(ATLS.L) Atlas Estates Ltd Buy/Sell

Zielono Land with zoning and building permit for 265 76%
apartments. Construction will commence with
appropriate financing. Location in a residential area
of Warsaw.

Millennium 32,700 square metres of modern accommodation in the 100%
Tower central business district of Warsaw with 6,100 sqm of
retail and 26,600 sqm of office space.

Cybernetyki 3,100 square metre plot of land zoned for 11,000 50%
project square metres and with building permit for
residential development. Construction will commence
with appropriate financing. Location in Mokotow
district close to the central business district of
Warsaw.

Sadowa project 6,550 square metre office building close to the city 100%
centre of Gdansk.

Kokoszki, 430,000 square metre plot in Gdansk with zoning for 100%
Gdansk construction of 130,000 square metres of mixed use
development, situated on the outskirts of Gdansk.

Hungary
Ikarus Business 283,000 square metre plot with 110,000 square metres 100%
Park of built business space and 70,000 of currently
lettable, located in the 16th district, a suburban
area of Budapest

Metropol Office 7,600 square metre office building in the 13th 100%
Centre district of central Budapest.

Atrium Homes Two phase development of 22,000 sqm of 456 apartments 100%
with 235 apartments in phase 1 with building permits,
located in the 13th district in central Budapest.

Ligetvaros 6,300 square metres of office/retail space with 100%
Centre rights to build extra 6,400 square metres, located in
the 7th district, a central district in Budapest.

Varosliget 12,000 square metre plot in the 7th district in 100%
Centre central Budapest, with zoning for a mixed use
development of 31,000 gross square metres.

Moszkva Square 1,000 square metres of office and retail space in the 100%
Buda district of the city.

Volan Project 20,640 square metre plot, zoning for 89,000 square 50%
metre mixed use scheme in a central district of
Budapest.

Romania
Voluntari 99,116 square metres of land in three adjacent plots 100%
at the pre-zoning stage, in the north eastern suburbs
of the city, known as Pipera.

Solaris Project 32,000 square metres plot for re-zoning to mixed-use 100%
development in a central district of Bucharest

Golden Tulip 83 room hotel in the city centre of Bucharest 100%

Hotel Bulgaria
The Atlas House Office building in Sofia's city centre with 3,472 100%
square metres of lettable area spread over eight
floors.

Directors - Atlas Estates Limited

Quentin Spicer Mr Spicer, an English Solicitor and resident of Guernsey,
was head of the Property Department of Wedlake Bell in
Chairman London before becoming Senior Partner of the Guernsey
office in 1996. He is Chairman of a number of companies
Non-executive including IRP Property Investments Limited (previously
Director ISIS Property Trust 2 Limited) and RAB Special Situations
Company Limited. Mr Spicer is also a non-executive
director of a number of property investment funds and is
a member of the Institute of Directors.

Mike Stockwell Mr Stockwell is a pension investment consultant for Kodak
Limited responsible for asset allocation and investment
Non-executive manager appointments. He is a trustee and a member of the
Director investment board of Kodak Limited's United Kingdom
pension plan (asset size £1.1 billion). Mr Stockwell has
Chairman of Audit over 30 years experience in the pension investment area,
Committee including fifteen years as manager of one of the UK's top
100 pension funds. Previously, Mr Stockwell was European
pensions investment director for a large US
multi-national with assets of over $2.5 billion in some
fifteen European countries.

Shelagh Mason Mrs Mason is an English property solicitor with over 25
years experience in commercial property. She currently
Non-executive practises as Mason & Co in Guernsey specialising in
Director English commercial property. Her last position in the
United Kingdom was as a senior partner of Edge & Ellison
(now part of Hammonds). For two years until 2001 she was
Chief Executive of Long Port Properties Limited, a
property development company active throughout the United
Kingdom and the Channel Islands. Mrs Mason is a member of
the Board of Directors of Standard Life Investment
Property Income Trust, a property fund listed on both the
London Stock Exchange and the Channel Islands Stock
Exchanges and is a non-executive director of PFB Data
Centre Fund and of G.Res 1 Limited, a residential
property investment company, New River Retails Limited
which is AIM listed and other property investment
companies. She is an immediate past Chair of the Guernsey
Branch of the Institute of Directors and a member of the
Chamber of Commerce and the Guernsey International Legal
Association.

Directors and Senior Management - Property Manager, Atlas Management Company Limited

Rafael Berber Mr Berber is a founding partner of RP Capital a
London-based investment group founded in July 2004 and
Chairman of AMC specialising in emerging markets. Prior to founding RP
Capital, Mr Berber was formerly Vice Chairman of Global

Investment Committee Capital Markets & Financing, Global Head of Equity Linked
member Products, and Global Head of Equity Trading and the
Strategic Risk Group at Merrill Lynch. Mr Berber also led
Non-executive the development of Merrill Lynch's European emerging
Director markets business. Mr Berber holds an MBA in Finance from
New York University and a Bachelors Degree in Economics
from Tel Aviv University.

Ron Izaki Mr Izaki is the Chief Executive Officer and primary
shareholder of the Izaki Group which was founded in 1948
Director and is now one of the leading real estate development
firms in Israel. He has been involved in the development
Chairman of of thousands of apartments and millions of square feet of

Investment Committee commercial and retail space in the USA, Israel and
Western Europe. Mr Izaki is also a director of Brack RE,
Non-executive an international owner, developer and manager of real
Director estate. He has a Bachelors Degree in civil engineering
from the Israel Institute of Technology.
Nahman Tsabar Prior to joining AMC, Mr. Tsabar was the CEO of OCIF
Investment and Development Limited from 2007. Before
Director joining OCIF, Mr. Tsabar was President and CEO of Tahal
Group, part of the Kardan Group, which is a leader in

Chief Executive Build-Own-Transfer/Build-Own-Operate ("BOT/BOO") projects
Officer across a number of emerging markets, including Romania,
Serbia, Poland, Russia, Turkey, India and China. Prior to
this, he was CEO of Solel Boneh Development and Roads
Limited, the largest contracting firm based in the Middle
East and active worldwide, with 500 staff. From 1998 to
2000, Mr. Tsabar was Vice President of Ashtrom
International Limited, an international construction
company, where he was responsible for the company's
operations in Jamaica, Turkey, Eastern Europe and the
CIS. Prior to 1998, Mr. Tsabar spent 20 years in aviation
construction.

Michael Williamson Mr. Williamson is a Chartered Accountant and holds a BSc
(Econ) in Economics from the University of Wales. He has
Chief Financial held divisional Finance Director positions in the
Officer pharmaceutical companies GlaxoSmithKline and
Sanofi-Aventis. He was Group Finance Director with the
FTSE listed group MFI Plc and has held CFO positions with
other listed companies.

