20 April 2022
owns a premium portfolio of properties in the Black Sea – Constanta region
Page 1 of 50
2021 Highlights
Net Asset Value (NAV)
Net Asset value was EUR 0.41 (NOK 4.33 before any tax) per share, that being 13.9% above
the announced year-end 2020 level.
The year-end 2021 valuation was concluded by Colliers in January 2022 and the values of
the Group’s investment property have been updated accordingly.
Operational highlights
During 2021, the Company sold a total of 33,337 sq. meters from the various projects totalling
EUR 7.4 milion. Hitherto, in 2022, the Company has sold 1.236 sq. meters for a total EUR 0.24
million.
By the end of 2021, a total of EUR 3.2 million (ex VAT) have been invested in infrastructure,
primarily in Industrial Park and Lakeside.
Financial Results
Net Result for the year 2021 was EUR 1.53 million net profit compared to a EUR 3.96 million
loss in 2020.
By year-end 2021, the Company had a cash position of EUR 3.8 million plus a total of EUR 4.1m
in unsettled receivables related to binding sales agreements, totalling EUR 7.9 million, or about
EUR 0.19 per share.
Macro and real estate market highlights
Romania's GDP expanded in 2021 by 5.6%, compared to a contraction of of 3.9% in 2020,
according to data from the Country's statistical board (INS). World Bank lowers Romania’s
2022 GDP growth projection to 4.3%. Erste keeps forecast for Romania’s 2022 GDP growth at
2.8% despite significant downside risks.
During February 2022 the average residential prices in Romania reached an average price of
EUR 1609/sqm, indicating an 18.5% increase compared with the same period last year. In
Constanta, average prices at the end of February 2022 reached at EUR 1434/sqm. showing an
increase of 13.1% compared with the same period last year according to www.imobiliare.ro
Page 2 of 50
Key Financials
EUR '000
2021
2020
Operating Revenue
836
700
Operating Expenses
981
(3,804)
Other operating income/ (expense), net
286
(215)
Net financial income/(cost)
(508)
(641)
Pre-tax result
1,593
(3,962)
Result for the period
1,532
(3,958)
Total assets
17,986
15,340
Total liabilities
1,160
305
Total equity
16,826
15,035
Equity %
93.6%
98.0%
NAV per share (EUR)
0.41
0.36
Cash position
3,807
1,207
For a more detailed analysis of the key financials please review the Financial Statements
section of this report.
Page 3 of 50
Property Portfolio
Total size of the Company’s Property Portfolio (“Land Bank”) totaled 235,833 sqm at the end of
2021. The Company owns prime location plots in the Black Sea region, County Constanta:
Plot name
Location
Size (m2)
1 Ovidiu Lakeside
Constanta North/Ovidiu
18,288
2 Badulescu plot
Constanta North/Ovidiu
50,000
3 Ovidiu (Oasis)
Constanta North/Ovidiu
23,685
4 Centrepoint
Constanta North/Ovidiu
121,672
5 Gunaydin plot
Constanta North/Ovidiu
15,000
6 Balada Market
Central Constanta
7,188
Total
235,833
For further information on the Company’s property portfolio, please visit www.RomReal.com
Romanian Macro development
Romania’s Gross Domestic Product has grew by 5.6% during the pandemic year of 2021,
compared to 2020, according to the latest flash report by the National Institute of Statistics
(INS).
The inflation over the last twelve months upto February 2022 was 8.53%. The increase is mostly
due to higher energy and raw material prices.
Romania has been a NATO member since 2004 and has a border with both Moldova and
Ukraine of about 600 kilometers each. The situation of the ground is very much “business as
usual”, but the number of refugees from Ukraine have increased significantly.
The political situation in Romania is presently stable, with a coalision of the Liberal Party (PNL)
and the Socail Democrartic Party (PSD). The PM is Mr Nicolae Ciuca, a former retired general
and member of PNL.
There have been almost 2.8 million confirmed cases of coronavirus in Romania upto medio
March 2022 and about 64,000 fatalities.
Page 4 of 50
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 50
Shareholder Overview
Please see below the list of the top 20 shareholders in RomReal as of 15 March 2022 :
Rank
Name
Holding
Stake
1
SIX SIS AG
10,331,934
24.98%
2
GRØNSKAG, KJETIL
5,752,914
13.90%
3
THORKILDSEN, WENCHE
5,392,985
13.04%
4
SAGA EIENDOM AS
3,311,526
8.01%
5
AUSTBØ, EDVIN
2,108,500
5.10%
6
Danske Bank A/S
1,507,924
3.65%
7
ENERGI INVEST AS
1,253,611
2.66%
8
GRØNLAND, STEINAR
1,110,021
2.68%
9
ORAKEL AS
1,101,000
2.66%
10
Bnp Paribas Securities Services
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
580,000
1.40%
16
AKSEL MAGDAHL
466,092
1.13%
17
NORDNET LIVSFORSIKRING AS
420,456
1.02%
18
FRENICO AS
396,000
0.96%
19
CITIBANK
220,000
0.53%
20
NORDNET BANK AB
202,773
0.49%
TOP 20
38,324,724
92.60%
(1) This is the Top 20 Shareholder list as per 15 March 2022.
(2) The total issued number of shares issued at 15 March 2022 was 41,367,783.
(3) Thorkildsen Invest AS is a Company controlled by RomReal Kay Thorkildsen family.
(4) Chairman Kjetil Grønskag owns directly and indirectly 5,752,914 shares corresponding to 13.90%. The
above list is the 20 largest shareholders according to the VPS (cumputerized shareholder register) print
out; please note that shareholders might use different accounts and account names, adding to their
total holding.
Page 6 of 50
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 2021. To the best of our knowledge, we confirm that RomReal Ltd and RomReal
Group’s consolidated annual financial statements for 2021 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 2021
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 2021 and per 31 December 2020:
31 December 2021
31 December 2020
Kjetil Grønskag
Appointed Nov 2006
5,752,914
4,451,626
Heidi Sørensen Austbø
Appointed April 2017
Nil
Nil
Bendt Thorkildsen
Appointed April 2016
6,222,463
6,245,234
Lacramioara Isarescu
Appointed April 2014
Nil
Nil
TOTAL
11,975,377
10,696,860
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Operations Update
Lake Side (No.1 on the table) – The Company has on-going processes for plot sales in the area
and sold 14 plots during fourth quarter and another 3 plots hitherto 2022. Street and utilities
have been delivered to the City Hall for public use according to agreement.
Oasis (No. 3 on the table) – The Company has commenced the process to re-authorise the
works to finalise the blocks erected on site. This in order to add value to the plot and authorise
the works for constructing the utilities in the area, with required permits hopefully granted
during first half 2022. The Company is close to finalising stage 1 of bringing gas to the project.
In November 2021, the Board made a principal decision to finalise the two block structures
and upgrade the four houses on the plot. This to hopefully improve profits and speed up exit.
Industrial Park (No. 4 on the table) – The Company is engaged in a process with an
international company to sell parts of the plot, but no binding agreement is signed.
Balada Market (No. 6 on the table) - The project is for sale. In order to its increase income, a
regulation process to utilise a larger part of the plot for parking has commenced and some
progress has been made with the local authorities. About three quarters of the pedestrian
walk on the property is upgraded.
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. Regular meetings with local and road authorities
are taking place.
Ovidiu Residence 2 (former 7,900 sqm)- The Company has commenced a process to regulate
the plot located nearby Lakeside for residential use. This will include infrastructure investments.
Ovidiu Residence 3 (former 7,100 sqm)- The Company has commenced commence a process
to regulate the plot located nearby the road between Ovidiu and Constanta for residential
use. It is expected to include infrastructure investments.
Restitution claim, plot of 1,453 sqm, Constanta Court case no. 2567/118/2016
The piece of land is agreed sold to the buyer of the Company’s previous Mamaia North plot
and the agreed proceeds about EUR 390,000 was received in full 21 February 2022.
