REG-Nordic Land PLC Final Results - Part 3
Released: 15/07/2009
Part 3 : For preceding part double-click [nRn2O6568V]
2009 2009 2009 2008 2008 2008
£000 £000 £000 £000 £000 £000
Swedish krona 2,550 53,119 (50,569) 3,275 54,114 (50,839)
Euro 7 19 (12) 60 85 (25)
Amounts in the above table are based on the carrying value of the monetary
assets and liabilities.
Foreign exchange sensitivity analysis
At 31 March 2009, had sterling strengthened by 5% in relation to all currencies,
with all other variables held constant, net assets attributable to shareholders,
with a corresponding effect on profit and loss, would have decreased by the
amounts shown below.
As at As at
31 March 31 March
2009 2008
£000 £000
Swedish krona 649 811
Euro (1) (1)
648 810
A 5% weakening of sterling against the above currencies would have resulted in
an equal but opposite effect on the net assets attributable to shareholders and
the net loss for the year, on the basis that all other variables remain
constant.
Interest rate risk management
The Group's interest rate risk arises from long-term borrowings used when
acquiring property. The Group limits its exposure to interest rate risk when
acquiring property by raising finance at fixed rates of interest. A movement in
market interest rates will result in a decrease/increase in the fair value of
the bank loan drawn to fund the acquisition of the property.
As the Group does not have any derivative financial instruments there is no
sensitivity on profit or net assets in relation to interest rate risk
management. The only sensitivity is in relation to the fair value of the bank
loans.
Fair value interest rate risk sensitivity analysis on bank loans
At 31 March 2009, had the market interest rate increased by 0.5%, with all other
variables held constant, the fair value of the bank loans would have decreased
by £749,000 (2008: £753,000).
A 0.5% decrease in the market interest rate, with all other variables held
constant, would result in an equal but opposite effect on the fair value of the
bank loans by the same amount.
However, Nordic Land's only obligation is to pay interest at fixed rates and
repay loans at par value at maturity.
Price risk
The Group is exposed to property price and property rental risks. The Group is
not exposed to the price risk with respect to financial instruments as it does
not hold any equity securities.
Credit risk
Credit risk is the risk that a counterparty will be unable to pay amounts in
full when due and relates principally to trade and other receivables and cash
and cash equivalents.
The Directors believe there is no significant credit risk to the Group as the
rental debtors are not reliant on a single rental contract or customer. The
Group also ensures that rental contracts are made with customers with an
appropriate credit history.
The Directors also believe there is no significant risk associated with the cash
and cash equivalents balance as the banks are reputable multinational corporate
banks which are regulated in various jurisdictions. Cash deposits are held with
approved financial institutions with high credit ratings.
With respect to credit risk arising from the other financial assets of the
Group, the Group's exposure to credit risk arises from default of the
counterparty, with a maximum exposure equal to the carrying amount of these
instruments.
Liquidity risk
The Directors limit the Group's liquidity risk by ensuring that sufficient cash
resources are available to fund its working capital requirements and that
committed bank facilities are available to fund its development project capital
expenditure programme.
The contractual maturities of financial liabilities are disclosed in note 14
regarding Trade and other payables, and note 15 regarding Borrowings.
Note 17 Deferred tax liability
The following are the major deferred tax liabilities recognised during the
year:
Revaluation of investment properties Accelerated tax depreciation as at 31 March 2009 Total as at 31 March 2009 Revaluation of investment properties Accelerated tax depreciation as at 31 March 2008 Total as at 31 March 2008
as at 31 March 2009 as at 31 March 2008
£000 £000 £000 £000 £000 £000
At start of period
1,305 833 2,138 - - -
Acquired - - - 255 558 813
Charge to Income
(999) 289 (710) 944 248 1,192
Foreign exchange differences
(27) 2 (25) 106 27 133
At the end of the period
279 1,124 1,403 1,305 833 2,138
Note 18 Ordinary share capital
As at As at
31 March 2009 31 March 2008
£000 £000
Authorised
250,000,000 ordinary shares of £0.01 each 2,500 2,500
As at As at
31 March 2009 31 March 2008
£000 £000
Issued and fully paid
19,859,561 (2008: 19,172,588)
ordinary shares of £0.01 each 199 192
On 24 July 2008, 686,973 shares were issued and credited as fully paid in part
settlement of the performance fee payable to the Manager for the period ended 31
March 2008.
Note 19 Net asset value per share
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 of 19,859,561 (2008: 19,172,588).
