15 April 2023
owns a premium portfolio of properties in the Black Sea – Constanta region
Page 1 of 51
2022 Highlights
Net Asset Value (NAV)
Net Asset value was EUR 0.40 (NOK 4.15 before any tax) per share, that being 2.5% below the
announced year-end 2021 level of EUR 0.41 per share.
The year-end 2022 valuation was concluded by Colliers in January 2023 and the values of the
Group’s investment property have been updated accordingly.
Operational highlights
During 2022, the Company sold a total of 21,117 sq. meters from the various projects totalling
EUR 2.7 milion. Hitherto, in 2023, the Company has sold 289 sq. meters for a total EUR 0.06 million.
By the end of 2022, a total of EUR 6.9 million (ex VAT) have been invested in infrastructure,
primarily in Industrial Park and Lakeside.
Financial Results
Net Result for the year 2022 was EUR 0.63 million loss compared to a EUR 1.53 million profit in
2021.
By year-end 2022, the Company had a cash position of EUR 4.1 million plus a total of EUR 5.1
million in unsettled receivables related to binding sales agreements, totalling EUR 9.2 million, or
about EUR 0.22 per share (2021: EUR 0.19 per share).
Macro and real estate market highlights
Romania's GDP expanded in 2022 by 4.8%, compared to a growth of 5.6% in 2021, according
to data from the Country's statistical board (INS). European Commission’s Romania 2023 GDP
growth projection to 2.5%.
During 2022 the average residential prices in Romania reached an average price of EUR
1,705/sqm, indicating an 5.6% increase compared with end of year prices 2021. Price growth
turned negative from June 2022. In Constanta, average prices at the end of December 2022
reached at EUR 1,609/sqm (1434), showing an increase of 10.9% compared with the same
period last year according to www.imobiliare.ro
Page 2 of 51
Key Financials
EUR '000
2022
2021
Operating Revenue
4,853
3,711
Operating Expenses
(1,721)
1,073
Other operating income/ (expense), net
(3,627)
(2,682)
Net financial income/(cost)
37
(509)
Pre-tax result
(457)
1,593
Result for the period
(635)
1,532
Total assets
16,724
17,986
Total liabilities
494
1,160
Total equity
16,230
16,826
Equity %
97.0%
93.6%
NAV per share (EUR)
0.39
0.41
Cash position
4,098
3,807
For a more detailed analysis of the key financials please review the Financial Statements
section of this report.
Page 3 of 51
Property Portfolio
Total size of the Company’s Property Portfolio (“Land Bank”) totaled 219,727 sqm at the end of
2022. The Company owns prime location plots in the Black Sea region, County Constanta:
Plot name
Location
Size (m2)
1 Ovidiu Lakeside
Constanta North/Ovidiu
2,764
2 Ovidiu Residence
Constanta North/Ovidiu
50,000
3 Ovidiu (Oasis)
Constanta North/Ovidiu
23,103
4 Centrepoint
Constanta North/Ovidiu
121,672
5 Ovidiu Residence 2 and 3
Constanta North/Ovidiu
15,000
6 Balada Market
Central Constanta
7,188
Total
219,727
For further information on the Company’s property portfolio, please visit www.RomReal.com
Romanian Macro development
The National Bank has decided to keep the monetary “Policy rate” at 7% (9 February 2023). The
annual inflation rate went down to 16.4 percent in December 2022 from 16.8 percent in
November 2022, mainly as a result of lower fuel prices amid the decline in oil prices and the
appreciation of the leu against the US dollar. This trend continued in January 2023 with an
increase of 15.1 percent y-o-y. According to the updated forecast from the Federal Planning
Bureau, the annual inflation rate is expected to fall significantly during 2023 to 4.5 percent.
On a 2022 full year basis, the GDP grew by 4.8%, compared to a 5.8% expansion in 2021, INS
said in a statement 14 February 2023. According to the latest forecast by the European
Commission, Romania’s economy is expected to grow 2.5 percent in 2023, marginally lower
than what is assumed in the Government 2023 budget (2.8%). According to INS, a modest
rebound of 3 % in GDP is projected for 2024 on the back of receding inflationary pressure,
lower interest rates and improved external outlook. Otherwise, the EUR/Ron average was
rather flat versus 2021, with just a 0.2 percentage increase to 4.93. This RON strength is
probably due to a hefty inflow of EU money.
Page 4 of 51
RomReal Ethical Policy
Introduction
RomReal is only involved in minor construction
or development projects, but aiming to
maintain its principles with regards to Ethical
Policy since its listing to the Oslo Stock
Exchange. These can be found below:
Energy
From initial site surveys, through to the
specification of fixtures and fittings, the
Company aims to identify the most energy-
efficient solutions. The Company is seeking
more intelligent and sustainable approaches
to design, construction and materials.
Water
All of the developments consider ways in
which water usage can be reduced, both
during construction and occupancy. Where
possible, specifying ways of increasing the
efficiency of water usage within the
infrastructure of our developments, delivering
responsibility and cost-efficiency.
Materials
The Company is aiming to select all
construction materials carefully. The aim is to
protect natural resources and reduce carbon
emissions, thereby contributing to a healthy
environment for the residents in all
developments.
Waste
RomReal is aware of the need to reduce and
manage waste across our operations and is
aiming to fulfil all legal requirements. It also
supports and encourages residents in their
own recycling efforts.
Community
From introducing improvements to the local
infrastructure to including spaces for
socialising and local amenities, the aim is to
contribute to sustainable communities for
everyone.
Healthy Living
RomReal recognizes our responsibility to
support healthy lifestyles and meet the needs
and aspirations of residents. RomReal seeks to
maximize the natural benefits of sunlight,
daylight and open space within each
development.
Education
RomReal seeks to deliver sustainable
development through its ethical policy and
working practices. The terms of reference
include requirements for economic and social
progress at a local level. The Company has
supported educational initiatives, both those
that spread best practice in sustainable
development, and those that enhance the
local educational infrastructure in general.
