Quarterly Report • May 27, 2022
Quarterly Report
Open in ViewerOpens in native device viewer
Q1
RomReal is a Company focusing on the Romanian Real Estate market. Established in 2005 and it owns premium properties in the Constanta region.
| EUR '000 | Q1 2022 | Q1 2021 |
|---|---|---|
| Operating Revenue | 1,901 | 258 |
| Operating Expenses | (316) | (37) |
| Other operating income/ (expense), net | (1,093) | (2,472) |
| Net financial income/(cost) | (89) | (642) |
| Pre-tax result | 403 | (3,962) |
| Result for the period | 332 | (3,958) |
| Total assets | 18,218 | 15,294 |
| Total liabilities | 1,064 | 289 |
| Total equity | 17,154 | 15,003 |
| Equity % | 94.2% | 98.1% |
| NAV per share (EUR) | 0.41 | 0.36 |
| Cash position | 4,370 | 1,247 |
The Net Asset Value (NAV) slightly increased to EUR 17,154,000at the end of Q1 2022compared to EUR 16,819,000 at the end of Q4 2021.
| Asset base | Q1 2022 | Q4 2021 | ||||
|---|---|---|---|---|---|---|
| EUR '000 | EUR/ share |
NOK/share | EUR '000 | EUR/ share | NOK/share | |
| Investment property |
2,034 | 0.05 | 0.48 | 4,997 | 0.12 | 1.29 |
| Assets held for sale |
2,482 | 0.06 | 0.58 | 2,480 | 0.06 | 0.64 |
| Inventories | 7,623 | 0.18 | 1.79 | 5,707 | 0.14 | 1.47 |
| Cash | 4,370 | 0.11 | 1.03 | 3,807 | 0.09 | 0.98 |
| Other assets/(liabilities) |
645 | 0.02 | 0.15 | (173) | (0.00) | (0.04) |
| Net asset value | 17,154 | 16,819 | ||||
| NAV/Share | 0.41 | 4.41 | 0.41 | 4.10 | ||
| Change in NAV vs previous quarter |
1.9% | 5.5% |
The average number shares used in the NAV calculation above is 41,367,783 shares and unchanged from Q4 2021.
The end of year 2021 independent valuation of the Company's property was executed by Colliers Romania. The property portfolio was evaluated in accordance with the ANEVAR Valuation Standards 2013, which include the International Valuation Standards, issued by the IVSC in 2011. The valuation also complies with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB); and it is performed in accordance with the RICS Valuation Standards, 8th edition.
| EUR '000 Y/E 2015 | Y/E 2016 | Y/E 2017 | Y/E 2018 | Y/E 2019 | Y/E 2020 | Y/E 2021 | Q1 2022 | |
|---|---|---|---|---|---|---|---|---|
| Property value | 28,736 | 32,787 | 23,419 | 14,962 | 15,435 | 13,420 | 13,192 | 12,139 |
| NAV | 18,089 | 19,369 | 19,930 | 19,603 | 18,501 | 15,035 | 16,826 | 17,154 |
| Market cap | 7,933 | 11,052 | 12,100 | 11,848 | 9,326 | 8,687 | 7,860 | 7,694 |
| Market cap/NAV | 44% | 57% | 61% | 60% | 50% | 58% | 47% | 45% |
| EUR '000 | Q1 2022 | Q1 2021 |
|---|---|---|
| Net cash flow from operating activities | (171) | (1,343) |
| Net cash flow used in investing activities | 734 | (4) |
| Net cash flows from financing activities | - | - |
| Net cash change during period | 563 | (1,347) |
Operating cash flow for Q1 2022was positive EUR 563,000 compared to a negative EUR 1,347,000in the same quarter last year. The net positive change is mainly explained by the disposals made during the quarter. The net cash from investing activities includes the collections made in respect of the sold plots.
Romania's economy rose 6.5%, the highest in the EU, year-on-year in the first quarter of 2022, compared to a 2.4% annual increase in the same quarter of 2021, based on non-adjusted flash data. On a seasonally adjusted annual comparison basis, Romania's gross domestic product (GDP) also rose by 6.5%, compared to a 2.4% real growth in the first quarter of 2021, INS, said in a statement 17 May 2022.
