real estate related assets primarily in
Italy. In July 2022, the Company announced the relaunch of its
investment activity by initially focusing on opportunistic real estate
investments in Greece with a plan to expand across Southern Europe.
The Company is currently in the early stages of pursuing its new
investment strategy.
The Company is Euro denominated and is listed on Euronext Amsterdam under the symbol
“ECT”. Eurocastle is managed by an affiliate of Fortress Investment Group LLC, a leading global
investment manager. For more information regarding Eurocastle Investment Limited and to be
added to our email distribution list, please visit www.eurocastleinv.com.

SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 1
BUSINESS REVIEW
FINANCIAL HIGHLIGHTS AT A GLANCE
1
STRATEGIC REVIEW
Eurocastle Investment Limited (the “Company” or “Eurocastle”) is a publicly traded closed-ended investment company. The Company previously
focused on Italian performing and non-performing loans (“NPLs”) and other real estate related assets in Italy which it is currently in the final stages
of exiting in accordance with the plan announced on 18 November 2019, to realise the majority of the Company’s assets with the aim of accelerating
the return of value to shareholders (the “Realisation Plan”). In March 2021, Eurocastle launched a strategic review of the Company’s options going
forward.
On 8 July 2022, the Company announced the conclusion of the strategic review and the decision to relaunch the Company’s investment activity (the
“Relaunch”). It also announced a tender offer to provide a liquidity opportunity for those shareholders who did not wish to participate in the
Relaunch (the “Tender Offer”). The Tender Offer closed on 4 August 2022 with 67% of eligible shares tendered, resulting in Eurocastle accepting
864,980 shares in exchange for €10.26 of cash per share tendered, or €8.9 million in total.
PORTFOLIO OVERVIEW
3
Following implementation of the Realisation Plan in December 2019, Eurocastle’s remaining portfolio of Italian Investments is made up of Real
Estate Funds, with the balance comprising Net Corporate Cash (after taking into account reserves for future costs and potential liabilities considered
by the Board in light of the Realisation Plan). The chart below shows a breakdown of Eurocastle’s net assets as at 31 December 2022.
Adjusted YE 2022 NAV:
€10.3mm
(YE 2021: €18.2mm)
(Q3 2022: €10.2mm)
YE 2022 IFRS NAV of €22.4mm
YE 2021 IFRS NAV of €32.9mm
Adjusted YE 2022 NAV per share
2
:
€10.33ps
(YE 2021: €9.79ps)
(Q3 2022: €10.26ps)
YE 2022 IFRS NAV of €22.45ps
YE 2021 IFRS NAV of €17.73ps
Net Available Cash: Corporate cash net of liabilities and additional
reserves.
Real Estate Funds: Interests in:
• Two private Italian real estate development funds which are now in
liquidation following completion of the development work and the sale of
all underlying apartment units.
▪ Remaining NAV is represented entirely by the net cash of the
funds.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 2
BUSINESS REVIEW
RELAUNCH UPDATE & NEW INVESTMENT STRATEGY
Eurocastle intends to commence its new investment strategy by initially focusing on opportunistic real estate in Greece with a plan to expand across
Southern Europe, where the Manager has an extensive footprint and a long track record investing in this asset class. The Company expects to invest
primarily in assets sold at real estate auctions leveraging the Manager’s deep knowledge of the sector, which offers significant investment
opportunities in the current market cycle. The Board believes that this strategy will allow Eurocastle to deploy available cash in order to establish a
platform and create a meaningful track record, while generating attractive risk adjusted returns in the short term. The Company is currently
working with the Manager to finalise the investment structure and expects to commence investing in the coming weeks.
At the same time, the Board will continue to monitor the market environment for raising new capital in order to assess pursuing all elements of its
new investment strategy, which would require additional capital to achieve meaningful scale.
The Board considers that any potential additional costs resulting from this phased approach are adequately covered by the Company’s existing
Additional Reserves. The Board will continue to evaluate these reserves and the Company’s available capital, taking into account investment
opportunities and the performance of the new strategy.