Steven Senter Mr. Senter is a Certified Public Accountant (CPA) and has
many years experience in managing worldwide financing
Chief Operating systems, working for leading international companies,
Officer like: Tahal Group - the international infrastructure
company, part of Kardan Group, where he acted as CFO and
temporarily as CEO; prior to working at Tahal, Mr Senter
was connected with Leadcom Cala - a member of Elgadcom
Group, leading telecommunications company, where he
directed the company as the CFO in all the Latin American
subsidiaries (Mexico, Guatemala, Costa Rica, Colombia,
Ecuador, Brazil, Peru, Argentina, Chile, Uruguay and
Bolivia). He also participated in development of 2
start-up companies of JVP Holdings and before that was
involved in Ashtrom International as financial manager -
a Real Estates Developer in Central and Eastern Europe,
Central America, Cyprus, Turkey and Jamaica. Mr Senter
holds BA in Accounting from Hebrew University of
Jerusalem and BA in Economics and Business Administration
from Ben-Gurion University.

Registered office Atlas Estates Box 119 Martello Court Admiral Park St Peter Port Guernsey

GY1 3HB

Advisors

Administrator, Custodian, Company Property Manager

Secretary
Atlas Management Company Limited

Intertrust Fund Services (Guernsey)
Limited Martello Court

Martello Court Admiral Park

Admiral Park St Peter Port

St Peter Port Guernsey GY1 3HB

Guernsey GY1 3HB

Nominated Advisor and Broker Financial Advisor in Poland

Fairfax I.S. PLC UniCredit CA IB Polska Sp. z o.o.

46 Berkeley Square Emilii Plater 53

London Warsaw

W1J 5AT Poland

Auditors Guernsey Advocates to the Company

BDO LLP Ozannes

55 Baker Street PO Box 186,

London 1 Le Marchant Street

W1U 7EU St Peter Port

Guernsey GY1 4HP

Solicitors to the Company as to English Registrar Law
Computershare Investor Services
Nabarro LLP (Channel Islands) Limited

Lacon House Ordnance House

Theobold's Road 31 Pier Road

London St. Helier

WC1X 8RW Jersey JE4 8PW

Solicitors to the Company as to Polish Public Relations in Poland

Law
NBS Public Relations Sp. z o.o.

Weil, Gotshal & Manges - Pawel Rymarz Sp
k. Ul. Kopernika 17

Ul. Emilii Plater 53 00-359 Warsaw

00-113 Warsaw Poland

Poland
Property Valuer Property Valuer

King Sturge Colliers International (Sk), s.r.o

Deloitte House Sturova 4

Al Jana Pawla II 19 Bratislava

00-854 Warsaw Slovak Republic

Poland 811 02

Directors' Report

The Directors present their report and the audited financial statements for the twelve months ended 31 December 2009.

Results and dividends

The results for the Group for the year are set out in the consolidated income statement on page 40 and show a loss after tax attributable to equity shareholders of Euro48.7 million (2008: loss after tax of Euro39.7 million).

The Company has not declared a dividend for 2009 (2008: Euronil).

Activities and review of business

The Company was admitted to the AIM market of the London Stock Exchange and commenced trading on 1 March 2006. In February 2008, the Company completed a listing on the Warsaw Stock Exchange. The Company is domiciled in Guernsey as a closed-ended investment company under Guernsey Law.

The principal activity of the Company and the Group is property investment and development throughout Central and Eastern Europe, together with the management of its properties. The development of the Group's business and future prospects, including a description of material risk factors and threats and information on the degree of the Group's exposure to such risks or threats, is considered in the Chairman's Statement on pages 5 to 9 and the Review of the Property Manager on pages 10 to 21.

On each of 1 January 2009 and 1 February 2009, the Group acquired an additional 5% of the share capital of its Kokoszki joint venture, Atlas Estates (Kokoszki) Sp. z o.o. (formerly Atlas Estates CF Plus 1 Sp. z o.o.) for a total cash consideration of PLN 300,000 (Euro68,483). At 31 December 2009, the Group's holding in Atlas Estates (Kokoszki) Sp. z o.o. was 100%.

On 2 November 2009 the Company entered into an agreement to sell its entire portfolio held in Slovakia for a cash price of Euro8.0 million. Details of the disposal are presented in Notes 20 and 31.

No other significant changes in the Company's organisational structure occurred in the year ended 31 December 2009.

A list of the operating subsidiaries of the Company subject to consolidation is included within note 36 of the financial statements of this report, on pages 87 to 88.

Investing Policy

The Company actively invests in a portfolio of real estate assets across a range of property types throughout CEE.

The Company targets countries within the CEE which possess attractive investment fundamentals including political and economic stability, strong GDP growth and low inflation. The Company may also make investments in countries which attract increasing foreign direct investment from being part of, or from being expected to join, the EU. The Company shall not invest in states of the former USSR.

The Company makes investments both on its own and, where appropriate, with joint venture partners in residential, industrial, retail, office and leisure properties in order to create an appropriately balanced portfolio of income-generating properties and development projects. There are no set restrictions on either sector or geographical spread of investments within the Company's stated investment region.

The Company may employ leverage to enhance returns on equity although the extent of such leverage will vary on a property by property basis. Wherever possible, the Directors intend to seek financing on non-recourse, asset by asset basis. The Company has no set limit on its overall level of gearing, however it is anticipated that the Company will employ a gearing ratio of up to 75 % of the total value of its interest in income-generating properties within its property portfolio.

The Company seeks to provide Shareholders with an attractive overall return through a combination of income and long term appreciation of the Company's assets.

The Board recognises that the current state of the credit markets and general downturn in the CEE economies in which the Company invests have had a negative effect on the overall value of the Group's portfolio, causing a decline in the Company's net asset value per share. In order for the Company to achieve its long term investing policy, the Board's short term investment strategy for 2009 and 2010 is cash focussed with new development activity in relation to parts of its portfolio being selectively deferred but with current active projects displaying good sales being progressed on time and on budget and being brought to a conclusion to achieve intended returns. No dividends are expected to be paid in the short term.

Diversification

In order to hedge against risks, the Group intends to maintain a diversified portfolio of real estate investments. The diversification will have three aspects: firstly, the Group intends to diversify its geographical reach by investing in various countries in the CEE region; secondly, the Group intends to diversify the type of investment (e.g. residential development, office, commercial, etc.); and thirdly, the Group intends to stagger the development phases of its various projects (e.g. the purchase of land, the design phase, the construction phase, the marketing and sale process) in order to maintain stable levels of income earned.

As at 31 December 2009, the Company had investment assets in Poland, Romania, Slovakia, Hungary and Bulgaria, but the Company intends to use its experiences in other dynamically developing markets. This strategy will allow the Group to further geographically diversify its operations and achieve an appropriate scale of its operations. The Group also intends to continue its strategy of investing in non-capital cities in the countries in which it operates.

Key performance Indicators

Key performance indicators vary between the different areas of the Group's business.