Page 5 of 51
Shareholder Overview
Please see below the list of the top 20 shareholders in RomReal as of 06 March 2023:
Rank
Name
Holding
Stake
1
SIX SIS AG
10,331,934
24.98%
2
GRØNSKAG, KJETIL
5,913,006
14.29%
3
THORKILDSEN,
WENCHE
5,392,985
13.04%
4
SAGA EIENDOM AS
3,386,636
8.19%
5
AUSTBØ, EDVIN
2,108,500
5.10%
6
Danske Bank A/S
1,557,838
3.78%
7
ENERGI INVEST AS
1,253,611
3.03%
8
Orakel AS
1,101,000
2.66%
9
GRØNLAND, STEINAR
1,045,277
2.53%
10
BNP Paribas
991,717
2.40%
11
SPAR KAPITAL
INVESTOR AS
940,236
2.27%
12
THORKILDSEN INVEST
AS
829,478
2.01%
13
PERSSON, ARILD
718,000
1.74%
14
HOEN, ANDERS
MYSSEN
689,557
1.67%
15
KVAAL INVEST AS
682,000
1.65%
16
AKSEL MAGDAHL
466,092
1.13%
17
Frenico AS
396,000
0.96%
18
NORDNET
LIVSFORSIKRING AS
295,903
0.72%
19
CITIBANK
220,000
0.53%
20
Jo Egil Aalerud
166,864
0.40%
TOP 20
38,486,634
93.08%
Page 6 of 51
Board of Directors
Kjetil Grønskag - Chairman of the Board and CEO
Lacramioara Isarescu – Board Member
Bendt Thorkildsen – Board Member
Heidi Sørensen Austbø – Board Member
Mr. Grønskag holds a master of General Business (siviløkonom) from
Handelshøyskolen BI and is a Certified Financial Analyst (CFA) from
Norwegian School of Economics and Business Administration. He has also
studied Law at University of Oslo. Mr. Grønskag has a long experience
within international banking and Real Estate. Mr Grønskag has significant
Directorship experience from both listed and private companies. He is a
Norwegian citizen and resides in London, UK.
Ileana Lacramioara Isarescu is a corporate professional with over 15
years of international experience in business development in real estate,
finance and IT. Having worked in Vienna and New York, Ileana is
currently the Governmental Programs Executive for IBM South East
Europe, and resides in Bucharest, Romania. Ileana holds a MBA degree
from Harvard Business School and a MSc in International Economics from
the Academy of Economic Studies Bucharest.
Mr. Thorkildsen holds a Master of Science (MSc) in International
Marketing and Strategy from the Norwegian School of Economics and
Business Administration. Mr. Thorkildsen has more than 20 years with
varied experience with particular focus on business development/sales
(IT). During the last 10 years Mr. Thorkildsen also has held various
Directorship including in the real-estate industry. He is a Norwegian
citizen.
Mrs Austbø is a State Authorised Public Accountant from
Handelshøyskolen BI in Oslo. Mrs Austbø has 14 years’ experience from
both audit and Management with Norwegian and global equities,
working for KPMG and long equity funds at Terra Fondsforvaltning and
Arctic Fund Management. Mrs Austbø also has Directorship and CEO
experience from privately held companies. She is a Norwegian citizen
and resides in Oslo.
7
Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board
of Directors Report and the RomReal Ltd consolidated and annual financial statements as of 31
December 2022. To the best of our knowledge, we confirm that RomReal Ltd and RomReal
Group’s consolidated annual financial statements for 2022 have been prepared in accordance
with IFRSs and IFRICs as adopted by the European Union (EU), IFRSs as issued by the International
Accounting Standards Board (IASB).
The information presented in the financial statements gives a true and fair view of the
Company’s and the Group’s assets, liabilities, financial position and results for the period
viewed in their entirety.
DIRECTORS REPORT 2022
RomReal Directors
The Board of Directors of RomReal is responsible for the supervision and administration of the
Company’s affairs and for ensuring that the Company’s operations are organized in a
satisfactory manner.
The Directors are shown below together with their interest in the number of shares in the
Company per 31 December 2022 and per 31 December 2021:
31 December 2022
31 December 2021
Kjetil Grønskag
Appointed Nov 2006
5,913,006
5,752,914
Heidi Sørensen Austbø
Appointed April 2017
Nil
Nil
Bendt Thorkildsen
Appointed April 2016
6,222,463
6,222,463
Lacramioara Isarescu
Appointed April 2014
Nil
Nil
TOTAL
12,135,469
11,975,377
8
Operations Update
Lake Side (No.1 on the table) – The Company has sold 7 plots during 2022. Street and utilities
have been delivered to the City Hall for public use according to agreement. The City Hall has
delivered the utilities to the water company during February 2023. RomReal is marketing the
remaining 4 small plots for sale.
Oasis (No. 3 on the table) – The Company has commenced the process to re-authorise the
regular utilities like gas, electricity and roads on the plot. Both block structures have already
been re-authorised by Ovidiu City Hall. This in order to add value to the plot and commence the
works for constructing the utilities. The Company has commenced the works for water and
sewage on the plot as well.
Industrial Park (No. 4 on the table) – The project is partly or fully still for sale. Some investments is
required on the plot to maintain its existing PUZ and building Authorisation before October 2023.
Balada Market (No. 6 on the table) – The project is for sale. A regulation process to utilise a larger
part of the plot for parking has been obtained and installation is expected be completed during
April this year.
Ovidiu Residence (former Badulescu plot, No. 2 on the table) – Based on the Lakeside plot
experience, the Company has commenced a process to regulate this plot located nearby
Lakeside for residential and commercial use. The regulation process is moving more or less as
planned, but a urbanistic regulation/PUZ is not obtained yet. The Company has signed a
precontract for sale of a part of the plot with a local investor.
Ovidiu Residence 2 (former Gynaydin 7,900 sqm No. 5 on the table) - The Company has
commenced a process to regulate the plot located nearby Lakeside for residential use. This will
include infrastructure investments. It is expected the urbanistic regulation/PUZ of the plot to be
approved by local authorities hopefully within end 2023. The Company has signed a precontract
for sale of the plot with a local investor.
