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RomReal Limited Annual Report 2022
15 April 2023
RomReal is a Company focused on the Romanian real estate market. Established in 2005 and
owns a premium portfolio of properties in the Black Sea – Constanta region
Page 1 of 51
2022 Highlights
Net Asset Value (NAV)
Net Asset value was EUR 0.40 (NOK 4.15 before any tax) per share, that being 2.5% below the
announced year-end 2021 level of EUR 0.41 per share.
The year-end 2022 valuation was concluded by Colliers in January 2023 and the values of the
Group’s investment property have been updated accordingly.
Operational highlights
During 2022, the Company sold a total of 21,117 sq. meters from the various projects totalling
EUR 2.7 milion. Hitherto, in 2023, the Company has sold 289 sq. meters for a total EUR 0.06 million.
By the end of 2022, a total of EUR 6.9 million (ex VAT) have been invested in infrastructure,
primarily in Industrial Park and Lakeside.
Financial Results
Net Result for the year 2022 was EUR 0.63 million loss compared to a EUR 1.53 million profit in
2021.
By year-end 2022, the Company had a cash position of EUR 4.1 million plus a total of EUR 5.1
million in unsettled receivables related to binding sales agreements, totalling EUR 9.2 million, or
about EUR 0.22 per share (2021: EUR 0.19 per share).
Macro and real estate market highlights
Romania's GDP expanded in 2022 by 4.8%, compared to a growth of 5.6% in 2021, according
to data from the Country's statistical board (INS). European Commission’s Romania 2023 GDP
growth projection to 2.5%.
During 2022 the average residential prices in Romania reached an average price of EUR
1,705/sqm, indicating an 5.6% increase compared with end of year prices 2021. Price growth
turned negative from June 2022. In Constanta, average prices at the end of December 2022
reached at EUR 1,609/sqm (1434), showing an increase of 10.9% compared with the same
period last year according to www.imobiliare.ro
Page 2 of 51
Key Financials
EUR '000
2022
2021
Operating Revenue
4,853
3,711
Operating Expenses
(1,721)
1,073
Other operating income/ (expense), net
(3,627)
(2,682)
Net financial income/(cost)
37
(509)
Pre-tax result
(457)
1,593
Result for the period
(635)
1,532
Total assets
16,724
17,986
Total liabilities
494
1,160
Total equity
16,230
16,826
Equity %
97.0%
93.6%
NAV per share (EUR)
0.39
0.41
Cash position
4,098
3,807
For a more detailed analysis of the key financials please review the Financial Statements
section of this report.
Page 3 of 51
Property Portfolio
Total size of the Company’s Property Portfolio (“Land Bank”) totaled 219,727 sqm at the end of
2022. The Company owns prime location plots in the Black Sea region, County Constanta:
Plot name
Location
Size (m2)
1 Ovidiu Lakeside
Constanta North/Ovidiu
2,764
2 Ovidiu Residence
Constanta North/Ovidiu
50,000
3 Ovidiu (Oasis)
Constanta North/Ovidiu
23,103
4 Centrepoint
Constanta North/Ovidiu
121,672
5 Ovidiu Residence 2 and 3
Constanta North/Ovidiu
15,000
6 Balada Market
Central Constanta
7,188
Total
219,727
For further information on the Company’s property portfolio, please visit www.RomReal.com
Romanian Macro development
The National Bank has decided to keep the monetary “Policy rate” at 7% (9 February 2023). The
annual inflation rate went down to 16.4 percent in December 2022 from 16.8 percent in
November 2022, mainly as a result of lower fuel prices amid the decline in oil prices and the
appreciation of the leu against the US dollar. This trend continued in January 2023 with an
increase of 15.1 percent y-o-y. According to the updated forecast from the Federal Planning
Bureau, the annual inflation rate is expected to fall significantly during 2023 to 4.5 percent.
On a 2022 full year basis, the GDP grew by 4.8%, compared to a 5.8% expansion in 2021, INS
said in a statement 14 February 2023. According to the latest forecast by the European
Commission, Romania’s economy is expected to grow 2.5 percent in 2023, marginally lower
than what is assumed in the Government 2023 budget (2.8%). According to INS, a modest
rebound of 3 % in GDP is projected for 2024 on the back of receding inflationary pressure,
lower interest rates and improved external outlook. Otherwise, the EUR/Ron average was
rather flat versus 2021, with just a 0.2 percentage increase to 4.93. This RON strength is
probably due to a hefty inflow of EU money.
Page 4 of 51
RomReal Ethical Policy
Introduction
RomReal is only involved in minor construction
or development projects, but aiming to
maintain its principles with regards to Ethical
Policy since its listing to the Oslo Stock
Exchange. These can be found below:
Energy
From initial site surveys, through to the
specification of fixtures and fittings, the
Company aims to identify the most energy-
efficient solutions. The Company is seeking
more intelligent and sustainable approaches
to design, construction and materials.
Water
All of the developments consider ways in
which water usage can be reduced, both
during construction and occupancy. Where
possible, specifying ways of increasing the
efficiency of water usage within the
infrastructure of our developments, delivering
responsibility and cost-efficiency.
Materials
The Company is aiming to select all
construction materials carefully. The aim is to
protect natural resources and reduce carbon
emissions, thereby contributing to a healthy
environment for the residents in all
developments.
Waste
RomReal is aware of the need to reduce and
manage waste across our operations and is
aiming to fulfil all legal requirements. It also
supports and encourages residents in their
own recycling efforts.
Community
From introducing improvements to the local
infrastructure to including spaces for
socialising and local amenities, the aim is to
contribute to sustainable communities for
everyone.
Healthy Living
RomReal recognizes our responsibility to
support healthy lifestyles and meet the needs
and aspirations of residents. RomReal seeks to
maximize the natural benefits of sunlight,
daylight and open space within each
development.
Education
RomReal seeks to deliver sustainable
development through its ethical policy and
working practices. The terms of reference
include requirements for economic and social
progress at a local level. The Company has
supported educational initiatives, both those
that spread best practice in sustainable
development, and those that enhance the
local educational infrastructure in general.
Page 5 of 51
Shareholder Overview
Please see below the list of the top 20 shareholders in RomReal as of 06 March 2023:
Rank
Name
Holding
Stake
1
SIX SIS AG
10,331,934
24.98%
2
GRØNSKAG, KJETIL
5,913,006
14.29%
3
THORKILDSEN,
WENCHE
5,392,985
13.04%
4
SAGA EIENDOM AS
3,386,636
8.19%
5
AUSTBØ, EDVIN
2,108,500
5.10%
6
Danske Bank A/S
1,557,838
3.78%
7
ENERGI INVEST AS
1,253,611
3.03%
8
Orakel AS
1,101,000
2.66%
9
GRØNLAND, STEINAR
1,045,277
2.53%
10
BNP Paribas
991,717
2.40%
11
SPAR KAPITAL
INVESTOR AS
940,236
2.27%
12
THORKILDSEN INVEST
AS
829,478
2.01%
13
PERSSON, ARILD
718,000
1.74%
14
HOEN, ANDERS
MYSSEN
689,557
1.67%
15
KVAAL INVEST AS
682,000
1.65%
16
AKSEL MAGDAHL
466,092
1.13%
17
Frenico AS
396,000
0.96%
18
NORDNET
LIVSFORSIKRING AS
295,903
0.72%
19
CITIBANK
220,000
0.53%
20
Jo Egil Aalerud
166,864
0.40%
TOP 20
38,486,634
93.08%
Page 6 of 51
Board of Directors
Kjetil Grønskag - Chairman of the Board and CEO
Lacramioara Isarescu – Board Member
Bendt Thorkildsen – Board Member
Heidi Sørensen Austbø – Board Member
Mr. Grønskag holds a master of General Business (siviløkonom) from
Handelshøyskolen BI and is a Certified Financial Analyst (CFA) from
Norwegian School of Economics and Business Administration. He has also
studied Law at University of Oslo. Mr. Grønskag has a long experience
within international banking and Real Estate. Mr Grønskag has significant
Directorship experience from both listed and private companies. He is a
Norwegian citizen and resides in London, UK.