The success of developing and selling residential apartments will be measured in terms of the price achieved for each apartment, the profit margin earned over construction cost and as a proportion of sales and the overall rate of return from a development. Information on sales is detailed in the Review of the Property Manager on pages 10 to 21. All apartments to date have been sold at prices in excess of the initial budget.

For yielding assets the measure of the yield of an asset relative to its cost to the Group is of key importance. Also the overall valuation of the portfolio will drive the value to the Company and ultimately the Company's share price. Details of total return targets and increases in net asset value per share are included within the Chairman's Statement and Review of the Property Manager.

The key financial risk policies are stated within the financial sections of this report on pages 56 to 59.

Going concern

As described in the Chairman's Statement and in the Review of the Property Manager, the economic environment has been challenging and the Group has reported a loss from operations for the year ended 31 December 2009 and a significant fall in net asset value as at 31 December 2009. The directors consider that the outlook presents ongoing challenges in terms of the markets in which the Group operates, the effect of fluctuating exchange rates in the functional currencies of the Group and the availability of bank financing for the Group.

As at 31 December 2009 the Group held land and building assets with a market value of Euro442 million, compared to external debt of Euro260 million. Subject to the time lag in realising the value in these assets in order to generate cash,this loan to value ratio gives a strong indication of the Group's ability to generate sufficient cash in order to meet its financial obligations as they fall due. Any land and building assets and associated debts which are ring-fenced in unique, specific, corporate vehicles, which are subject to any repossession by the bank on default of loan terms would clear the outstanding debt and not result in additional finance liabilities for the Company or for the Group. There are also unencumbered assets which could potentially be leveraged to raise additional finance.

For the first time the Group has entered into a cross collateralisation agreement on four of its loans with one bank. This has been necessary due to technical covenant breaches. As a result of the amendment agreement the bank has agreed to a waiver of all prior covenant breaches and improved terms and conditions for the Group.

In the preparation of the consolidated financial statements for the year ended 31 December 2009, the directors have reclassified four loans totaling Euro92.4 million within the financial statements from non current liabilities to current liabilities as bank loans and overdrafts due within one year or on demand, where covenant breaches or defaults on these loans arose. The banks are aware of the technical breaches and defaults and have not asked for repayment of the loans. Two of these loans, totalling Euro67.1 million in 2009, were in breach at 31 December 2008 and were classified as bank loans and overdrafts due within one year or on demand at 31 December 2008. The defaults on the other two loans result from non payment of interest. In addition there is one loan that is repayable on demand in the amount of Euro9.0 million (2008: Euro8.4 million due within one year). Negotiations are ongoing with the bank on refinancing terms. Loans maturing within one year total Euro156.0 million (excluding loans associated with assets held for sale) at 31 December 2009 compared to Euro95.7 million at 31 December 2008. Euro25.4 million of the Euro60.3 million increase from 31 December 2008 relates to the two defaults discussed above. The remaining increase of Euro 34.9 million has resulted from the natural maturing of the Group's debt. Discussions are currently in progress with the banks in relation to repayment of certain of these loans.

In assessing the going concern basis of preparation of the consolidated financial statements for the year ended 31 December 2009, the directors have taken into account the status of current negotiations on loans. These are disclosed in note 24 as part of the bank loans note. The Company has also continued to provide funds to service interest and capital repayments on these loans on behalf of its subsidiary companies

The Directors have also taken into account the disposal of the Group's interests in Slovakia as announced on 3 November 2009. This is discussed in notes 20 and 31 as part of the assets held for sale and the disposals note. On completion of this transaction, the combined impact of ceasing to consolidate its share of debt in the joint venture and the receipt of the cash consideration will reduce the Group's overall debt by some Euro20.5 million pending any reinvestment of the cash proceeds.

The Group's forecasts and projections have been prepared taking into account the economic environment and its challenges and the mitigating factors referred to above. These forecasts take into account reasonably possible changes in trading performance, potential sales of properties and the future financing of the Group. They show that the Group will have sufficient facilities for its ongoing operations.

While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the consolidated financial statements for the year ended 31 December 2009.

The financial statements do not include any adjustments that would result if the going concern basis of preparation were to become no longer appropriate.

Substantial shareholdings

As of 12 March 2010, the Board was aware of the following direct or indirect interest in 3% or more of the Company's ordinary share capital (excluding treasury shares). All shares have equal voting rights.

Table 1 - Significant Number of Shares held Percentage of Issued

Shareholders
Share Capital

Livermore Investments 10,170,367 21.71

Limited
Lockerfield Limited 6,730,623 14.37

Forest Nominees Limited (1) 6,536,925 13.95

Capital Venture Worldwide 6,385,000 13.63

Group Limited
RP Capital Group 5,560,572 11.87

Finiman Limited 4,097,509 8.75

APG Investments 1,600,000 3.42

TOTAL 87.70

(1) Mr Ron Izaki is the ultimate beneficial owner of 6,461,425 of the shares, representing 13.79% of the issued share capital of the Company.

Purchase of own shares

By a resolution passed on 24 June 2009, shareholders granted the Directors the authority to purchase a maximum of 14.99% of the Company's own shares. These may be purchased at a minimum of Euro0.01 per share and a maximum of no more than 5% above the average mid-market price as derived from the Daily Official List for the five business days preceding the purchase. This authority was not exercised during 2009.

Directors and Directors' share interests

The non-executive Directors who served during the year are detailed in Table 2 below. No Director had any direct interest in the share capital of the Company or any of its subsidiaries during the year or the preceding year. Mr Spicer acquired a beneficial interest in 14,785 shares in the Company in 2007.

Table 2 - Non-executive Directors
Mr Quentin Appointed 9 February 2006

Spicer
Mr Michael John Stockwell Appointed 3 February 2006

Mrs Shelagh Appointed 3 February 2006

Mason
Dr Helmut Appointed 3 February 2006

Tomanec
Resigned 28 May 2009

Biographical details for all Directors are set out on page 24.

The Directors retire by rotation and Mrs Shelagh Mason, being so entitled and willing, offers herself for re-election.

The Board is of the view that non-executive appointments for a fixed term would be inappropriate for each of the non-executive Directors due the nature of the management of the Company. The Articles of the Company do provide for the retirement by rotation of a third of the Board each year.

The Remuneration Report contains details of Directors' remuneration, terms of their appointment and those of the Property Manager and is set out on pages 35 to 37. No other Director had, during the accounting year or in the period to 15 March 2010, any material beneficial interest in any significant contract in the Group's business.