Ovidiu Residence 3 (former Gunaydin 7,100 sqm, No. 5 on the table) – The Company has
commenced a process to regulate the plot located nearby the road between Ovidiu and
Constanta for residential use. It is expected to include infrastructure investments. It is expected
the urbanistic regulation/PUZ of the plot to be approved by local authorities hopefully within
end 2023.
Key features of the real estate market
Romanian Investment Market: According to Colliers, 2022 was a strong year for investment
deals in Romania totalling EUR 1.25 billion versus EUR 890 million in 2021. The largest transaction
was the sale of CA Immo’s office portfolio in Romania of EUR 377 million. Another
characteristic of 2022 is the increased strong demand stemming from local investors with an
estimated 50 percent of the volume.
Offices: In the main market Bucharest, about 125,000 m2 of new modern offices has been
delivered this year. Taking the overall stock to about 3.3m m2 according to Colliers. The
estimated vacancy ended at about 15 percent versus around 16.5 percent by the end of
2021. The two main unknowns for 2023 is the overall macro development and a how the
hybrid work (home vs office work) pans out. The new office pipeline for 2023 is about 100,000
9
m2. All in all, the Romanian office market is still undersupplied on a per capita basis relative to
Western European capitals, and the Romanian regional market is even more so.
Retail: According to Colliers, about 77,000 m2 was delivered in total in Romania in 2022 versus
about 102,000 m2 in 2021. This is the second lowest year figure in almost two decades. The
largest delivery in Bucharest in 2022 was the extension of the Colosseum Mall (16,500 m2) and
the Scallier’s Funshop Retail Park in Timisoare (10,800 m2). The bulk of the deliveries came via
retail parks. The estimated total retail space in Romania is about 4.1m m2 by the end of 2022.
The estimated 2023 deliveries of about 260,000 m2, may turn out to be among the most
significant supply additions since 2011. This could lead to some delays and some projects
pushed into 2024. Again, retail parks are set to be the main contributor.
Industrial/logistics: The industrial and logistic sector reached 6.2m m2 of modern stock during
2022 following completion of several larger projects, About 50% of the new stock came in
Bucharest. During last year about 800,000 m2 was agreed in new rental contracts. The
RomReal Limited Fourth quarter 2022 Page 6 of 15 biggest transaction in 2022 was H & M’s
new distribution center in Ploiesti, totalling circa 88,000 m2. Colliers is optimistic with regards to
the long-term prospects of the I&L market, with an estimate of about 10m m2 by the end of
the decade.
Residential: Asking prices for apartments and houses in Romania decreased by 1.35% in the
fourth quarter of 2022 compared the third quarter of 2022 (EUR 1,705/m2 to EUR 1,682/m2 at
the end of 4Q 2022). In Constanta, average prices increased by 0.21% during the fourth
quarter of 2022 (EUR 1,431/m2 at the end of December 2022, compared to EUR 1,428/m2 at
the end of September 2022), according to www.imobiliare.ro index. The Romanian housing
market has been increasing since 2015 with a nationwide price average of about 84%. This
trend turned negative from June 2022. The Governmental project Noua Casa (New Home),
which gives favourable, state-guaranteed loans to those who intends to buy their first home,
has seen less demand last year. Only about 75% of the available funds in the programme has
been used this year vs 100% take-up after two months in 2021. The main reasons are increased
interest rates and building costs and reduced consumer confidence.
The following graphs indicate the apartment prices trend in Romania and Constanta by year-
end 2022:
During 2022, the average residential prices in Romania reached an average price of EUR
1,682/sqm, indicating an 5.6% increase compared with end of year prices 2021 (EUR 1,593/sqm).
Romania
10
Price growth turned negative from June 2022. In Constanta, average prices at the end of
December 2022 reached at EUR 1,431/sqm. (2021: 1,408) showing an increase of 1.63%
compared with the same period last year according to www.imobiliare.ro
Accounts and financial position
Operating revenues
RomReal had consolidated operating revenues of EUR 4.85 million in 2022 compared to EUR
3.71 million in 2021. The main revenue streams were rental income from the Balada Market and
sales of plots.
Operating expenses
Total consolidated operating expenses were EUR 1.72 million in 2022 (mainly due to the
unrealised losses related to the inventories portfolio) compared to a positive EUR 1.07 million in
2021. RomReal (parent Company) operating loss were EUR 1.15 million in 2022 compared to EUR
2.32 million gains in 2021.
Profit/Loss
Consolidated profit/loss after tax in 2022 was a los of EUR 0.635 million compared to a profit after
tax of EUR 1.532 million in 2021. RomReal (parent Company) loss after tax was EUR 0.60 million in
2022 compared to EUR 1.79 million gain in 2021.
Constanta
11
The end of year 2022 independent land bank portfolio valuation has shown a net increase on
a like for like basis compared to the end of year 2021 valuation, mainly reflecting the works to
increase the value of plots under Lakeside and Oasis Residence.
Dividends
The Directors are not proposing any dividends for the period.
Balance sheet
RomReal had on a consolidated basis a total balance sheet of EUR 16.72 million at 31
December 2022 (2021: EUR 17.99 milion). RomReal (parent Company) had a total balance
sheet of EUR 16.29 million (2021: EUR 16.88 million). Total consolidated equity at 31 December
2022 amounted to EUR 16.23 million (parent Company EUR 16.23 million) compared with EUR
16.83 million in 2021 (parent Company EUR 16.82 million). The Company has total current and
non current liabilities of EUR 0.49 million at 31 December 2022 (parent Company EUR 0.06 million).
Net cash flow from consolidated operations was positive EUR 0.29 million at December 31 2022
compared to positive EUR 2.60 million in 2021 (parent Company positive EUR 0.25 million
compared to negative EUR 0.16 million in 2021). Consolidated current assets were EUR 12.22
million at 31 December 2022 compared to EUR 13.37 million at 31 December 2021 (parent
Company EUR 0.29 million in 2022 compared to EUR 0.04 million in 2021).
Financial risk
The Company does not have any current nor potential litigation, previous tax dispute was fully
settled in November 2020.