Ileana Lacramioara Isarescu is a corporate professional with over 15
years of international experience in business development in real estate,
finance and IT. Having worked in Vienna and New York, Ileana is
currently the Governmental Programs Executive for IBM South East
Europe, and resides in Bucharest, Romania. Ileana holds a MBA degree
from Harvard Business School and a MSc in International Economics from
the Academy of Economic Studies Bucharest.
Mr. Thorkildsen holds a Master of Science (MSc) in International
Marketing and Strategy from the Norwegian School of Economics and
Business Administration. Mr. Thorkildsen has more than 20 years with
varied experience with particular focus on business development/sales
(IT). During the last 10 years Mr. Thorkildsen also has held various
Directorship including in the real-estate industry. He is a Norwegian
citizen.
Mrs Austbø is a State Authorised Public Accountant from
Handelshøyskolen BI in Oslo. Mrs Austbø has 14 years’ experience from
both audit and Management with Norwegian and global equities,
working for KPMG and long equity funds at Terra Fondsforvaltning and
Arctic Fund Management. Mrs Austbø also has Directorship and CEO
experience from privately held companies. She is a Norwegian citizen
and resides in Oslo.
7
Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board
of Directors Report and the RomReal Ltd consolidated and annual financial statements as of 31
December 2022. To the best of our knowledge, we confirm that RomReal Ltd and RomReal
Group’s consolidated annual financial statements for 2022 have been prepared in accordance
with IFRSs and IFRICs as adopted by the European Union (EU), IFRSs as issued by the International
Accounting Standards Board (IASB).
The information presented in the financial statements gives a true and fair view of the
Company’s and the Group’s assets, liabilities, financial position and results for the period
viewed in their entirety.
DIRECTORS REPORT 2022
RomReal Directors
The Board of Directors of RomReal is responsible for the supervision and administration of the
Company’s affairs and for ensuring that the Company’s operations are organized in a
satisfactory manner.
The Directors are shown below together with their interest in the number of shares in the
Company per 31 December 2022 and per 31 December 2021:
31 December 2022
31 December 2021
Kjetil Grønskag
Appointed Nov 2006
5,913,006
5,752,914
Heidi Sørensen Austbø
Appointed April 2017
Nil
Nil
Bendt Thorkildsen
Appointed April 2016
6,222,463
6,222,463
Lacramioara Isarescu
Appointed April 2014
Nil
Nil
TOTAL
12,135,469
11,975,377
8
Operations Update
Lake Side (No.1 on the table) – The Company has sold 7 plots during 2022. Street and utilities
have been delivered to the City Hall for public use according to agreement. The City Hall has
delivered the utilities to the water company during February 2023. RomReal is marketing the
remaining 4 small plots for sale.
Oasis (No. 3 on the table) – The Company has commenced the process to re-authorise the
regular utilities like gas, electricity and roads on the plot. Both block structures have already
been re-authorised by Ovidiu City Hall. This in order to add value to the plot and commence the
works for constructing the utilities. The Company has commenced the works for water and
sewage on the plot as well.
Industrial Park (No. 4 on the table) – The project is partly or fully still for sale. Some investments is
required on the plot to maintain its existing PUZ and building Authorisation before October 2023.
Balada Market (No. 6 on the table) – The project is for sale. A regulation process to utilise a larger
part of the plot for parking has been obtained and installation is expected be completed during
April this year.
Ovidiu Residence (former Badulescu plot, No. 2 on the table) – Based on the Lakeside plot
experience, the Company has commenced a process to regulate this plot located nearby
Lakeside for residential and commercial use. The regulation process is moving more or less as
planned, but a urbanistic regulation/PUZ is not obtained yet. The Company has signed a
precontract for sale of a part of the plot with a local investor.
Ovidiu Residence 2 (former Gynaydin 7,900 sqm No. 5 on the table) - The Company has
commenced a process to regulate the plot located nearby Lakeside for residential use. This will
include infrastructure investments. It is expected the urbanistic regulation/PUZ of the plot to be
approved by local authorities hopefully within end 2023. The Company has signed a precontract
for sale of the plot with a local investor.
Ovidiu Residence 3 (former Gunaydin 7,100 sqm, No. 5 on the table) – The Company has
commenced a process to regulate the plot located nearby the road between Ovidiu and
Constanta for residential use. It is expected to include infrastructure investments. It is expected
the urbanistic regulation/PUZ of the plot to be approved by local authorities hopefully within
end 2023.
Key features of the real estate market
Romanian Investment Market: According to Colliers, 2022 was a strong year for investment
deals in Romania totalling EUR 1.25 billion versus EUR 890 million in 2021. The largest transaction
was the sale of CA Immo’s office portfolio in Romania of EUR 377 million. Another
characteristic of 2022 is the increased strong demand stemming from local investors with an
estimated 50 percent of the volume.
Offices: In the main market Bucharest, about 125,000 m2 of new modern offices has been
delivered this year. Taking the overall stock to about 3.3m m2 according to Colliers. The
estimated vacancy ended at about 15 percent versus around 16.5 percent by the end of
2021. The two main unknowns for 2023 is the overall macro development and a how the
hybrid work (home vs office work) pans out. The new office pipeline for 2023 is about 100,000
9
m2. All in all, the Romanian office market is still undersupplied on a per capita basis relative to
Western European capitals, and the Romanian regional market is even more so.
Retail: According to Colliers, about 77,000 m2 was delivered in total in Romania in 2022 versus
about 102,000 m2 in 2021. This is the second lowest year figure in almost two decades. The
largest delivery in Bucharest in 2022 was the extension of the Colosseum Mall (16,500 m2) and
the Scallier’s Funshop Retail Park in Timisoare (10,800 m2). The bulk of the deliveries came via
retail parks. The estimated total retail space in Romania is about 4.1m m2 by the end of 2022.
The estimated 2023 deliveries of about 260,000 m2, may turn out to be among the most
significant supply additions since 2011. This could lead to some delays and some projects
pushed into 2024. Again, retail parks are set to be the main contributor.
Industrial/logistics: The industrial and logistic sector reached 6.2m m2 of modern stock during
2022 following completion of several larger projects, About 50% of the new stock came in
Bucharest. During last year about 800,000 m2 was agreed in new rental contracts. The
RomReal Limited Fourth quarter 2022 Page 6 of 15 biggest transaction in 2022 was H & M’s
new distribution center in Ploiesti, totalling circa 88,000 m2. Colliers is optimistic with regards to
the long-term prospects of the I&L market, with an estimate of about 10m m2 by the end of
the decade.
Residential: Asking prices for apartments and houses in Romania decreased by 1.35% in the
fourth quarter of 2022 compared the third quarter of 2022 (EUR 1,705/m2 to EUR 1,682/m2 at
the end of 4Q 2022). In Constanta, average prices increased by 0.21% during the fourth
quarter of 2022 (EUR 1,431/m2 at the end of December 2022, compared to EUR 1,428/m2 at
the end of September 2022), according to www.imobiliare.ro index. The Romanian housing
market has been increasing since 2015 with a nationwide price average of about 84%. This
trend turned negative from June 2022. The Governmental project Noua Casa (New Home),
which gives favourable, state-guaranteed loans to those who intends to buy their first home,
has seen less demand last year. Only about 75% of the available funds in the programme has
been used this year vs 100% take-up after two months in 2021. The main reasons are increased
interest rates and building costs and reduced consumer confidence.
The following graphs indicate the apartment prices trend in Romania and Constanta by year-
end 2022:
During 2022, the average residential prices in Romania reached an average price of EUR
1,682/sqm, indicating an 5.6% increase compared with end of year prices 2021 (EUR 1,593/sqm).