Directors' Responsibilities

Guernsey company law requires that Directors prepare financial statements for each financial period. These must give a true and fair view of the state of affairs of the Group as at the end of the financial period and of the results of the Group for that period. In preparing those financial statements, the Directors are required to:

* Select suitable accounting policies and then apply them consistently; * Make judgements and estimates that are reasonable and prudent; * Ensure the financial statements comply with IFRS as adopted by the EU; and * Prepare the financial statements on the going concern basis, unless it is

inappropriate to presume that the Group will continue in business. The Directors are responsible for ensuring that proper accounting records are maintained, which disclose with reasonable accuracy the financial position of the Group, and that the financial statements comply with Guernsey Law. They are also responsible for the system of internal control, for safeguarding the assets of the Group and hence for taking reasonable steps for the detection and prevention of fraud and other irregularities.

Company website

To provide a portal for investor information and in accordance with the requirements of AIM and WSE, the Company maintains a website accessed at www.atlasestates.com.

The Directors are responsible for the maintenance and integrity of the website. There is, however, some uncertainty regarding the legal requirements of the website as information published on the internet is accessible in many countries with different legal requirements relating to the preparation and dissemination of financial statements. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

Auditors

The Directors confirm that as at 15 March 2010:

* So far as they are aware, there is no relevant information (that is,

information needed by the Group's auditors, in connection with preparing

their report) of which the Group's auditors are unaware; * The Directors have taken all the steps that they ought to have taken as

Directors in order to make themselves aware of any relevant audit

information and to establish that the Group's auditors are aware of that

information; and * The auditing firm (qualified auditor of financial statements) who audited

the consolidated annual financial statements has been selected in

compliance with the provisions of the law and that this firm and the

qualified auditors who performed the audit met the conditions to issue an

impartial and independent opinion on the audited consolidated annual

financial statements in accordance with the applicable provisions of

national law. The consolidated financial statements of the Group for 2009 were audited by BDO LLP on the basis of a contract concluded on 9 December 2009. The consolidated financial statements of the Group for 2008 were audited by BDO LLP on the basis of a contract concluded on 5 December 2008.

The total fees specified in the contract with the audit company, payable or paid for an audit and review of the financial statements and for other services are presented below:

Table 3 - Audit Company - fees

Euro'000 Euro'000

Audit of individual and consolidated annual financial 315 328

statements
Review of interim individual and consolidated financial 95 101

statements
Tax services 11 90

Total 421 519

A resolution concerning the re-appointment of BDO LLP as auditors and their remuneration will be submitted to the Annual General Meeting.

Annual General Meeting

The Annual General Meeting will be held on 16 June 2010.

Information about court proceedings

As of 12 March 2010, the Company was not aware of any proceedings instigated before a court, a competent arbitration body or a public administration authority concerning liabilities or receivables of the Company, or its subsidiaries, whose joint value constitutes at least 10% the Company's equity capital.

Significant Agreements

In addition to the Property Management Agreement detailed in the Remuneration Report, the Group had the following significant agreements.

Agreement of 23 June 2008, between Capital Art Apartments and Eiffage Budownictwo MITEX S.A. as amended

Under the above agreement, Eiffage Budownictwo MITEX S.A. agreed to carry out construction works, as the general contractor, with regard to the second stage of the Capital Art Apartments Project. The value of the agreement was agreed as equivalent to a lump sum of the amount of PLN 40,680,931 plus VAT (Euro9.9 million plus VAT) for part of the works, increased by a sum based on a costs plus fee (fee equal to 8%) formula for the remaining works within the general contractor works. The maximum value of the contract was agreed by the Parties at 78,000,000 PLN plus VAT (Euro19.0 million plus VAT). The works were completed in December 2009.

Agreement of 4 September 2007, between Platinum Towers and HOCHTIEF Polska Sp. z o.o.

Under the above agreement, HOCHTIEF Polska Sp. z o.o. agreed to carry out construction works with regard to the Platinum Towers Project. The value of the agreement is PLN 179,655,000. The works were completed in September 2009.

Details of the bank financing agreements are disclosed as required in note 24 to the financial statements.

Related party transactions

Related party transactions are stated within note 32 of the financial statements of this report, on pages 85 to 86.

Credit and loan facilities, guarantees and sureties

Metropol financing

On 25 January 2010 the Company announced that its Hungarian subsidiary Cap East Kft, which owns the Metropol office building in Budapest, had signed a credit facility for Euro3.1 million with FHB Kereskedelmi Bank Zft. This loan will be utilised as working capital for operations and to fund the development of its portfolio.

Erste cross collateralisation agreement

On 24 February 2010 the Atlas Group companies Atlas Estates (Millennium) Sp. z o.o., Ligetvaros Kft, Atlas Solaris SRL and World Real Estate SRL signed an amendment agreement with Erste Bank. This agreement created a cross collateralisation arrangement between these 4 companies with respect to the loans provided by Erste Bank. In return for this cross collateralisation the bank agreed to waive any claims for any breaches of covenants which were in existence. A new covenant of interest service coverage has been included, with a priority of payments list, reduced margins on each loan and extension of maturity dates for the two Romanian land loans to 31 December 2012.

Atlas Investments B.V.

An understanding was given to Investkredit Bank AG by Atlas Investments B.V. that invested money would not be withdrawn without prior approval of Investkredit Bank AG and to cover all costs not covered by the current sale proceeds or by the loan granted to the company Capital Art Apartments Sp. z o.o.

Corporate governance review

The Group aspires to apply the highest possible standards of corporate governance in all areas of its business. The Board and, where delegated, the Property Manager use a comprehensive system of controls, checks and reporting requirements that they consider provide the capability to maintain these standards. The systems mentioned are being designed to meet the requirements of the Company and its business and to assess and manage the opportunities and risks that may arise. Whilst the Board is mindful of the guidance of the Combined Code, its systems will be suitable for a Company of its size, the small number of Directors that form the Board and the external management function provided by the Property Manager. In accordance with the WSE Rules, the Board resolved in January 2008, to the extent practicable, to also comply with the majority of the corporate governance rules defined in the Code of Best Practices for WSE Listed Companies. However, the Company's compliance with certain principles is limited by the differences between Guernsey and Polish legal systems, procedures and accepted practices.

Structure and membership of the Company's Board

The Board of Directors comprises the non-executive Chairman and two further non-executive Directors. In May 2009 Dr. Helmut Tomanec resigned as a non-executive Director. There is a clear separation of the role of the Chairman and the Property Manager, governed by the Property Management Agreement that was entered into on 24 February 2006. The Board did not find it necessary to appoint a Senior Independent Director. The Board identifies all of its non-executive Directors as being independent of the Company based on their level of involvement with the founder shareholders prior to the formation of the Group and their involvement in the day to day management of the Group on an ongoing basis. They provide strategic management and act as the final Investment Committee for all investment/divestment decisions. The executive and day to day management is provided by the Property Manager whose role and responsibilities are clearly defined in the Property Management Agreement.

The Board meets formally at least four times a year and regular contact is made between the Board and the Property Manager in the intervening periods. The Directors meet periodically without the Property Manager present and on occasion without the presence of the Chairman.

