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2 July 2008

Nordic Land Limited

 Preliminary Announcement of Results

For the period from 3 April 2007 to 31 March 2008

CORPORATE STATEMENT

Nordic Land Limited ('Nordic Land' or the 'Company', or together with its subsidiaries, the 'Group') is a Jersey-registered, property investment company established in April 2007 to invest principally in retail real estate in the Nordic region including Sweden, Norway and Finland.  The Manager is Lathe Investments (Nordic) LLP.

The Company's investment objective is to provide shareholders with attractive total returns over the medium to long term through dividends and increases in net asset value. 

The Company's shares are traded on the AIM market of the London Stock Exchange.

HIGHLIGHTS

• Adjusted NAV per share* of £1.17; an increase of 30% since IPO

• Increase of £3.3 m in the value of property assets over aggregate cost of £64.6 m (including purchase costs and capital expenditure during the period), to £67.9 m, as at 
  31 March 2008

• Profit for the period attributable to equity shareholders of £0.7 m

• Raised initial capital of £13.4 m (gross of costs) in April 2007

• Acquired an initial property portfolio in Sweden for £59.0 m (including costs) in 
  May 2007

• Admitted to AIM on 3 August 2007, raising £4.9 m (gross of costs)

• Acquired further retail property in Greater Stockholm for £5.5 m (including costs) in September 2007

• Excellent progress on asset management:

• Increase in net operating income at Helsingborg through letting vacant space, increasing mall income and implementing significant energy cost savings

• Creation of valuable development opportunities with the support of Helsingborg Municipality

• Planning permission granted for a new 1,130 m2 unit at Borlänge

• 100% occupancy achieved in the vacant office accommodation in Borlänge

• Upward rent indexation of 2.7% for all of the properties in January 2008
  

* Adjusted NAV per share is the Net Asset Value per share of the Company adjusted to exclude the effect of deferred tax relating to the revaluation of investment properties and the fair value of derivative financial instruments net of attributable taxation.

For further information please contact:

Nordic Land Limited
Ray Horney	+44 (0) 1273 775225
Ian Knight	+44 (0) 1892 752005
Bankside Consultants
Simon Rothschild/Oliver Winters	+44 (0) 20 7367 8888

  CHAIRMAN'S STATEMENT

I am very pleased to present the first results for your Company for the period from 3 April 2007 to 31 March 2008. The Company has made considerable progress in the period under review having completed its pre-Initial Public Offering ('IPO') capital raising in April 2007 and substantially invested the proceeds, on a leveraged basis, in its first property portfolio, the following month. A further property was acquired in September 2007. Full details of these acquisitions are set out in the Managing Director's Review.

In August, your Company successfully completed its Admission to AIM, despite extremely challenging market conditions.

Nordic Land remains the only company presently listed on AIM, which is exclusively investing in commercial real estate in the Nordic region, offering its shareholders exposure not only to your Manager's real estate skills but also to some of the most favourable macro-economic conditions prevailing in Europe.

Growth in Net Asset Value

Due to the careful, selective process the Directors go through before agreeing to buy property, we have been successful in acquiring properties in Sweden at competitive prices and adding value through our successful asset management.

I am pleased to report that property valuations have increased by some 15% to £67.9 m since the interim results, as a result of your Manager's asset management work and favourable exchange rate movements. Details of the successful programmes implemented to add value, particularly at Terminalen 1 in Helsingborg, through a mixture of attracting new tenants, letting previously vacant space and cost reductions, are outlined in the Managing Director's Review.

As a result, the Adjusted NAV per share of the Company has increased by some 30% to £1.17 per share, up from 90 p per share as at the date of Admission to AIM. This increase in the Adjusted NAV per share is well ahead of the Board's expectations.

In line with the statement made at the time of the IPO, no dividend has been declared.

Financing

As at 31 March 2008 the Group's net debt totalled £43.0 m. The Group's bank borrowings are all secured on the Group's properties and are operating well within bank covenants.

The loans are repayable in 2012, with an option to extend for a further year, and are on a fixed-interest basis, with a weighted average, all-in interest rate of 5.45% per annum.

At the period end the net debt/property gearing ratio was 63.4%.

Outlook

Your Company's management team has performed well in giving the Company an impressive start. We have acquired good assets to which we have already added value and this, when supported by a strong Swedish economy, enables the Board to look forward to the future with confidence.  

The retail property market in Sweden offers an attractive combination of low rents and high consumer-spend forecasts, probably the best in Europe. We will, therefore, continue to focus our main attention on further building our investment platform in Sweden.

Pending recovery of the capital markets, expansion of the business is most likely to be achieved by way of joint venturing with financial partners and/or merger with/acquisition of other investment vehicles, which wish to share our vision.

I am pleased to announce that, since the period-end, Olle Arnoldsson, a Swedish national, has been appointed a director of the Group's Swedish subsidiaries. This appointment took place in May and he has subsequently been appointed a director to the Company's Board. Olle brings over 35 years of commercial property experience to the Company and I welcome him to the Board.

This has been an excellent start for your Company which has been achieved in very challenging conditions. This bodes well for the Company's future, particularly when the markets improve.

On behalf of the shareholders, I would like to thank all of the management team and the Company's professional advisers for their considerable efforts in generating an excellent result for the Company's first year of operation.

RAY HORNEY

Chairman

30 June 2008

  MANAGING DIRECTOR'S REVIEW 

THE NORDIC PROPERTY MARKET

In early 2007 your Manager undertook a detailed appraisal of the European real estate markets to identify a region or countries with strong economic and political fundamentals, a high degree of liquidity and an environment in which the Manager could use its skills in retail property to good, profitable effect.