Organization
RomReal Ltd operates in Romania through its fully owned subsidiary S.C. Westhouse Group SRL
(WHG). WHG holds an office in Constanta, Romania, and a small team of five employees, legal
operations of the subsidiary companies being supervised by Cristea & Partners Law office headed
by Mr. Adrian Cristea. The employees mainly deal with managing the assets, accounting
compliance and reporting as well as sales/ marketing.
Working Conditions, Equal Opportunities, Health and Environmental issues
RomReal works continuously on facilitating employee development, good health, enthusiasm
and commitment among its employees. The Company also encourages employees to use public
transport on travelling to reduce pollution. Women and men in comparable jobs receiving the
same pay.
Climate risks and risk management
RomReal has a clear ambition to exit the Romanian real estate market by selling its projects
(primarily land) in due course, and the remaining assets is rather limited in value and size.
Consequently, the view of the Board of the Directors is it will not materially be affected from
external climate risk or any known EU and/or Romanian regulations. Even though, the
Romanian affiliated companies of the Group have on a best effort basis satisfied all known
climate risk/environmental procedures assessment for all the remaining properties, and the
required approvals has been issued in time by the Environment authorities for each project.
12
Corporate Governance
RomReal Ltd (RomReal) is trying to focus on practicing good corporate governance, which will
strengthen confidence in the Group and thereby contribute to the best possible long-term value
creation to the benefit of the shareholders, the employees and other stakeholders. The purpose
of its principles for corporate governance is to regulate the division of roles between shareholders,
the Board and the Executive Management more comprehensively than is required by legislation.
The Norwegian code of practice for corporate governance (the code) has been issued by the
Norwegian Corporate Governance Board (NCGB). It builds on the principle of “comply or
explain”, whereby companies must either comply with the code or explain why they may have
chosen an alternative approach. It also requires the Company’s report on its corporate
governance to address all 15 sections of the code. The Oslo Stock Exchange stipulates that listed
companies must provide an overall presentation of their corporate governance principles in
accordance with the applicable code, and that this must be included in their annual report.
RomReal’s principles for corporate governance are based on the recommendation of 14 October
2021, which can be found at www.nues.no.
1. Implementation and reporting on corporate governance
Confidence in its Management and business are crucial for RomReal’s present and future
competitiveness. The Group practices open Management, and thereby builds trust both in-house
and externally.
The Board of RomReal is responsible for implementing sound corporate governance principles in
the Group according to Bermuda Corporate Governance standards. RomReal’s corporate
governance does not deviate from the requirements of the code in a significant way which
requires more detailed explanation. Relations between owners and the Group will be
characterized by respect for the owners, good and timely information, and equal treatment of
shareholders.
2. Business
RomReal owns a portfolio of prime location plots in the Black Sea region, more specifically
Constanta and Ovidiu. The plots are well suited for residential and commercial developments.
RomReal is involved in several construction or development projects for the time being. The ethical
guidelines observed by RomReal reflect its values base; please see separate Ethical Policy Section.
The objective of the Company for 2023 is to:
• Focus on land value enhancing activities in order to improve the shareholder value.
• Key action points are increased & more professional sales & marketing efforts
• Some infra-structure investments and, if necessary, engage more resources into
regulation processes like what is planned on Oasis.
• Maintain a cost efficient, and healthy organisation
• Conservative cash management and secure collection of vendor financing
3. Equity and dividends
RomReal aims to maintain a solid equity and good liquidity appropriate to its objectives, strategy,
and risk profile
13
Dividend
The Company is fully financed without any external debt, and when/if certain additional disposals
are realized, tax cases concluded a potential re-distribution of cash to the shareholders will
reappear on the Board of Directors agenda.
Under Bermuda law, a Company’s Board of Directors may declare and pay dividends from time
to time unless there are reasonable grounds for believing that the Company is, or would after the
payment be, unable to pay its liabilities as they become due or that the realizable value of its
assets would thereby be less than the aggregate of its liabilities and issued share capital and share
premium accounts. Under the Company’s Bye-Laws, each share is entitled to dividends if, as and
when dividends are declared by the Board, subjects to any preferred divided right of the holders
of any preference shares. There are no restrictions on the Company’s ability to transfer funds (other
than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to
Norwegian residents who are holders of the Company’s Shares.
4. Equal treatment of shareholders and transactions with close associates
Share Issues
Only the General Meeting considers Board mandates to increase the share capital for each
purpose after assessing the requirements set by the Board.
Different Classes of Shares
RomReal has a single share class, and each share carries one vote. Shareholders will be treated
equally unless qualified grounds exist for an alternative approach.
Efforts will be made to conduct possible transactions by the Company in its own shares through
the stock exchange or in others ways at prevailing stock exchange prices.
Transactions with close associates
RomReal’s routines specify that, in general, no transactions should be conducted between the
Group and its shareholders, Directors, senior executives or their close associates. Should any of
these have an interest in a transaction involving the Group, the Board must be informed and take
up the matter for consideration if necessary. Unless the transaction is insignificant, the Board will
secure third-party assessments of the transaction and otherwise assure itself that no form of unfair
treatment of shareholders, elected officers, employees or others is involved. The related parties,
including shareholders and close associates, are reported to the stock exchange via
www.newspoint.no. During 2022, there was nine insider transaction by Chairman Kjetil Gronskag.
14
5. Shares and negotiability
RomReal’s articles of association place no restrictions on transferability, and its shares are freely
negotiable. RomReal received a listing on the Oslo Stock Exchange’s Oslo Axess list on 11 June
2007.
6. General Meetings
RomReal facilitates the participation of as many shareholders as possible at the General Meeting
and ensures that it functions as much as possible as an effective meeting place for the
shareholders and the Board so that the owners can exercise their rights. Notice of the Meeting
and supporting documents are prepared no later than 21 days before the Meeting is to take
place and posted on the Company’s website. The documents are sent to all shareholders with a
known address in the Norwegian Central Securities Depository (VPS) in good time before the
General Meeting takes place. This is facilitated by RomReal’s register keeper DNB, which ensures
that documents, including proxies and notifications, are carried by email and/or regular post to
all shareholders. The notifications and proxies clearly specify the deadline for returning the proxies
which provide the shareholders between 2 to 3 weeks to return their vote depending on their
accessibility more i.e., email or post.