9
Key features of the real estate market
Office: At the end of 2021, Bucharest modern office stock reached at 3.2 million m2 of office
space, up from 2.95 million m2 by the end of 2020. The supply was well received with an
estimated gross take-up according to Colliers 263,000 m2, though some of the new buildings
display vacancy rates above average. The take-up increased in the second half of 2021 in
particular.
Retail: Stock reached at the end of 2021 above 4 million m2 of shopping centers and retail
parks, as about 102,000 m2 was new supply during the year according to Colliers. With some
planned mall extensions delayed until 2022, this means the additions were mostly within the
retail park segment. This trend is similar to the development in the most recent years. Despite
overall retail sales being above pre-covid levels, some sectors are still struggling. A big part of
the recovery being driven by online sales and the shift to sectors like sportswear, DIY and
discounters.
Industrial and logistics: Stock in Romania reached at the end of 2021 at approx. 5.8 million m2
after more than half a million were delivered over the year. About 60% of the total 2021
delivered area is in Bucharest, Romania’s largest industrial hub, while the remaining 35% is
scattered mostly throughout the country in the northern and western part. Estimated rental
activity declined by 14% during 2021 according to Colliers, to 675,000 m2. This is due to the
fact that 2020 was all time high in in Romania with nearly 800,000 m2, and 2021 is still well
above the 2017-2019 levels of about 475,000 per year. Bucharest is again the dominant force,
with more than 60% of new rental deals signed.
The most active real estate sector proved to be the residential market with numerous investors
either entered as new players on this market, either increased their portfolio strategizing for the
next place to be.
The following graphs indicate the apartment prices trend in Romania and Constanta in
February 2022:
According to the largest online broker in Romania imobiliare.ro, Asking prices for apartments
and houses in Romania continued to raise in the last quarter of 2021 compared the third
quarter of 2021, up to EUR 1,593/m2 at the end of Q4 and EUR 1,609/ m2 at the end of
February 2022. In Constanta, average prices increased during the fourth quarter of 2021,
Romania
10
compared to the third quarter of 2021,up to EUR 1,408/m2 at the end of December 2021, and
EUR 1,434/ m2 at the end of February 2022, according to www.imobiliare.ro index
Since the bottom in December 2013, the average price has increased by about 60% both in
Romania and Constanta.
Accounts and financial position
RomReal has prepared the financial statements as of 31 December 2021, on the basis of
going concern. While the industry has faced significant challenges in Romania, RomReal
actively seeks to improve liquidity, capitalize on its strong assets base, and take advantage of
the future developments of the country’s economy.
Operating revenues
RomReal had consolidated operating revenues of EUR 0.84 million in 2021 compared to EUR
0.70 million in 2020. The main revenue streams were rental income from the Balada Market
and sales of plots.
Operating expenses
Total consolidated operating expenses were a positive EUR 0.98 million in 2021 (mainly due to
the unrealised gains related to the inventories portfolio) compared to a negative EUR 3.80
million in 2020. RomReal (parent Company) operating gains were EUR 2.32 million in 2021
compared to EUR 3.46 million losses in 2020.
Constanta
11
Profit/Loss
Consolidated profit/loss after tax in 2021 was a gain of EUR 1.53 million compared to a loss
after tax of EUR 3.96 million in 2020. RomReal (parent Company) gain after tax was EUR 1.79
million in 2021 compared to EUR 3.46 million loss in 2020.
The end of year 2021 independent land bank portfolio valuation has shown a net increase on
a like for like basis compared to the end of year 2020 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 17.99 million at 31
December 2021. RomReal (parent Company) had a total balance sheet of EUR 16.88 million.
Total consolidated equity at 31 December 2021 amounted to EUR 16.83 million (parent
Company EUR 16.82 million) compared with EUR 15.04 million in 2020 (parent Company EUR
15.03 million). The Company has total current and non current liabilities of EUR 1.16 million at
31 December 2021 (parent Company EUR 0.06 million).
Net cash flow from consolidated operations was positive EUR 2.60 million at December 31 2021
compared to negative EUR 1.16 million in 2020 (parent Company negative EUR 0.16 million
compared to negative EUR 1.32 million in 2020). Consolidated current assets were EUR 13.37
million at 31 December 2021 compared to EUR 9,58 million at 31 December 2020 (parent
Company EUR 0.04 million in 2021 compared to EUR 0.20 million in 2020).
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.
During November 2020 the Company decided to make a EUR 1.05 million payment in
relation to the tax dispute with the local tax authorities, to benefit a waiver of any potential
penalties. The legal process regarding the tax dispute is set to continue unchanged and
discontinued disputing it in the courts.
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.
12
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.
13
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 2022 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.
• Conclude the several on-going court cases in a satisfactory manner.
• Maintain a cost efficient, and healthy organisation
14
3. Equity and dividends
RomReal aims to maintain a solid equity and good liquidity appropriate to its objectives,
strategy, and risk profile
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 2021, there was nine insider transaction by Chairman Kjetil Gronskag.
15
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 28 April 2022, 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 28 April 2022.
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 2021, the Annual General Meeting of the Company will take place on the 28 April at, 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.
16
8. Board of Directors: composition and independence
RomReal’s Board of Directors consisted at 31 December 2021 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 28 April 2022, 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 2021 nine (9) Board
meetings were conducted. In addition to the Chairman, the Board has two independent chairs
17
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
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.
18
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
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 most of its
deposits in EUR. The average exchange rate during 2021 was 1.00 EUR to 4.92 RON.
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 3% tax calculated on total revenue. This is the case for 7 of the Group companies while 3 of
them are 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 2021, the Directors received the following remuneration:
Lacramioara Isarescu EUR 6,000
Heidi Sørensen Austbø EUR 6,000
Bendt Thorkildsen EUR 6,000
19
During 2021, 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.
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
€58,800
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.
20
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.
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.
2022 Financial Calendar includes the following dates:
Q4 2021 Report 25/02/2022
AGM 2021 28/04/2022
Q1 2022 Report 27/05/2022
Q2 2022 Report 25/08/2022
Q3 2022 Report 25/11/2022
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
21
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.
Prospects
RomReal is focusing on land value enhancing activities in order to improve the shareholder
value and exit. This includes, among others, increased sales & marketing efforts, and if
deemed required some infra-structure investments, and more resources into regulation
processes.
Romania is a NATO/EU member since 2004/2007 respectively. The country has a border of
about 600 kilometres with both Ukraine and Moldova. The situation on the ground in Romania
is stable at present, but an modest influx of Ukrainian refugees hitherto is expected to increase
when/if Russia increases its attacks on the Odesa and other western regions of Ukraine. The
Russian unrecognised enclave of Transnistria in Moldova is another uncertainty.
In order to speed up an exit and target a higher profitability on the attractive located Oasis
project, the Board of Directors have decided to provide the financial resources to complete
the two apartment structures and upgrade the four houses on the property. This in addition to
the infrastructure required on the Oasis project is both increasing the risk and project upside.
With an increased geo-political uncertainty, reduced expected GDP growth in 2022,
combined with increased inflation and the likelihood of higher interest rates, the Board expect
a somewhat lower sales activity in 2022 versus the record levels realised in 2021.