Romania
10
Price growth turned negative from June 2022. In Constanta, average prices at the end of
December 2022 reached at EUR 1,431/sqm. (2021: 1,408) showing an increase of 1.63%
compared with the same period last year according to www.imobiliare.ro
Accounts and financial position
RomReal has prepared the financial statements as of 31 December 2022, 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 4.85 million in 2022 compared to EUR
3.71 million in 2021. The main revenue streams were rental income from the Balada Market and
sales of plots.
Operating expenses
Total consolidated operating expenses were EUR 1.72 million in 2022 (mainly due to the
unrealised losses related to the inventories portfolio) compared to a positive EUR 1.07 million in
2021. RomReal (parent Company) operating loss were EUR 1.15 million in 2022 compared to EUR
2.32 million gains in 2021.
Profit/Loss
Consolidated profit/loss after tax in 2022 was a los of EUR 0.635 million compared to a profit after
tax of EUR 1.532 million in 2021. RomReal (parent Company) loss after tax was EUR 0.60 million in
2022 compared to EUR 1.79 million gain in 2021.
Constanta
11
The end of year 2022 independent land bank portfolio valuation has shown a net increase on
a like for like basis compared to the end of year 2021 valuation, mainly reflecting the works to
increase the value of plots under Lakeside and Oasis Residence.
Dividends
The Directors are not proposing any dividends for the period.
Balance sheet
RomReal had on a consolidated basis a total balance sheet of EUR 16.72 million at 31
December 2022 (2021: EUR 17.99 milion). RomReal (parent Company) had a total balance
sheet of EUR 16.29 million (2021: EUR 16.88 million). Total consolidated equity at 31 December
2022 amounted to EUR 16.23 million (parent Company EUR 16.23 million) compared with EUR
16.83 million in 2021 (parent Company EUR 16.82 million). The Company has total current and
non current liabilities of EUR 0.49 million at 31 December 2022 (parent Company EUR 0.06 million).
Net cash flow from consolidated operations was positive EUR 0.29 million at December 31 2022
compared to positive EUR 2.60 million in 2021 (parent Company positive EUR 0.25 million
compared to negative EUR 0.16 million in 2021). Consolidated current assets were EUR 12.22
million at 31 December 2022 compared to EUR 13.37 million at 31 December 2021 (parent
Company EUR 0.29 million in 2022 compared to EUR 0.04 million in 2021).
Financial risk
The Company does not have any current nor potential litigation, previous tax dispute was fully
settled in November 2020.
Organization
RomReal Ltd operates in Romania through its fully owned subsidiary S.C. Westhouse Group SRL
(WHG). WHG holds an office in Constanta, Romania, and a small team of five employees, legal
operations of the subsidiary companies being supervised by Cristea & Partners Law office headed
by Mr. Adrian Cristea. The employees mainly deal with managing the assets, accounting
compliance and reporting as well as sales/ marketing.
Working Conditions, Equal Opportunities, Health and Environmental issues
RomReal works continuously on facilitating employee development, good health, enthusiasm
and commitment among its employees. The Company also encourages employees to use public
transport on travelling to reduce pollution. Women and men in comparable jobs receiving the
same pay.
Climate risks and risk management
RomReal has a clear ambition to exit the Romanian real estate market by selling its projects
(primarily land) in due course, and the remaining assets is rather limited in value and size.
Consequently, the view of the Board of the Directors is it will not materially be affected from
external climate risk or any known EU and/or Romanian regulations. Even though, the
Romanian affiliated companies of the Group have on a best effort basis satisfied all known
climate risk/environmental procedures assessment for all the remaining properties, and the
required approvals has been issued in time by the Environment authorities for each project.
12
Corporate Governance
RomReal Ltd (RomReal) is trying to focus on practicing good corporate governance, which will
strengthen confidence in the Group and thereby contribute to the best possible long-term value
creation to the benefit of the shareholders, the employees and other stakeholders. The purpose
of its principles for corporate governance is to regulate the division of roles between shareholders,
the Board and the Executive Management more comprehensively than is required by legislation.
The Norwegian code of practice for corporate governance (the code) has been issued by the
Norwegian Corporate Governance Board (NCGB). It builds on the principle of “comply or
explain”, whereby companies must either comply with the code or explain why they may have
chosen an alternative approach. It also requires the Company’s report on its corporate
governance to address all 15 sections of the code. The Oslo Stock Exchange stipulates that listed
companies must provide an overall presentation of their corporate governance principles in
accordance with the applicable code, and that this must be included in their annual report.
RomReal’s principles for corporate governance are based on the recommendation of 14 October
2021, which can be found at www.nues.no.
1. Implementation and reporting on corporate governance
Confidence in its Management and business are crucial for RomReal’s present and future
competitiveness. The Group practices open Management, and thereby builds trust both in-house
and externally.
The Board of RomReal is responsible for implementing sound corporate governance principles in
the Group according to Bermuda Corporate Governance standards. RomReal’s corporate
governance does not deviate from the requirements of the code in a significant way which
requires more detailed explanation. Relations between owners and the Group will be
characterized by respect for the owners, good and timely information, and equal treatment of
shareholders.
2. Business
RomReal owns a portfolio of prime location plots in the Black Sea region, more specifically
Constanta and Ovidiu. The plots are well suited for residential and commercial developments.
RomReal is involved in several construction or development projects for the time being. The ethical
guidelines observed by RomReal reflect its values base; please see separate Ethical Policy Section.
The objective of the Company for 2023 is to:
• Focus on land value enhancing activities in order to improve the shareholder value.
• Key action points are increased & more professional sales & marketing efforts
• Some infra-structure investments and, if necessary, engage more resources into
regulation processes like what is planned on Oasis.
• Maintain a cost efficient, and healthy organisation
• Conservative cash management and secure collection of vendor financing
3. Equity and dividends
RomReal aims to maintain a solid equity and good liquidity appropriate to its objectives, strategy,
and risk profile
13
Dividend
The Company is fully financed without any external debt, and when/if certain additional disposals
are realized, tax cases concluded a potential re-distribution of cash to the shareholders will
reappear on the Board of Directors agenda.
Under Bermuda law, a Company’s Board of Directors may declare and pay dividends from time
to time unless there are reasonable grounds for believing that the Company is, or would after the
payment be, unable to pay its liabilities as they become due or that the realizable value of its
assets would thereby be less than the aggregate of its liabilities and issued share capital and share
premium accounts. Under the Company’s Bye-Laws, each share is entitled to dividends if, as and
when dividends are declared by the Board, subjects to any preferred divided right of the holders
of any preference shares. There are no restrictions on the Company’s ability to transfer funds (other
than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to
Norwegian residents who are holders of the Company’s Shares.
4. Equal treatment of shareholders and transactions with close associates
Share Issues
Only the General Meeting considers Board mandates to increase the share capital for each
purpose after assessing the requirements set by the Board.
Different Classes of Shares
RomReal has a single share class, and each share carries one vote. Shareholders will be treated
equally unless qualified grounds exist for an alternative approach.
Efforts will be made to conduct possible transactions by the Company in its own shares through
the stock exchange or in others ways at prevailing stock exchange prices.
Transactions with close associates
RomReal’s routines specify that, in general, no transactions should be conducted between the
Group and its shareholders, Directors, senior executives or their close associates. Should any of
these have an interest in a transaction involving the Group, the Board must be informed and take
up the matter for consideration if necessary. Unless the transaction is insignificant, the Board will
secure third-party assessments of the transaction and otherwise assure itself that no form of unfair
treatment of shareholders, elected officers, employees or others is involved. The related parties,
including shareholders and close associates, are reported to the stock exchange via
www.newspoint.no. During 2022, there was nine insider transaction by Chairman Kjetil Gronskag.
14
5. Shares and negotiability
RomReal’s articles of association place no restrictions on transferability, and its shares are freely
negotiable. RomReal received a listing on the Oslo Stock Exchange’s Oslo Axess list on 11 June
2007.