Even though the flash GDP figures for first quarter this year was surprisingly strong and the highest in the EU, a recent indicator signalling a gradual weakening trend in Romania in line with most comparable countries with a reduction in growth. 76% of Romanian managers consider they will be affected much and very much by the Ukraine war according to a recent survey by the Impetum Group.
In line with 2020, the Romanian investment market recorded transactions of almost EUR 900 million last year, representing over 8% of the total EUR 11.7 billion investment volume recorded by the 6 largest countries in Eastern Europe. Bucharest has some of the highest yields in the region for the industrial and logistics facilities (7.5%), compared to at most 4% in Prague, 4.1% in Warsaw, or 5.7% in Budapest and Bratislava. In fact, according to Colliers, industrial assets in Romania recorded in 2021 their highest volume since 2015, attracting transactions totalling around EUR 260 million, representing over 29% of total volume. According to Colliers Romania:
Offices: In terms of investment dimensions, the office sector saw again the biggest transaction of 2021 - the purchase of Atenor's Hermes Business Campus for around EUR 150 million by Hungarian fund Adventum. The second biggest office deal was the sale of Skanska's Campus 6.2 and 6.3 to Austrian fund S IMMO for EUR 97m, marking the latter's first major purchase on the local market, previously primarily acting as a developer. Other major deals included the sale of Atenor's Dacia One office project to the owners of the Romanian DIY chain Dedeman for EUR 50m.
Retail: The retail segment has also been active, as new projects totalling almost 100,000m2 were completed last year, mostly in secondary and tertiary locations, with a clear preference towards retail parks being observed, as these projects have been less impacted by the pandemic and the subsequent Government restrictions, a development trend which is expected to continue going forward.
Industrial: The industrial and logistic sector also saw several major deals from the active developers, as well as two entries on the local scene, Colliers said. CTP Invest, the biggest developer in the local industrial market, added nearly 340,000 square meters of new warehouse spaces to its portfolio via 4 different purchases during 2021 for around EUR 170m in total. Another large industrial deal in terms of size marked the first direct local purchase by Fortress REIT, NEPI Rock castle's biggest shareholder, which acquired Element Industrial's ELI Park 1 near Bucharest for EUR 30m.
Residential: Bucharest and Cluj-Napoca remaining the most expensive markets for home buyers, according to a report by Imobiliare.ro portal. The increase in apartment prices have according to the same source on a nationwide basis continued in April.
Lake Side (No.1 on the table) – The Company has on-going processes for plot sales in the area and sold 4 plots during first quarter and 1 plot after the end of the quarter. Street and utilities have been delivered to the City Hall for public use according to agreement.
Oasis (No. 3 on the table)– The Company has commenced the process to re-authorise the works to finalise the blocks erected on site. During May, one block structure has been reauthorised by Ovidiu City Hall. The second structure will most probably be re-authorised during June/July 2022. This in order to add value to the plot and authorise the works for constructing the utilities in the area, with required permits hopefully granted also during first half 2022. The Company has commenced the works for water, sewage and gas on the plot.
Industrial Park (No. 4 on the table) – The Company is engaged in a process with an international company to sell parts of the plot, but no binding agreement is signed. A final decision is expected before end of August 2022.
Balada Market (No. 6 on the table) - The project is for sale. In order to its increase income, a regulation process to utilise a larger part of the plot for parking has commenced and some progress has been made with the local authorities.
Ovidiu Residence (former Badulescu plot (No. 2 on the table) – Based on the Lakeside plot experience, the Company has commenced a process to regulate this plot located nearby Lakeside for residential and commercial use. Regular meetings with local and road authorities are taking place.
Ovidiu Residence 2 (former 7,900 sqm)- The Company has commenced a process to regulate the plot located nearby Lakeside for residential use. This will include infrastructure investments. It is expected the urbanistic regulation of the plot to be approved by local authorities during Q4 2022.
Ovidiu Residence 3 (former 7,100 sqm)- 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 of the plot to be approved by local authorities during Q4 2022.