The Nordic Region continues to be the third largest commercial property market in Europe; Sweden itself is the fourth. 

Sweden's economy continues to perform above trend. Although GDP growth is succumbing to an inevitable degree of slowdown, forecasts to 2011 suggest that Sweden will continue to out-perform the Eurozone as a whole as well as France and Germany. 

The economy is expected to be particularly buoyed by a strong labour market. Although consumer spending has slowed a little, healthy growth in underlying retail sales is forecast for the longer term. 

Low vacancy rates and solid rental growth bear testament to continued occupier demand. Retail sales to 2017 are forecast to grow by 34%, ahead of the UK, Germany, France and the Eurozone.

As a result, investor demand for Swedish retail stock has held up well against a global backdrop of reduced liquidity. 

Although investment levels in 2008 are unlikely to reach the heights of the previous two years, the solid fundamentals and forecasts lead us to believe that Sweden will not be subject to the same level of decline in values as seen in other European markets.  After a number of years of yield compression, the trend going forward is likely to be more towards stabilisation.

Swedish retail property continues to generate one of the highest levels of return in Europe.   Forecasts suggest that average annual total returns for Swedish retail property will remain in double-digits between 2007 and 2011, comfortably out-performing most western European markets.

OUR BUSINESS MODEL

Nordic Land focuses on multi-let investment properties with a strong retail element. This forms the basis of the Company's strategy of seeking to add value whilst having a well-spread mix of tenants.  

The Company's acquisition process is stringent and based on local knowledge. For each property, and further development thereof, detailed business plans are prepared to manage risk and to add real value through both development and asset management. 

Acquisition financing is carefully structured to provide sufficient headroom to operate within loan covenants. Protection against future interest rate movements is achieved by fixed-rate funding, which in turn matches the timing of the contracted income flows from occupational leases.

Nordic Land's financial controls are equally stringent and detailed working capital forecasts are maintained to assist in the planning of property acquisitions and subsequent developments.

As far as property operations are concerned, the Directors believe that in Sweden the Company should operate as a Swedish company. 

Accordingly the Company's Swedish subsidiary, Nordic Land AB, which operates from a newly-opened office in Gothenburg, is headed by a Swedish national, Olle Arnoldsson, who has over 35 years of development experience in Sweden and previously in Europe and the Middle East.

Your Company's management team meets in Sweden every week.  Day-to-day property management and leasing is contracted to major firms chosen for being 'best-in-class'. 

The Board meets quarterly to review comprehensive management reports and make further decisions thereon. 

 

PROPERTY REVIEW

Each of the Company's properties provides a range of profitable asset management and development opportunities, which the Board expects to realise and which will be reflected in increases in cashflow and net asset value per share. 

The portfolio is well secured on 115 tenants, of which 79% are municipalities and national multiples, including market leaders such as Willy:s, Rusta, Scandlines, Sportex and McDonalds. 

The quality and size of the tenant base is important to us in terms of diversifying risk as well as opening up multiple prospects of adding value through providing good-quality space on attractive lease terms.  

Retail leases in Sweden are typically fairly short, at between three and five years. Terms may be longer (up to ten years), particularly on new lettings of larger retail boxes. However, it is commonplace for retailers to have the right to renew their lease. Rents are annually indexed to the Consumer Price Index.

Nordic Land's assets comprise Terminalen 1 in Helsingborg, which is a regionally-important, mixed-use, retail and transport hub serving the west coast of Sweden and Denmark, a prime-located retail park in Borlänge with additional development opportunities and a multi-let retail property in an affluent part of Greater Stockholm.

Terminalen 1, Helsingborg

This long-leasehold interest was acquired in May 2007 for £47.0 m (including costs) to reflect an initial yield of 5.7% at purchase. 

Helsingborg is a major port city in south-west Sweden, opposite Denmark. The property itself is in central Helsingborg, unique for the area's transportation systems, and in a prime office location.

The building was constructed in 1991 and is the region's central transport terminal. It comprises the terminal area, which provides ticket sales, waiting halls and a passenger link to the main Sweden to Denmark ferry terminal, a shopping centre with a number of restaurants above, and offices in a further 5-6 levels above. The total lettable area is some 19,500 m².  

Underneath the building are the main, west-coast-line, railway station and the town's main bus terminal, both of which the Group owns.

The property has both a multi-storey, roof-top, car park (303 spaces) and surface roof-top parking (399 spaces) which benefit from being directly adjacent to the ferry and train terminals and together provide a strong income stream.  In total there are some 92 tenants.

The South Harbour area, directly to the south of the property, is to be redeveloped into a major 'docklands-style' development, comprising 800,000 m2 of residential apartments, offices and a conference centre. This project, which we understand is planned to start within 4-5 years' time, would further improve the location around the building and benefit the property.  Terminalen is the 'gateway' property by virtue of its location and hosting of the major transport links and thus gives Nordic Land the opportunity to become involved in the development of this area.

We are particularly encouraged by our ongoing meetings with officials of the Municipality and its efforts to make a positive contribution to the South Harbour scheme.

A substantial uplift in valuation has already been achieved, largely by generating an increase in net operating income ('NOI').  Valuations in Sweden are largely a function of NOI and investment yield. Improvements in NOI can, therefore, be extremely valuable.

The management team has commissioned, and is implementing, an energy-saving programme so as to reduce operating costs for both Nordic Land, as landlord, and the tenants.  This is now flowing through to an increase in NOI.

We have already let previously-vacant space to new tenants so as to increase income, and there is further under-utilised or vacant space at the property which we further intend to make income-producing.