Shareholders should however be aware that the implementation and performance of the Company’s new investment strategy is subject to risks,
uncertainty, and assumptions. The Manager is currently in the early stages of pursuing the new investment strategy and there can be no certainty
that it will have success in doing so. There is likewise no certainty that it will be able to attain sufficient scale to achieve the desired returns. In
addition, changes in economic conditions generally and the real estate market specifically, the availability of appropriate investment opportunities
and the ability to raise financing on suitable terms, may also affect the success of the Relaunch. Accordingly, there is no guarantee that the
Company’s new investment strategy will be effectively implemented nor will there necessarily be a future opportunity for shareholders to achieve
an exit from their investment in the Company at a price equal to or higher than the current share price.
For further details of the Relaunch, the Company’s new investment strategy and the Additional Reserves, please refer to the Circular published in
July 2022 and available on the Company’s website under the Periodic Reports and Shareholder Communications section.
FY 2022 NAV Bridge
In € per share
€9.79
€8.67
€10.33
€22.45
(€1.12)
€0.12
€0.28
€1.25
€6.56
€5.56
Q4 2021
Adjusted
NAV
Tender Offer
(including costs)
Q4 2021
Adjusted NAV
after Tender Offer
Italian
NPLs
Fair Value
Movement
RE Fund
Investments
Fair Value
Movement
Reserves
& Other
Movement
Q4 2022
Adjusted
NAV
Legacy
German
Tax Reserve
Liquidation
Reserve
Q4 2022
IFRS
NAV
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 3
BUSINESS REVIEW
2022 BUSINESS HIGHLIGHTS
SUBSEQUENT EVENT TO 31 DECEMBER 2022
FY 2022 Overview
During 2022, the Company made significant progress on realising its remaining assets as part of its Realisation Plan with 95% of its YE
2021 NAV relating to investments realised in the period. As at 31 December 2022, the Company had realised 106% of the NAV of the
investments reported at the time of the announcement of the Realisation Plan in November 2019.
In particular, Eurocastle disposed of the two remaining loan pools that the Company had an interest in and all remaining apartment units
in its two real estate fund investments were sold. As a result, Eurocastle’s investment interests now comprise the residual net assets of its
two RE Fund Investments with a NAV of €0.6 million, or 6% of the Company’s total Adjusted NAV.
Investment Realisations & Highlights
▪ During 2022, the Company realised €4.8 million from its investments, of which €3.4 million came from its RE Fund Investments (~91%
of their YE 2021 NAV) and €1.5 million from its minority NPL and Other Loan holdings (~109% of their YE 2021 NAV).
▪ RE Fund Investments – REFI II & REFI V:
▪ Both funds are now in liquidation with all apartment units sold.
▪ During 2022, Eurocastle received €3.4 million comprising (i) €1.0 million from REFI II (~70% of its YE 2021 NAV) and (ii) €2.4 million
from REFI V (~103% of its YE 2021 NAV).
▪ Italian NPLs & Other Loans: The Company disposed of its residual minority interest in 2 loan pools, which were under contract to be
sold once the underlying portfolio level financing on each was repaid, realising €1.3 million and a further €0.2 million in distributions
during the year.
▪ Additional Reserves: The Company reduced these reserves from €14.8 million to €12.1 million during the year. The reduction of €2.7
million reflects €1.4 million of reserves being utilised, in line with anticipated costs, and a release of €1.3 million of the existing reserves
in the year. The majority of this release relates to the legacy German tax matter following a revision to the estimated total liability. As at
31 December 2022, of the total Additional Reserves of €12.1 million, €6.5 million related to the legacy German tax matter with the
balance of approximately €5.5 million in place to allow for an orderly liquidation process.
▪ As previously announced, the Company made a payment of €4.6 million in March 2022 in relation to the legacy German tax matter
against which it raised a corresponding tax asset, with the current remaining financial impact (excluding associated costs of €0.2
million) estimated to be €1.7 million. As at 31 December 2022, the remaining expected financial impact has not been reflected within the
IFRS NAV of the Company. Notwithstanding the Company’s expectation that the tax matter will eventually be resolved in the
Company’s favour, as at 31 December 2022, the full potential liability is fully reserved for within the Additional Reserves.
Net Available Cash for Relaunch
As at 31 December 2022 the Company has €17.1 million of net corporate cash and approximately €9.7 million of net available cash to
commence seeking new investments under the new investment strategy.