Bermuda, 20.04.2022
The Board of Directors of RomReal
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
22
FINANCIAL STATEMENTS AS OF
31 DECEMBER 2021
23
Income Statement
Consolidated
Parent company
Notes
2021
2020
2021
2020
Rent revenue
12
-
-
Sales of inventories
Cost of sales- inventories
5
(2,875,897 )
(941,935 )
-
-
Profit / (loss) on sales of
investment property
-
-
Total income
-
-
Payroll and related expenses
13
(242,987 )
(214,305 )
(18,000)
(18,000)
Depreciation and amortisation
expense
3
(41,854 )
(32,853 )
-
-
Other operating expenses
15
(92,124 )
(1,313,737 )
2,668,806
(3,213,656)
Inventory (write off )/ reversal
5
(1,688,047 )
General and administrative
expenses
14
(822,593 )
(555,314 )
(331,646)
(224,614)
Operating expenses
(3,804,256 )
2,319,160
(3,456,270)
Net gain/(loss) from revaluation of
investment properties
4
(215,840 )
-
-
Profit/(loss) from operations
(3,320,562 )
2,319,160
(3,456,270)
Interest income
16
-
(9,710)
Interest expense
16
(9,710 )
-
570
Foreign exchange, net
16
(516,055 )
(637,160 )
(512,017)
-
Profit/(loss) before taxes
(3,962,393 )
1,807,143
(3,465,410)
Tax expense
17
(61,175 )
(16,000)
-
Result of the period
(3,958,495 )
1,791,143
(3,465,410)
Attributable to:
-Equity holders of the parent
(3,958,495 )
1,791,143
(3,465,410)
Basic earnings/(losses) per share
from continuing operations
22
(0.10 )
0.04
(0.08)
Basic earnings/(losses) per share
from continuing - diluted
22
(0.10 )
0.04
(0.08)
24
Statement Of Comprehensive Income
Figures in EUR
Consolidated
Parent company
2021
2020
2021
2020
Profit / (loss) for the year
(3,958,495 )
1,791,143
(3,456,410)
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
(3,465,424 )
1,791,143
(3,456,410)
Attributable to equity holders of the
parent:
(3,465,424 )
1,791,143
(3,456,410)
25
Statement of Financial Position
Figures in EUR
Consolidated
Parent company
ASSETS
Notes
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
Noncurrent assets
Property, plant & equipment
3
-
-
Investment properties
4
-
-
Deferred tax asset
17
-
-
Investments in subsidiaries
1
16,844,808
14,885,992
Total non current assets
16,844,808
14,885,992
Current assets
Inventories
5
-
-
Trade receivables and other receivables
6
15,726
23,059
Cash and cash equivalents
9
19,492
178,934
Total current assets
35,217
201,993
Assets held for sale
11
-
-
Total assets
16,880,025
15,087,986
Figures in EUR
LIABILITIES AND EQUITY
Notes
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
Equity
Issued share capital
7
103,419
103,419
Contributed surplus
7
87,117,249
87,117,249
Retained earnings
8
(74,126,724 )
(75,658,73 5 )
(70,396,741)
(72,187,885)
Other Reserves
-
-
Translation reserve
-
-
Total equity
16,823,927
15,032,784
Non current liabilities
Deferred tax liability
17
-
-
Total non current liabilities
-
-
Current liabilities
Trade and other payables
10
56,098
55,203
Income tax payable
17
-
-
Contract liabilities
18
-
-
Total current liabilities
56,099
55,203
Total liabilities and equity
16,880,025
15,087,986
26
Signed on behalf of the Board of Directors
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
27
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 2019
(71,700,240 )
Profit / (loss) for the period
(3,958,495 )
(3,958,495 )
Other comprehensive income
Total comprehensive income and
expense for the year
(3,958,495 )
(3,465,424 )
Balance as of
31 December 2020
(75,658,735 )
0
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the
year
Balance as of
31 December 2021
(74,126 ,724 )
28
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 2020
103,419
87,117,249
(68,722,475)
18,498,193
Profit for the period
-
-
(3,465,410)
(3,465,410)
Other comprehensive income
-
-
-
-
Total comprehensive income and expense for
the year
-
-
(3,465,410)
(3,465,410)
Balance as of
31 December 2020
103,419
87,117,249
(72,187,885)
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
(70,396,742)
16,823,926
29
Statement Of Cash Flows
Figures in EUR
Consolidated
Parent company
Notes
2021
2020
2021
2020
CASH FLOW FROM OPERATING
ACTIVITIES:
Net profit/(loss)
(3,958,495 )
1,791,143
(3,465,410)
Adjustments for:
- Income tax expense/(profit)
17
(3,898 )
-
-
-Net (gain)/loss from revaluation of
investment properties
4,11
(2,466,064 )
-
-
-Expenses/(gain) on disposal of
investment property
4,11
(663,475 )
(446,26 5 )
-
-
- Depreciation and amortization
3
-
-
- Interest Income
16
(7,152 )
(5,039 )
-
-
- Interest expense
16
-
(570)
-Unrealised foreign exchange (gain) /
loss
16
512,017
-
-Other operating expenses
15
(2,668,807)
3,223,366
Decrease/(increase) in trade and other
receivables
(356,580 )
(7,192 )
7,333
(167)
(Decrease)/increase in current payables
(19,331 )
896
(21,162)
Decrease/(increase) in inventories
-
-
Cash generated from operations
(471,470 )
(1,902,757 )
(357,418)
(263,943)
Income tax paid
(17,935 )
(3,495 )
16,000
-
Net cash flow from operating activities
(489,405 )
(1,906,252 )
(341,418)
(263,943)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Sales of investment property
-
-
Capital expenditure on investment
property
(811,676 )
(739,340 )
-
-
Net cash flow used in investing activities
-
-
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of borrowings
-
(1,056,185)
Payment of issue costs
181,976
-
Repayment of borrowings
-
-
Interest paid
16
(9,710 )
-
-
Interest received
-
-
Net cash from financing activities
(4,673 )
181,976
(1,056,185)
Other non-cash expenses/(revenues)
-
-
Net change in cash and cash equivalents
(1,163,663 )
(159,442)
(1,320,128)
Cash and cash equivalents, beginning of
period
178,934
1,499,062
Cash and cash equivalents, end of
period
19,942
178,934
30
Notes To The Financial Statements
The consolidated financial statements of RomReal Limited and its subsidiaries (collectively the “Group” or the
“Company”) for the year ended 31 December 2021 were authorised for issue in accordance with a resolution of
the directors on the 14 April 2022.
These financial statements cover RomReal Ltd . and its subsidiaries. RomReal Ltd. is incorporated in Bermuda
whereas the subsidiaries Westhouse Group SRL, Concorde Group SRL, Investate SRL, Westhouse Oasis
Residences SRL (former Rofrench Connection SRL) , Westhouse Lakeside SRL ( former Terra del Sol SRL) are
incorporated in Romania. RomReal Ltd and its subsidiaries (the Group) are principally engaged in property
investments and development in Romania .
Also, for reference, single financial statements of the parent company, Romreal Ltd. have been prepared. As a
general rule, all comments refer to the consolidated financial statements of the Group, unless specifically
mentioned otherwise.
Both consolidated financial statements and those of the parent have been prepared on a going concern basis.
The registered office address of RomReal Ltd is located at Burnaby Building, 16 Burnaby street, Hamilton
HM11, Bermuda.
The investment in subsidiaries at the Parent Company have been impaired, mainly as a result of the decrease in
land bank valuations after the 2008 crisis as well as due to the ongoing operational expenditure. The vast majority
of the impairment is concentrated in Westhouse Group SRL where most of the assets are located.
During the period, there were no additions or disposal. The movement in investment in subsidiaries for the parent
company during the period is solely due to the change in value between the periods.
Entity
Country of business
Owner’s share
Number of shares
Westhouse Group SRL
Romania
100%
19,460,043
Concorde Group SRL
Romania
100%
375,442
Westhouse Oasis Residences
SRL (former Rofrench
Connection SRL)
Romania
100%
152.430
Investate SRL
Romania
100%
351,320
Westhouse Lakeside SRL
(former Terra del Sol SRL)
Romania
100%
22
Note 1 ORGANIZATION AND OPERATIONS
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
31
2.1 Basis for preparation
those of the parent company are presented in euros.
The financial statements have been prepared on the
basis of historical cost except for Investment
Properties which is presented at fair value and
Assets Held for sale which are measured at the
lower of carrying amount before the reclassification
and the fair value less cost to sell.
2.2 Consolidation
The consolidated financial statements comprise the
financial statements of RomReal Ltd. and its
subsidiaries as of 31 December 2021 and 31
December 2020; the Group was established in the
autumn 2005. Subsidiaries are fully consolidated
from the date of acquisition, being the date on
which the Group obtains control, and continue to be
consolidated until the date that such control ceases.
The financial statements of the subsidiaries are
prepared for the same reporting year as the parent
company, using consistent accounting policies. All
intra-group balances, transactions, income and
expenses and profits and losses resulting from intra-
group transactions are eliminated in full.