6. General Meetings
RomReal facilitates the participation of as many shareholders as possible at the General Meeting
and ensures that it functions as much as possible as an effective meeting place for the
shareholders and the Board so that the owners can exercise their rights. Notice of the Meeting
and supporting documents are prepared no later than 21 days before the Meeting is to take
place and posted on the Company’s website. The documents are sent to all shareholders with a
known address in the Norwegian Central Securities Depository (VPS) in good time before the
General Meeting takes place. This is facilitated by RomReal’s register keeper DNB, which ensures
that documents, including proxies and notifications, are carried by email and/or regular post to
all shareholders. The notifications and proxies clearly specify the deadline for returning the proxies
which provide the shareholders between 2 to 3 weeks to return their vote depending on their
accessibility more i.e., email or post.
The Meeting takes place on 27 April 2023, at our registered office in Bermuda and it is accessible
to all Board members and shareholders. Shareholders unable to attend in person will be given an
opportunity to vote by proxy. The Company provides information on the procedure for:
(a) Appointing a proxy
(b) appoint a person who can act as proxy for the shareholder
(c) allowing separate voting instructions for each matter but not for each one of the
candidates nominated.
The Board will propose to vote for each individual Board Member as of Ordinary General Meeting
scheduled for 27 April 2023.
Representatives of the Board always attend the Annual General Meeting, together with
representatives of the Executive Management, and normally a representative from EY auditors
either in person or via conference calling.
The Board determines the agenda for the General Meeting. The main items on the agenda
comply with the requirements of the Public Limited Companies Act as well as the parent
Company’s articles of association. As recommended by the code, each General Meeting
appoints a person to act as its independent Chair. Minutes of general meetings are published on
www.RomReal.com and on the Oslo Stock Exchange website at www.newsweb.no.
For 2022, the Annual General Meeting of the Company will take place on the 27 April 2023, at the
Company’s registered office in Bermuda.
7. Nomination Committee
RomReal has chosen not to comply with the directive 7 for appointing a Nomination Committee.
This is due to the current size, resources and activity of the Company, the Company considers that
the cost of running a separate nomination committee should be avoided.
15
8. Board of Directors: composition and independence
RomReal’s Board of Directors consisted at 31 December 2022 of four Directors:
Kjetil Grønskag
Bendt Thorkildsen
Lacramioara Isarescu
Heidi Sørensen Austbø
The Directors have long and varied experience in real estate, banking and finance which ensures
that the Board can function effectively as a collegiate body. An overview of the Directors
expertise, role and attendance can be found on the Company’s website, www.RomReal.com.
The composition of the Board ensures that it serves the common interest and that it can operate
as independently as possible of special interests. Chairman Kjetil Gronskag holds an executive
position as Chief Executive of RomReal following Board approval on the 26 May 2016.
The Chairman of the Board, as well as the Vice Chairman, Secretary, and assistant Secretary are
elected by the Board of Directors during the first meeting of the newly elected Board. The term
office for members of the Board is one year.
To be proposed as of Ordinary General Meeting on 27 April 2023, the General Meeting should
elect the Chairman of the Board as the Company’s highest governing body.
9. The work of the Board of Directors
The Board of Directors is the Company’s highest body, and answerable only to the General
Meeting. It has overall responsibility for planning and execution of the Group’s strategy and
activities, including its organization, remuneration policy and risk Management.
The Board also has overall responsibility for control and supervision. It produces an annual plan for
its work with objectives, strategy and implementation. This is supported by a 2 year forecast plan
or budget, which is updated on a quarterly basis during Board meetings. During Board meetings
decisions are taken and tasks are delegated to the Executive Management. The Board discusses
all matters relating to the Group’s activities which are of significant importance or of a special
character.
The duties and responsibilities of the Board are dictated by applicable legislation, the parent
Company’s articles of association, and mandates and instructions adopted by the general
meeting. The Board will exercise supervision to ensure that the Group meets its business goals and
manages risk in a wise and satisfactory manner. The Board is responsible for appointing the chief
executive.
The Chairman is responsible for ensuring that the work of the Board is conducted in an efficient
and proper manner and in compliance with applicable legislation. During 2022 6 (six) Board
meetings were conducted. In addition to the Chairman, the Board has two independent chairs
to lead the discussion on issues where the chair has a conflict of interest or is unable to attend.
The Board carries out an annual assessment of its work
16
The Board of Directors ensures that members of the board of Directors and executive personnel
make the Company aware of any material interests that they may have in items to be considered
by the board of Directors, prior to each Annual General Meeting.
The Board does not hold any Independent Committees due to the small size and limited activity
of the Company. Four out of five Board members are independent therefore their direct
judgement and decision-making during Board meetings, ensures that the Board is aligned to
shareholders’ value in decisions related to audit and remuneration of the executive personnel.
10. Risk Management and internal control
The Board and Executive Management of RomReal place great emphasis on establishing and
maintaining routines for risk Management and internal control. An annual review of the most
important risks affecting the business is conducted by the Board.
Economic conditions and Emerging markets risk
The financial market climate and especially the price of property/plots and general rental
levels in Romania represents risk, as it will affect the Group’s limited rental income. There is risk
associated with the general development of lease levels of commercial property for various
segments and the locations where the Group owns properties. This especially applies to the
market conditions at the expiration of lease contracts on the Group’s properties. The
Company aims to reduce this type of fluctuations, by holding tenants’ deposits and/or bank
guarantees. If fluctuations occur, it will have a negative impact on the Group’s earnings and
financial position.
The risk of market slowdown due to Covid-19 and the political risk in the region is evaluated
and monitored by the Management on a regular basis.
Financial reporting
Quarterly operational and accounting reports are prepared for Board approval using
International Financial Reporting Standards.
Counterparty risk
RomReal conducts an annual review of both clients and suppliers to identify counterparty risk.
New clients are also subject to a thorough assessment to identify any risk they may present.
Financial risk
The Company will continue to pursue all available legal means for challenging the effects of
such reassessment, in order to cancel the additional tax liabilities.
Foreign Exchange risk
The Company’s main reporting currency is the EUR, which is used to facilitate loans to its
subsidiaries. At the subsidiary level in Romania, the operational currency is RON. Due to its
17
operational exposure in Romania, the financial reporting currency used to value the Company’s
assets is the RON. Due to the difference between reporting and operational currency the
Company is exposed to foreign exchange risk. To manage this, the Company holds its deposits in
a mix of RON and EUR. The average exchange rate during 2022 was 1.00 EUR to 4.93 RON (4.92).
Tax risk
Changes in laws and rules regarding tax and duties may involve new and changed
parameters for investors and the Company. This may involve a reduction in the profitability of
investing in property and the profit after tax for the Company. Tax implications of transactions
and dispositions conducted by the Company are to a certain extent based on judgment of
applicable tax laws and regulations. Even if the Company is of the opinion that it has assessed
tax law in good faith, it could not be ruled out that the authorities are of a different opinion. A
change in regulation status in parts or all of the Land Bank may also normally change the
applicable tax.
The Company is required to calculate its current income tax at a flat rate of 16%. Starting 2013,
the companies in the Group with turnover below a EUR 65,000 threshold are subject to a 1%
tax calculated on total revenue. This is the case for 4 of the Group companies (2 pay 1% tax
and 2 of them 3% tax) while one compay subject to 16% on taxable profits.
In order to simplify and optimize the Romanian sub-holding structure, a number of merger
processes of the Romanian subsidiaries is under way.
The new fiscal code implemented 01 Jan 2016 has applied a land tax increase of 500% on idle
plots that lack cleaning. The Board has allocated a budget for the Management to maintain
all of the Company’s idle plots in a clean condition.
Director’s Liability risk
The Company holds a Directors and Officers liability insurance policy with the reputable insurance
Company, Chartis.
11. Remuneration of the Board of Directors
The General Meeting determines Directors’ fees. The remuneration is not linked to the Company’s
performance in any way.
During 2022, the Directors received the following remuneration:
Lacramioara Isarescu EUR 6,000
Heidi Sørensen Austbø EUR 6,000
Bendt Thorkildsen EUR 6,000
During 2022, Chairman Kjetil Grønskag abstained from receiving any remuneration as a Board
Member during the year. There are no outstanding share options. The Company does not grant
share options to board members.