Work is in progress to develop a new, vibrant, restaurant area for national-multiple operators at first floor level, and, potentially, new offices.  We have appointed a leading local architect and together we are in discussions with the Municipality.

Lackeraren 3, Borlänge 

This freehold interest was acquired in May 2007 for £12.0 m (including costs) to reflect an initial yield of 5.8% at purchase.

Borlänge is a major regional town 120 km to the north west of Stockholm with large corporate employers and a strong local economy. The property itself is located next to the regionally-dominant Kupolen Shopping Centre. 

The property comprises a prime, retail-warehouse park and two small, free-standing office buildings, all of some 10,000 m², plus a 327-space surface car park and extensive servicing areas. The income is well secured by major national retailers including Willy:s and Rusta.

We have now fully let the office building and income has been increased by some 11% since purchase.

 

We have successfully secured planning consent for a scheme to develop a new 1,130 m² retail warehouse unit on vacant land.  Construction work will commence upon securing a pre-let to a major retailer, on which we are in negotiations.

Also, we have produced a scheme to extend one of the existing retail units so as to deliver additional accommodation for the occupier, and generate additional income from the introduction of new advertising. 

In addition, we have implemented plans to maximize NOI by cost reduction, cost recovery and rental uplifts through indexation and lettings.

Sicklaön 117, Nacka, Stockholm

This freehold interest was acquired in September 2007 for £5.5 m (including costs) to reflect an initial yield of 5.9% at purchase.

The property is well-located in the Sickla shopping quarter which, as the main retail location for the Nacka community, generates some of the highest sales per square metre in Sweden.  This area is amongst the most affluent regions in Sweden, featuring high per capita income and strong population growth.  

The immediate location benefits from recent and substantial improvements to local infrastructure. New retail developments and car parking facilities have recently been completed adjacent to the building, and a new road connection is being planned.

The property comprises 3,400 m² of retail, storage and office accommodation in one building, predominantly let to national multiple retailers, plus a villa and land for re-development.  

There are a number of asset-management initiatives, which we have in hand, including improvement to the retail elements so as to substantially increase the overall net lettable areas, and a property-cost reduction and recovery programme so as to increase NOI. 

    

VALUATIONS

As at 31 March 2008, the value of the Group's property portfolio had increased by some £9.0 m to £67.9 m, compared to the value included in the Group's Interim Results as at 30 September 2007. 

This follows the completion of its formal year-end valuation, which was carried out by DTZ, in accordance with the Appraisal and Valuation Standards of RICS:

Property		Valuation as at 31 March  2008	Valuation as at 30 September 2007	Increase/ (decrease)
Helsingborg	£ m SEK m	48.8 575	41.7  550	7.1 25
Lackeraren	£ m SEK m	13.2 155	12.0 158	1.2 (3)
Sicklaön	£ m SEK m	5.9 70	5.2 69	0.7 1
Total	£ m SEK m	67.9  800	58.9 777	9.0 23
Blended yield		5.7%	5.7%

Note: SEK:GBP exchange rate was 11.8 as at 31 March 2008 (13.2 as at 30 September 2007).

Of the total increase in valuations, around £1.9 m has arisen directly as a result of the asset management initiatives implemented in the period, which include:

• an increase in net operating income at Helsingborg through letting vacant space, increasing mall income and implementing energy cost savings; 

• the achievement of 100% occupancy in the vacant office accommodation in Borlänge;

• upward rent indexation of 2.7% for all of the properties in January 2008.

The remainder of the increase in valuations, around £7.1 m, has resulted from the strengthening of the Swedish krona relative to sterling. 

FINANCIAL REVIEW

Results

Net rental income for the period was £2.6 m, arising from the acquisition of the Helsingborg and Borlänge properties in May 2007 and the Sicklaön property in September 2007.  Operating profit for the period was £3.5 m, after allowing for administrative expenses of £1.9 m, the exceptional item relating to the loss on an abortive transaction of £0.1 m, and the gain on the revaluation of investment properties of £2.9 m.

Profit before tax for the period was £1.9 m, after allowing for the net interest payable of £1.9 m and the change in fair value of derivative financial instruments of £0.3 m.

The tax charge for the period was £1.2 m, principally due to the deferred tax on the revaluation of investment properties.

Profit after tax was therefore £0.7 m.  Adjusted earnings per share, excluding the gain on revaluation of investment properties, the change in fair value of derivative financial instruments and exceptional items, all net of attributable taxation, was a loss of 6.8 p.

Dividend

As reported in the Chairman's Statement, no dividend has been declared, in line with the statement made by the directors at the time of Admission.

Cash flow

Net cash flows from operating activities provided an inflow of £1.6 m. Capital expenditure on the acquisition of investment properties was £57.4 m. After allowing for net cash inflows from raising equity of £17.3 m and bank loan drawdowns of £44.8 m, the net increase in cash and cash equivalents for the period was £6.3 m. Including foreign exchange gains of £0.5 m, available cash balances at the period end were £6.8 m.

Balance sheet

At 31 March 2008 the value of the Group's property portfolio was £67.9 m. During the period, costs of £64.5 m were incurred on the acquisition of properties.  After allowing for foreign exchange differences of £0.4 m and capital expenditure incurred during the period of £0.1 m, the valuation surplus was £2.9 m.

Adjusted net asset value per share was as follows:

	As at 31 March 2008
Basic net asset value per share	£1.07
Adjusted net asset value per share	£1.17

Adjusted net asset value per share is a property industry measure which excludes deferred tax relating to the revaluation of investment properties and the fair value of derivative financial instruments net of attributable taxation.