A subsidiary is a company which the Company
controls. The control is typically evidenced if an
only if the Company has:
• Power over the investee (i.e. existing rights
that give it the current ability to direct the
relevant activities of the investee)
• Exposure, or rights, to variable returns from
its involvement with the investee, and
• The ability to use its power over the investee
to affect its returns
2.3 Significant accounting judgements, estimates
and assumptions
The preparation of the Group's financial statements
requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and
liabilities, and the disclosure of contingent
liabilities, at the reporting date. Uncertainty about
these assumptions and estimates could result in
outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in
future periods.
Judgements
In the process of applying the Group's accounting
policies, management has made the following
judgements, which have the most significant effect
on the amounts recognised in the consolidated
financial statements.
Classification of property
The Group determines whether a property is
classified as investment property, assets held for
sale or inventory:
-Investment property comprises land and buildings
which are not occupied substantially for use by, or
in the operations of, the Group, nor for sale in the
ordinary course of business, but are held primarily
to earn rental income and capital appreciation.
-Assets held for sale comprises property which is
available for immediate sale and for which the sale
is highly probable and expected to be substantially
completed within a year from the date of
classification.
-Inventory comprises property that is held for sale
in the ordinary course of business. Principally, this
is residential property that the Group develops and
intends to sell before or on completion of
construction.
Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year,
are described below. The Group based its
assumptions and estimates on parameters available
when the consolidated financial statements were
prepared. Existing circumstances and assumptions
about future developments, however, may change
due to market changes or circumstances arising that
are beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Estimate of fair value of investment properties
Fair values are determined based on an annual
evaluation performed by an accredited external,
independent valuer that is certified by the Romanian
Institute of Valuers. Valuation has been made such,
in accordance with the International Valuation
Standards, to reflect market value of the properties,
namely “The amount for which an asset could be
exchanged or a liability settled, between
knowledgeable, willing parties, in an arm’s length
transaction”. No account has been taken of any
additional prospective purchaser with a special
interest. No allowance has been made with regard to
any expenses of realization, or for any taxation
arising in case of disposal. The determined fair
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Note 4 INVESTMENTS PROPERTIES
32
value of the investment properties is most sensitive
to the degree to which comparable transactions are
available, including the degree of judgement and
adjustments necessary to make such market
transactions comparable to the investment property
being valued. The determination of the fair value of
investment property may also require the use of
estimates such as future cash flows from assets and
discount rates applicable to those assets. In addition,
development risks (such as construction and letting
risks) are also taken into consideration when
determining the fair value of investment properties
under construction. These estimates are based on
local market conditions existing at reporting date.
Taking into account the characteristics of the
Group’s properties, as well as the features of the
local market, the market comparison approach was
considered in these circumstances as the most
suitable in estimating the market value of the
properties.
The management believes that the valuation
assumptions used reflect the best estimate of the
investment properties’ fair value at the date of the
balance sheet. The key assumptions used to
determine the fair value of the investment properties
are further explained in Note 4.
Estimation of net realisable value for inventory
Inventory is stated at the lower of cost and net
realisable value (NRV). NRV for completed
inventory property is assessed with reference to
market conditions and prices existing at the
reporting date. NRV in respect of inventory
property under construction is assessed with
reference to market prices at the reporting date for
similar completed property, less estimated costs to
complete construction and less the estimated costs
to make the sale.
NRV is determined by the Group based on an
annual evaluation performed by an accredited
external, independent valuer. However, given the
limited liquidity of the market, there is a significant
degree of uncertainty in estimating the NRV.
Recognition of the deferred tax asset
When determining the deferred tax liabilities and
deferred tax assets, the Group considers, at the
balance sheet date, the manner in which it expects
to recover or settle the carrying amount of its assets
and liabilities. A deferred tax asset is recognised for
the carry forward of unused tax losses and unused
tax credits to the extent that it is probable that future
taxable profit will be available against which the
unused tax losses and unused tax credits can be
utilised. Where the group considered that it is not
probable enough future taxable profits will be
available within the legal time framework of seven
years to utilise the tax losses against, the group has
not recognised such deferred tax assets.
Capitalised costs
Costs are capitalised when future cash generation is
expected. Such costs include the construction costs
of the inventories. See note 2.8.
2.4 Property, plant and equipment
Plant and equipment is stated at cost net of
accumulated depreciation and/or accumulated
impairment losses, if any. Such cost includes the
cost of replacing part of such plant and equipment
when that cost is incurred if the recognition criteria
are met. Depreciation is calculated on a straight-line
basis over the useful life of the assets. The carrying
values of plant and equipment are reviewed for
impairment when events or changes in
circumstances indicate that the carrying value may
be impaired.
Depreciation is calculated on a straight-line basis
over the estimated useful lives of the assets as
follows:
IT equipment
Motor vehicles
Other fixtures
and fittings
2-4 years
4 years
3-9 years
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected from its use or
disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount
of the asset) is included in the income statement in
the year the asset is derecognised.
The asset's residual values, useful lives and methods
of depreciation are reviewed, and adjusted if
appropriate, at each financial year end.
2.5 Investment properties
Property that is held for long-term rental yields or
for capital appreciation or both, and that is not
occupied by the companies in the consolidated
Group, is classified as investment property.
Investment property comprises freehold land and
freehold buildings.
Investment properties are measured initially at cost,
including transaction costs.
Subsequent to initial recognition, investment
properties are stated at fair value which reflects
market conditions at the reporting date. Gains or
losses arising from changes in the fair values are
included in the income statement in the year in
which they arise. Please see 2.3 above for details
about fair values estimations.
Investment properties are derecognised when they
have been disposed of or permanently withdrawn
from use and no future economic benefit is expected
from their disposal. The difference between the net
disposal proceeds and the carrying amount of the
asset is recognised in the income statement in the
period of derecognition.
33
Subsequent expenditure is charged to the asset’s
carrying amount only when it is probable that future
economic benefit associated with the item will flow
to the Group and the cost of the item can be
measured reliably. All other repairs and
maintenance are charged to the income statement
during the financial period in which they are
incurred.
Transfers are made to or from investment property
only when there is a change in use. For a transfer
from investment property to owner-occupied
property, the deemed cost for subsequent
accounting is the fair value at the date of change in
use. If owner-occupied property becomes an
investment property, the Group accounts for such
property in accordance with the policy stated under
property, plant and equipment up to the date of
change in use. Property being constructed for sale in
the ordinary course of business, rather than to be
held for rental or capital appreciation, is held as
inventory property and is measured at the lower of
cost and net realisable value (NRV).
If an item of property, plant and equipment becomes
an investment property because its use has changed,
any differences resulting between the carrying value
and the fair value of this item at the date of transfer
is recognised in equity as a revaluation of property,
plant and equipment under IAS 16. However, if it is
a fair value gain, such is recognised in the income
statement.
2.6 Cash and cash equivalents
Cash includes cash in hand and at bank. Cash
equivalents are short-term liquid investments that
can be converted into cash within three months and
to a known amount, and which contain insignificant
risk elements.
For the purpose of the consolidated cash flow
statement, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of
outstanding bank overdrafts.
2.7 Financial assets
Financial assets are classified at initial recognition,
and subsequently measured at amortised cost, fair
value through other comprehensive income, or fair
value through profit or loss
The classification of financial assets at initial
recognition depends on the financial asset’s
contractual cash flow characteristics and the
Group’s business model for managing them. With
the exception of trade receivables that do not
contain a significant financing component or for
which the Group has applied the practical
expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss,
transaction costs. As the Group’s rent and other
trade receivables do not contain a significant
financing component or for which the Group has
applied the practical expedient, they are measured at
the transaction price determined under IFRS 15.
Refer to the accounting policies on revenues from
contracts with customers.
In order for a financial asset to be classified and
measured at amortised cost or fair value through
other comprehensive income (OCI), it needs to give
rise to cash flows that are ‘solely payments of
principal and interest (SPPI)’ on the principal
amount outstanding. This assessment is referred to
as the SPPI test and is performed at an instrument
level. Financial assets with cash flows that are not
SPPI are classified and measured at fair value
through profit or loss, irrespective of the business
model.