The Company's land bank consists at the end of Q1 2022 of 6 plots with a total size of 232.298m2:
| Plot name | Location | Size (m2) |
|---|---|---|
| 1 Ovidiu Lakeside | Constanta North/Ovidiu | 14.753 |
| 2 Badulescu plot | Constanta North/Ovidiu | 50,000 |
| 3 Ovidiu (Oasis) | Constanta North/Ovidiu | 23,685 |
| 4 Centrepoint | Constanta North/Ovidiu | 121,672 |
| 5 Gunaydin plot | Constanta North/Ovidiu | 15,000 |
| 6 Balada Market | Central Constanta | 7,188 |
| Total | 232.298 |
| Rank | Name | Holding | Stake |
|---|---|---|---|
| 1 | SIX SIS AG | 10,331,934 | 24.98% |
| 2 | GRØNSKAG, KJETIL | 5,813,322 | 14.05% |
| 3 | THORKILDSEN, WENCHE | 5,392,985 | 13.04% |
| 4 | SAGA EIENDOM AS | 3,311,526 | 8.01% |
| 5 | AUSTBØ, EDVIN | 2,108,500 | 5.10% |
| 6 | Danske Bank A/S | 1,507,741 | 3.64% |
| 7 | ENERGI INVEST AS | 1,253,611 | 2.66% |
| 8 | GRØNLAND, STEINAR | 1,105,021 | 2.67% |
| 9 | Orakel AS | 1,101,000 | 2.66% |
| 10 | Bnp Paribas Securities Services | 991,717 | 2.40% |
| 11 | SPAR KAPITAL INVESTOR AS | 940,236 | 2.27% |
| 12 | THORKILDSEN INVEST AS | 829,478 | 2.01% |
| 13 | PERSSON, ARILD | 718,000 | 1.74% |
| 14 | HOEN, ANDERS MYSSEN | 689,557 | 1.67% |
| 15 | KVAAL INVEST AS | 605,700 | 1.46% |
| 16 | AKSEL MAGDAHL | 466,092 | 1.13% |
| 17 | NORDNET LIVSFORSIKRING AS | 420,657 | 1.02% |
| 18 | FRENICO AS | 396,000 | 0.96% |
| 19 | CITIBANK | 220,000 | 0.53% |
| 20 | Jo Egil Aalerud | 166,864 | 0.40% |
| TOP 20 | 38,369,941 | 92.40% |
Please see below the list of the top 20 shareholders in RomReal as of 23 May 2022:
(1) This is the Top 20 Shareholder list as per 23 May 2022
(2) The total issued number of shares issued at end Q1 2022 was 41,367,783.
(3) Thorkildsen Invest AS is a Company controlled by RomReal Kay Thorkildsen family.
(4) Chairman Kjetil Grønskag owns directly and indirectly 5,813,322 shares corresponding to 14.05%.
(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.
The situation on the ground in Romania is normal, but as a precaution NATO has also gradually stepped up its presence, in the region and Romania including recognised parts of the Black Sea. Romania has seen the second largest influx of Ukrainian refugees of about 950,000 by 18 May according to the Border Police.
Even though, the Romanian first quarter 2022 GDP flash growth numbers was the highest in the EU, the Board expects a slower growth ahead. This has hitherto not affected the residential market, but RomReal's land bank and project development activities are under constant review. With no external debt and very limited building activity, on-going and planned infrastructure investments to improve marketability could be paused very quickly, if deemed necessary.
The condensed consolidated interim financial statements for the fourth quarter of 2021, which have been prepared in accordance with IFRS as adopted by EU and IAS 34 Interim Financial Reporting, give a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations. The accounting policies applied in the preparation of the quarterly result are consistent with the principles applied in the financial statements for the year to 31 December 2021. The financial statements have been prepared on a going concern basis.
To information presented in the interim report for the first quarter of 2022 includes a fair review of important events that have occurred during the period and their impact on the condensed financial statements, the principal risks and uncertainties for the remaining of 2022, and major related party transactions.
The interpretations below refer to comparable financial information for Q1 2022and Q1 2021. They are prepared for RomReal on a consolidated basis and use consistent accounting policies and treatments.
The operating revenue during Q1 2022 was EUR 1,901,000 compared to a total of EUR 258,000 reported in Q1 2021. This consists of the revenue resulting mainly from the disposals made during the quarter as well as marginally the rent earned by the company in respect of some of the plots.
Total operating expenses amounted to a negative EUR 316,000 in Q1 2022compared to a total negative EUR 37,000 in Q1 2021. The main elements of cost relate to the administrative expenses (EUR 194,000) and the payroll costs (EUR 62,000).The unrealised losses in respect of the inventories portfolio represented EUR 61,000 unrealised losses.