Financing

As at 31 March 2008 the Group's net debt totalled £43.0 m. The Group's bank borrowings are all secured on the Group's properties and are operating well within bank loan covenants.

The loans are repayable in 2012, with an option to extend for a further year, and are on a fixed-interest basis, with a weighted-average, all-in interest rate of 5.45% per annum. 

At the period end the net debt/property gearing ratio was 63.4%.

OUTLOOK

We are pleased with the Group's first purchases and progress to date which has generated real value for shareholders.  We look forward to generating further value for shareholders. 

IAN KNIGHT

Managing Director

  Consolidated Financial Statements

Consolidated Income Statement for the period ended 31 March 2008

		3 April 2007 to 31 March 2008
	Note	£000
Gross rental income		3,883
Property operating expenses		(1,279)
Net rental income	4	2,604
Administrative expenses		(1,941)
Loss on abortive transaction		(104)
Gain on revaluation of investment properties		2,947
Operating profit	5	3,506
Net interest payable and other finance costs	6	(1,892)
Change in fair value of derivative financial instruments		272
Profit before tax		1,886
Tax	7	(1,154)
Profit for the period attributable to equity shareholders		732
Earnings per share - basic and diluted	8	4.2 p
Adjusted earnings per share	8	(6.8) p

The notes form part of these consolidated financial statements.

  Consolidated Balance Sheet as at 31 March 2008

		31 March 2008
	Note	£000
ASSETS
Non-current assets
Investment properties	9	67,878
Derivative financial instruments	10	272
		68,150
Current assets
Trade and other receivables	11	363
Cash and cash equivalents	12	6,838
		7,201
Total assets		75,351
LIABILITIES
Current liabilities
Trade and other payables	13	2,798
Income tax provision		9
		2,807
Non-current liabilities
Borrowings	14	49,860
Deferred tax liability	16	2,138
		51,998
Total liabilities		54,805
Net assets		20,546
EQUITY
Ordinary share capital	17	192
Share premium		17,059
Retained earnings		3,295
Total shareholders' equity		20,546
Net asset value per share	18	£1.07
Adjusted net asset value per share	18	£1.17

The notes form part of these consolidated financial statements.

  Consolidated Cash Flow Statement for the period ended 31 March 2008

	3 April 2007 to 31 March 2008
	£000
Cash flows from operating activities
Operating profit	3,506
Adjustments for non-cash items:
Gain on revaluation of investment properties	(2,947)
Share-based payments	526
Other movements arising from operations:
Increase in trade and other receivables	(248)
Increase in trade and other payables	1,393
Tax paid	(9)
Net cash generated from operations	2,221
Interest received	264
Interest paid	(922)
Net cash flows from operating activities	1,563
Cash flows from investing activities
Acquisition of investment properties	(57,352)
Cash flows from investing activities	(57,352)
Cash flows from financing activities
Proceeds from the issue of share capital at a premium	19,173
Cost of issue of shares at a premium	(1,922)
Net drawdown of borrowings	44,829
Cash flows from financing activities	62,080
Net increase in cash and cash equivalents	6,291
Opening cash and cash equivalents	-
Exchange gains on cash balances	547
Closing cash and cash equivalents	6,838

  Consolidated Statement of Changes in Equity for the period ended 31 March 2008

	Ordinary Share Capital £000	Share Premium £000	Retained Earnings £000	Total Equity £000
Balance at 3 April 2007	-	-	-	-
Profit for the period	-	-	732	732
Share-based payments	-	-	526	526
Foreign exchange differences recognised directly in equity	-	-	2,037	2,037
Total recognised income and expense	-	-	3,295	3,295
Ordinary shares issued at a premium	192	18,981	-	19,173
Cost of issue of shares at a premium	-	(1,922)	-	(1,922)
Balance at 31 March 2008	192	17,059	3,295	20,546

  Notes to the accounts

Note 1 General Information

Nordic Land Limited (the 'Company') is a Jersey incorporated company which invests principally in retail property in the Nordic region. The Company was incorporated on 3 April 2007. The consolidated financial statements have been prepared for the period from incorporation to 31 March 2008.

The audited consolidated financial statements were authorised for issuance on 30 June 2008.

These statements are not statutory accounts and have been extracted from the full statutory accounts for the period ended 31 March 2008, on which the auditors' report is unqualified.

Note 2 Basis of preparation

The financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union and is presented in sterling.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

This is the first preliminary announcement presented by the Company. Consequently, no comparative figures are presented.

The consolidated financial statements have been prepared on the historical cost basis modified for the revaluation of investment properties and derivative financial instruments which are both measured at fair value.

In November 2006, the IASB issued IFRS 8 - 'Operating Segments' which is effective for annual periods beginning on or after 1 January 2009. The standard replaces IAS 14 ('Segment Reporting').The standard requires segment disclosure based on the components of the entity that management monitors in making decisions about operating matters and also introduces additional segmental reporting disclosures. This 'management approach' differs from IAS 14, which currently requires the disclosure of two sets of segments, business and geographical segments, based on a disaggregation of information contained in the financial statements. Under IFRS 8 operating segments become reportable based on threshold tests related to revenues, results and assets. The Company will apply IFRS 8 for its accounting period commencing 1 April 2009. The standard will only affect reporting of financial and descriptive information about the Company's reportable segments in the financial statements.

