REG-Nordic Land Limited Half Yearly Report - Part 2
Released: 11/12/2008
Part 2 : For preceding part double click [nRn1K9725J]
* Financial liabilities measured at amortised cost.
Derecognition
The Group derecognises a financial asset when the contractual rights to the cash
flows from the financial asset expire or it transfers the financial asset and
the transfer qualifies for derecognition in accordance with IAS 39.
A financial liability is derecognised when the obligation specified in the
contract is discharged, cancelled or expired.
Trade and other receivables
Trade and other receivables are reported at their fair value. As trade and other
receivables have a short expected term, they are valued at face value without
discounting. Trade and other receivables are reported at the amount they are
expected to realise after a deduction for doubtful debts, which is made on a
case by case basis.
A provision for impairment is made when there is objective evidence (such as the
probability of insolvency or significant financial difficulties of the debtor)
that the Group will not be able to collect all the amounts due under the
original terms of the invoice. Impaired debts are derecognised when they are
assessed as uncollectable.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and on demand deposits that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value. In order to be classified as cash and
cash equivalents, the maturity of the cash and cash equivalents instruments is
three months or less at the time of acquisition.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at their issue proceeds, net
of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest method.
Amortised cost is calculated by taking into account any issue costs, and any
discount or premium on settlement. Borrowing costs are recognised on an accruals
basis in the Income Statement using the effective interest rate method.
Gains and losses are recognised in the Income Statement when the liabilities are
derecognised or impaired, as well as through the amortisation process.
Derivative financial instruments
The Group uses derivative financial instruments such as interest rate swaps to
hedge its risks associated with interest rate fluctuations. Such derivative
financial instruments are stated at fair value, based on market prices,
estimated future cash flows and forward rates as appropriate. Any gains or
losses arising from changes in fair value are taken directly to the Income
Statement. In accordance with its treasury policy, the Group does not hold or
issue derivative financial instruments for trading purposes.
Trade and other payables
Trade and other payables are non-interest bearing and are reported at their fair
value. As trade payables have a short expected term, they are valued at their
face value without discounting.
Taxation
The Company is incorporated as an exempt company under Jersey law and is not
subject to any Jersey taxes. Certain subsidiary undertakings are subject to
foreign taxes in respect of foreign source income; provision for such taxes is
made on the basis of taxable profits.
Deferred taxation
Deferred income tax is recognised on all taxable temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in
the financial statements, with the following exceptions:
(a) where the temporary difference arises from the initial recognition of
goodwill or of an asset or liability in a transaction that is not a business
combination that at the time of the transaction affects neither accounting nor
taxable profit or loss;
(b) in respect of temporary differences associated with investments in
subsidiaries, where the timing of the reversal of the temporary difference can
be controlled by the Group and it is probable that the temporary difference will
not reverse in the foreseeable future; and
(c) deferred income tax assets are recognised only to the extent that it is
probable that taxable profit will be available against which the deductible
temporary differences, carry-forward of unused tax assets and unused tax losses
can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis
at the tax rates that are expected to apply when the related asset is realised
or liability is settled, based on tax rates and laws enacted or substantially
enacted at the balance sheet date and are expected to apply when the related
deferred tax asset is realised or the deferred tax liability is settled.
Deferred income tax is recognised in the Income Statement except when it relates
to items that are credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity.
Segmental analysis
The Group has a single geographical and business segment, being investment in
property in the Nordic region.
Management fees
Under the terms of the Management Agreement, the Manager, Lathe Investments
(Nordic) LLP, is entitled to receive an annual management fee dependent on the
gross assets of the Group. Fees are recorded on an accruals basis.
Foreign currencies
The assets and liabilities of foreign entities are translated into sterling at
the rate of exchange ruling at the balance sheet date and their income
statements and cash flows are translated at the average rate for the period.
Exchange differences arising from the retranslation of the net investment in
foreign entities are dealt with in reserves. Transactions in currencies other
than the Group's functional currency are recorded at the exchange rate
prevailing at the transaction dates. Foreign exchange gains and losses resulting
from settlement of these transactions and from retranslation of monetary assets
and liabilities denominated in foreign currencies are recognised in the Income
Statement except when qualifying as hedges, in which case they are dealt with in
reserves.
Note 4 Net rental income
The Group engages in only one class of business activity, being investment in
retail property. All operations are continuing and are based in the Nordic
region.