As at 2 March 2023, there were no material subsequent events to disclose.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 4
BUSINESS REVIEW
ITALIAN REAL ESTATE FUNDS
Further details of all remaining RE Fund Investments as at 31 December 2022 can be found in the table below:
Fund
Investment II
Fund
Investment V
Investment Date
Jul-14
Q2-17
Eurocastle Ownership
49.7%
49.6%
Fund Type
Private
Private
Collateral Type
2 luxury residential
redevelopments
1 luxury residential
redevelopment
Collateral Location
Rome
Rome
Eurocastle YE 2022 Adjusted NAV per
share
-
€0.63
Fund Leverage
0%
0%
Legal Fund Maturity
In liquidation
In liquidation
RE Fund
Investments
Equity Invested
€ million
Total
Cash flows
Distributed
to Eurocastle
€ million
Of which
Received in
2022
€ million
Adjusted
NAV
€ million
Adjusted
NAV
€ per share
Total Return
(Cash flows
Distributed
+Adj. NAV)
€ million
II
15.4
15.1
1.0
-
-
15.1
V
5.6
7.4
2.4
0.6
0.63
8.0
TOTAL
21.0
22.5
3.4
0.6
0.63
23.1
Since 2014, Eurocastle has made several investments in this asset
class, investing €67.2 million in five separate real estate funds; of
which three have been fully realised.
The Company opportunistically targeted either public or private
funds that could be acquired at a significant discount to the
value of their underlying assets.
Following adoption of the Realisation Plan, the Company plans
to continue to hold and realise these assets in accordance with
existing business plans. It will support these investments to the
extent required to optimise returns and distribute cash to
shareholders when available.
RE Fund Investments Update
During 2022, the Company’s RE Fund interests comprised two private Italian real estate redevelopment funds.
• RE Fund II - As at 31 December 2022, all units in both buildings were sold with the fund now in liquidation. In 2022, the Company received
€1.0 million, or 70% of the 2021 YE NAV of this investment. The investment’s carrying value at year end reflects no further cash flows from
the fund while the fund manager resolves certain potential liabilities and seeks to liquidate the fund. During 2022, a fair value decrease of
€402k, or €0.40 per share, was recognised.
• RE Fund V – As at 31 December 2022, all units in both buildings sold with the fund now in liquidation. The Q4 2022 NAV is represented by
the net cash of the fund together with the value of units under contract. In 2022, the Company received distributions of €2.4 million, or 103%
of the 2021 YE NAV of this investment. During 2022, a fair value increase of €684k or €0.69 per share was recognised.
Italian RE funds – FY 2022 Adjusted NAV Bridge
(€ million)
€3.7
€0.6
(€3.4)
€0.3
Q4 2021
NAV
Cashflow
Distributed
Fair Value
Movement
Q4 2022
NAV
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 5
FINANCIAL REVIEW
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022
Income
Statement
Income
Statement
2022
2021
€ Thousands
€ Thousands
Portfolio Returns
Italian NPLs & Other Loans realised gain
116
114
Italian NPLs & Other Loans unrealised fair value movement
-
488
Real Estate Funds realised fair value movement
-
129
Real Estate Funds unrealised fair value movement
282
1,932
Fair value movement on Italian investments
398
2,663
Fair value movements on residual Legacy entities
9
275
Interest income
68
-
Loss on foreign currency translation
(7)
(5)
Total income
468
2,933
Operating Expenses
Interest expense
12
7
Manager base and incentive fees
92
175
Remaining operating expenses
1,247
1,687
Other operating expenses
1,339
1,862
Total expenses
1,351
1,869
(Loss) / profit for the year
(883)
1,064
€ per share
(0.58)
0.57
BALANCE SHEET AND ADJUSTED NAV RECONCILIATION AS AT 31 DECEMBER 2022
Italian
Investments
€ Thousands
Corporate
€ Thousands
Total
€ Thousands
Assets
Cash and cash equivalents
-
17,721
17,721
Other assets
-
109
109
Legacy German tax asset
-
4,645
4,645
Investments:
Real Estate Funds
628
-
628
Total assets
628
22,475
23,103
Liabilities
Trade and other payables
-
736
736
Manager base and incentive fees
-
17
17
Total liabilities
-
753
753
IFRS Net Asset Value
628
21,722
22,350
Liquidation cash reserve
-
(5,537)
(5,537)
Legacy German tax cash reserve
-
(1,888)
(1,888)
Legacy German tax asset
-
(4,645)
(4,645)
Adjusted NAV
628
9,652
10,280
Adjusted NAV (€ per Share)
0.63
9.69
10.33
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 6
FINANCIAL REVIEW
ADDITIONAL RESERVES
The table below summarises the movement of Eurocastle's Additional Reserves, set as part of the Realisation Plan in 2019. In light of the
disposal of the majority of its investments, the Company has taken a prudent view in managing its cash and accordingly implemented
various reserves which sought to ensure that the Company could continue to meet known, potential and unknown future liabilities over the
period which it anticipated would be required for the Company to complete the realisation of its investments and then be liquidated in an
orderly fashion. The Additional Reserves are not accounted for under IFRS as no formal commitments for these future costs and potential
liabilities exist.