In September 2007, the IASB issued a revised IAS 1 ('Presentation of Financial Statements'). The revised standard supersedes the 2003 version of IAS 1 ('Presentation of Financial Statements') as amended in 2005. The revised standard introduces a requirement to aggregate information in the financial statements on the basis of shared characteristics. The revised standard also introduces as a financial statement the 'Statement of Comprehensive Income'. The revised standard also introduces new titles for the financial statements e.g. Statement of Financial Position instead of Balance Sheet. The revised standard is applicable for periods beginning on or after 1 January 2009. The Company will adopt the revised standard for its accounting period beginning 1 April 2009.

The revised standard will affect the presentation of the amounts currently recognised in the Income Statement and Statement of Changes in Equity. 

The other new standards and interpretations issued but not effective are not considered relevant to the entity and have not been listed above.

Note 3 Significant Accounting Policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. The accounting policies have been consistently applied by the Company and its subsidiaries (together the 'Group').

Basis of consolidation

The financial statements incorporate the net assets and liabilities of the Group at the balance sheet date and its results for the period then ended. Results of subsidiaries acquired or disposed during a period are included from the effective date of acquisition or up to the effective date of disposal as appropriate.  The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences up to the date that control ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The consolidated financial statements are presented in sterling, which is the Company's and Group's functional and presentational currency.

Share capital

Shares are classified as equity to the extent that they meet the following two conditions:

• they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company; and

• where the instrument will or may be settled in the Company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

Share issue expenses

The costs incurred by the Company in connection with the issue of shares are written off against the share premium account.

Share-based payments

Options

The grant-date fair value of options granted to employees of the Manager and Directors of the Company are recognised as an expense, with a corresponding increase in equity, over the period that the employees and Directors become unconditionally entitled to the options. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

Performance carry

The Manager is entitled to receive a performance carry equal to 20 per cent. of the Total Shareholder Return (defined as the sum of the increase in adjusted net asset value per share and dividends per share,    divided by the adjusted net asset value per share at the beginning of the relevant financial period) in excess of 8 per cent. per annum for the relevant period, subject to a high watermark, to which a performance carry relates. This cost will be recorded on an accruals basis. To the extent it is payable by the issue of shares in the Company, the cost of such share-based payments is recognised in the Income Statement by reference to the fair value at the date of payment, together with a corresponding increase in equity.

Revenue

Revenue represents amounts receivable calculated on an accruals basis in respect of property rental income earned in the normal course of business, net of sales-related taxes.  

Investment property

Investment properties are properties owned or leased by the Group which are held for long-term rental income and for capital appreciation. Investment property is initially recognised at cost and re-valued at the balance sheet date to fair value, as determined by professionally qualified external valuers.

The surplus or deficit on revaluation is reported in the Income Statement. No depreciation is provided in respect of investment property.

Borrowing costs associated with direct expenditure on investment properties under development or undergoing refurbishment are capitalised using the average rate of interest paid on the relevant debt outstanding until the date of practical completion.

Sales of investment property are recognised when contracts have been unconditionally exchanged during the period and the significant risks and rewards of ownership have been transferred.

Acquisitions of corporate interests in investment property are accounted for on consolidation as if the Group had acquired the underlying property asset directly. Accordingly, no goodwill arises on such acquisitions as any difference between the fair values of the assets acquired and the acquisition consideration are allocated to the investment property asset, which is subject to subsequent revaluation under IAS 40.

Impairment of assets

The Group assesses at each reporting date whether there is objective evidence that an asset may be impaired.  If any such indication exists the Group makes an estimate of the asset's recoverable amount.  An asset's recoverable amount is the higher of the asset's fair value less costs to sell and its value in use and is determined on an asset by asset basis.  When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased.  If such an indication exists, the recoverable amount is estimated and the corresponding impairment loss that was previously booked is reversed.

Financial instruments

Classification

Management determines the classification of financial instruments at initial recognition.  The Group classifies its financial assets into the following categories:

• Financial assets at fair value through profit and loss

• Loans and receivables

The Group classifies its financial liabilities into the following categories:

• Financial liabilities at fair value through profit and loss

• Financial liabilities measured at amortised cost

Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition in accordance with IAS 39.

A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.

Trade and other receivables

Trade and other receivables are reported at their fair value. As trade and other receivables have a short expected term, they are valued at face value without discounting. Trade and other receivables are reported at the amount they are expected to realise after a deduction for doubtful debts, which is made on a case by case basis.

A provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all the amounts due under the original terms of the invoice. Impaired debts are derecognised when they are assessed as uncollectable.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on demand deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. In order to be classified as cash and cash equivalents, the maturity of the cash and cash equivalents instruments is three months or less at the time of acquisition.

Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at their issue proceeds, net of issue costs associated with the borrowing.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.  Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.  Borrowing costs are recognised on an accruals basis in the Income Statement using the effective interest rate method.

Gains and losses are recognised in the Income Statement when the liabilities are derecognised or impaired, as well as through the amortisation process.

Derivative financial instruments

The Group uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rate fluctuations.  Such derivative financial instruments are stated at fair value, based on market prices, estimated future cash flows and forward rates as appropriate. Any gains or losses arising from changes in fair value are taken directly to the Income Statement.

In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.

Trade and other payables

Trade and other payables are non-interest bearing and are reported at their fair value. As trade payables have a short expected term, they are valued at their face value without discounting.

Taxation

The Company is incorporated as an exempt company under Jersey law and is not subject to any Jersey taxes. Certain subsidiary undertakings are subject to foreign taxes in respect of foreign source income; provision for such taxes is made on the basis of taxable profits.