The Meeting takes place on 27 April 2023, at our registered office in Bermuda and it is accessible
to all Board members and shareholders. Shareholders unable to attend in person will be given an
opportunity to vote by proxy. The Company provides information on the procedure for:
(a) Appointing a proxy
(b) appoint a person who can act as proxy for the shareholder
(c) allowing separate voting instructions for each matter but not for each one of the
candidates nominated.
The Board will propose to vote for each individual Board Member as of Ordinary General Meeting
scheduled for 27 April 2023.
Representatives of the Board always attend the Annual General Meeting, together with
representatives of the Executive Management, and normally a representative from EY auditors
either in person or via conference calling.
The Board determines the agenda for the General Meeting. The main items on the agenda
comply with the requirements of the Public Limited Companies Act as well as the parent
Company’s articles of association. As recommended by the code, each General Meeting
appoints a person to act as its independent Chair. Minutes of general meetings are published on
www.RomReal.com and on the Oslo Stock Exchange website at www.newsweb.no.
For 2022, the Annual General Meeting of the Company will take place on the 27 April 2023, at the
Company’s registered office in Bermuda.
7. Nomination Committee
RomReal has chosen not to comply with the directive 7 for appointing a Nomination Committee.
This is due to the current size, resources and activity of the Company, the Company considers that
the cost of running a separate nomination committee should be avoided.
15
8. Board of Directors: composition and independence
RomReal’s Board of Directors consisted at 31 December 2022 of four Directors:
Kjetil Grønskag
Bendt Thorkildsen
Lacramioara Isarescu
Heidi Sørensen Austbø
The Directors have long and varied experience in real estate, banking and finance which ensures
that the Board can function effectively as a collegiate body. An overview of the Directors
expertise, role and attendance can be found on the Company’s website, www.RomReal.com.
The composition of the Board ensures that it serves the common interest and that it can operate
as independently as possible of special interests. Chairman Kjetil Gronskag holds an executive
position as Chief Executive of RomReal following Board approval on the 26 May 2016.
The Chairman of the Board, as well as the Vice Chairman, Secretary, and assistant Secretary are
elected by the Board of Directors during the first meeting of the newly elected Board. The term
office for members of the Board is one year.
To be proposed as of Ordinary General Meeting on 27 April 2023, the General Meeting should
elect the Chairman of the Board as the Company’s highest governing body.
9. The work of the Board of Directors
The Board of Directors is the Company’s highest body, and answerable only to the General
Meeting. It has overall responsibility for planning and execution of the Group’s strategy and
activities, including its organization, remuneration policy and risk Management.
The Board also has overall responsibility for control and supervision. It produces an annual plan for
its work with objectives, strategy and implementation. This is supported by a 2 year forecast plan
or budget, which is updated on a quarterly basis during Board meetings. During Board meetings
decisions are taken and tasks are delegated to the Executive Management. The Board discusses
all matters relating to the Group’s activities which are of significant importance or of a special
character.
The duties and responsibilities of the Board are dictated by applicable legislation, the parent
Company’s articles of association, and mandates and instructions adopted by the general
meeting. The Board will exercise supervision to ensure that the Group meets its business goals and
manages risk in a wise and satisfactory manner. The Board is responsible for appointing the chief
executive.
The Chairman is responsible for ensuring that the work of the Board is conducted in an efficient
and proper manner and in compliance with applicable legislation. During 2022 6 (six) Board
meetings were conducted. In addition to the Chairman, the Board has two independent chairs
to lead the discussion on issues where the chair has a conflict of interest or is unable to attend.
The Board carries out an annual assessment of its work
16
The Board of Directors ensures that members of the board of Directors and executive personnel
make the Company aware of any material interests that they may have in items to be considered
by the board of Directors, prior to each Annual General Meeting.
The Board does not hold any Independent Committees due to the small size and limited activity
of the Company. Four out of five Board members are independent therefore their direct
judgement and decision-making during Board meetings, ensures that the Board is aligned to
shareholders’ value in decisions related to audit and remuneration of the executive personnel.
10. Risk Management and internal control
The Board and Executive Management of RomReal place great emphasis on establishing and
maintaining routines for risk Management and internal control. An annual review of the most
important risks affecting the business is conducted by the Board.
Economic conditions and Emerging markets risk
The financial market climate and especially the price of property/plots and general rental
levels in Romania represents risk, as it will affect the Group’s limited rental income. There is risk
associated with the general development of lease levels of commercial property for various
segments and the locations where the Group owns properties. This especially applies to the
market conditions at the expiration of lease contracts on the Group’s properties. The
Company aims to reduce this type of fluctuations, by holding tenants’ deposits and/or bank
guarantees. If fluctuations occur, it will have a negative impact on the Group’s earnings and
financial position.
The risk of market slowdown due to Covid-19 and the political risk in the region is evaluated
and monitored by the Management on a regular basis.
Financial reporting
Quarterly operational and accounting reports are prepared for Board approval using
International Financial Reporting Standards.
Counterparty risk
RomReal conducts an annual review of both clients and suppliers to identify counterparty risk.
New clients are also subject to a thorough assessment to identify any risk they may present.
Financial risk
The Company will continue to pursue all available legal means for challenging the effects of
such reassessment, in order to cancel the additional tax liabilities.
Foreign Exchange risk
The Company’s main reporting currency is the EUR, which is used to facilitate loans to its
subsidiaries. At the subsidiary level in Romania, the operational currency is RON. Due to its
17
operational exposure in Romania, the financial reporting currency used to value the Company’s
assets is the RON. Due to the difference between reporting and operational currency the
Company is exposed to foreign exchange risk. To manage this, the Company holds its deposits in
a mix of RON and EUR. The average exchange rate during 2022 was 1.00 EUR to 4.93 RON (4.92).
Tax risk
Changes in laws and rules regarding tax and duties may involve new and changed
parameters for investors and the Company. This may involve a reduction in the profitability of
investing in property and the profit after tax for the Company. Tax implications of transactions
and dispositions conducted by the Company are to a certain extent based on judgment of
applicable tax laws and regulations. Even if the Company is of the opinion that it has assessed
tax law in good faith, it could not be ruled out that the authorities are of a different opinion. A
change in regulation status in parts or all of the Land Bank may also normally change the
applicable tax.