As at 31 December 2022, the Additional Reserves totalled €12.1 million, of which €6.5 million is specifically related to the disposal of a
legacy German property subsidiary in prior years, with the balance of approximately €5.5 million in place to allow for an orderly liquidation
process. Notwithstanding the Company’s expectation that the legacy German tax matter will eventually be resolved in the Company’s
favour, as at 31 December 2022, the potential liability was fully reserved for within the Additional Reserves.
Eurocastle started the year with €14.8m of Additional Reserves to fund future costs and potential liabilities. These reserves currently stand
at €12.1 million as at 31 December 2022 after utilising €1.4 million of reserves in line with anticipated costs and a release of the existing
reserves of €1.3 million in the year.
Dec 2021
Additional
Reserves
€ million
Reserves
paid/ payable
in 2022
€ million
Dec 2021 Reserves
after paid/ payable
in 2022
€ million
Q4 2022
Reserves
€ million
2022 Net
Movement on
Reserves
€ million
Legacy German Tax Reserve
4
(7.4)
0.0
(7.3)
(6.5)
0.8
Liquidation Reserve
(7.4)
1.4
(6.0)
(5.5)
0.5
Total
(14.8)
1.4
(13.3)
(12.1)
1.3
Per Share
5
(14.82)
1.43
(13.39)
(12.12)
1.26
Additional
Reserves as at
announcement of
Realisation Plan
€ million
Reserves
paid/ payable
since Realisation
Plan
€ million
Reserves
after paid/ payable
since Realisation
Plan
€ million
Q4 2022
Reserves
€ million
2022 Net
Movement on
Reserves
€ million
Legacy German Tax Reserve
47
(7.1)
0.2
(6.9)
(6.5)
0.3
Liquidation Reserve
(12.9)
6.1
(6.8)
(5.5)
1.3
Total
(20.0)
6.3
(13.7)
(12.1)
1.6
Per Share
5
(20.05)
6.28
(13.77)
(12.12)
1.64
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 7
DIRECTORS’ REPORT
DISTRIBUTION
During the year ended 31 December 2022, no distributions were declared or paid (during the year ended 31 December 2021, the Company
declared and paid a distribution €1.0 million or €0.54 per share relating to 2020).
DIRECTORS
The Directors who have held office during the year were:
Randal A. Nardone (resigned 23 August 2022)
Constantine (Dean) Dakolias (appointed at the AGM on 8 September 2022)
Claire Whittet
6
Jason Sherwill
6
Peter Smith
Simon J. Thornton
6
DIRECTORS INTERESTS
The interests of the Directors in the voting shares of Eurocastle are as follows:
SUBSTANTIAL SHAREHOLDINGS
Per the shareholder register and as at 28 February 2023, the following shareholders had an interest in 3% or more of Eurocastle's share
capital:
% Holdings
8
Nederlands Centraal Instituut Voor Giraal Effectenverkeer BV
60%
Euroclear Nominees Limited
25%
Vidacos Nominees Limited
8%
Eurocastle is subject to EU transparency rules as a result of its listing on an EU regulated market and, consequently, shareholders are
required to notify the relevant regulators of certain changes to the percentage of voting rights in Eurocastle held by them.
A number of individual shareholders have made a notification of exceeding the reporting thresholds per the EU transparency rules as
implemented in the Netherlands. These notifications are registered in the public register maintained by the Netherlands Authority for
Financials Markets (AFM) and can be found at the following website www.afm.nl. The shareholding above has been obtained from the
share register, which records legal title to the Company’s shares. The shareholdings listed above may therefore not reflect beneficial
ownership.