The other operating income/ (expense) during the quarter were loss of EUR 1,093,000, compared to a loss of EUR 2,472,000 during the same period of the previous year. The vast majority of the total amount is represented by the cost of the disposed assets.
During Q1 2022, RomReal generated an operating profit of EUR 492,000, compared to a loss of EUR 3,321,000 in Q1 2021.
Foreign exchange result for Q1 2022 was a net loss of EUR 89,000 compared to a net foreign exchange loss of EUR 642,000 in Q1 2021. During the quarter the RON lost0.02% to the EUR. The Company's policy is to hedge these effects by retaining most of its cash in Euros and also by denominating all receivables in Euros. Although not reflected from an accounting perspective, practice in real-estate is that transactions are denominated in EUR and payments made at the exchange rate ruling at the date of payment, hence reducing the risk of cash losses due to exchange rate movements.
The result before tax in Q1 2022 was a gain of EUR 332,000 compared to a loss before tax of EUR 3,962,000 in Q1 2021.
The Company's cash and cash equivalents position at end of Q1 2022 was EUR 4,370,000 compared to EUR 3,807,000 as at end of Q4 2021.
| Romreal portfolio / sale transactions to be completed in 2022-2024 | ||||||
|---|---|---|---|---|---|---|
| No Plot name | Location | Agreed sale value (EUR) |
Installments received@ 17/05/2022 |
To cash 2022 |
To cash 2023 |
To cash 2024 |
| Ovidiu | ||||||
| 1 Ovidiu Oasis plot | Constanta | 88,000 | 72,400 | 15,600 | ||
| Ovidiu | ||||||
| 2 Ovidiu Lakeside 6 blocks | Constanta | 2,658,500 | 940,780 | 490,780 | 736,170 | 490,770 |
| 3 Ovidiu Lakeside 28 plots | Ovidiu Constanta |
1,318,400 | 329,600 | 494,400 | 494,400 | |
| Ovidiu | ||||||
| 4 Ovidiu Lakeside 10 plots | Constanta | 452,600 | 188,150 | 117,533 | 146,918 | |
| Total | 4,517,500 | 1,530,930 | 1,118,313 1,377,488 | 490,770 |
RomReal portfolio / sale transactions to be completed in2022/2024.
The Company is required to calculate its current income tax at a flat rate of 16%. Starting 2013, based on turnover thresholds, some companies in the Group are subject to 16% taxable profits, while some are subject to 1% tax calculated on total revenue. This is the case for 4 of the Group companies (2 pays 1% tax and 2 of them 3% tax) while 1 company is subject to 16% on taxable profits.
The Company accounts for deferred tax on all movements in the fair values of its investment properties at a flat rate of 16%. Any change in the deferred tax liability or change in the deferred tax asset is reflected as an element of income tax in the profit and loss statement. The Company recognises deferred tax asset for the amount of carried forward unused tax losses to the extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilised.
| YTD 2022 | YTD 2021 | |
|---|---|---|
| Rent revenue | 45 | 38 |
| Revenue from sale of assets | 1,856 | 220 |
| Operating revenue | 1,901 | 258 |
| Payroll expenses | (62) | (65) |
| Management fees | 0 | (24) |
| Inventory (write off)/reversal | (61) | 179 |
| General and administrative expenses | (194) | (127) |
| Operating expenses | (316) | (37) |
| Profit/ (loss) before other operating items | 1,585 | (849) |
| Other operating income/(expense), net | (1,093) | (2,472) |
| Profit from operations | 492 | (3,321) |
| Financial income | (70) | 5 |
| Financial costs | 0 | (10) |
| Foreign exchange, net | (19) | (637) |
| Result before tax | 403 | (3,962) |
| Tax expense | (71) | 4 |
| Result of the period | 332 | (3,958) |
| (UNAUDITED) Figures in thousand EUR |
|
|---|---|
| ---------------------------------------- | -- |
| ASSETS | March 31, 2022 | March 31, 2021 | December 31, 2021 |
|---|---|---|---|
| Non-current assets | |||
| Investment properties | 2,034 | 4,087 | 2,033 |
| Property, plant and equipment | 80 | 66 | 52 |
| Deferred tax asset | 55 | 115 | 55 |
| Total non current assets | 2,169 | 4,267 | 2,140 |