The Group’s business model for managing financial
assets refers to how it manages its financial assets in
order to generate cash flows. The business model
determines whether cash flows will result from
collecting contractual cash flows, selling the
financial assets, or both. Financial assets classified
and measured at amortised cost are held within a
business model with the objective to hold financial
assets in order to collect contractual cash flows.
2.8 Inventories
Property acquired or being constructed for sale in
the ordinary course of business, rather than to be
held for rental or capital appreciation, is held as
inventory and is measured at the lower of cost and
net realisable value. Net realisable value is the
estimated selling price in the ordinary course of
business less cost to complete development and
selling expenses. The cost of inventory recognised
in profit or loss on disposal is determined with
reference to the specific costs incurred on the
property sold and an allocation of any non-specific
costs based on the relative size of the property sold.
2.9 Trade and other receivables
Trade and other receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active market.
The Group recognises an allowance for expected
credit losses (ECLs) for all debt instrument except
those held at fair value through profit or loss. ECLs
are based on the difference between the contractual
cash flows due in accordance with the contract and
all the cash flows that the Group expects to receive,
discounted at an approximation of the original
effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms
2.10 Non-current assets held for sale
Non-current assets are classified as held for sale if
their carrying amount will be recovered through a
sale transaction rather than through continuing use.
This condition is regarded as met only when the sale
34
is highly probable and the asset is available for sale
in its immediate condition. The sale should be
expected within one year from the date of
classification as held for sale.
Immediately before classification as held for sale,
the assets are remeasured in accordance with the
Group’s accounting policies. Thereafter, the assets
are recognised at the lower of their carrying amount
and fair value less cost to sell. Assets classified as
held for sale are not depreciated. Impairment losses
on initial classification as held for sale and
subsequent gains or losses on remeasurement are
included in the income statement. Gains are not
recognised in excess of any cumulative impairment
loss. In case conditions for classification of non-
current assets are no longer met, classification as
held for sale ceases. Non-current assets that ceases
to be classified as held for sale are remeasured at
the lower of their carrying amount before
classification as held for sale, adjusted for any
depreciation, amortisation or revaluations that
would have been recognised had the asset or
disposal group not been classified as held for sale,
and its recoverable amount at the date of the
subsequent decision to sell.
2.11 Provisions
Provisions are recognised when, and only when, the
company has a valid liability (legal or constructive)
as a result of past events and it can be proven
probable (more likely than not) that an outflow of
resources embodying economic benefits will be
required to settle the obligation, and that the size of
the amount can be measured reliably. Provisions are
reviewed on each balance sheet date and their level
reflects the best estimate of the liability.
2.12 Equity
Transaction costs relating to equity transactions are
recognised directly in equity.
2.13 Operating lease contracts – the Group as a
lessor
The Group has entered into commercial property
leases on its investment property portfolio. The
Group has determined, based on an evaluation of
the terms and conditions of the arrangements (such
as the lease term not constituting a major part of the
economic life of the commercial property and the
present value of the minimum lease payments not
amounting to substantially all of the fair value of the
commercial property), that it retains all the
significant risks and rewards of ownership of these
properties and accounts for the contracts as
operating leases.
2.14 Revenue recognition
Revenue is recognised to the extent that it is
probable that the economic benefits will flow to the
Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the
consideration received, excluding discounts,
rebates, and sales taxes or duty. The Group assesses
its revenue arrangements against specific criteria in
order to determine if it is acting as principal or
agent. The Group has concluded that it is acting as a
principal in all of its revenue arrangements
Revenue includes rental income, service charges
and management charges from properties, and
income from property trading.
Rental income: Rental income is recognised over
the life of the rental period. Rental income related to
rent yielding assets of the Group in respect of
properties let to third parties.
Other income: Other income is recognised as it is
earned.
Income from sales of investment property plots:
Deposits cashed by the Group for the sale of plots
are not recognised as revenue until the Group has
transferred to the buyer the significant risks and
rewards of ownership of the plots.
2.15 Foreign currency translation
The consolidated financial statements are presented
in euros, which is the parent company's functional
and presentation currency. Each entity in the group
determines its own functional currency and items
included in the financial statements of each entity
are measured using that functional currency.
Transactions in foreign currencies are initially
recorded by the Group entities at their respective
functional currency rates prevailing at the date of
the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated
at the functional currency spot rate of exchange
ruling at the reporting date. All differences are taken
to the income statement. Non-monetary items that
are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as
at the dates of the initial transactions. Non-monetary
items measured at fair value in a foreign currency
are translated using the exchange rates at the date
when the fair value is determined. On disposal of a
foreign operation, the component of other
comprehensive income relating to that particular
foreign operation is recognised in the income
statement.
The functional currency of the Romanian operations
is the Romanian New Leu. As at the reporting date,
the assets and liabilities of these subsidiaries are
translated into the presentation currency of
RomReal Ltd. Group (the euro) at the rate of
exchange ruling at the balance sheet date and, their
income statements are translated at the average
exchange rates for each month unless there have
been significant fluctuations in the exchange rate
over the applicable period, in which case the
exchange rate at each transaction date is applied.
The exchange differences arising on the translation
are recognised in other comprehensive income.
35
December 31,
2021
December 31,
2020
Closing
4.9481
4.8694
2.16 Taxes
RomReal Ltd. is incorporated in the Islands of
Bermuda so is not subject to any income,
withholding or capital gains taxes under current
Bermuda law. The subsidiaries are registered in
Romania and are subject to Romanian taxation
rules.
Current income tax assets and liabilities are
measured at the amount expected to be recovered
from or paid to taxation authorities. The tax rates
and tax laws used to compute the amount are those
that are enacted or substantively enacted by the
reporting date. Current income tax relating to items
recognised directly in equity is recognised in equity
and not in profit or loss. Management periodically
evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations are
subject to interpretation and establishes provisions
where appropriate.
Deferred income tax is provided using the liability
method on temporary differences at the balance
sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes at the reporting date. Deferred
income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax
credits and unused tax losses. Deferred income tax
assets are recognised to the extent that it is probable
that taxable profit will be available against which
the deductible temporary differences, and the carry-
forward of unused tax credits and unused tax losses
can be utilised.
The carrying amount of deferred income tax assets
is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all
or part of the deferred income tax asset to be
utilised. Unrecognised deferred income tax assets
are reassessed at each balance sheet date and are
recognised to the extent that it has become probable
that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred income tax assets and liabilities are
measured at the tax rates that are expected to apply
to the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the balance
sheet date.
Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and
the deferred taxes relate to the same taxable entity
and the same taxation authority.
2.17 Loans and Borrowings
Borrowing costs generally are expensed as incurred.
Borrowing costs are capitalized if they are directly
attributable to the acquisition, construction or
production of a qualifying asset. Capitalization of
borrowing costs commences when the activities to
prepare the asset are in progress and expenditures
and borrowing costs are being incurred. Borrowing
costs are capitalized until the assets are substantially
ready for their intended use.
Borrowings are classified as current liabilities
unless the group has an unconditional right to defer
settlement of the liability for at least 12 months after
the balance sheet date.
Loan is accounted for at fair value, at the time of
disbursement, reduced for any transaction costs.
After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest rate method. Gains
and losses are recognised in the income statement
when the liabilities are derecognised as well as
through the effective interest rate method
amortisation process. Amortised cost is calculated
by taking into account any discount or premium on
acquisition and fee or costs that are an integral part
of the effective interest rate. The effective interest
rate amortisation is included in finance cost in the
income statement.
2.18 Operating segments
For management purposes, the group is organised
into a single business unit and consequently has
only one operating segment which the management
monitors in terms of performance assessment.
2.19 Changes in accounting policies and
disclosures
The accounting policies adopted are consistent with
those of the previous financial year. No new
standards have been applied in 2021.