As at
As at
31-Dec-22
31-Dec-21
Randal A. Nardone
7
(resigned 23 August 2022)
7,662
7,662
Dean Dakolias (appointed at the AGM on 8 September 2022)
-
-
Claire Whittet
6,324
5,324
Jason Sherwill
14,965
13,965
Peter Smith
-
-
Simon J. Thornton
13,427
12,427
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 8
DIRECTORS’ REPORT
AUDITORS
BDO LLP were re-appointed during the period and have expressed a willingness to continue in office.
CORPORATE GOVERNANCE
The Directors have applied the principles of the Guernsey Code of Corporate Governance which came into effect from the 1 January 2012.
As a Guernsey incorporated company which is managed and controlled in Guernsey, Eurocastle Investment Limited is subject to the
provisions of the UK City Code on Takeovers and Mergers.
MANAGEMENT AGREEMENT
The Independent Directors have reviewed the continued appointment of the Manager. In carrying out the review, the Independent
Directors considered the past performance of the Company and the capability and resources of the Manager to deliver satisfactory
investment performance and have concluded that the continued appointment of the Manager is in the best interest of the shareholders.
DIRECTORS’ STATEMENTS AS TO DISCLOSURE OF INFORMATION TO AUDITORS
The Directors who were members of the Board at the time of approving the Directors’ Report are listed on page 7. Having made enquiries of
fellow Directors and of Eurocastle’s auditors, each of these Directors confirms that:
− to the best of each Director’s knowledge and belief, there is no information (that is, information needed by the Company’s auditors
in connection with preparing their report) of which Eurocastle’s auditors are unaware; and
− each Director has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit
information and to establish that Eurocastle’s auditors are aware of that information.
GOING CONCERN
Following the announcement of the Realisation Plan in 2019, the Directors have assessed, and continue to have a reasonable expectation,
that the Company will be able to continue in operation and meet its liabilities as they fall due. The Directors have reviewed the Company’s
processes to control those risks to which the Company is exposed, as disclosed in note 3, as well as reviewing the annual budget, including
the additional reserves set aside as part of the Realisation Plan. As a result of the Realisation Plan, no contractual commitments have become
onerous and no commitments for further realisation costs have been made. Therefore, no provisions have been recorded in the financial
statements for the future costs of the business. In particular, neither COVID-19 nor the ongoing war in Ukraine is expected to have a
significant impact on the Company's liquidity. The Directors have also reviewed forecasts that have been sensitised to reflect plausible
downside scenarios. The Directors have determined that there is no material uncertainty that casts doubt on the entity’s ability to continue
as a going concern. The Directors have also considered the above in light of the Relaunch.
As a result of this, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
DIRECTORS’ STATEMENTS PURSUANT TO THE DISCLOSURE AND TRANSPARENCY RULES
Each of the Directors as at 31 December 2022 (whose names are listed on page 7) confirms that, to the best of each person’s knowledge and
belief:
− the financial statements, prepared in accordance with International Financial Reporting Standards, as adopted by the EU, give a
true and fair view of the assets, liabilities, financial position and loss of the Company; and
− the Report of the Directors contained in the Annual Report includes a fair review of the development and performance of the
business and the position of the Company, together with a description of the principal risks and uncertainties that they face as
disclosed in note 3 of the Annual Report.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 9
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the financial statements in accordance with applicable Guernsey law and generally accepted
accounting principles.
Guernsey Company law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the
state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these financial statements, the Directors
should:
− select suitable accounting policies and then apply them consistently;
− make judgements and estimates that are reasonable and prudent;
− state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in
the financial statements; and
− prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue
its business.
The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company
website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
FORWARD LOOKING STATEMENTS
This release contains statements that constitute forward-looking statements. Such forward-looking statements may relate to, among other
things, future commitments to sell real estate and achievement of disposal targets, availability of investment and divestment opportunities,
timing or certainty of completion of acquisitions and disposals, the operating performance of our investments and financing needs.
Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may”, “will”, “should”, “potential”,
“intend”, “expect”, “endeavor”, “seek”, “anticipate”, “estimate”, “overestimate”, “underestimate”, “believe”, “could”, “project”, “predict”,
"project", “continue”, “plan”, “forecast” or other similar words or expressions. Forward-looking statements are based on certain
assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial
condition or state other forward-looking information. The Company’s ability to predict results or the actual effect of future plans or
strategies is limited. Although the Company believes that the expectations reflected in such forward-looking statements are based on
reasonable assumptions, its actual results and performance may differ materially from those set forth in the forward-looking statements.