A formal schedule of matters reserved specifically for the Board's decision is approved and reviewed on an ongoing basis by the Board. Such matters include, but are not limited to:

* developing Group strategy and monitoring the progress towards objectives

set for management; * reviewing the Company's capital, operating and management structures; * setting the system of internal and financial controls and accounting

policies; * communicating the aims and objectives of the Company to shareholders; and * ensuring that the Group has effective risk management procedures in

operation at all times. A formal schedule of matters reserved for the Board of the Property Manager is also approved and reviewed on an ongoing basis by the Board.

All members of the Board have access to the advice and services of the Company's Administrator and full and timely access to all relevant information in an appropriate form and of sufficient quality to enable them to discharge their duties and responsibilities. Guidance is provided to Directors on obtaining independent professional advice when necessary and the Company maintains a comprehensive directors' and officers' liability insurance policy.

Appointments to the Board are subject to a formal process of selection involving the Board as a whole. The Directors are appointed for indefinite terms and a third of the Board retire by rotation each year. Directors' terms of appointment provide for prior approval of the Board for the acceptance of any outside appointments. In the event of a request for approval the Director in question is asked to confirm and demonstrate that they can continue to commit sufficient time to the fulfilment of their duties.

Board committees

The Audit Committee comprises the whole of the Board and is chaired by Mr Stockwell. It meets at least three times a year to review the interim and year end financial statements prior to their submission to the Board and to review the appointment of the independent auditors and the scope, performance and remuneration of services provided by them. Procedures are in place for the approval of non-audit services provided by the Company's auditors. The auditors will not be awarded non-audit work unless the Company is satisfied, through enquiry, that the provision of such services would not prejudice the independence and objectivity of the auditor.

The entire Board also forms the Investment Committee in order to appraise and approve or reject investment proposals made by the Property Manager. The Investment Committee meets as and when required.

The Company has not formed a separate Remuneration or Nominations Committee as the Property Management Agreement provides for the remuneration of the Manager and the Board as a whole considers any further appointments.

Table 4 - Attendance at meetings
Committee meetings

Board Audit

No. of meetings in the 16 5

year
Mr Quentin Spicer 14 3

Mr Michael John 13 5

Stockwell
Mrs Shelagh Mason 13 3

Dr Helmut Tomanec 7 2

No Investment Committee meetings were held in the year because all discussions and decisions related to investment proposals were made during the Board meetings.

Property Manager

The Property Manager has also undertaken to maintain the highest standards of corporate governance in line with the direction set by the Board. Where delegated, the Property Manager has continued to put in place a comprehensive system of controls, checks and reporting requirements that they feel provides the ability to maintain these standards.

The Property Manager has a board ("PM board") comprising of a non-executive Chairman and one non-executive director. It meets formally at least four times a year and more regularly when required to do so to review its requirements under the terms of the Property Management Agreement. A formal schedule of matters reserved for the decision of the PM board, derived from the role and responsibilities set out in the Agreement has been approved and is reviewed on an ongoing basis.

The Property Manager has appointed an Investment Committee comprising two of its non-executive directors to review and approve those investment and divestment opportunities that are presented to the Company for its approval and completion. The PM board collectively approves the appointment of senior management within the Property Manager, details of which are then reported to the Company.

Internal control

The Directors assume overall responsibility for the Group's system of internal control designed to safeguard shareholders' investments and the Group's assets and for reviewing its effectiveness. The system is regularly reviewed by the Board and accords with the Internal Control Guidance for Directors on the Combined Code. The controls are designed to identify and manage risks faced by the Group and not to totally eliminate the risk of failure to achieve business objectives. To this end internal controls provide reasonable, but not absolute assurance against material misstatement or loss. The implementation and operation of such systems has been delegated to the Property Manager and the processes are communicated regularly to all of their staff who are made aware of the areas for which they are responsible. Such systems include strategic planning, the appointment of appropriately qualified staff, regular reporting and monitoring of performance and effective control over capital expenditure and investment. The Group's key internal controls are centred on a system of comprehensive reporting on all of its business activities. The Property Manager meets on a monthly basis to review the control systems and to assess the performance and position of the Group. A separate risk management process is operated that engages the Directors and senior management of the Company and Property Manager that is aimed at identifying areas of risk faced by the Group and assessing the likely impact on operating activities. Significant risks that are identified by this process are communicated to the Board with recommendations for actions to mitigate them. The Group uses independent agents to undertake any specialist analysis, investigation or action that is needed. The Board reports to shareholders at least annually that they have carried out a review of the system for internal controls.

Internal financial controls centre on a clearly defined set of control procedures and a comprehensive monthly and quarterly reporting structure. Detailed revenue, cash flow and capital forecasts are prepared for each asset and updated regularly throughout the year and reviewed by the Property Manager and the Board. The Property Manager agreement sets out clearly defined guidelines for all asset transactions. These require the approval of the Investment Committee of the Property Manager and then of the Board within defined levels of authority and de-minimis thresholds.

The Property Manager undertakes responsibility for the management of the Group's property portfolio, delegating this responsibility to appropriately qualified independent parties where it is deemed necessary. Terms of engagement for such appointments include the requirement for regular reports in an agreed form.

The Audit Committee is responsible for reviewing the effectiveness of the system of internal financial control. A review of these processes is conducted on a regular basis and any significant issues raised by this review are communicated to the Board for their consideration.

In accordance with the procedures outlined in this report, the Board has conducted a review of the effectiveness of the system of internal control for the year ended 31 December 2009. The review took account of material developments that have taken place since the year end and considered the need for an internal audit function. The Board resolved that due to the size of the Company an internal audit function would be inappropriate but will review this need on an annual basis.

Shareholder relations

The Board encourages active communication with all of the Company's shareholders. The Chief Executive and Chief Financial Officer of the Property Manager are the main points of contact for shareholders and they endeavour to respond to enquiries on a timely basis either verbally or in writing. Provision is made on the Company's website for enquiries to be made of Directors.

As part of the communication process a series of meetings is held between the Property Manager and significant shareholders throughout the year. Directors are invited to attend these meetings and are available should shareholders request their attendance. All shareholders have at least twenty working days notice of the Annual General Meeting, at which all Directors and committee chairmen are introduced and available for questions.

Throughout the year meetings are held with the Company's brokers and other corporate advisors to feed back information that they have gathered concerning shareholder opinion. Topics raised at other meetings are communicated to the Board and discussed at subsequent Board meetings.

The non-executive directors have direct face-to-face contact with shareholders and are also regularly updated on major shareholder meetings and analysts or broker briefings.

The rights of the shareholders are subject to Guernsey Law and the Articles of Association of the Company.

The rules governing the change in the articles of the Company are subject to Guernsey Law and the Memorandum and Articles of Association of the Company.