| Current assets | |||
| Inventories | 7,623 | 7,094 | 8,680 |
| Other short term receivables | 1,573 | 446 | 880 |
| Cash and cash equivalents | 4,370 | 1,247 | 3,807 |
| Total current assets | 13,567 | 8,787 | 13,367 |
| Assets held for sale | 2,482 | 2,240 | 2,480 |
| TOTAL ASSETS | 18,218 | 15,294 | 17,986 |
| EQUITY AND LIABILITIES | March 31, 2022 | December 31, 2020 |
December 31, 2020 |
| Equity | |||
| Share capital | 103 | 103 | 103 |
| Contributed surplus | 87,117 | 87,117 | 87,117 |
| Other reserves | 160 | 160 | 160 |
| Retained earnings | (74,127) | (75,659) | (75,659) |
| Result of current period | 332 | 78 | 1,532 |
| FX reserve | 3,567 | 3,203 | 3,572 |
| Total equity | 17,154 | 15,003 | 16,826 |
| Non current liabilities | |||
| Deferred income tax | 158 | 119 | 158 |
| Total non current liabilities | 158 | 117 | 158 |
| Current Liabilities | |||
| Other payables | 880 | 87 | 963 |
| Contract liabilities | 25 | 25 | 25 |
| Tax payable | 1 | 60 | 14 |
| Total current liabilities | 906 | 172 | 1,002 |
| TOTAL EQUITY AND LIABILITIES | 18,218 | 15,294 | 17,986 |
| March 31, 2022 | December 31, 2021 |
March 31, 2021 |
|
|---|---|---|---|
| Profit for the year | 332 | 1,532 | 78 |
| Other comprehensive income | |||
| Exchange differences on translation of foreign operations | 364 | 259 | 69 |
| Other comprehensive income for the year, net of tax | 364 | 259 | 69 |
| Total comprehensive income for the year, net of tax | 697 | 1,791 | 146 |
Figures in thousand EUR
| Figures in thousand EUR | |||
|---|---|---|---|
| March 31, 2022 December 31, | 2021 | March 31, 2021 |
|
| Net cash flow from operating activities | (171) | (725) | (549) |
| Net cash flow from investing activities | 734 | 3,325 | 732 |
| Net cash flows from financing activities | - | - | - |
| Net cash change during period | 563 | 2,600 | 183 |
| Cash at beginning of period | 3,807 | 1,207 | 2,371 |
| Cash and cash equivalents at end of the period | 4,370 | 3,807 | 2,554 |
| Figures in thousand EUR | |||
|---|---|---|---|
| March 31, 2022 | December 31, 2021 |
March 31, 2021 |
|
| Equity at the beginning of the period | 16,826 | 15,035 | 18,501 |
| Result for the period | 332 | 1,532 | (520) |
| Other changes | (5) | 259 | 400 |
| Equity at the end of the period | 17,154 | 16,826 | 18,381 |
We confirm that, to the best of our knowledge, the condensed consolidated interim financial statements for the first quarter of 2022, which have been prepared in accordance with IFRS as adopted by EU and IAS 34 Interim Financial Reporting, give a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations. To the best of our knowledge, the interim report for the first quarter of 2022 includes a fair review of important events that have occurred during the period and their impact on the condensed financial statements, the principal risks and uncertainties for the remaining period of 2022, and major related party transactions.
May 27, 2022
The Board of Directors RomReal Limited Hamilton, Bermuda:
Kjetil Grønskag (Chairman & CEO), Bendt Thorkildsen (Director), Heidi Sørensen Austbø (Director) and Lacramioara Isarescu (Director)
Questions should be directed to: Kjetil Grønskag: Chairman & CEO, +44 776 775 4119
RomReal Limited Postal address: Burnaby Building, 16 Burnaby street, Hamilton HM11, Bermuda Telephone: Tel- +1-441-293-6268 Fax +1-441-296-3048 | www.RomReal.com
Visiting address:54 Cuza Voda street, Constanța, Romania Tel: +40-241-551488 Fax: +40-241-551322
Kjetil Gronskag +44 776 775 4119| [email protected]
For further information on RomReal, including presentation material relating to this interim report and financial information, please visit www.RomReal.com.
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. For a further description of other relevant risk factors, we refer to RomReal's Annual Report for 2021. 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.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.