Note 5 Net interest payable and other finance costs
Six months to 30 September 2008 3 April 2007 to 3 April 2007 to
30 September 2007 31 March2008
£000 £000 £000
Interest on bank loans 1,390 832 2,102
Other finance costs 56 9 81
Interest payable 1,446 841 2,183
Interest receivable (125) (134) (291)
Net interest payable and other finance costs 1,321 707 1,892
Note 6 Income tax
Six months to 3 April 2007 to 3 April 2007 to
30 September 2008 30 September 2007 31 March2008
£000 £000 £000
Current income tax charge/(credit) 5 21 (38)
Deferred taxation (156) 490 1,192
Tax (credit)/charge (151) 511 1,154
Note 7 Earnings per share
Earnings per share and adjusted earnings per share have been calculated, using
the weighted average number of shares in issue during the period of 19,405,333,
as follows:
Six months to Six months to 3 April 2007 to 3 April 2007 to 3 April 3 April
30 September 30 September 30 September 30 September 2007 to 2007 to
2008 2008 2007 2007 31 March 31 March
(Loss)/profit Earnings Profit Earnings 2008 2008
after tax per share After tax per share Profit Earnings
After tax per share
£000 pence £000 pence £000 pence
(Loss)/profit for the period (1,477) (7.6)p 1,222 7.9p 732 4.2p
Loss/(gain) on revaluation of investment properties 1,187 6.1p (1,763) (11.3)p (2,947) (16.9)p
Change in fair value of derivative instruments 203 1.0p (163) (1.1)p (272) (1.5)p
Deferred tax on revaluation of investment properties (156) (0.8)p 490 3.2p 1,192 6.8p
Loss on abortive transaction - - 100 0.6p 104 0.6p
Adjusted (243) (1.3)p (114) (0.7)p (1,191) (6.8)p
Basic and diluted earnings per share are the same as the issued share options
are currently anti-dilutive.
Adjusted earnings per share, excluding the gain/loss on revaluation of
investment properties, the change in fair value of derivative financial
instruments and exceptional items, all net of attributable taxation, is an
accepted property industry measure for reporting recurring profits.
Note 8 Investment properties
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Opening balance 67,878 - -
Investment properties acquired - 57,191 64,511
Capital expenditure on properties during the period 101 - 89
Foreign exchange (losses)/gains (3,511) - 331
(Loss)/gain on revaluation (1,187) 1,763 2,947
63,281 58,954 67,878
The fair value of investment properties is based on a valuation at 30 September
2008 by DTZ Sweden AB performed in accordance with the Appraisal and Valuation
Standards of RICS, on the basis of market value.
Note 9 Derivative financial instruments
The fair value of derivative financial instruments has been calculated by
discounting the expected future cash flows at prevailing interest rates. The
derivative financial instruments relate to the fixed interest swaps (principal
amount of SEK 592.7 m; see note 13) used for managing the Group's exposure to
interest rate movements on its bank borrowings. These swaps expire at the same
time as the bank borrowings in April 2012.
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Derivative financial instruments 69 163 272
Note 10 Trade and other receivables
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Rental debtors 208 189 189
Prepayments and accrued income 134 104 130
Other debtors 18 171 44
360 464 363
The carrying amount of trade and other receivables approximate their fair
value.
Note 11 Cash and cash equivalents
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Cash and cash equivalents 5,702 6,841 6,838
Cash and cash equivalents comprise cash held by the Group and short-term
deposits with a maturity of three months or less. The carrying value of these
assets equals their fair value.
Note 12 Trade and other payables
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Accounts payable - trade 145 301 244
Deferred income 1,003 861 987
Accruals 832 1,090 931
Other creditors 121 67 168
Performance fee payable to the Manager - - 468
2,101 2,319 2,798
The Directors consider that the carrying amount of trade and other payables
approximate to their fair value.
Note 13 Borrowings
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Amounts falling due after more than one year:
Bank loans 47,685 44,966 50,285
Unamortised borrowing costs (353) (429) (425)
47,332 44,537 49,860
The bank loans represent borrowings of SEK 592.7 m. The weighted average
interest rate is 5.45% per annum. The interest rates on all loans are fixed
using derivative financial instruments until maturity of the borrowings in April
2012.
The bank loans are secured on the shares of the borrowing subsidiaries and their
investment properties.
The Directors estimate that the book value of the Group's bank loans
approximates to their fair values.
The Group also has undrawn committed facilities of £8.9 m available to fund the
capital expenditure requirements of the borrowing subsidiaries. These facilities
are available until April 2012, unless extended by a further year. However, as
mentioned in the Chairman's and Managing Director's Statement, there is some
doubt as to whether these undrawn committed facilities exist.
The gearing ratio at the period end is as follows:
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Bank loans 47,332 44,537 49,860
Cash and cash equivalents (5,702) (6,841) (6,838)
Net debt 41,630 37,696 43,022
Value of investment properties 63,281 58,954 67,878
Net gearing ratio 65.8% 63.9% 63.4%
Gross gearing ratio 74.8% 75.5% 73.5%
Note 14 Deferred tax liability
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Opening balance 2,138 - -
Acquired - 727 813
Net (credit)/charge per Income Statement (156) (490) 1,192
Foreign exchange differences (117) 395 133
Closing balance 1,865 632 2,138
Note 15 Net asset value per share
As at As at As at
30 September 30 September 31 March
2008 2007 2008
£000 £000 £000
Net assets 18,100 18,822 20,546
Adjust for:
Fair value of derivative financial instruments (69) (163) (272)
Deferred tax on revaluation of investment properties 1,865 632 2,138
Adjusted net assets 19,896 19,291 22,412
Net asset value per share £0.91 £0.98 £1.07
Adjusted net asset value per share £1.00 £1.01 £1.17
Number of ordinary shares in issue at balance sheet 19,859,561 19,172,588 19,172,588
date
Net asset value per share has been calculated by dividing the net assets
attributable to the equity holders of the Company by the number of ordinary
shares in issue at the period end.
Note 16 Interim report
The report is available on the Company's website: www.nordicland.com
The interim report for the period from 1 April to 30 September 2008 will be sent
to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
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