18
12. Remuneration of the Executive Management
The Board determines the Chief Executive’s terms of employment. The main principle applied by
RomReal for determining the pay of the Chief executive and other senior executives is that these
persons will be offered competitive terms. In addition, RomReal will offer terms which encourage
value creation for the Group and its shareholders, and which strengthen the loyalty of senior
employees to the business.
The Executive Management of RomReal comprises three executives with good knowledge within
their job functions and with senior Management experience from across the industry. The
Executive Management of RomReal currently includes the following persons with the yearly
outlined remuneration:
Name
Position
Yearly fees
Benefits/Bonuses
Kjetil Gronskag
CEO RomReal
€97,200
0.7% on asset sales
Adrian Cristea
Board member of Rom
subsidiaries and legal advisor
€54,000
2% on asset sales *
Claudia Oprisan
Chief Accountant
€23,000
N/A
* The incentive lawyer fee is applied on the net proceeds received by RomReal or any of its
subsidiary net of any transactions fees and vat to be added (net proceeds in Euro). These net
proceeds have to be approved by the CEO of RomReal’s subsidiaries Board of Directors and
paid by RomReal’s subsidiaries.
13. Information and communication
RomReal takes the view that objective, detailed and frequent information to the market is essential
for a correct valuation of its share, and accordingly pursues a continuous dialogue with analysts
and investors.
Information about important events in RomReal as well as its periodic reporting of results is
published in accordance with the guidelines to which the Group became subject through its listing
on Oslo Axess. RomReal seeks continuously to publish all relevant information to the market in a
timely, efficient and non-discriminatory manner. The Company constantly improves its Investor
Relation material by upgrading its reporting format, content, and website.
All stock exchange announcements are made available on www.RomReal.com and the Oslo
Stock Exchange website www.newsweb.no. The Group will provide the same information to all
shareholders at the same time. To the extent that analysts or shareholders ask for further details,
RomReal and the Board will ensure that only information which has already been made public is
provided.
The Group holds quarterly and interim presentations. These provide an overview of operational
and financial developments in the previous quarter as well as an overview of market prospects
and the outlook for the business. Interim reports, and presentation materials are made available
on the Group’s website for a period of at least 5 years.
19
The Board determines the Group’s financial calendar, which specifies the dates for publication of
interim reports, the annual general meeting and the payment of dividends. This calendar is
published by the end of December via the Oslo Stock Exchange’s information system and on the
RomReal website.
2023 Financial Calendar includes the following dates:
Q4 2022 Report 23/02/2023
AGM 2022 27/04/2023
Q1 2023 Report 25/05/2023
Q2 2023 Report 31/08/2023
Q3 2023 Report 24/11/2023
14. Takeovers
In the event of a bid for the parent Company’s shares, the Board and the Executive Management
will try to ensure that everyone gets access to sufficient information to be able to reach a decision
on the offer. Unless otherwise instructed by the general meeting, the Board will not try to deploy
defensive mechanisms to prevent the implementation of the bid.
The Board will provide shareholders with its view of the offer and, providing they have reached a
decision on this, Directors are duty-bound to inform shareholders whether they personally intend
to accept the bid. Should the Board find that it is unable to recommend whether the shareholders
should accept the bid, it will explain the reasons why such a recommendation cannot be given.
An explanation must be provided if the Board’s decision is not unanimous. The Board will consider
whether an assessment should be obtained from an independent expert.
15. Auditors and advisors
RomReal is audited by Ernst & Young AS. Ernst & Young AS, registration number 976 389 387, has
been the Company’s auditor since its incorporation in 2005. The registered business address of
Ernst & Young AS is Thormøhlens gate 53 D, NO-5008 Bergen, Norway, and Ernst & Young AS is a
member of the Norwegian Institute of Public Accountants (Nw. “Den Norske Revisorforeningen”).
The Group will not use the auditor as a consultant unless this has been approved in advance by
the Board or its Chair. A plan for their work is submitted annually by the external auditor to the
Board, and this plan will specify planned services other than auditing.
The auditor attends Board meetings which deal with the annual accounts and is also present
during the AGM. During these meetings, the auditor will review possible changes to the Company’s
auditing principles, assessments of significant accounting estimates and all cases where
disagreement has arisen between the auditor and the Executive Management.
At least once a year, the auditor will conduct a review of the Company’s internal control system
and possible weaknesses. The auditor will also propose improvements. In addition, the Board and
the auditor will hold at least one meeting a year without the chief executive or other executive
personnel being present. A briefing on the audit work and an assessment of the Group’s internal
control will be provided by the auditor to the general meeting.
The Board of Director’s Reports the auditor remuneration to the general meeting, including details
of the fee paid for audit work and any fees paid for other specific assignments.
20
Prospects
Both the CPI and GDP growth in Romania is expected fall during 2023 with a modest
improvement in 2024. RomReal is in a relatively strong financial position with zero external debt.
The weakening macro fundamentals have already resulted in a slower sales progress of the
remaining projects, and no additional new sales have materialised during 1.quarter 2023.
Hitherto, all the vendor financing schemes have been 100% honoured. In addition, the
infrastructure investments are reviewed on an on-going basis to ensure the cash position is
satisfactory.
Bermuda, 15.04.2023
The Board of Directors of RomReal
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
21
FINANCIAL STATEMENTS 2022
22
Income Statement
Figures in EUR
Consolidated
Parent company
Notes
2022
2021
2022
2021
Rental income
12
188,148
172,108
-
-
Sales of inventories
12
4,665,261
3,539,372
Cost of sales- inventories
12
(3,480,332)
(2,875,897)
-
-
Profit / (loss) on sales of
investment property
1,184,929
663,475
-
-
Total income
1,373,077
835,583
-
-
Payroll and related expenses
13
(260,660)
(242,987)
(18,000)
(18,000)
Depreciation expense
3
(19,939)
(41,854)
-
-
Other operating expenses
15
3,662
(92,124)
(191,115)
2,668,806
Inventory (write off )/ reversal
5
(741,756)
2,180,481
General and administrative
expenses
14
(698,997)
(822,593)
(257,256)
(331,646)
Operating expenses
(1,717,690)
980,923
(466,371)
2,319,160
Net gain/(loss) from revaluation of
investment properties
(149,876)
285,583
-
-
Profit/(loss) from operations
(494,48 9)
2,102,089
(466,371)
2,319,160
Interest income
16
61,426
7,152
680
-
Interest expense
16
-
-
-
-
Foreign exchange, net
16
(24,429)
(516,055)
(10,756)
(512,017)
Profit/(loss) before taxes
(457,492)
1,593,186
(476,447)
1,807,143
Tax expense
17
(177,719)
(61,175)
(119,859)
(16,000)
Result of the period
(635,21 1)
1,532,011
(596,305)
1,791,143
Attributable to:
-Equity holders of the parent
(635,21 1)
1,532,011
(596,305)
1,791,143
Basic earnings/(losses) per share
from continuing operations
22
(0.02)
0.04
(0.01)
0.04
Basic earnings/(losses) per share
from continuing - diluted
22
(0.02)
0.04
(0.01)
0.04
23
Statement Of Comprehensive Income
Figures in EUR
Consolidated
Parent company
2022
2021
2022
2021
Profit / (loss) for the year
(635,21 1)
1,532,011
(596,305)
1,791,143
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods
Exchange differences on translation of
foreign operations
38,907
259,145
-
-
Other comprehensive income for
the year, net of tax
38,907
259,145
-
-
Total comprehensive income for the
year, net of tax
(596,304)
1,791,156
(596,305)
1,791,143
Attributable to equity holders of the
parent:
(596,304)
1,791,156
(596,305)
1,791,143
24
Statement of Financial Position
Figures in EUR
Consolidated
Parent company
ASSETS
Notes
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Noncurrent assets
Property, plant & equipment
3
54,983
51,620
-
-
Investment properties
4
4,398,324
2,032,724
-
-
Deferred tax asset
17
55,178
55,170
-
-
Investments in subsidiaries
1
-
-
15,995,495
16,844,808
Total non current assets
4,508,485
2,139,514
15,995,495
16,844,808
Current assets
Inventories
5
5,719,233
8,679,507
-
-
Trade receivables and other assets
6
2,397,725
880,021
16,059
15,726
Cash and cash equivalents
9
4,098,477
3,807,182
274,479
19,492
Total current assets
12,215, 435
13,366,710
290,538
35,217
Assets held for sale
11
-
2,480,010
-
-
Total assets
16,723, 920
17,986,234
16,286,032
16,880,025
Figures in EUR
LIABILITIES AND EQUITY
Notes
December 31,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Equity
Issued share capital
7
103,419
103,419
103,419
103,419
Contributed surplus
7
87,117,249
87,117,249
87,117,249
87,117,249
Retained earnings
8
(74,761 ,935)
(74,126,7 24)
(70,993,046)
(70,396,741)
Other Reserves
160,221
160,221
-
-
Translation reserve
3,611,071
3,572,164
-
-
Total equity
16,230,025
16,826,329
16,227,622
16,823,927
Non current liabilities
Deferred tax liability
17
101,092
157,763
-
-
Total non current liabilities
101,092
157,763
-
-
Current liabilities
Trade and other payables
10
365,747
963,335
58,410
56,098
Income tax payable
17
1,932
13,686
-
-
Contract liabilities
25,124
25,121
-
-
Total current liabilities
392,803
1,002,142
58,410
56,099
Total liabilities and equity
16,723, 920
17,986,234
16,286,032
16,880,025
25
Signed on behalf of the Board of Directors
.......................................... ..........................................