The Company is required to calculate its current income tax at a flat rate of 16%. Starting 2013,
the companies in the Group with turnover below a EUR 65,000 threshold are subject to a 1%
tax calculated on total revenue. This is the case for 4 of the Group companies (2 pay 1% tax
and 2 of them 3% tax) while one compay subject to 16% on taxable profits.
In order to simplify and optimize the Romanian sub-holding structure, a number of merger
processes of the Romanian subsidiaries is under way.
The new fiscal code implemented 01 Jan 2016 has applied a land tax increase of 500% on idle
plots that lack cleaning. The Board has allocated a budget for the Management to maintain
all of the Company’s idle plots in a clean condition.
Director’s Liability risk
The Company holds a Directors and Officers liability insurance policy with the reputable insurance
Company, Chartis.
11. Remuneration of the Board of Directors
The General Meeting determines Directors’ fees. The remuneration is not linked to the Company’s
performance in any way.
During 2022, the Directors received the following remuneration:
Lacramioara Isarescu EUR 6,000
Heidi Sørensen Austbø EUR 6,000
Bendt Thorkildsen EUR 6,000
During 2022, Chairman Kjetil Grønskag abstained from receiving any remuneration as a Board
Member during the year. There are no outstanding share options. The Company does not grant
share options to board members.
18
12. Remuneration of the Executive Management
The Board determines the Chief Executive’s terms of employment. The main principle applied by
RomReal for determining the pay of the Chief executive and other senior executives is that these
persons will be offered competitive terms. In addition, RomReal will offer terms which encourage
value creation for the Group and its shareholders, and which strengthen the loyalty of senior
employees to the business.
The Executive Management of RomReal comprises three executives with good knowledge within
their job functions and with senior Management experience from across the industry. The
Executive Management of RomReal currently includes the following persons with the yearly
outlined remuneration:
Name
Position
Yearly fees
Benefits/Bonuses
Kjetil Gronskag
CEO RomReal
€97,200
0.7% on asset sales
Adrian Cristea
Board member of Rom
subsidiaries and legal advisor
€54,000
2% on asset sales *
Claudia Oprisan
Chief Accountant
€23,000
N/A
* The incentive lawyer fee is applied on the net proceeds received by RomReal or any of its
subsidiary net of any transactions fees and vat to be added (net proceeds in Euro). These net
proceeds have to be approved by the CEO of RomReal’s subsidiaries Board of Directors and
paid by RomReal’s subsidiaries.
13. Information and communication
RomReal takes the view that objective, detailed and frequent information to the market is essential
for a correct valuation of its share, and accordingly pursues a continuous dialogue with analysts
and investors.
Information about important events in RomReal as well as its periodic reporting of results is
published in accordance with the guidelines to which the Group became subject through its listing
on Oslo Axess. RomReal seeks continuously to publish all relevant information to the market in a
timely, efficient and non-discriminatory manner. The Company constantly improves its Investor
Relation material by upgrading its reporting format, content, and website.
All stock exchange announcements are made available on www.RomReal.com and the Oslo
Stock Exchange website www.newsweb.no. The Group will provide the same information to all
shareholders at the same time. To the extent that analysts or shareholders ask for further details,
RomReal and the Board will ensure that only information which has already been made public is
provided.
The Group holds quarterly and interim presentations. These provide an overview of operational
and financial developments in the previous quarter as well as an overview of market prospects
and the outlook for the business. Interim reports, and presentation materials are made available
on the Group’s website for a period of at least 5 years.
19
The Board determines the Group’s financial calendar, which specifies the dates for publication of
interim reports, the annual general meeting and the payment of dividends. This calendar is
published by the end of December via the Oslo Stock Exchange’s information system and on the
RomReal website.
2023 Financial Calendar includes the following dates:
Q4 2022 Report 23/02/2023
AGM 2022 27/04/2023
Q1 2023 Report 25/05/2023
Q2 2023 Report 31/08/2023
Q3 2023 Report 24/11/2023
14. Takeovers
In the event of a bid for the parent Company’s shares, the Board and the Executive Management
will try to ensure that everyone gets access to sufficient information to be able to reach a decision
on the offer. Unless otherwise instructed by the general meeting, the Board will not try to deploy
defensive mechanisms to prevent the implementation of the bid.
The Board will provide shareholders with its view of the offer and, providing they have reached a
decision on this, Directors are duty-bound to inform shareholders whether they personally intend
to accept the bid. Should the Board find that it is unable to recommend whether the shareholders
should accept the bid, it will explain the reasons why such a recommendation cannot be given.
An explanation must be provided if the Board’s decision is not unanimous. The Board will consider
whether an assessment should be obtained from an independent expert.
15. Auditors and advisors
RomReal is audited by Ernst & Young AS. Ernst & Young AS, registration number 976 389 387, has
been the Company’s auditor since its incorporation in 2005. The registered business address of
Ernst & Young AS is Thormøhlens gate 53 D, NO-5008 Bergen, Norway, and Ernst & Young AS is a
member of the Norwegian Institute of Public Accountants (Nw. “Den Norske Revisorforeningen”).
The Group will not use the auditor as a consultant unless this has been approved in advance by
the Board or its Chair. A plan for their work is submitted annually by the external auditor to the
Board, and this plan will specify planned services other than auditing.
The auditor attends Board meetings which deal with the annual accounts and is also present
during the AGM. During these meetings, the auditor will review possible changes to the Company’s
auditing principles, assessments of significant accounting estimates and all cases where
disagreement has arisen between the auditor and the Executive Management.
At least once a year, the auditor will conduct a review of the Company’s internal control system
and possible weaknesses. The auditor will also propose improvements. In addition, the Board and
the auditor will hold at least one meeting a year without the chief executive or other executive
personnel being present. A briefing on the audit work and an assessment of the Group’s internal
control will be provided by the auditor to the general meeting.
The Board of Director’s Reports the auditor remuneration to the general meeting, including details
of the fee paid for audit work and any fees paid for other specific assignments.