These forward-looking statements are subject to risks, uncertainties and other factors that may cause the Company’s actual results in future
periods to differ materially from forecasted results or stated expectations including the risks regarding Eurocastle’s ability to declare
dividends, or achieve its targets regarding asset disposals or asset performance.
Registered Office
Oak House
Hirzel Street
St. Peter Port
Guernsey
GY1 2NP
On behalf of the Board
Simon J. Thornton
Director and Audit Committee Chairman
Date: 2 March 2023
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 10
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF EUROCASTLE INVESTMENT LIMITED
OPINION ON THE FINANCIAL STATEMENTS
In our opinion, the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2022 and of its loss for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
and
• have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
We have audited the financial statements of Eurocastle Investment Limited (the ‘Company’) for the year ended 31 December 2022 which
comprise the Income Statement, the Balance Sheet, the Cash Flow Statement, the Statement of Changes in Equity and the notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union.
BASIS OF OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion
INDEPENDENCE
We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
CONCLUSION RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included:
• Reviewing the forecasted cash flows that support the Directors’ assessment of going concern by comparing the forecasted cash
flows due to be received to actual cash flows received after year-end, as well as taking into account any new investments made
after year end following the relaunch of the Company’s investment activity;
• Assessing the sensitivity of the forecasted cash flows to changes in the future financial performance of the Company and its
investments; and
• Challenging the appropriateness of the Directors’ assumptions and judgements made with regards to the going concern forecasts
specifically the forecast level of expenditure and the sufficiency of cash reserves to cover this in both base case and stress-tested
scenarios which considered the outcome of any contingent liabilities.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this
report.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 11
INDEPENDENT AUDITOR’S REPORT
OVERVIEW
Key audit matters
2022
2021
Recoverability of the legacy German tax asset


Valuation, existence and ownership of
investments —Non Performing Loans and
Real Estate Funds

Valuation, existence and ownership of investments — Non Performing Loans and Real Estate
Funds is no longer considered to be a Key Audit Matter due to the full realisation of the Non-
Performing Loans portfolio and the balance of the Real Estate funds investments being
immaterial.
Due to the materiality and judgement involved in assessing the recoverability of the Legacy
German Tax Asset, we considered this to be a Key Audit Matter.
Materiality
Company financial statements as a whole
€0.7m (2021: €1.0m) based on 3% (2021: 3%) of Net assets (2021: Net assets)
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of
internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement. In particular, we looked at where the Directors made subjective judgements, for example in respect of assessing the
recoverability of the legacy German tax sset.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 12
INDEPENDENT AUDITOR’S REPORT
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts
of the engagement team. This matter was addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this matter.
Key audit matter
How the scope of our audit addressed the key audit matter
Recoverability of the
Legacy German Tax Asset
Refer to note 2, 7 and
17
During the year the German Tax
Authorities finalised their
review of historic tax returns
filed between 2008-2012 by the
entities that owned the Turret
portfolio, a German property
portfolio disposed of by the
Company in prior years.
The Company is in the process
of appealing the judgement.
However to avoid incurring
interest on the assessed tax
liabilities, payment on account
has been made. The Company
believes that the German Tax
Courts will ultimately find in
their favour, and therefore in
line with the requirements set
out in IFRIC 23 and IAS 12, the
Company has concluded that
the amount is fully recoverable.
There is a risk that while the
judgement is being appealed the
legal position changes and that
it is no longer probable that the
German Tax Courts will find in
the Company’s favour and that
the relevant tax asset should be
impaired.
Given the judgement involved
and the materiality to the
financial statements as a whole,
we considered the recoverability
of this balance to be a key area
of our overall audit strategy and
allocation of our resources and
hence a Key Audit Matter.
We consulted directly with our internal tax expert and the Company’s
advisors, to consider whether the legal position regarding the
recoverability of the Legacy German Tax Asset has changed and
reviewed the evidence presented by the Company to support their
position.
We assessed the competence, capabilities and expertise of the
Company’s advisors (‘the expert’), through consideration of the
qualifications held by the expert and the position held in the firm
employing the expert. We also considered the services provided by the
firm, which employs the expert and the independence and objectivity of
the expert.
We also reviewed the most recent correspondence including the appeal
notice to identify any matters which could impact the recoverability of
the Legacy German Tax Asset.