Performance evaluation

The Property Manager agreement provides for a formal process of performance evaluation that is based on the collective performance of the Manager rather than on an individual's performance. These performance criteria are based on financial measures over the life of the Property Management Agreement. In addition, procedures are in place to review the approach and resources applied by the Property Manager and its performance throughout the year.

Procedures are also in place that enables the Board to appraise the performance of and level of fees paid to the Administrator and the Company's professional advisors.

Details of those Directors seeking re-election at the Company's Annual General Meeting can be found on page 30.

Quentin Spicer Shelagh Mason

Chairman Director

15 March 2010

Remuneration Report

The Directors present their report on their remuneration and that of the Property Manager (the `Report') that has been prepared in a manner consistent with commonly accepted practice.

The Report is to be approved at the Annual General Meeting of the Company at which the financial statements will be approved and a resolution to this effect will be proposed at the Meeting.

Non-executive Directors

All non-executive Directors have specific terms of appointment that include their membership of the Audit Committee and the fee payable to them for their services. Their remuneration is determined by the Board in accordance with the Articles of Association of the Company. Such fees are reviewed annually with regard to a Director's performance and those fees paid to non-executive directors of similar companies.

Non-executive Directors do not participate in the Warrant Instrument.

Details of the terms of appointment for those who served as non-executive Directors during the year are:

Table 5 - Non-executive Directors' service contracts
Contract Date Term Notice Period

Mr Quentin Spicer 9 February 2006 Indefinite 90 days

Mr Michael John 3 February 2006 Indefinite 90 days

Stockwell
Mrs Shelagh Mason 3 February 2006 Indefinite 90 days

Dr Helmut Tomanec 3 February 2006 Resigned 28 May 2009 n/a

Property Manager

On signing the Property Management Agreement, the Company looked to structure a remuneration package that combined a basic fee element with performance related rewards that motivate the Property Manager and align their interests with the performance and growth of the business and the long term enhancement of shareholder value.

Basic fee

In consideration of the services to be provided by AMC, AMC will receive an annual management fee of 2 per cent. of the previous year's closing adjusted NAV (less any un-invested net proceeds of the IPO or any subsequent equity capital raising).

In addition, AMC is entitled to be reimbursed by the Company for all costs and expenses incurred by it in the performance of its obligations under the Property Management Agreement (not including its own internal operating costs).

Performance fee

In addition, AMC will receive a performance fee payable if the Total Shareholder Return in any year exceeds 12 per cent (adjusted to make up for any prior years where the Total Shareholder Return was negative - the "Hurdle Rate"). Once this threshold is exceeded, AMC is entitled to receive a fee equal to 25 per cent of the amount by which the Total Shareholder Return for the relevant financial period exceeds the Hurdle Rate for such period multiplied by the previous year's closing adjusted NAV after the deduction of any dividends declared or to be declared but not yet paid in respect of that period.

One third of any performance fee payable to AMC under the agreement may, at the option of the Company be paid in the form of new Ordinary Shares issued to AMC at a price equal to the average closing price of the Company's shares for the 45 days prior to the date of issue of such shares. This option may not be exercised where it would trigger an obligation to make a mandatory offer for the Company pursuant to the City Code.

AMC performance fee payment

AMC's performance fee in respect of the financial years ended 31 December 2009 and 31 December 2008 was Euronil.

Term and Termination

The Property Management Agreement is to run for an initial seven year term from 24 February 2006 and may be terminated thereafter on 12 months' notice by either party. The agreement may be terminated at any time for reasons of material breach by either party not remedied within a 90 day period (21 days if the breach relates to non-payment of sums due to the Property Manager) or on the insolvency of either party. The Company may also terminate the Agreement in the event that any of the AMC Shareholders sells (other than to certain categories of intra-group permitted transferees) more than 49 per cent. of their respective shareholdings in AMC as at the date of Admission or in the event that the AMC Shareholders (or their permitted transferees) between them cease to own collectively at least 75 per cent of the issued share capital of AMC. The Company also has the right to terminate the agreement in the event that it becomes tax resident in the United Kingdom for any reason. Upon termination of this Agreement, the Manager shall be entitled to receive all fees and other moneys accrued to it (and unpaid) and a performance fee.

Share schemes

On 23 February 2006 the Company executed and adopted a Warrant Instrument providing for the issue of warrants over 5,114,153 ordinary shares. Following the exercise of the Greenshoe on 15 March 2006, an additional Warrant Instrument was executed and adopted to provide for the issue of warrants over a further 373,965 ordinary shares. The Warrants are exercisable during the period commencing 1 March 2007 and expiring on the earlier of: (i) 28 February 2013; or, (ii) upon an offeror becoming entitled to acquire the entire issued share capital of the Company.

The exercise price of each of the Warrants is £3.41 (Euro3.85 as at 31 December 2009). The exercise price and number of Ordinary Shares relating to such Warrants will be subject to adjustment in respect of dilution events, including the payment by the Company of cash or special dividends, any amalgamation, reorganisation, reclassification, consolidation, merger or sale of all or substantially all of the Group's assets and other dilutive events. The Warrants are freely transferable.

The total amounts for Directors' remuneration were as follows:

Table 6 - Directors' emoluments - representing fees only 2009

Euro

Non-executive Directors
Mr Quentin Spicer 63,866

Mr Michael John 47,059

Stockwell
Mrs Shelagh Mason 52,661

Dr Helmut Tomanec 23,529

Total 187,115

Table 7 - Warrants issued
Granted Transferred At 31 Dec Date of g Date
2009 rant
Exercisable