As at As at
31 March 31 March
2009 2008
£000 £000
Net assets 16,645 20,546
Adjust for:
Fair value of derivative financial instruments - (272)
Deferred tax on investment properties 1,403 2,138
EPRA net assets 18,048 22,412
Net asset value per share £0.84 £1.07
EPRA net asset value per share £0.91 £1.17
EPRA net asset value is the net asset value per share of the Company adjusted to
exclude the effect of deferred tax relating to the revaluation of investment
properties and the fair value of derivative financial instruments net of
attributable taxation.
Basic and diluted net asset value per share are the same, as the issued share
options are currently anti-dilutive.
Note 20 Related party transactions
The following related party transactions were conducted during the period:
* asset management fees of £458,000(2008: £382,000) have been charged in
accordance with the management agreement. The Manager receives a fee of 0.65%
based on the consolidated gross assets of the Group; and
* a performance fee is payable to the Manager equal to 20% of the Total
Shareholder Return in excess of 8% in any relevant period, subject to a high
watermark. At 31 March 2009, this amounted to £nil (2008: £936,000). Payment
of the performance fee consists of not more than 50% in cash and not less than
50% in new shares in the Company.
Note 21 Group entities
Details of all of the Group's subsidiaries at 31 March 2009 are as follows:
Place of Proportion of Proportion of
incorporation ownership voting power
interest held
% %
Nordic Land Holdings Limited Jersey 100 100
NordicLand Holding (Luxembourg) Sssrl Luxembourg 100 100
Nordic Land (Luxembourg) Sssrl Luxembourg 100 100
Nordic Land Finance (Luxembourg) Sssrl Luxembourg 100 100
Nordic Land AB Sweden 100 100
Nordic Land Terminalen AB Sweden 100 100
Nordic Land Borlssnge AB Sweden 100 100
Nordic Land Sicklaon Holding AB Sweden 100 100
Each of the undertakings listed above is engaged in investment in retail
property.
Note 22 Share-based payments
On 25 July 2007 the Company established a share option programme (the 'Nordic
Land Share Option Plan') that entitles Directors and representatives of the
Manager to purchase shares in the Company. The share-based payment scheme is
equity settled by the award of options to acquire ordinary shares.
The number and weighted-average exercise prices of share options are as
follows:
Weighted average exercise price 2009 Weighted average exercise
price2008
Number of options Number of options2008
2009
Outstanding at the beginning of the period 455,686 -
Granted during the period 106 p 23,984 106 p 479,670
Lapsed during the period 106 p (95,934) 106 p (23,984)
Outstanding at the end of the period 383,736 455,686
The Nordic Land Share Option Plan is open to certain Directors of the Company,
employees and partners of the Manager and any local property adviser as engaged
by a member of the Group, at the discretion of the Directors.
Options over 23,984 shares were granted, as a reallocation of previously issued
share options, on 27 March 2008 at an exercise price of 106 p. The first day on
which these options may be exercised is 27 March 2010; the last day on which the
options may be exercised is 26 March 2018. Options for 95,934 shares, which had
been issued to a former partner of the Manager, have since lapsed.
Options over 455,686 were granted in the period ended 31 March 2008. The first
day on which those options may be exercised is 6 September 2009; the last day on
which the options may be exercised is 5 September 2017.
The options are not subject to performance conditions. If the options remain
unexercised after a period of 10 years from the date of grant, the options
expire. Options are normally forfeited if the optionholder leaves the Group or
the Manager before the options vest.
In accordance with IFRS 2 'Share-based Payment', the fair value of
equity-settled share-based payments is determined at the date of grant and is
expensed on a straight-line basis over the vesting period, based on the Group's
estimate of options that will eventually vest. Fair value is calculated using
the standard Black-Scholes pricing model, with the following inputs:
* Share price106 p
* Exercise price 106 p
* Expected volatility 33%
* Expected option life6 years
* Expected dividend yield 0%
* Risk-free interest rate 5.1%
Expected volatility is estimated by considering historic average share price
volatility for a group of comparable companies within the same sector and with a
similar market capitalisation as the Company.
The aggregate of the fair values of the outstanding options is £135,000 (2008:
£205,000).
The total share-based payment charge relating to shares of the Company is:
31 March 3 April 2007 to
2009 31 March 2008
£000 £000
Share options 77 58
Performance fee payable to the Manager (note 20) - 468
Total 77 526
Note 23 Capital commitments
Future capital expenditure, contracted for and approved by the Directors, but
not provided for in these consolidated financial statements, is as follows:
As at As at