Kjetil Grønskag (Chairman & CEO) Bendt Thorkildsen (Director)
........................................... ...........................................
Heidi Sørensen Austbø (Director) Lacramioara Isarescu (Director)
26
Consolidated Statement Of Changes in Equity
Figures in EUR
Attributable to equity holders of the parent
Share
Capital
(Note 7)
Contributed
Surplus (Note
7)
Retained
Earnings
(Note 8)
Translation
Reserve
Other
Reserves
Total
Balance as of
31 December 2020
103,419
87,117,249
(75,658,735)
3,313,019
160,221
15,035,173
Profit / (loss) for the period
-
-
1,532,011
-
-
1,532,011
Other comprehensive income
-
-
-
259,145
-
259,145
Total comprehensive income for the
year
-
-
1,532,011
259,145
-
1,791,156
Balance as of
31 December 2021
103,419
87,117,249
(74,126,724)
3,572,164
160,221
16,826,329
Profit / (loss) for the period
-
-
(635,211)
-
-
(635,211)
Other comprehensive income
-
-
-
38,907
-
38,907
Total comprehensive income for the
year
-
-
(635,211)
38,907
-
(596,304)
Balance as of
31 December 2022
103,419
87,117,249
(74,761,935)
3,611,071
160,221
16,230,025
27
Parent Company’s Statement Of Changes in Equity
Figures in EUR
Share
Capital
(Note 7)
Contributed
Surplus (Note 7)
Retained
Earnings (Note 8)
Total
Balance as of
01 January 2021
103,419
87,117,249
(72,187,884)
15,032,783
Profit for the period
-
-
1,791,143
1,791,143
Other comprehensive income
-
-
-
-
Total comprehensive income and expense for
the year
-
-
1,791,143
1,791,143
Balance as of
31 December 2021
103,419
87,117,249
(70,396,741)
16,823,927
Profit for the period
-
-
(596,305)
(596,305)
Other comprehensive income
-
-
-
-
Total comprehensive income and expense for
the year
-
-
(596,305)
(596,305)
Balance as of
31 December 2022
103,419
87,117,249
(70,993,046)
16,227,622
28
Statement Of Cash Flows
Figures in EUR
Consolidated
Parent company
Notes
2022
2021
2022
2021
CASH FLOW FROM OPERATING
ACTIVITIES:
Net profit/(loss)
(635,21 1)
1,532,011
(596,305)
1,791,143
Adjustments for:
- Income tax expense/(profit)
17
177,719
61,175
119,859
-
-Net (gain)/loss from revaluation of
investment properties
4,11
891,632
(2,466,064)
-
-
-Expenses/(gain) on disposal of
investment property
4,11
(1,184,929)
(663,475)
-
-
- Depreciation and amortization
3
19,939
41,854
-
-
- Interest Income
16
(61,426)
(7,152)
(680)
-
- Interest expense
16
-
-
-
-
-Unrealised foreign exchange (gain) /
loss
16
24,429
516,055
10,755
512,017
-Other operating expenses
15
-
-
191,115
(2,668,807)
Decrease/(increase) in trade and other
receivables
(1,517,708)
(356,580)
(333)
7,333
(Decrease)/increase in current payables
(597,585)
870,592
2,312
896
Decrease/(increase) in inventories
2,508,331
114
-
-
Cash generated from operations
(374,809)
(471,470)
(273,277)
(357,418)
Income tax paid
(292,960)
(17,935)
(119,859)
16,000
Net cash flow from operating activities
(667,769)
(489,405)
(393,136)
(341,418)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Sales of investment property
2,698,465
3,857,295
-
-
Capital expenditure on investment
property
(1,796,603)
(811,676)
-
-
Net cash flow used in investing activities
901,862
3,045,619
-
-
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payment of issue costs
-
-
647,424
181,976
Repayment of borrowings
-
-
-
-
Interest paid
16
-
-
-
-
Interest received
57,120
7,152
680
-
Net cash from financing activities
57,120
7,152
648,104
181,976
Other non-cash expenses/(revenues)
82
36,834
19
-
Net change in cash and cash equivalents
291,295
2,600,200
254,987
(159,442)
Cash and cash equivalents, beginning of
period
3,807,182
1,206,982
19,492
178,934
Cash and cash equivalents, end of
period
4,098,477
3,807,182
274,479
19,492
29
Notes To The Financial Statements
Note 1 ORGANIZATION AND OPERATIONS
The consolidated financial statements of RomReal Limited and its subsidiaries (collectively the “Group” or the
“Company”) for the year ended 31 December 2022 were authorised for issue in accordance with a resolution of the
directors on the 15 April 2023.
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 2022 2 (two) shares in Westhouse Lakeside (former Terra del Sol) are transferred from RomReal to
Westhouse Group, in exchange for 1 (one) share increase in number of shares of Westhouse Group.
During the period, there were no additions or disposal. The movement in investment in subsidiaries for the parent
company during the period is due to the change in value between the periods and increase in share capital of
Westhouse Oasis Residences by EUR 2m, equivalent of 197,706 shares (2021: 152,430 shares).
Entity
Country of business
Owner’s share
Number of shares
Westhouse Group SRL
Romania
100%
19,612,516
Concorde Group SRL
Romania
100%
375,442
Westhouse Oasis Residences
SRL (former Rofrench
Connection SRL)
Romania
100%
350,136
Investate SRL
Romania
100%
351,320
Westhouse Lakeside SRL
(former Terra del Sol SRL)
Romania
100%
22
30
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis for preparation
The consolidated financial statements of the RomReal Group and those of the parent company have been prepared
in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB), adopted by the EU. All IFRS standards adopted have effective date 1 January 2022 or
earlier. The consolidated financial statements and 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 2022 and 31 December 2021; 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.
31
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
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.
32
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.
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.
33
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 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.
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.
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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.
December 31,
2022
December 31,
2021
Closing
4.9474
4.9481
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
35
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 2022.