Rafael 306,849 - 306,849 24 Feb 2006 1 March 2007

Berber
306,849 - 306,849 24 Feb 2006 1 March 2008

22,438 - 22,438 20 Mar 2006 1 March 2007

22,438 - 22,438 20 Mar 2006 1 March 2008

Roni Izaki 306,849 - 306,849 24 Feb 2006 1 March 2007

306,849 - 306,849 24 Feb 2006 1 March 2008

22,438 - 22,438 20 Mar 2006 1 March 2007

22,438 - 22,438 20 Mar 2006 1 March 2008

Dori Dankner 306,849 - 306,849 24 Feb 2006 1 March 2007

306,849 - 306,849 24 Feb 2006 1 March 2008

22,438 - 22,438 20 Mar 2006 1 March 2007

22,438 - 22,438 20 Mar 2006 1 March 2008

Gadi Dankner 306,849 - 306,849 24 Feb 2006 1 March 2007

306,849 - 306,849 24 Feb 2006 1 March 2008

22,438 - 22,438 20 Mar 2006 1 March 2007

22,438 - 22,438 20 Mar 2006 1 March 2008

D Saradhi 208,063 - 208,063 24 Feb 2006 1 March 2007

Rajan
208,063 - 208,063 24 Feb 2006 1 March 2008

22,438 - 22,438 20 Mar 2006 1 March 2007

22,438 - 22,438 20 Mar 2006 1 March 2008

Lou Silver 98,786 - 98,786 24 Feb 2006 1 March 2007

98,786 - 98,786 24 Feb 2006 1 March 2008

Atlas 511,416 - 511,416 24 Feb 2006 1 March 2007

Management
Company 511,416 - 511,416 24 Feb 2006 1 March 2008

Limited
511,416 - 511,416 24 Feb 2006 1 March 2009

511,415 - 511,415 24 Feb 2006 1 March 2010

37,396 - 37,396 20 Mar 2006 1 March 2007

37,396 - 37,396 20 Mar 2006 1 March 2008

37,396 - 37,396 20 Mar 2006 1 March 2009

37,397 - 37,397 20 Mar 2006 1 March 2010

The warrants have been issued at nil cost to the recipients with an exercise price of £3.41 per share. These warrants are exercisable at any time during the period commencing on admission to trading on AIM (1 March 2006) and ending on the seventh anniversary of such admission. There are no performance criteria for execution and execution can be undertaken on or after the date of exercise as detailed above or immediately upon a Change of Control of the Company. None of the terms and conditions of the warrants has been varied in the period.

No Directors have been issued warrants over the shares in any other Group company.

During the year to 31 December 2009, the market price of the ordinary shares ranged between £0.30 and £0.98 on AIM and PLN 1.85 and PLN 4.76 on WSE.

Approval

The Board approved the Remuneration Report without amendment. This report was approved by the Board of Directors on 15 March 2010 and signed on its behalf by:

Quentin Spicer

Director

15 March 2010

Declaration of the Board of Directors

The Board of Directors of Atlas Estates Limited hereby declare that, to the best of their knowledge, the consolidated annual financial statements and report and the comparable information have been prepared in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market, with the rules of the Warsaw Stock Exchange, and with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation. The consolidated annual financial statements and report give a true, fair and clear view of the assets, liabilities, financial position and net result of the Group.

The annual report includes a fair review of the development of the business and important events impacting it, as well as a description of the principal risks and uncertainties of the business.

Quentin Spicer

Chairman

Michael Stockwell

Director

Shelagh Mason

Director

15 March 2010

Independent Auditor's Report to the shareholders of Atlas Estates Limited

We have audited the group financial statements of Atlas Estates Limited for the year ended 31 December 2009 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement, and the related notes. These financial statements have been prepared under the accounting policies set out therein.

We have reported separately on the company financial statements of Atlas Estates Limited for the year ended 31 December 2009.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the annual report and group financial statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and have been properly prepared in accordance with The Companies (Guernsey) Law, 2008 and whether the information given in the directors' report is consistent with those financial statements. We also report to you if, in our opinion, the company has not kept proper accounting records or if we have not received all the information and explanations we require for our audit.

We read other information contained in the consolidated financial statements and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the consolidated financial statements. This other information comprises the Financial Highlights, Chairman's Statement, Review of the Property Manager, Property Portfolio Information, Directors' Report, Remuneration Report and the Declaration of the Board of Directors. Our responsibilities do not extend to any other information.

Our report has been prepared pursuant to the requirements of The Companies (Guernsey) Law, 2008 and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of The Companies (Guernsey) Law, 2008 or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

BDO LLP

Chartered Accountants and Registered Auditors

London

15 March 2010

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2009

2009 2008 Notes

Euro'000 Euro'000

Revenues 47,279 51,875 3

Cost of operations (31,730) (35,284) 4.1

Gross profit 15,549 16,591

Property manager fee (4,140) (5,719)

Central administrative (1,337) (4,436)

expenses
Property related expenses (4,872) (5,251)

Administrative expenses (10,349) (15,406) 4.2

Decrease in value of (35,558) (4,495) 16

investment properties
Other operating income 1,023 1,164 5

Other operating expense (17,797) (1,974) 6

Impairment charge in - (469) 11

relation to goodwill
Negative goodwill realised - 687 11

on acquisitions
Lossfrom operations (47,132) (3,902)

Finance income 586 1,379 7

Finance costs (10,607) (16,153) 7

Other gains and (losses) - 130 (22,174) 7

foreign exchange
Loss before taxation (57,023) (40,850)

Tax credit 7,805 1,153 8

Loss for the year (49,218) (39,697)

Attributable to:
Equity shareholders of the (48,677) (39,694)

Company
Minority interests (541) (3)

(49,218) (39,697)

Loss per Euro0.01 ordinary (103.9) (86.6) 10

share - basic (eurocents)
Loss per Euro0.01 ordinary (103.9) (86.6) 10

share - diluted (eurocents)

All amounts relate to continuing operations.

The notes on pages 46 to 88 form part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2009

Euro'000 Euro'000

LOSS FOR THE PERIOD (49,218) (39,697)

Other comprehensive income:
Revaluation of buildings within property, plant (10,852) 11,052

and equipment
Deferred tax on revaluation of buildings 2,213 (3,621)

Exchange adjustments (2,108) (17,929)

Deferred tax on exchange adjustments (5) 1,009

Other comprehensive income for the period (net (10,752) (9,489)

of tax)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (59,970) (49,186)

Total comprehensive income attributable to:
Equity shareholders of the parent Company (59,429) (49,183)

Non-controlling interests (541) (3)

(59,970) (49,186)

The notes on pages 46 to 88 form part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

As at 31 December 2009

Euro'000 Euro'000 Notes

ASSETS

Non-current assets
Intangible assets 227 610 13

Land under operating lease - 13,166 16,445 14
prepayments

Property, plant and equipment 95,525 108,035 15

Investment property 161,027 198,677 16

Other loans receivable 2,380 7,928 19

Deferred tax asset 8,233 5,358 26

280,558 337,053

Current assets
Inventories 138,720 155,855 18

Trade and other receivables 4,380 7,838 19

Cash and cash equivalents 13,051 15,288 21

156,151 178,981

Non current assets classified as held 26,591 - 20

for sale
182,742 178,981

TOTAL ASSETS 463,300 516,034

Current liabilities
Trade and other payables (55,543) (53,402) 23

Bank loans (156,031) (95,702) 24

Derivative financial (368) (456) 25
instruments

(211,942) (149,560)

Liabilities directly associated with (19,444) - 20

non current assets held for sale
(231,386) (149,560)

Non-current liabilities
Other payables (5,308) (10,104) 23

Bank loans (91,719) (151,983) 24

Derivative financial (1,257) (1,427) 25
instruments

Deferred tax liabilities (19,732) (29,121) 26

(118,016) (192,635)

TOTAL LIABILITIES (349,402) (342,195)

NET ASSETS 113,898 173,839

The notes on pages 46 to 88 form part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET

As at 31 December 2009

Euro'000 Euro'000 Notes

EQUITY

Share capital account 6,268 6,268 27

Revaluation reserve 6,936 15,575 29

Other distributable reserve 194,817 194,817 29

Translation reserve (6,795) (4,682) 29

Accumulated loss (88,060) (39,412)