20
Prospects
Both the CPI and GDP growth in Romania is expected fall during 2023 with a modest
improvement in 2024. RomReal is in a relatively strong financial position with zero external debt.
The weakening macro fundamentals have already resulted in a slower sales progress of the
remaining projects, and no additional new sales have materialised during 1.quarter 2023.
Hitherto, all the vendor financing schemes have been 100% honoured. In addition, the
infrastructure investments are reviewed on an on-going basis to ensure the cash position is
satisfactory.
Bermuda, 15.04.2023
The Board of Directors of RomReal
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
21
FINANCIAL STATEMENTS 2022
22
Income Statement
Figures in EUR
Consolidated
Parent company
Notes
2022
2021
2022
2021
Rental income
12
-
-
Sales of inventories
12
Cost of sales- inventories
12
(3,480,332 )
(2,875,897 )
-
-
Profit / (loss) on sales of
investment property
-
-
Total income
-
-
Payroll and related expenses
13
(260,660 )
(242,987 )
(18,000)
(18,000)
Depreciation expense
3
(19,939 )
(41,854 )
-
-
Other operating expenses
15
(92,124 )
(191,115)
2,668,806
Inventory (write off )/ reversal
5
(741,756 )
General and administrative
expenses
14
(698,997 )
(822,593 )
(257,256)
(331,646)
Operating expenses
(1,717,690 )
(466,371)
2,319,160
Net gain/(loss) from revaluation of
investment properties
(149,876 )
-
-
Profit/(loss) from operations
(494,48 9 )
(466,371)
2,319,160
Interest income
16
680
-
Interest expense
16
-
-
Foreign exchange, net
16
(24,429 )
(516,055 )
(10,756)
(512,017)
Profit/(loss) before taxes
(457,492 )
(476,447)
1,807,143
Tax expense
17
(177,719 )
(61,175 )
(119,859)
(16,000)
Result of the period
(635,21 1 )
(596,305)
1,791,143
Attributable to:
-Equity holders of the parent
(635,21 1 )
(596,305)
1,791,143
Basic earnings/(losses) per share
from continuing operations
22
(0.02 )
(0.01)
0.04
Basic earnings/(losses) per share
from continuing - diluted
22
(0.02 )
(0.01)
0.04
23
Statement Of Comprehensive Income
Figures in EUR
Consolidated
Parent company
2022
2021
2022
2021
Profit / (loss) for the year
(635,21 1 )
(596,305)
1,791,143
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
Exchange differences on translation of
foreign operations
-
-
Other comprehensive income for
the year, net of tax
-
-
Total comprehensive income for the
year, net of tax
(596,304 )
(596,305)
1,791,143
Attributable to equity holders of the
parent:
(596,304 )
(596,305)
1,791,143
24
Statement of Financial Position
Figures in EUR
Consolidated
Parent company
ASSETS
Notes
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Noncurrent assets
Property, plant & equipment
3
-
-
Investment properties
4
-
-
Deferred tax asset
17
-
-
Investments in subsidiaries
1
15,995,495
16,844,808
Total non current assets
15,995,495
16,844,808
Current assets
Inventories
5
-
-
Trade receivables and other assets
6
16,059
15,726
Cash and cash equivalents
9
274,479
19,492
Total current assets
290,538
35,217
Assets held for sale
11
-
-
Total assets
16,286,032
16,880,025
Figures in EUR
LIABILITIES AND EQUITY
Notes
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Equity
Issued share capital
7
103,419
103,419
Contributed surplus
7
Retained earnings
8
(74,761 ,935 )
(74,126,7 24 )
(70,993,046)
(70,396,741)
Other Reserves
-
-
Translation reserve
-
-
Total equity
16,227,622
16,823,927
Non current liabilities
Deferred tax liability
17
-
-
Total non current liabilities
-
-
Current liabilities
Trade and other payables
10
58,410
56,098
Income tax payable
17
-
-
Contract liabilities
-
-
Total current liabilities
58,410
56,099
Total liabilities and equity
16,286,032
16,880,025
25
Signed on behalf of the Board of Directors
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
26
Consolidated Statement Of Changes in Equity
Figures in EUR
Attributable to equity holders of the parent
Share
Capital
(Note 7)
Contributed
Surplus (Note
7)
Retained
Earnings
(Note 8)
Translation
Reserve
Other
Reserves
Total
Balance as of
31 December 2020
(75,658,735 )
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the
year
Balance as of
31 December 2021
(74,126,724 )
Profit / (loss) for the period
(635,211 )
(635,211 )
Other comprehensive income
Total comprehensive income for the
year
(635,211 )
(596,304 )
Balance as of
31 December 2022
(74,761,935 )
27
Parent Company’s Statement Of Changes in Equity
Figures in EUR
Share
Capital
(Note 7)
Contributed
Surplus (Note 7)
Retained
Earnings (Note 8)
Total
Balance as of
01 January 2021
103,419
87,117,249
(72,187,884)
15,032,783
Profit for the period
-
-
1,791,143
1,791,143
Other comprehensive income
-
-
-
-
Total comprehensive income and expense for
the year
-
-
1,791,143
1,791,143
Balance as of
31 December 2021
103,419
87,117,249
(70,396,741)
16,823,927
Profit for the period
-
-
(596,305)
(596,305)
Other comprehensive income
-
-
-
-
Total comprehensive income and expense for
the year
-
-
(596,305)
(596,305)
Balance as of
31 December 2022
103,419
87,117,249
(70,993,046)
16,227,622
28
Statement Of Cash Flows
Figures in EUR
Consolidated
Parent company
Notes
2022
2021
2022
2021
CASH FLOW FROM OPERATING
ACTIVITIES:
Net profit/(loss)
(635,21 1 )
(596,305)
1,791,143
Adjustments for:
- Income tax expense/(profit)
17
119,859
-
-Net (gain)/loss from revaluation of
investment properties
4,11
(2,466,064 )
-
-
-Expenses/(gain) on disposal of
investment property
4,11
(1,184,929 )
(663,475 )
-
-
- Depreciation and amortization
3
-
-
- Interest Income
16
(61,426 )
(7,152 )
(680)
-
- Interest expense
16
-
-
-Unrealised foreign exchange (gain) /
loss
16
10,755
512,017
-Other operating expenses
15
191,115
(2,668,807)
Decrease/(increase) in trade and other
receivables
(1,517,708 )
(356,580 )
(333)
7,333
(Decrease)/increase in current payables
(597,585 )
2,312
896