36
Note 3 PROPERTY, PLANT AND EQUIPMENT
Figures in EUR -
Consolidated
IT equipment
Other fixtures
and fittings
Motor vehicles
Total
Gross book value as at
December 31, 2021
49,680
293,280
53,994
396,954
Additions in period
3,442
16,553
-
19,995
Disposals in period
-
(21,724)
-
(21,724)
Translation difference
(2)
42
187
227
Gross book value as at
December 31, 2022
53,120
288,151
54,181
395,452
Accumulated Depreciation
as at December 31, 2021
(49,421)
(254,335)
(41,576)
(345,333)
Charge for the period
(1,762)
(18,177)
-
(19,939)
Disposals in the period
-
21,724
-
21,724
Translation difference
(3)
3,091
(9)
3,079
Accumulated Depreciation
as at December 31, 2022
(51,186)
(247,697)
(41,585)
(340,469)
Net book Value as at
December 31, 2021
259
38,945
12,418
51,621
Net book Value as at
December 31, 2022
1,934
40,454
12,596
54,983
Depreciation method
Linear
Linear
Linear
Depreciation period
(Years)
2-4
3-9
4
There were no impairment charges in 2022 and 2021.
Note 4 INVESTMENTS PROPERTIES
Figures in EUR - Consolidated
2022
2021
Opening balance as at January 1
2,032,724
3,329,477
Additions in period
32,370
-
Sales
-
-
Transfers from Assets Held for Sale (note 11)
2,128,000
-
Transfers to Inventories
-
(1,239,000)
Fair value adjustment during the period
205,603
15,329
Translation differences
(373)
(73,082)
Carrying amount as at December 31
4,398,324
2,032,724
Investment properties consist of land and buildings at various locations in Romania. The fair value of investment
property as at 31 December 2022 is based on a valuation by an independent valuer who holds a recognised and
37
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 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
38
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 2022.
Note 5 INVENTORIES
Figures in EUR - Consolidated
2022
2021
Opening balance
8,679,507
7,850,162
Additions
1,237,743
418,883
Disposals
(3,480,332)
(2,875,897)
Transfers from Investment Properties
-
1,239,000
Change in provisions
(741,756)
2,180,481)
F/X reserve
24,071
(133,122)
Balance as at December 31
5,719,233
8,679,507
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 2022, inventories relate to the Oasis
project (EUR 3.8 million) and Lakeside (EUR 0.7 million). The cost for the Oasis project is EUR 5.5 million. The
net realisable value test in 2022 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.
Note 6 TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Figures in EUR
Consolidated
2022
2021
Trade receivables
2,272,048
776,644
VAT receivable
102,809
86,356
Other prepayments
1,935
1,013
Other short-term receivables
20,933
16,008
Total
2,397,725
880,021
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.
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Parent company trade receivables refer to other short-term receivables. 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
2022
2,397,725
2,335,226
-
-
-
-
62,499
2021
880,021
829,375
11,535
39,111
-
-
-
Note 7 SHARE CAPITAL AND PAID-IN CAPITAL
Figures in EUR
Number of
shares
Share
capital
Contributed
Surplus
Paid in share
capital
Total share capital
January 1, 2021
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
New issues in the period
-
-
-
-
Reduction in par value of shares
-
-
-
-
Total share capital
December 31, 2022
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 2022 and 2021.
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 shareholders as of 06 March 2023.
Rank
Name
Holding
Stake
1
SIX SIS AG
10,331,934
24.98%
2
GRØNSKAG, KJETIL
5,913,006
14.29%
3
THORKILDSEN, WENCHE
5,392,985
13.04%
4
SAGA EIENDOM AS
3,386,636
8.19%
5
AUSTBØ, EDVIN
2,108,500
5.10%
6
Danske Bank A/S
1,557,838
3.78%
7
ENERGI INVEST AS
1,253,611
3.03%
8
Orakel AS
1,101,000
2.66%
9
GRØNLAND, STEINAR
1,045,277
2.53%
10
BNP Paribas
991,717
2.40%
11
SPAR KAPITAL INVESTOR AS
940,236
2.27%
12
THORKILDSEN INVEST AS
829,478
2.01%
13
PERSSON, ARILD
718,000
1.74%
14
HOEN, ANDERS MYSSEN
689,557
1.67%
15
KVAAL INVEST AS
682,000
1.65%
16
AKSEL MAGDAHL
466,092
1.13%
17
Frenico AS
396,000
0.96%
18
NORDNET LIVSFORSIKRING AS
295,903
0.72%
19
CITIBANK
220,000
0.53%
20
Jo Egil Aalerud
166,864
0.40%
TOP 20
38,486,634
93.08%
(1) This is the Top 20 Shareholder list as per 06 March 2023
(2) The total issued number of shares issued at 06 March 2023 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 5,913,006 shares corresponding to 14.92%.
(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.
Note 8 RETAINED EARNINGS
Movements in retained earnings for the Group can be analysed as follows:
Figures in EUR
Consolidated
Retained earnings as of December 31, 2021
(74,126,724)
Net profit in the period
(635,211)
Retained earnings as of December 31, 2022
(74,761,935)
No dividends will be distributed by the Group in respect of 2022.
Note 9 CASH AND CASH EQUIVALENTS
41
Cash and cash equivalents amount to EUR 4,098,477 at 31 December 2022 (EUR 3,807,182 at 31 December 2021).
At parent company level, cash and cash equivalents amount to EUR 274,479 at 31 December 2022 (EUR 19,492
at 31 December 2021). There are no restrictions on the cash balances.
Note 10 TRADE AND OTHER PAYABLES
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Figures in EUR
Consolidated
2022
2021
Trade payables
51,601
39,332
Contract liabilities
243,903
858,287
Employee taxes
6,469
4,282
Other payables
63,774
61,434
Trade and other payables
365,747
963,335
At 31 December 2022, the balance of EUR 365,747 Other payables for the group as well as the balance of Other
payables of EUR 58,410 for the parent company, include EUR 59,708 accrued expenses related to the 2022 audit
fees.
Contract liabilities in amount of EUR 243,903 at 31 December 2022 (EUR 858,287 at 31 December 2021) mainly
include the payments received in respect of pre-sales of plots.
Figures in EUR Parent company
2022
2021
Trade payables
-
-
Employee taxes
-
-
Other payables
58,410
56,098
Trade payables
58,410
56,098
Note 11 ASSETS HELD FOR SALE
Figures in EUR - Consolidated
2022
2021
Opening balance as at January 1
2,480,010
2,240,016
Sales
-
-
Transfers to investment Properties (note 4)
(2,128,000)
-
Fair value adjustment during the period
(353,503)
277,119
Translation differences
1,493
(37,125)
Carrying amount as at December 31
-
2,480,010
The Group does not consider the completion of the transactions highly probable; the assets are not available for
immediate sale in their present condition. Hence Piata Balada plot has been reclassified as investment property.
42
Note 12 RENTAL INCOME AND REVENUE FROM CONTRACTS WITH
CUSTOMERS
Figures in EUR - Consolidated
2022
2021
Rental income
6,18
188,148
172,108
Sales of inventories
5
4,665,261
3,539,372
Cost of sales- inventories
5
(3,480,332)
(2,875,897)
Total operating income
1,373,077
835,583
All rental revenue is generated from Balada market for both years. Future minimum rentals receivable under non-
cancellable operating leases as at 31 December are, as follows:
Figures in EUR - Consolidated
2022
2021
Within 1 year
188,148
172,108
After 1 year
-
-
Total operating income
188,148
172,108
The Sales of inventories during 2022 relate to the sale of several small plots of land the Group owned in the town
of Ovidiu.
Note 13 PAYROLL EXPENSES AND NUMBER OF EMPLOYEES
The key management (which includes the executive officer of the Group and its directors) received remuneration
in amount of EUR 120,771 (2021: EUR 94,800). Mr Kjetil Grønskag’s remuneration as CEO of the Group has
been assimilated to the Management Support Agreement (see note 18).