Deferred taxation

Deferred income tax is recognised on all taxable temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions:

• where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss;

• in respect of temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future; and

• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.  Deferred income tax is recognised in the Income Statement except when it relates to items that are credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Segmental analysis

The Group has a single geographical and business segment, being investment in property in the Nordic region.

Management fees

Under the terms of the Management Agreement, the Manager, Lathe Investments (Nordic) LLP, is entitled to receive an annual management fee dependent on the gross assets of the Group.  Fees are recorded on an accruals basis.

Foreign currencies

The assets and liabilities of foreign entities are translated into sterling at the rate of exchange ruling at the balance sheet date and their income statements and cash flows are translated at the average rate for the period. Exchange differences arising from the retranslation of the net investment in foreign entities are dealt with in reserves. Transactions in currencies other than the Group's functional currency are recorded at the exchange rate prevailing at the transaction dates. Foreign exchange gains and losses resulting from settlement of these transactions and from retranslation of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement except when qualifying as hedges, in which case they are dealt with in reserves.

Note 4 Net rental income

The Group engages in only one class of business activity, being investment in retail property. All operations are continuing and are based in the Nordic region.

Note 5 Operating profit

Operating profit is stated after charging:

	For the period from 3 April 2007 to 31 March 2008
	£000
Auditors' remuneration for audit and non-audit services	67
Asset management fees payable to the Manager (note 19)	382
Performance fee payable to the Manager (note 19)	468
Share-based payments (note 21)	526

The analysis of auditors' remuneration is as follows:

	For the period from 3 April 2007 to 31 March 2008
	£000
Audit fees payable to the Company's auditors and their associates  for the audit of the Company's and Group financial statements	30
Non-audit fees payable to the Company's auditors and their associates for:
- Tax services	14
- Other services	23
Total auditors' remuneration	67

In addition to the fees disclosed above, fees amounting to £104,000 were paid to associates of KPMG Channel Islands Limited for due diligence services relating to property acquisitions, and £312,000 for financial reporting and taxation advice relating to the admission to AIM.

Note 6 Net interest payable and other finance costs

	For the period from 3 April 2007 to 31 March 2008
	£000
Interest on bank loans	2,102
Interest receivable	(291)
Other finance costs	81
Net interest payable and other finance costs	1,892

Note 7 Tax

	For the period from 3 April 2007 to 31 March 2008
	£000
Current income tax charge/(credit)	(38)
Deferred tax (see note 16)	1,192
	1,154

The tax rate applicable to the Company in Jersey is nil as it is not subject to any Jersey income taxes. The current tax charge/(credit) and deferred tax calculations represent corporate income tax on income arising in Sweden, that is subject to income tax at 28%, and Luxembourg, at 29.63%.

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the tax rates applicable to the consolidated entities as follows:

	For the period from 3 April 2007 to 31 March 2008
	£000
Profit before tax	1,886
Income tax calculated at the Jersey income tax rate of 0%:	-
Effects of:
Taxation of income in other countries	(38)
Deferred taxation	1,192
Tax charge	1,154

Note 8 Earnings per share

Earnings per share and adjusted earnings per share have been calculated, using the weighted average number of shares in issue during the period of 17,433,213, as follows:

	For the period from 3 April 2007 to 31 March 2008	For the period from 3 April 2007 to 31 March 2008
	Profit after tax £000	Earnings per share pence
Profit for the period	732	4.2 p
Gain on revaluation of investment properties	(2,947)	(16.9) p
Change in fair value of derivative financial   instruments	(272)	(1.5) p
Deferred tax on revaluation of investment  properties	1,192	6.8 p
Loss on abortive transaction	104	0.6 p
Adjusted	(1,191)	(6.8) p

Basic and diluted earning per share are the same as the issued share options are currently 
anti-dilutive.

Adjusted earnings per share, excluding the gain on revaluation of investment properties, the change in fair value of derivative financial instruments and exceptional items, all net of attributable taxation, is an accepted property industry measure for reporting recurring profits.

Note 9 Investment properties

	As at 31 March 2008 £000
Opening balance	-
Investment properties acquired	64,511
Capital expenditure on properties during the period	89
Foreign exchange gains	331
Gain on revaluation	2,947
	67,878

The fair value of investment properties is based on a valuation at 31 March 2008 by DTZ Sweden AB performed in accordance with the Appraisal and Valuation Standards of RICS, on the basis of market value.

Note 10 Derivative financial instruments

The fair value of derivative financial instruments has been calculated by discounting the expected future cash flows at prevailing interest rates. The derivative financial instruments relate to the fixed interest swaps (principal amount of SEK 592.7 m; see note 14) used for managing the Group's exposure to interest rate movements on its bank borrowings.  These swaps expire at the same time as the bank borrowings in April 2012.

Note 11 Trade and other receivables

	As at 31 March 2008
	£000
Rental debtors	189
Prepayments and accrued income	130
Other debtors	44
	363

The carrying amount of trade and other receivables approximate their fair value.

The Group's credit risk is primarily the risk that a rental debtor will be unable to pay amounts in full when due, with a maximum exposure equal to the carrying amount of the debtor. As at 
31 March 2008 no provision had been made for any doubtful debts.

Note 12 Cash and cash equivalents

	As at 31 March 2008
	£000
Cash and cash equivalents	6,838

Cash and cash equivalents comprise cash held by the Group and short-term deposits with a maturity of three months or less. The carrying value of these assets equals their fair value.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

Note 13 Trade and other payables

	As at 31 March 2008
	£000
Accounts payable - trade	244
Deferred income	987
Accruals	931
Other creditors	168
Performance fee payable to the Manager	468
	2,798

The Directors consider that the carrying amount of trade and other payables approximate to their fair value.