36
Figures in EUR -
Consolidated
IT equipment
Other fixtures
and fittings
Motor vehicles
Total
Gross book value as at
December 31, 2020
50,483
281,138
54,816
386,437
Additions in period
-
16,783
-
16,783
Disposals in period
-
-
-
-
Translation difference
(803)
(4,641)
(822)
(6,266)
Gross book value as at
December 31, 2021
49,680
293,280
53,994
396,954
Accumulated Depreciation
as at December 31, 2020
(50,211)
(219,537)
(42,409)
(312,158)
Charge for the period
-
(41,854)
-
(41,854)
Disposals in the period
-
-
-
-
Translation difference
790
7,055
833
8,678
Accumulated Depreciation
as at December 31, 2021
(49,421)
(254,335)
(41,576)
(345,333)
Net book Value as at
December 31, 2019
272
61,601
12,407
74,279
Net book Value as at
December 31, 2020
259
38,945
12,418
51,620
Depreciation method
Linear
Linear
Linear
Depreciation period
(Years)
2-4
3-9
4
There were no impairment charges in 2021 and 2020.
Figures in EUR - Consolidated
2021
2020
Opening balance as at January 1
3,329,477
3,543,196
Additions in period
-
-
Sales
-
-
Transfers to Assets Held for Sale (note 11)
-
-
Transfers to Inventories
(1,239,000)
-
Fair value adjustment during the period
15,329
(169,632)
Translation differences
(73,082)
(44,086)
Carrying amount as at December 31
2,032,724
3,329,477
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 3 PROPERTY, PLANT AND EQUIPMENT
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
37
Investment properties consist of land and buildings at various locations in Romania. The fair value of investment
property as at 31 December 2021 is based on a valuation by an independent valuer who holds a recognised and
relevant professional qualification in Romania and who has recent experience in the location and categories of the
investment property being valued. Additionally, for those properties where pre-sale agreements were in place, the
sale value included in the respective sale agreements has been used for the purposes of the valuation.
Valuation has been made such, in accordance with the International Valuation Standards, to reflect market value
of the properties, namely “The amount for which an asset could be exchanged or a liability settled, between
knowledgeable, willing parties, in an arm’s length transaction”. No account has been taken of any additional
prospective purchaser with a special interest. No allowance has been made with regard to any expenses of
realization, or for any taxation arising in case of disposal.
With regard to the valuation methodology, two approaches were used: (i) the direct market comparison approach
and (ii) the residual approach. Both approaches were utilised, and the degree to which either, or both, are relevant
depended upon the nature of the specific land plot and the availability of information. When data is available, the
market comparison approach is the most direct and systematic approach as it recognizes that property prices are
determined by the market. Valuation by comparison is essentially objective since it is based on an analysis of the
price achieved or offered for sites with broadly similar development characteristics with the land being valued.
The residual approach estimates the land value considering the value of the proposed project upon completion
and the deduction of the development costs, including the developer’s profit. This method requires the input of a
large amount of data and involves a large number of assumptions. Even small changes in any of the inputs can
cumulatively lead to a large change in the land value. Thus, the application of this method requires a high level of
expertise, being mainly used as an alternative approach when there are no or limited comparables to apply the
direct market comparison approach. In line with the market practice, the valuation of assets is determined and
quoted in EUR. While the basis for preparation of accounting records is RON the EUR/RON exchange rate
movements result into currency differences which are reflected as an adjustment to the carrying value of the
investment property.
Taking into account the characteristics of the Group’s properties, as well as the features of the local market, the
market comparison approach was considered in these circumstances as the most suitable in estimating the market
value of the properties. For each property, several comparables were selected and the following elements of
comparison were considered: price, real property rights transferred, financing terms, conditions of sale,
expenditures made immediately after the purchase, location, area, visibility and frontage, utilities, access, public
transportation, existing buildings, existing potential building permitting and best use. Land price varies depending
on the size of the plot. In case of development sites, the larger the plot, the lower the price per square meter. In
terms of size, based on market evidence, land plots were grouped in several intervals, as follows: smaller than
1,000 sq m, between 1,000 and 5,000 sq m, between 5,000 and 10,000 sq m, between 10,000 and 50,000 sq m
and larger than 50,000 sq m. If comparison was made with sites that are in different size intervals, a 5%
adjustment was applied.
The properties have been inspected along with the surrounding neighbourhood and location from which
comparable data was drawn where possible. The limited liquidity of the market has resulted in comparables being
mainly based on the most recent asking prices. In such cases, several adjustments ranging on average between 10-
30% were applied to the asking prices to adjust for reduced liquidity, difference in size, accessibility, permitting,
etc.
Within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement
the above described valuation of investment properties is categorised as Level 3 — Valuation techniques for
which the lowest level input that is significant to the fair value measurement is unobservable. In arriving at their
estimates of market values the valuators used their market knowledge and professional judgement and did not
38
rely solely on historical transactional comparables. In these circumstances, there was a greater degree of
uncertainty than which exists in a more active market in estimating the market values of investment property.
Furthermore, given the rapid change on the market, significant alterations of value can be encountered within
short periods of time. Unforeseen macroeconomic or political crises can have a sudden and dramatic effect on
markets. This could manifest itself by either panic buying or selling, or simply disinclination to trade until it is
clear how prices in the market will be affected in the longer term. There have been no transfers between Levels in
the hierarchy as compared to the previous reporting period.
There were no disposals to investment properties during 2021.
Figures in EUR - Consolidated
2021
2020
Opening balance
7,850,162
9,572,347
Additions
418,883
1,086,617
Disposals
(2,875,897)
(941,935)
Transfers from Investment Properties
1,239,000
-
Change in provisions
2,180,481
(1,688,047)
F/X reserve
(133,122)
(178,819)
Balance as at December 31
8,679,507
7,850,162
Inventories consist of the development projects of the Group. These are carried at the lower of cost and net
realisable value. Net realisable value is the estimated selling price in the ordinary course of business less
estimated costs of completion and the estimated costs to make the sale. At year-end 2021, inventories relate to
the Oasis project (EUR 3.6 million) and Lakeside (EUR 3.8 million). The cost for the Oasis project is EUR 5.5
million. The net realisable value test in 2021 resulted in a reversal of provision.
Within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement
the above described estimate of net realisable value is categorised as Level 3 — Valuation techniques for which
the lowest level input that is significant to the fair value measurement is unobservable. In arriving at their
estimates of market values the valuators used their market knowledge and professional judgement. The net
realisable value was assessed with reference to market prices at the reporting date for similar completed property,
less estimated costs to complete construction and less the estimated costs to make the sale. There have been no
transfers between Levels in the hierarchy as compared to the previous reporting period.
Figures in EUR
Consolidated
Parent company
2021
2020
2021
2020
Trade receivables
776,644
336,481
-
-
VAT receivable
86,356
160,135
-
-
Other prepayments
1,013
1,004
-
-
Other short-term receivables
16,008
25,821
15,726
23,059
Total
880,021
523,441
15,726
23,059
Note 5 INVENTORIES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 6 TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
39
Trade receivables include mainly receivables related to the sales of plots for which an instalments payment
schedule has been agreed by the Group and other receivables resulting in the ordinary course of business in
respect of the lease agreements for some of the rent yielding investment properties and the rest in sundry debtors.
As of 31 December the analysis of receivables that are past due is set out below:
Total
Neither past
due nor
impaired
Past due but not impaired
<30 days
30-60 days
60-90 days
90-120 days
>120 days
2021
880,021
829,375
11,535
39,111
-
-
-
2020
523,441
478,649
1,004
43,788
-
-
-
Figures in EUR
Number of
shares
Share
capital
Contributed
Surplus
Paid in share
capital
Total share capital
January 1, 2020
41,367,783
103,419
87,117,249
87,220,668
New issues in the period
-
-
-
-
Reduction in par value of shares
-
-
-
-
Total share capital December 31,
2020
41,367,783
103,419
87,117,249
87,220,668
New issues in the period
-
-
-
-
Reduction in par value of shares
-
-
-
-
Total share capital
December 31, 2021
41,367,783
103,419
87,117,249
87,220,668
There were no changes to the share capital or the number of shares during 2021 and 2020.