Key observations:
Based on the procedures we performed we found the
judgements made by management in assessing the
recoverability of the Legacy German Tax Asset to be
appropriate.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 13
INDEPENDENT AUDITOR’S REPORT
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as
follows:
Company financial statements
2022
2021
Materiality
€0.7m
€1.0m
Basis for determining materiality
3% of Net assets
Rationale for the benchmark applied
We consider net assets to represent the most appropriate basis for setting materiality
as it represents the interest of the users of the financial statements.
Performance materiality
€0.5m
€0.75m
Basis for determining performance materiality
75% of total materiality
The level of performance materiality applied was set after having considered a
number of factors including the expected total value of known and likely
misstatements and the level of transactions in the year.
REPORTING THRESHOLD
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of €33,000 (2021: €20,000). We
also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the annual report other
than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 14
INDEPENDENT AUDITOR’S REPORT
OTHER COMPANIES (GUERNSEY) LAW 2008 REPORTING
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
• proper accounting records have not been kept by the Company; or
• the financial statements are not in agreement with the accounting records; or
• we have failed to obtain all the information and explanations which, to the best of our knowledge and belief, are necessary for the
purposes of our audit.
OTHER REPORTING - EUROPEAN SINGLE ELECTRONIC FORMAT (ESEF)
The Company has prepared its annual report in ESEF. The requirements for this are set out in the Delegated Regulation (EU) 2019/815 with
regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the annual report prepared in XHTML-format, including the financial statements of Eurocastle Investment Limited, has
been prepared in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report including the financial statements, in accordance with the RTS on ESEF.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report complies with the RTS on ESEF.
Our procedures included:
• obtaining an understanding of the entity’s financial reporting process, including the preparation of the annual financial report in
XHTML-format; and
• identifying and assessing the risks that the annual report does not comply in all material respects with the RTS on ESEF and
designing and performing further assurance procedures responsive to those risks to provide a basis for our opinion, including
examiningwhether the annual financial report in XHTML-format is in accordance with the RTS on ESEF.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend
to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the Company and industry in which the Company
operates, and considered the risk of acts by the Company which were contrary to applicable laws and regulations, including fraud. We
SEE PAGE 16 FOR ALL END NOTES EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 15
INDEPENDENT AUDITOR’S REPORT
considered the significant laws and regulations to be Companies (Guernsey) Law, 2008, Euronext Rule Book and International Financial
Reporting Standards as adopted by the European Union.
Our procedures included:
• agreement of the financial statement disclosures to underlying supporting documentation;
• enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and
regulations;
• review of minutes of Board meetings throughout the period for any non-compliance with laws and regulations; and
• obtaining an understanding of the control environment in monitoring compliance with laws and regulations.
We assessed the susceptibility of the financial statements to material misstatement, including fraud and considered the fraud risk areas to be
the Recoverability of the Legacy Tax Asset and management override of controls.
Our procedures included:
• Recalculated investment management fees in total;
• Obtained independent confirmation of bank balances;
• The procedures set out in the Key Audit Matters section of our report; and
• Testing journals which met a defined risk criteria by agreeing to supporting documentation and evaluating whether there was
evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement due to fraud.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to
any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Christopher Young
For and on behalf of BDO LLP
Chartered Accountants and Recognised Auditor
London, UK
2 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT
16
ENDNOTES
1
Per share calculations for Eurocastle throughout this document are based on the weighted average or outstanding voting shares and
therefore exclude shares held in treasury. As at 31 December 2022, a total of 1.0 million shares were in issue of which 1.0 million were
voting shares and no shares were held in treasury. Amounts per share are therefore calculated on the following basis: Q4 2022 Net Asset
Value per share (“NAV per share”) – 1.0 million voting shares in issue; Q4 2021 NAV per share based on 1.9 million voting shares; Q3 2022
NAV per share based on 1.0 million voting shares.
2
In light of the Realisation Plan, the Adjusted NAV reflects the additional reserves for future costs and potential liabilities, which have not
been accounted for under the IFRS NAV.
3
Refer to page 5 for further details.
4
In March 2022, the Company made a payment of €4.6 million in relation to the legacy German tax matter. Notwithstanding the Company’s
expectation that the tax matter will eventually be resolved in the Company’s favour, as at 31 December 2022, this tax asset was fully
reserved for within the Additional Reserves
5
Per share calculation based on 1.0 million shares post Aug 22 tender offer.