Equity attributable to equity 113,166 172,566

holders of the Company
Minority Interests 732 1,273 30

TOTAL EQUITY 113,898 173,839

Basic net asset value per share Euro2.42 Euro3.68

The notes on pages 46 to 88 form part of these consolidated financial statements. The financial statements on pages 40 to 88 were approved by the Board of Directors on 15 March 2010 and signed on its behalf by:

Quentin Spicer Shelagh Mason

Chairman Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2009

Share Other Accumulated Total Minority Total
capital reserves loss interest equity
account

Euro'000 Euro'000 Euro'000 Euro'000 Euro'000 Euro'000

As at 1 January2008 484 224,524 (1,631) 223,377 739 224,116

Total comprehensive - (11,311) (37,872) (49,183) (3) (49,186)

income for the year
Minority interest - - - - 537 537

acquired in the year (note 30)
Shares issued in the 5,784 - - 5,784 - 5,784

year (note 27)
Share based payments - - 91 91 - 91

(note 28)
Dividends paid (note 9) - (7,503) - (7,503) - (7,503)

As at 31 December 2008 6,268 205,710 (39,412) 172,566 1,273 173,839
Total comprehensive - (10,752) (48,677) (59,429) (541) (59,970)

income for the year
Share based payments - - 29 29 - 29

(note 28)
As at 31 December 2009 6,268 194,958 (88,060) 113,166 732 113,898

CONSOLIDATED CASH FLOW STATEMENT

Year ended 31 December 2009

Note Euro'000 Euro'000

Cash inflow/ (outflow) generated from 22 2,446 (13,052)

operations
Interest received 148 517

Interest paid (12,227) (16,114)

Tax paid (791) (491)

Net cash outflow from operating activities (10,424) (29,140)

Investing activities
Acquisition of subsidiaries - net of cash - 58

acquired
Disposal of subsidiary interest - net of 792 -

cash disposed
Purchase of investment property (268) (835)

Purchase of property, plant and equipment (233) (1,460)

Proceeds from disposal of property, plant 69 156

and equipment
Purchase of intangible assets - software (21) (18)

Net cash from/ (used in) investing 339 (2,099)

activities Financing activities
Dividends paid - (6,256)

New bank loans raised 27,972 41,899

Repayments of bank loans (18,214) (16,796)

New loans granted to JV partners (259) (746)

New loans received from minority investors 2,713 722

Net cash from financing activities 12,212 18,823

Net increase/ (decrease) in cash 2,127 (12,416)

and cash equivalents in the year
Effect of foreign exchange rates (4,364) (7,157)

Net decrease in cash and cash equivalents in (2,237) (19,573)

the year
Cash and cash equivalents at the beginning 15,288 34,861

of the year
Cash and cash equivalent at the end of the 13,051 15,288

year Cash and cash equivalents
Cash and cash equivalents 21 13,265 15,288

Cash and cash equivalents held for sale 20 (214) -

Bank overdrafts - -

21 13,051 15,288

Year ended 31 December 2009

Basis of preparation

These consolidated financial statements have been prepared in accordance with applicable Guernsey law and International Financial Reporting Standards ("IFRS") and IFRIC interpretations adopted by the European Union and therefore comply with Article 4 of the EU IAS Regulation. The consolidated financial statements have been prepared on a going concern basis and on a historical cost basis as amended by the revaluation of land and buildings and investment property, and financial assets and financial liabilities at amortised cost. The principal accounting policies are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

As described in the Chairman's Statement and in the Review of the Property Manager, the economic environment has been challenging and the Group has reported a loss from operations for the year ended 31 December 2009 and a significant fall in net asset value as at 31 December 2009. The directors consider that the outlook presents ongoing challenges in terms of the markets in which the Group operates, the effect of fluctuating exchange rates in the functional currencies of the Group and the availability of bank financing for the Group.

As at 31 December 2009 the Group held land and building assets with a market value of Euro442 million, compared to external debt of Euro260 million. Subject to the time lag in realising the value in these assets in order to generate cash, this loan to value ratio gives a strong indication of the Group's ability to generate sufficient cash in order to meet its financial obligations as they fall due. Any land and building assets and associated debts which are ring-fenced in unique, specific, corporate vehicles, which are subject to any repossession by the bank on default of loan terms would clear the outstanding debt and not result in additional finance liabilities for the Company or for the Group. There are also unencumbered assets which could potentially be leveraged to raise additional finance.

For the first time the Group has entered into a cross collateralisation agreement on four of its loans with one bank. This has been necessary due to technical covenant breaches. As a result of the amendment agreement the bank has agreed to a waiver of all prior covenant breaches and improved terms and conditions for the Group.

In the preparation of the consolidated financial statements for the year ended 31 December 2009, the directors have reclassified four loans totaling Euro92.4 million within the financial statements from non current liabilities to current liabilities as bank loans and overdrafts due within one year or on demand, where covenant breaches or defaults on these loans arose. The banks are aware of the technical breaches and defaults and have not asked for repayment of the loans. Two of these loans, totalling Euro67.1 million in 2009, were in breach at 31 December 2008 and were classified as bank loans and overdrafts due within one year or on demand at 31 December 2008. The defaults on the other two loans result from non payment of interest. In addition there is one loan that is repayable on demand in the amount of Euro9.0 million (2008: Euro8.4 million due within one year). Negotiations are ongoing with the bank on refinancing terms. Loans maturing within one year total Euro156.0 million (excluding loans associated with assets held for sale) at 31 December 2009 compared to Euro95.7 million at 31 December 2008. Euro25.4 million of the Euro60.3 million increase from 31 December 2008 relates to the two defaults discussed above. The rem

2. Half year consolidated financial statements 2010 - 16 August 2010.

3. Stand alone and consolidated financial statements for 2009 - 15 March 2010.

The Board of Directors of the Company represents further that, in accordance with paragraph 83 sections 1 and 3 of the Regulation, the Company intends to publish consolidated quarterly reports, containing quarterly financial information according to paragraph 87 of the Regulation and a consolidated half year report containing the condensed half year financial statements of the Company.

Further information, please contact:

Atlas Management Company Limited

Nahman Tsabar / Michael Williamson Tel: +44 (0) 207 245 8672

Intertrust Fund Services (Guernsey) Limited

Andre Le Prevost Tel: +44 (0) 1481 211 000

Fairfax I.S. PLC

David Floyd / Rachel Rees Tel: +44 (0) 20 7598 5368

END

Further information, please contact:

Atlas Management Company Limited Tel: +44 (0) 207 245 8672

Nahman Tsabar / Michael Williamson
Intertrust Fund Services (Guernsey) Tel: +44 (0) 1481 211 000

Limited Andre Le Prevost
Fairfax I.S. PLC Tel: +44 (0) 20 7598 5368

David Floyd / Rachel Rees

END