Note 7 SHARE CAPITAL AND PAID-IN CAPITAL
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
40
Shareholders rights
There are no restrictions on voting rights or the transferability of shares in RomReal Ltd. The below summarised
is the 20 largest shareholder as of 15 March 2022.
Rank
Name
Holding
Stake
1
SIX SIS AG
10,331,934
24.98%
2
GRØNSKAG, KJETIL
5,752,914
13.90%
3
THORKILDSEN, WENCHE
5,392,985
13.04%
4
SAGA EIENDOM AS
3,311,526
8.01%
5
AUSTBØ, EDVIN
2,108,500
5.10%
6
Danske Bank A/S
1,507,924
3.65%
7
ENERGI INVEST AS
1,253,611
2.66%
8
GRØNLAND, STEINAR
1,101,000
2.66%
9
ORAKEL AS
1,110,021
2.68%
10
Bnp Paribas Securities Services
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
580,000
1.40%
16
AKSEL MAGDAHL
466,092
1.13%
17
NORDNET LIVSFORSIKRING AS
420,456
1.02%
18
FRENICO AS
396,000
0.96%
19
CITIBANK
220,000
0.53%
20
NORDNET BANK AB
202,773
0.49%
TOP 20
38,324,724
92.60%
(1) This is the Top 20 Shareholder list as per 15 March 2022
(2) The total issued number of shares issued at 15 March 2022 was 41,367,783.
(3) Thorkildsen Invest AS is a Company controlled by RomReal Kay Thorkildsen family.
(4) Chairman Kjetil Grønskag owns directly and indirectly 5,752,914 shares corresponding to 13.90%.
(5) The above list is the 20 largest shareholders according to the VPS print out; please note that
shareholders might use different accounts and account names, adding to their total holding.
Movements in retained earnings for the Group can be analysed as follows:
Figures in EUR
Consolidated
Parent
Company
Retained earnings as of December 31, 2020
(75,658,735)
(72,187,885)
Net profit in the period
1,532,011
1,791,143
Retained earnings as of December 31, 2021
(74,126,724)
(70,396,742)
No dividends will be distributed by the Group in respect of 2021.
Note 8 RETAINED EARNINGS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
41
Cash and cash equivalents amount to EUR 3,807,182 at 31 December 2021 (EUR 1,206,982 at 31 December
2020).
At parent company level, cash and cash equivalents amount to EUR 19,492 at 31 December 2021 (EUR 178,934
at 31 December 2020). There are no restrictions on the cash balances.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
Figures in EUR
Consolidated
Parent Company
2021
2020
2021
2020
Trade payables
897,619
27,768
-
-
Employee taxes
4,282
2,572
-
-
Other payables
61,434
62,403
56,098
55,203
Trade payables
963,335
92,743
56,098
55,203
At 31 December 2021, the balance of EUR 963,335 Other payables for the group as well as the balance of Other
payables of EUR 55,806 for the parent company, include EUR 36,900 accrued expenses related to the 2021 audit
fees.
Figures in EUR - Consolidated
2021
2020
Opening balance as at January 1
2,240,016
2,319,857
Sales
-
-
Transfers from investment Properties (note 4)
-
-
Fair value adjustment during the period
277,119
(46,209)
Translation differences
(37,125)
(33,632)
Carrying amount as at December 31
2,480,010
2,240,016
The Group considers the completion of the transactions highly probable while the assets are available for
immediate sale in its present condition.
Figures in EUR - Consolidated
2021
2020
Rental income
6,18
172,108
253,268
Sales of inventories
4
3,539,372
1,388,201
Cost of sales- inventories
4
(2,875,897)
(941,935)
Total operating income
835,583
699,534
Note 10 TRADE AND OTHER PAYABLES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 9 CASH AND CASH EQUIVALENTS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 12 RENTAL INCOME AND REVENUE FROM CONTRACTS WITH
CUSTOMERS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 11 ASSETS HELD FOR SALE
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
42
Balada market is the main rent generating property. Total rent generated during the year 2021 amounted to EUR
172,108 (2020: EUR 253,268). Future minimum rentals receivable under non-cancellable operating leases as at
31 December are, as follows:
Figures in EUR - Consolidated
2021
2020
Within 1 year
172,108
253,268
After 1 year
-
-
Total operating income
172,108
253,268
The Sales of inventories during 2021 relate to the sale of several small plots of land the Group owned in the town
of Ovidiu.
The key management (which includes the executive officer of the Group and its directors) received remuneration
in amount of EUR 94,800 (2021: EUR 94,800). Mr Kjetil Grønskag’s remuneration as CEO of the Group has
been assimilated to the Management Support Agreement (see note 19).
The Directors are shown below together with their interest in the shares of the Company per 31 December 2021 and
per 31 December 2020:
31 December 2021
31 December 2020
Kjetil Grønskag
Appointed November 2006
5,752,914
4,451,626
Heidi Sørensen Austbø
Appointed April 2017
Nil
Nil
Bendt Thorkildsen
Appointed April 2016
6,222,463
6,245,234
Lacramioara Isarescu
Appointed April 2014
Nil
Nil
TOTAL
11,975,377
10,696,860
The average number of employees in Westhouse Group during 2021 was 5. Payroll expenses related to these
employees amounted to EUR 242,987 during 2021 (2020: 214,305). All compensations offered by the Group are
short term benefits. The Group does not offer a pension plan or other long term employee benefits to its
employees as of December 31, nor are there any post-employment benefits.
Figures in EUR
Consolidated
Parent company
2021
2020
2021
2020
Management fee
(94,800)
(94,800)
(94,800)
(94,800)
Legal expenses
(134,531)
(87,983)
-
-
Rent expenses
(6,140)
(5,544)
-
-
Travel expenses
(581)
(488)
(593)
(488)
Professional services
(136,900)
(25,955)
(183,123)
(68,679)
Land and other taxes
(63,943)
(52,029)
-
-
Other expenses
(385,698)
(288,515)
(53,130)
(60,647)
Total
(822,593)
(555,314)
(331,646)
(224,614)
Note 13 PAYROLL EXPENSES AND NUMBER OF EMPLOYEES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 14 GENERAL AND ADMINISTRATIVE EXPENSES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
43
Legal expenses include one off fees related to the legal services in connection with the sales of plots entered into
during 2021. For the parent company, Professional Services include EUR 36,900 accrued expenses related to the
2021 audit fees.
For RomReal (the parent company) “Other operating (loss)/gains” of EUR 2,668,806 gain in 2021 (2020: EUR
3,213,656 loss) relates mainly to change in the fair value of the investment in subsidiaries).
Figures in EUR
Consolidated
Parent company
2021
2020
2021
2020
Interest income from subsidiaries
-
-
-
1
Interest income from banks
7,152
5,039
-
-
Total financial income
7,152
5,039
-
1
Interest expense and other bank fees
-
(9,710)
-
(9,710)
Foreign exchange gain
19,601
55,815
Foreign exchange loss
(535,656)
(692,976)
(512,057)
-
Total Financial expense
(516,055)
(646,871)
(512,057)
(9,710)
During 2021 the RON has fluctuated against the EUR and at year end was 1.6% weaker against the EUR. All
intercompany loans taken by the Romanian subsidiaries from RomReal Ltd were revalued at the closing rate.
RomReal Ltd. is registered in Bermuda and is consequently not subject to taxation. The subsidiaries are subject to
taxation in Romania. The applicable tax rate in Romania is 16 %. The applicable tax rate is the same whether any
profits are paid out as dividends or retained in the company. There have not been any changes to the applicable
tax rates in 2021.