6
Independent director.
7
Randal A. Nardone is a member of Fortress Operating Entity I LP (registered holder of 38 shares) and Principal Holdings I LP (registered
holder of 750 shares) and as a result of these relationships he is interested in the shares owned by these entities. The Manager and its
principals hold an additional 13,514 shares in the Company.
8
Percentages calculated on 1.0 million voting shares in issue.
EUROCASTLE INVESTMENT LIMITED
INCOME STATEMENT
Year ended
31 December
2022
Year ended
31 December
2021
Notes €'000 €'000
Portfolio Returns
Realised fair value gain on Italian investments 4 116 243
Unrealised fair value movements on Italian investments 4 282 2,420
Realised fair value movements on other investments 4 9 275
Other income
Interest income 68 -
Loss on foreign currency translation (7) (5)
Total income 468 2,933
Operating expenses
Interest expense 12 7
Other operating expenses 5 1,339 1,862
Total expenses 1,351 1,869
Net operating (loss) / profit before taxation (883) 1,064
Tax on (loss)/ profit 2--
Total tax expense --
(Loss) / Profit for the year (883) 1,064
Attributable to:
Ordinary equity holders of the Company (883) 1,064
(Loss) / profit for the year (883) 1,064
€€
Earnings per ordinary share
(1)
Basic and diluted 11 (0.58) 0.57
The Company had no other comprehensive income in the year ended 31 December 2022 and the year ended 31 December 2021.
(1)
See notes to the financial statements (page 21 to 34) which form an integral part of these financial statements.
Earnings per share is based on the weighted average number of shares in the year of 1,514,850 (31 December 2021: 1,856,158). Refer to note 11.
EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 17
EUROCASTLE INVESTMENT LIMITED
BALANCE SHEET
As at 31
December
2022
As at 31
December
2021
Notes €'000 €'000
Assets
Cash and cash equivalents
6 17,721 28,356
Other assets
7 109 115
Investments 8
628 5,062
Legacy German tax asset 7
4,645 -
Total assets 23,103 33,533
Equity and Liabilities
Capital and reserves
1,615,091 1,624,762
Accumulated losses (1,592,741) (1,591,830)
Total equity 22,350 32,932
Liabilities
Trade and other payables 10 753 601
Total liabilities 753 601
Total equity and liabilities 23,103 33,533
See notes to the financial statements (page 21 to 34) which form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 2 March 2023 and signed on its behalf by:
Simon J. Thornton
Director and Audit Committee Chairman
Issued capital, no par value, unlimited number of shares authorised
EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 18
EUROCASTLE INVESTMENT LIMITED
CASH FLOW STATEMENT
Year ended
31 December
2022
Year ended
31 December
2021
Notes €'000 €'000
Cash flows from operating activities
(Loss) / profit for the year before taxation (883) 1,064
Adjustments for:
Realised fair value gain on Italian investments 4 (116) (243)
Unrealised fair value movements on Italian investments 4 (282) (2,420)
Realised fair value movement on other investments 4 (9) (275)
Interest expense 12 7
Interest income (68) -
Loss on foreign currency translation 75
Total adjustments to (loss) / profit for the year (456) (2,926)
(Increase) / decrease in other assets 6 (4)
(Decrease) in trade and other payables (206) (423)
Movements in working capital (200) (427)
Disposal of Italian investments 8 1,254 -
Cash distribution from Italian investments 8 3,578 6,284
Cash distribution from other investments -28
Interest received 54 -
Interest paid (12) (7)
Cash movements from operating activities 4,874 6,305
Cash (used in) / generated from operations 3,335 4,016
Taxation paid - Legacy German Tax 17 (4,645) -
Net cash flows from operating activities (1,310) 4,016
Cash flows from financing activities
Repurchase of share capital including costs 12 (9,325) -
Distribution paid 13 - (1,001)
Net decrease in cash flows from financing activities (9,325) (1,001)
Net (decrease) / increase in cash and cash equivalents (10,635) 3,015
Cash and cash equivalents, beginning of the year 6 28,356 25,341
Total cash and cash equivalents, end of the year 6 17,721 28,356
See notes to the financial statements (page 21 to 34) which form an integral part of these financial statements.
EUROCASTLE INVESTMENT LIMITED | 2022 ANNUAL REPORT 19