Note 14 Borrowings

	As at 31 March 2008
	£000
Amounts falling due after more than one year:
Bank loans	50,285
Unamortised borrowing costs	(425)
	49,860

The bank loans represent borrowings of SEK 592.7 m.  The weighted average interest rate is 5.45% per annum. The interest rates on all loans are fixed using derivative financial instruments until maturity of the borrowings in April 2012.

The bank loans are secured on the shares of the borrowing subsidiaries and their investment properties.

The Directors estimate that the book value of the Group's bank loans approximates to their fair values.

The Group also has undrawn committed facilities of £9.3 m available to fund the capital expenditure requirements of the borrowing subsidiaries. These facilities are available until April 2012, unless extended by a further year.

Note 15 Financial instruments

Financial risk management objectives and policies

The Group's activities expose it to a variety of market, capital and financial risks, including:

• market risk (including currency risk, price risk and interest rate risk)

• credit risk

• liquidity risk

The main risks arising from the Group's financial instruments are detailed below together with the policies adopted by the Board to manage these risks.

These risks are managed by the Group under policies approved by the Board of Directors. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and the Group's operational activities.

 

Financial risks relate to trade and other receivables, trade and other payables, cash and cash equivalents and borrowings.  The Group also enters into derivative transactions, primarily fixed interest rate swaps, for the purpose of managing the interest rate risk arising from funding the acquisition of the Group's properties.

In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes.

Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain satisfactory levels of financial resources to mitigate against financial risk.

The capital structure of the Group consists of a mixture of bank loans, cash and cash equivalents and retained earnings, all as disclosed in the Balance Sheet. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by the value of the Group's properties. Net debt is calculated as bank loans less cash and cash equivalents.

The gearing ratio at the period end is as follows:

	As at 31 March 2008
	£000
Bank loans	49,860
Cash and cash equivalents	(6,838)
Net debt	43,022
Value of investment properties	67,878
Net debt to property ratio	63.4%

Categories of financial instruments

The Group's financial instruments relate to trade and other receivables, derivative financial instruments, cash and cash equivalents, trade and other payables and borrowings.    

In all cases, the Directors consider that the carrying amount of the Group's financial instruments approximate to their fair value.

Currency risk

The Group operates in the Nordic region and is exposed to foreign exchange risk arising primarily with respect to the Swedish krona and Euros.  Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investment in foreign operations.

The Group's approach to managing its foreign currency exposure is to match, as far as possible, local currency assets with local currency liabilities.  The Group's policy is not to undertake any speculative currency hedging arrangements.

At the reporting date the Group had the following exposure, measured as a proportion of net assets:

	As at 31 March 2008
Currency
Swedish krona	82.9%
Euro	0.1%

The following table sets out the Group's total exposure to foreign currency risk and the net exposure to foreign currencies of monetary assets and liabilities:

	Monetary Assets	Monetary Liabilities	Net Exposure
	£000	£000	£000
Swedish krona	3,275	54,114	(50,839)
Euro	60	85	(25)

        

Amounts in the above table are based on the carrying value of the monetary assets and liabilities.

Foreign exchange sensitivity analysis

At 31 March 2008, had sterling strengthened by 5% in relation to all currencies, with all other variables held constant, net assets attributable to shareholders would have decreased by the amounts shown below. 

	As at 31 March 2008
	£000
Swedish krona	811
Euro	(1)
Total	810

A 5% weakening of sterling against the above currencies would have resulted in an equal but opposite effect on the above financial statement amounts to the amounts shown above, on the basis that all other variables remain constant.

Interest rate risk management

The Group's interest rate risk arises from long-term borrowings used when acquiring property. The Group limits its exposure to cashflow interest rate risk when acquiring property by raising finance at fixed rates of interest. Borrowing rates are fixed by using floating-to-fixed interest rate swaps which exposes the Group to fair value interest rate risk on derivative financial instruments. A movement in market interest rates will result in a decrease/increase in the fair value of the derivative financial instrument.

Fair value interest rate risk sensitivity analysis

At 31 March 2008, had the market interest rate increased by 0.5%, with all other variables held constant, net assets attributable to shareholders would have increased by £983,000.

A 0.5% decrease in the market interest rate, with all other variables held constant, would result in an equal but opposite effect on the net assets attributable to shareholders by the same amount.

Price risk

The Group is exposed to property price and property rental risks.  The Group is not exposed to the market risk with respect to financial instruments as it does not hold any equity securities.

Credit risk

Credit risk is the risk that a counterparty will be unable to pay amounts in full when due and relates principally to trade and other receivables and cash and cash equivalents.

The Directors believe there is no significant credit risk to the Group as the rental debtors are not reliant on a single rental contract or customer. The Group also ensures that rental contracts are made with customers with an appropriate credit history.

The Directors also believe there is no risk associated with the cash and cash equivalents balance as the banks are reputable multinational corporate banks which are regulated in various jurisdictions. Cash deposits are held with approved financial institutions with high credit ratings.

With respect to credit risk arising from the other financial assets of the Group, the Group's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Liquidity risk

The Directors limit the Group's liquidity risk by ensuring that sufficient cash resources are available to fund its working capital requirements and that committed bank facilities are available to fund its development project capital expenditure programme.