The Directors are shown below together with their interest in the shares of the Company per 31 December 2022 and
per 31 December 2021:
31 December 2022
31 December 2021
Kjetil Grønskag
Appointed November 2006
5,913,006
5,752,914
Heidi Sørensen Austbø
Appointed April 2017
Nil
Nil
Bendt Thorkildsen
Appointed April 2016
6,222,463
6,222,463
Lacramioara Isarescu
Appointed April 2014
Nil
Nil
TOTAL
12,135,469
11,975,377
The average number of employees in Westhouse Group during 2022 was 12. Payroll expenses related to these
employees amounted to EUR 260,660 during 2022 (2021: 242,987). 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, 2022 nor are there any post-employment benefits.
43
Note 14 GENERAL AND ADMINISTRATIVE EXPENSES
Figures in EUR
Consolidated
2022
2021
Management fee
(97,200)
(94,800)
Legal expenses
(128,382)
(134,531)
Rent expenses
(6,137)
(6,140)
Travel expenses
(1,709)
(581)
Professional services
(63,708)
(136,900)
Land and other taxes
(67,895)
(63,943)
Other expenses
(333,966)
(385,698)
Total
(698,997)
(822,593)
Legal expenses include one off fees related to the legal services in connection with the sales of plots entered into
during 2022. For the parent company, Professional Services include EUR 59,708 accrued expenses related to the
2022 audit fees.
Figures in EUR
Parent company
2022
2021
Management fee
(97,200)
(94,800)
Legal expenses
-
-
Rent expenses
-
-
Travel expenses
(1,709)
(593)
Professional services
(63,708)
(183,123)
Land and other taxes
-
-
Other expenses
(94,639)
(53,130)
Total
(257,256)
(331,646)
Note 15 OTHER OPERATING (LOSS) / GAINS
For RomReal (the parent company) “Other operating (loss)/gains” of EUR 191,115 loss in 2022 (2021: EUR
2,668,806 gain) relates mainly to change in the fair value of the investment in subsidiaries).
Note 16 FINANCIAL INCOME AND EXPENSE
Figures in EUR Consolidated
2022
2021
Interest income from subsidiaries
-
-
Interest income from banks
61,426
7,152
Total financial income
61,426
7,152
44
Interest expense and other bank fees
-
-
Foreign exchange gain
-
19,601
Foreign exchange loss
(24,429)
(535,656)
Total Financial expense
(36,997)
(516,055)
Figures in EUR Parent company
2022
2021
Interest income from subsidiaries
-
-
Interest income from banks
680
-
Total financial income
-
-
Interest expense and other bank fees
-
-
Foreign exchange gain
-
-
Foreign exchange loss
(10,756)
(512,057)
Total Financial expense
(10,076)
(512,057)
During 2022 the RON has fluctuated against the EUR and at year end was 0.014% stronger against the EUR.
Note 17 TAXATION
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 2022.
Current income tax expense for 2022 was EUR 177,719 (2021: 61,175). The major components of the income tax
expense for the periods ended December 31, 2022 and December 31, 2021 are:
The table below shows the composition of the deferred tax assets and deferred tax liability in the balance sheet:
Figures in EUR - Consolidated
2022
2021
Losses carried forward resulting in deferred tax asset
55,178
55,170
Fair value adjustments of Investment property resulting in
deferred tax liability
101,092
157,763
The following table shows the composition of the deferred tax asset per each company:
Figures in EUR - Consolidated
2022
2021
Current income tax charge
234,596
17,935
Deferred income tax movement
in the period
(56,877)
43,240
Income tax expense/(income)
in the consolidated income statement
177,719
61,175
45
2022
2021
Westhouse SRL
55,178
55,170
TOTAL
55,178
55,170
The deferred tax asset relates to the following:
2022
2021
Carried forward fiscal losses
55,178
55,170
TOTAL
55,178
55,170
The following table shows the composition of the deferred tax liability per each company:
2022
2021
Concorde SRL
91,701
148,373
Investate SRL
9,391
9,390
TOTAL
101,092
157,763
The deferred tax liability relates to the following:
2022
2021
Revaluation of investment properties to fair value
101,092
157,763
TOTAL
101,092
157,763
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.
2022
2021
Accounting taxable profits/(loss)
(457,492)
1,593,187)
Tax at applicable rate of 16%
73,199
(254,910)
Tax effect of (expenses)/income that are not
(deductible)/taxable in determining taxable profit
(250,918)
193,735
Tax (expense)/income
(177,719)
(61,175)
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.
46
Note 18 TRANSACTIONS WITH RELATED PARTIES
Transactions with subsidiary
As at 31 December 2022, RomReal Ltd. does not have any loan to its Romanian subsidiaries. Previous loans granted
to Westhouse Group were converted into equity in 2020. In dec 2021 agreement was signed for loan interest
forgiveness between RomReal Ltd. and Westhouse Group.
Transactions with other related parties
During 2022 the Company paid a direct remuneration of EUR 120,771 per year to Chairman and CEO Kjetil
Grønskag. The Chairman and CEO agreement has a yearly remuneration of EUR 97,200 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.
Note 19 FINANCIAL RISK, FAIR VALUES AND CAPITAL MANAGEMENT
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 2022, 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 2022, the Group’s had no exposure bearing the risk of changes
in market interest rates
47
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
2022
On
demand
Less than 3
months
3 to 12
months
1 to 5 years
> 5 years
Total
Other payables
-
365,747
-
-
-
365,747
Deferred income
-
-
25,124
-
-
25,124
Tax payable
-
1,932
-
-
-
1,932
Total
-
367,679
25,124
-
-
392,803
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
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 2022 and 31 December 2021 and had no financial debt.
Note 20 GUARANTEE OBLIGATIONS
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.
48
Note 21 EARNINGS PER SHARE
Basis for calculation of earnings per share
Consolidated
2022
2021
The year’s earnings from continuing operations
(635,211)
1,532,011
No. of shares at the balance sheet date
41,367,782
41,367,782
Average of no. of shares
41,367,782
41,367,782
Earnings per share
(0.02)
0.04
Diluted Earnings per share
(0.02)
0.04
Note 22 SUBSEQUENT EVENTS
No subsequent events.
Basis for calculation of earnings per share
Parent Company
2022
2021
The year’s earnings from continuing operations
(596,305)
1,791,143
No. of shares at the balance sheet date
41,367,782
41,367,782
Average of no. of shares
41,367,782
41,367,782
Earnings per share
(0.01)
0.04
Diluted Earnings per share
(0.01)
0.04
49
Statement
pursuant to Section 5-5 of the Securities Trading Act
We hereby confirm that the annual accounts for the Group and the Company for 2022
to the best of our knowledge have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets, liabilities, financial
position and profit t or loss of the Group and the
Company taken as a whole.
The Directors’ report gives a true and fair view of the development and performance
of the business and the position of the Group and the Company, as well as a
description of the principal risks and uncertainties facing the Group.
Bermuda, 15.04.2023
The Board of Directors of RomReal Ltd
.......................................... ..........................................
Kjetil Grønskag (Chairman) Bendt Thorkildsen
........................................... ...........................................
Heidi Sorensen (Director) Lacramioara Isarescu (Director)
50
Company Addresses
Westhouse Group srl Westhouse Group SRL, 54 Cuza-Voda Street, ap. 3, ground floor, Constanta,
Romania, 900682
RomReal Ltd Burnaby Building, 16 Burnaby Street, Hamilton, HM11, Bermuda
Auditors Ernst & Young SRL, Premium Plaza Building, 3
rd
Floor, 63-69 Dr. Iacob Felix
Street, Sector 1, 011033, Bucharest, Romania
Auditors Ernst & Young AS, Thormøhlens gate 53 D, PO Box 6163, Postterminalen,
Bergen, N5892, Norway
Legal Advisors Wakefield Quin Limited, Victoria Place, 31 Victoria Street, Hamilton, HM10,
Bermuda
Bank in Norway Nordea Bank Norge ASA, Olav Munkegaten 21gt. 39/4, 7005 Trondheim,
Norway
Bank in Romania Alpha Bank Constanta, 175 Mamaia Boulevard, 900540, Constanta,
Romania
IR
investors@RomReal.com
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.