Decrease/(increase) in inventories
-
-
Cash generated from operations
(374,809 )
(471,470 )
(273,277)
(357,418)
Income tax paid
(292,960 )
(17,935 )
(119,859)
16,000
Net cash flow from operating activities
(667,769 )
(489,405 )
(393,136)
(341,418)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Sales of investment property
-
-
Capital expenditure on investment
property
(1,796,603 )
(811,676 )
-
-
Net cash flow used in investing activities
-
-
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payment of issue costs
647,424
181,976
Repayment of borrowings
-
-
Interest paid
16
-
-
Interest received
680
-
Net cash from financing activities
648,104
181,976
Other non-cash expenses/(revenues)
19
-
Net change in cash and cash equivalents
254,987
(159,442)
Cash and cash equivalents, beginning of
period
19,492
178,934
Cash and cash equivalents, end of
period
274,479
19,492
29
Notes To The Financial Statements
Note 1 ORGANIZATION AND OPERATIONS
Entity
Country of business
Owner’s share
Number of shares
Westhouse Group SRL
Romania
100%
19,612,516
Concorde Group SRL
Romania
100%
375,442
Westhouse Oasis Residences
SRL (former Rofrench
Connection SRL)
Romania
100%
350,136
Investate SRL
Romania
100%
351,320
Westhouse Lakeside SRL
(former Terra del Sol SRL)
Romania
100%
22
30
31
32
33
34
35
36
37
38
39
-
-
-
40
41
Figures in EUR Parent company
2022
2021
Trade payables
-
-
Employee taxes
-
-
Other payables
58,410
56,098
Trade payables
58,410
56,098
42
43
Figures in EUR
Parent company
2022
2021
Management fee
(97,200)
(94,800)
Legal expenses
-
-
Rent expenses
-
-
Travel expenses
(1,709)
(593)
Professional services
(63,708)
(183,123)
Land and other taxes
-
-
Other expenses
(94,639)
(53,130)
Total
(257,256)
(331,646)
Note 15 OTHER OPERATING (LOSS) / GAINS
For RomReal (the parent company) “Other operating (loss)/gains” of EUR 191,115 loss in 2022 (2021: EUR
2,668,806 gain) relates mainly to change in the fair value of the investment in subsidiaries).
44
Figures in EUR Parent company
2022
2021
Interest income from subsidiaries
-
-
Interest income from banks
680
-
Total financial income
-
-
Interest expense and other bank fees
-
-
Foreign exchange gain
-
-
Foreign exchange loss
(10,756)
(512,057)
Total Financial expense
(10,076)
(512,057)
Figures in EUR - Consolidated
2022
2021
Current income tax charge
234,596
17,935
Deferred income tax movement
in the period
(56,877)
43,240
Income tax expense/(income)
in the consolidated income statement
177,719
61,175
45
46
47
48
Basis for calculation of earnings per share
Parent Company
2022
2021
The year’s earnings from continuing operations
(596,305)
1,791,143
No. of shares at the balance sheet date
41,367,782
41,367,782
Average of no. of shares
41,367,782
41,367,782
Earnings per share
(0.01)
0.04
Diluted Earnings per share
(0.01)
0.04
49
Statement
pursuant to Section 5-5 of the Securities Trading Act
We hereby confirm that the annual accounts for the Group and the Company for 2022
to the best of our knowledge have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets, liabilities, financial
position and profit t or loss of the Group and the
Company taken as a whole.
The Directors’ report gives a true and fair view of the development and performance
of the business and the position of the Group and the Company, as well as a
description of the principal risks and uncertainties facing the Group.
Bermuda, 15.04.2023
The Board of Directors of RomReal Ltd
.......................................... ..........................................
Kjetil Grønskag (Chairman) Bendt Thorkildsen
........................................... ...........................................
Heidi Sorensen (Director) Lacramioara Isarescu (Director)
50
Company Addresses
Westhouse Group srl Westhouse Group SRL, 54 Cuza-Voda Street, ap. 3, ground floor, Constanta,
Romania, 900682
RomReal Ltd Burnaby Building, 16 Burnaby Street, Hamilton, HM11, Bermuda
Auditors Ernst & Young SRL, Premium Plaza Building, 3
rd
Floor, 63-69 Dr. Iacob Felix
Street, Sector 1, 011033, Bucharest, Romania
Auditors Ernst & Young AS, Thormøhlens gate 53 D, PO Box 6163, Postterminalen,
Bergen, N5892, Norway
Legal Advisors Wakefield Quin Limited, Victoria Place, 31 Victoria Street, Hamilton, HM10,
Bermuda
Bank in Norway Nordea Bank Norge ASA, Olav Munkegaten 21gt. 39/4, 7005 Trondheim,
Norway
Bank in Romania Alpha Bank Constanta, 175 Mamaia Boulevard, 900540, Constanta,
Romania
IR
For further information on RomReal, including presentation material relating to this interim report and
financial information, please visit www.RomReal.com
DISCLAIMER
The information included in this Report contains certain forward-looking statements that address activities,
events or developments that RomReal Limited (“the Company”) expects, projects, believes or anticipates
will or may occur in the future. These statements are based on various assumptions made by the Company,
which are beyond its control and are subject to certain additional risks and uncertainties. The Company
is subject to a large number of risk factors including but not limited to economic and market conditions in
the geographic areas and markets in which RomReal is or will be operating, counterparty risk, interest rates,
access to financing, fluctuations in currency exchange rates, and changes in governmental regulations.
As a result of these and other risk factors, actual events and our actual results may differ materially from
those indicated in or implied by such forward-looking statements. The reservation is also made that
inaccuracies or mistakes may occur in the information given above about current status of the Company
or its business. Any reliance on the information above is at the risk of the reader, and RomReal disclaims
any and all liability in this respect.