Note 16 Deferred tax liability

The following are the major deferred tax liabilities recognised during the period:

	Revaluation of investment properties	Accelerated tax depreciation	Total
	£000	£000	£000
At start of period	-	-	-
Acquired	255	558	813
Charge to income	944	248	1,192
Foreign exchange differences	106	27	133
At 31 March 2008	1,305	833	2,138

Note 17 Ordinary share capital

	As at 31 March 2008
	£000
Authorised
250,000,000 ordinary shares of £0.01 each	2,500
Issued and fully paid
19,172,588 ordinary shares of £0.01 each	192

During the period from incorporation to 31 March 2008, 19,172,588 ordinary shares have been issued at a price of £1 per share.

The Company was incorporated with an authorised share capital of £100,000,000 divided into 10,000,000,000 shares of £0.01 each, of which 13,375,000 shares were subsequently issued for cash at an issue price of £1 per share as part of the initial private placement of shares on 
19 April 2007.

On 21 June 2007, Ian Knight's pension vehicle subscribed for 50,000 shares at a price of £1 per share.

On 5 July 2007, 200,000 shares were issued credited as fully paid in satisfaction of the discretionary bonus awarded to the Manager.

On 12 July 2007, the amount of the Company's authorised share capital was reduced by the cancellation of 9,750,000,000 shares, leaving the Company with an authorised share capital of 250,000,000 shares of £0.01 each.

On 26 July 2007, 668,750 shares were issued, conditional on Admission of the Company's shares to the Alternative Investment Market of the London Stock Exchange, and credited as fully paid in satisfaction of the commission due in respect of the private placement of shares.

On 3 August 2007, 4,878,838 shares were issued at a price of £1 per share, of which 185,838 had been issued in satisfaction of fees payable to advisers, and 4,693,000 had been issued for cash at an issue price of £1 per share.

Note 18 Net asset value per share

Net asset value per share has been calculated by dividing the net assets attributable to the equity holders of the Company by the number of ordinary shares in issue at the period end of 19,172,588.

	As at 31 March 2008
	£000
Net assets	20,546
Adjust for:
Change in fair value of derivative financial instruments	(272)
Deferred tax on investment properties	2,138
Adjusted net assets	22,412
Net asset value per share	£1.07
Adjusted net asset value per share	£1.17

Note 19 Related party transactions

The following related party transactions were conducted during the period:

• asset management fees of £0.4 m have been charged in accordance with the management agreement. The Manager receives a fee of 0.65% based on the consolidated gross assets of the Group;

• a performance fee is payable to the Manager equal to 20% of the Total Shareholder Return in excess of 8% in any relevant period, subject to a high watermark.  At 31 March 2008, this amounted to £0.9 m, and has been accrued for in the accounts.  As stated in the Company's Admission Document this payment will consist of not more than 50% in cash and not less than 50% in new shares in the Company; and

• as reported in the Company's Admission Document, on 5 July 2007, 200,000 shares were issued, credited as fully paid, in satisfaction of the discretionary bonus awarded to the Manager.

Note 20 Group entities

Details of all of the Group's subsidiaries at 31 March 2008 are as follows:

	Place of incorporation	Proportion of ownership interest	Proportion of voting power held
		%	%
Nordic Land Holdings Limited	Jersey	100	100
Nordic Land Holding (Luxembourg) Sàrl	Luxembourg	100	100
Nordic Land (Luxembourg) Sàrl	Luxembourg	100	100
Nordic Land Finance (Luxembourg) Sàrl	Luxembourg	100	100
Nordic Land AB	Sweden	100	100
Nordic Land Terminalen AB	Sweden	100	100
Nordic Land Borlänge AB	Sweden	100	100
Nordic Land Sicklaön Holding AB	Sweden	100	100

Each of the undertakings listed above is engaged in investment in retail property.

Note 21 Share-based payments

On 25 July 2007, the Company established a share option programme (the 'Nordic Land Share Option Plan') that entitles Directors and representatives of the Manager to purchase shares in the Company. The share-based payment scheme is equity settled by the award of options to acquire ordinary shares.

The number and weighted average exercise prices of share options are as follows:

	Weighted average exercise price	Number of options
	2008	2008
Granted during the period	106 p	479,670
Lapsed during the period	106 p	(23,984)
Outstanding at 31 March 2008		455,686

The Nordic Land Share Option Plan is open to certain Directors of the Company, employees and partners of the Manager and any local property adviser as engaged by a member of the Group, at the discretion of the Directors.

Options over 479,670 shares were granted on 6 September 2007 at an exercise price of 106 p. The first day on which the options may be exercised is 6 September 2009; the last day on which the options may be exercised is 5 September 2017.  Options for 23,984 shares, which had been issued to a local adviser, have since lapsed.

The options are not subject to performance conditions. If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options are normally forfeited if the optionholder leaves the Group or the Manager before the options vest.

In accordance with IFRS 2 'Share-based Payment', the fair value of equity-settled share-based payments is determined at the date of grant and is expensed on a straight-line basis over the vesting period, based on the Group's estimate of options that will eventually vest. Fair value is calculated using the standard Black-Scholes pricing model, with the following inputs:

Share price	106 p
Exercise price	106 p
Expected volatility	33%
Expected option life	6 years
Expected dividend yield	0%
Risk-free interest rate	5.1%

Expected volatility is estimated by considering historic average share price volatility for a group of comparable companies within the same sector and with a similar market capitalisation as the Company. 

The aggregate of the fair values of the outstanding options is £205,000.

The total share-based payment charge relating to shares of the Company is:

	For the period from 3 April 2007 to 31 March 2008
	£000
Share options	58
Performance fee payable to the Manager (note 19)	468
Total	526

Note 22 Annual Report

The Annual Report for the period from 3 April 2007 to 31 March 2008 will be sent to shareholders in due course and will be available on the Company's website: www.nordicland.com

ENDFR FKDKQOBKDFOK