Current income tax expense for 2021 was EUR 61,175 (2020: (3,898)). The major components of the income tax
expense for the periods ended December 31, 2021 and December 31, 2020 are:
The table below shows the composition of the deferred tax assets and deferred tax liability in the balance sheet:
Figures in EUR - Consolidated
2021
2020
Losses carried forward resulting in deferred tax asset
55,170
116,014
Fair value adjustments of Investment property resulting in
deferred tax liability
157,763
116,616
The following table shows the composition of the deferred tax asset per each company:
Figures in EUR - Consolidated
2021
2020
Current income tax charge
17,935
3,495
Deferred income tax movement
in the period
43,240
(7,393)
Income tax expense/(income)
in the consolidated income statement
61,175
(3,898)
Note 16 FINANCIAL INCOME AND EXPENSE
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 17 TAXATION
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 15 OTHER OPERATING (LOSS) / GAINS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
44
2021
2020
Westhouse SRL
55,170
116,014
TOTAL
55,170
116,014
The deferred tax asset relates to the following:
2021
2020
Carried forward fiscal losses
55,170
116,014
TOTAL
55,170
116,014
The following table shows the composition of the deferred tax liability per each company:
2021
2020
Concorde SRL
148,373
107,075
Investate SRL
9,390
9,541
TOTAL
157,763
116,616
The deferred tax liability relates to the following:
2021
2020
Revaluation of investment properties to fair value
157,763
116,616
TOTAL
157,763
116,616
The Group measures the deferred tax liabilities and deferred tax assets in order to reflect the tax consequences
that would follow from the manner in which the entity expects, at the balance sheet date, to recover or settle the
carrying amount of its assets and liabilities. Consequently, where the group had transactions which are not
expected to carry a deferred tax liability or the deferred tax asset, the group has not recognised such deferred tax.
The Group used its judgement to determine whether there will be enough taxable income in the foreseeable future
to offset the deferred tax asset against. Where there was not enough conclusive evidence to support that, such
deferred tax asset was not recognised/written off.
The following shows a numerical reconciliation between the tax expense and the accounting profit.
2021
2020
Accounting taxable profits/(loss)
1,593,187
(3,962,394)
Tax at applicable rate of 16%
(254,910)
633,983
Tax effect of (expenses)/income that are not
(deductible)/taxable in determining taxable profit
193,735
(630,085)
Tax (expense)/income
(61,175)
3,898
The Company has not recognised a deferred tax assets in respect of the carried forward tax losses for which there
was not enough evidence to support future taxable income to offset them against. The Group can carry forward
the tax losses for a period of 7 years on a rolling basis.
Contract liabilities amounting to EUR 25,121 at the end of 2021 (2020: EUR 35,524) included mainly the
payments received in respect of the pre-sales of plots.
Note 18 CONTRACT LIABILITIES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
45
Transactions with subsidiary
RomReal Ltd. has granted its subsidiary Westhouse Group SRL loans amounting to EUR 49,184,000 for a term
of 11 months, with quasi-automatic rollover at maturity. Part of the loans have been repaid out based on
availability of cash flows resulting from the monetization of the land bank assets. The remaining balance are
planned to be converted into equity, an operation which will strengthen the capitalization of the Group Romanian
subsidiaries.
Transactions with other related parties
During 2021 the Company paid a direct remuneration of EUR 94,800 per year to Chairman and CEO Kjetil
Grønskag. The Chairman and CEO agreement has a yearly remuneration of EUR 94,800 and a variable element
of 0.7% of all realized sales.
The Group’s Chairman Kjetil Gronskag, holds an executive position as Chief Executive of RomReal following
Board approval on the 26 May 2016.
All transactions with related parties have been conducted following the principle of arm’s length.
The Group’s principal financial liabilities comprise trade and other payables. Its financial assets comprise cash
and cash equivalents as well as trade receivables.
Fair value
The fair value of the financial assets and liabilities are the amounts at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or liquidation sale. Cash and short-term
deposits, trade receivables, trade payables, and other current liabilities approximate their carrying amounts largely
due to the short-term maturities of these instruments. The fair value of borrowings is estimated by discounting
future cash flows using rates currently available for debt or similar terms and remaining maturities. The fair value
approximates their carrying values gross of unamortised transaction costs.
The fair value of the Group’s financial assets and liabilities is equal to the carrying amount.
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities, from its
financial investments and from its deposits with banks.
The carrying amounts of the Group’s cash and cash equivalents, other current assets and receivables represented
the maximum exposure to credit risk in relation to financial assets. Cash is placed with reputable banks.
As of 31 December 2021, no trade and other receivables were impaired (see note 6).
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. At 31 December 2021, the Group’s had no exposure bearing the risk of
changes in market interest rates
Note 20 FINANCIAL RISK, FAIR VALUES AND CAPITAL MANAGEMENT
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 19 TRANSACTIONS WITH RELATED PARTIES
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
46
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of
bank deposits and loans. The objective of the Group is to ensure that sufficient cash is maintained to cover the
operating costs until the market recovers. Equally, the Group is actively looking to divest some of smaller plots in
order to strengthen its cash position. The table below summarises the maturity profile of the Group’s financial
liabilities based on contractual undiscounted payments.
Year ended 31 December
2021
On
demand
Less than 3
months
3 to 12
months
1 to 5 years
> 5 years
Total
Other payables
-
963,335
-
-
-
963,335
Deferred income
-
-
25,121
-
-
25,121
Tax payable
-
13,686
-
-
-
13,686
Total
-
977,021
25,121
-
-
1,002,142
Year ended 31 December
2020
On
demand
Less than 3
months
3 to 12
months
1 to 5 years
> 5 years
Total
Other payables
-
92,743
-
-
-
92,743
Deferred income
-
-
35,524
-
-
35,524
Tax payable
-
60,302
-
-
-
60,302
Total
-
153,045
35,524
-
-
188,569
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Group is subject to foreign exchange risk as the Romanian
subsidiaries have business activities denominated in RON, which is different from the currency of the parent
company, EUR. All investment properties are owned by the Romanian subsidiaries and thus denominated in
RON. However, it is the market practice that investment properties are valued with reference to EUR
denominated values, thus minimising the foreign exchange risk of the Group. From an operational point of view,
the Group’s policy is to mitigate these effects by retaining as much cash in EUR as possible and also by
denominating receivables in EUR. The impact on the Group’s profit before tax is due to changes in the fair value
of monetary assets and liabilities of the subsidiaries before they get translated into the functional currency of the
Group. The impact on the Group’s equity is due to the translation reserves.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its
capital structure and makes adjustments to it, in light of changes in economic conditions.
The Group monitors capital primarily using a loan to value ratio, which is calculated as the amount of outstanding
debt divided by the valuation of the investment property portfolio. The Group’s policy is to keep a low average
loan to value ratio of the Group and in any event not higher than 70%. To maintain or adjust the capital structure,
the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The Group complies with its target loan to value ratio and no changes were made in the objectives, policies or
processes during the years ended 31 December 2021 and 31 December 2020 and had no financial debt.
The Group has not issued any guarantees on behalf of external parties.
The directors of the Parent Company have issued a support letter to its operating subsidiaries stating its intentions
to continue to support the subsidiaries if issues regarding their viability subsequently arose.
Note 21 GUARANTEE OBLIGATIONS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
47
Basis for calculation of earnings per share
Consolidated
Parent Company
2021
2020
2021
2020
The year’s earnings from continuing operations
1,532,011
(3,958,495)
1,791,143
(3,465,409)
No. of shares at the balance sheet date
41,367,782
41,367,782
41,367,782
41,367,782
Average of no. of shares
41,367,782
41,367,782
41,367,782
41,367,782
Earnings per share
0.04
(0.10)
0.04
(0.08)
Diluted Earnings per share
0.04
(0.10)
0.04
(0.08)
Based on the developments to date, the Group does not see a major impact of the events in Ukraine on its
operations. The ongoing projects are currently progressing. The lifting of the Covid restrictions on the 8
th
of
March has resulted in business returning to pre-pandemic times i.e. the implementation of the projects as well as
increased sales activities.
Note 22 EARNINGS PER SHARE
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
Note 23 SUBSEQUENT EVENTS
Note 6 INVENTORIES
Note 6 INVENTORIES
Note 4 INVESTMENTS PROPERTIES
Note 4 INVESTMENTS PROPERTIES
48
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
2021 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, 20.04.2022
The Board of Directors of RomReal Ltd
.......................................... ..........................................
Kjetil Grønskag (Chairman) Bendt Thorkildsen
........................................... ...........................................
Heidi Sorensen (Director) Lacramioara Isarescu (Director)
49
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.