As stated in Company release no. 35 / 2010 - Interim release Tower Group A/S has been selected for accounting control by the Danish Commerce and Companies Agency for the financial year 2008/09.
The Danish Securities Council arrived at a ruling for five of the six points, which the accounting control case included, on 13 January 2011. As a consequence of this ruling, the Company announced corrective / additional information to the Annual Report 2008/09 in company release no. 5, 14 February 2011.
One point, the calculation of the fair value for the Company's investment properties where the Company has applied the DCF model, remained outstanding. The Company has today received the Securities Council's ruling on this sixth point.
In the ruling the Securities Council states that:
• The Company must make a calculation of the fair value of its investment properties as per 30 June 2009 in accordance with IAS 40. This includes among other things that the calculation must be performed on reliable data, which must be applied consistently, and that the elements included in the calculation (including equity, debt ratio and foreign capital costs) must be consistent and reflect the position of the balance sheet as per 30 June 2009. The Company must be able to demonstrate the respective additions / premiums representing the difference between the equity utilized and the risk-free interest.
• The Company must submit a calculation of the fair value of its investment properties as per 30 June 2009 (and as per June 30 2008 for the purpose of comparison) to the Danish Commerce and Companies Agency no later than 26 April 2011 together with an income statement and balance sheet of main items with comparative figures for 2008/09 where the calculated fair value of the investment properties is included. The calculation must be provided with an Auditor's endorsement with a high degree of certainty, stating that the calculation is made in accordance with the Danish Securities Council's ruling and international accounting standards. The same applies to the income statement and the balance sheet of main items.
• The Company must – to the extent that the re-calculation of the fair value shows that the previously published information on property value represents a substantial deviation – treat the aforementioned issues as a correction of errors; see IAS 8, Section 41-49. In this case, the Company must as soon as possible publish corrective / additional information, from which it shows, to what extend the errors have affected the items in the Annual Report (including impact on comparative figures). The additional / corrective information must explicate that the previously published financial information, the Annual Report 2008/09, contains errors and that the corrective / additional information is disclosed under orders from the Danish Securities Council. The corrective / additional information to the Annual Report must be compiled and presented so that readers of the accounts gets a clear and comprehensive picture of the corrected errors' impact on the Annual Report 2008/09.
• The company management must also provide a management statement covering the corrective / additional information and herein indicate whether the corrective / additional information is consistent with the Danish Securities Council's orders.
The corrective / additional information must be audited by the Company's auditor.
The Company must publish the corrective / additional information in the same manner as the Annual Report 2008/09 was published and must submit it to the Danish Commerce and Companies Agency no later than 26 April 2011.
The Danish Securities Council's decision may be appealed to the Commerce Appeals Tribunal ("Erhvervsankenævnet") within four weeks.
The Company disagrees with the decision and is considering the next step, which may very well lead to an appeal against the decision.
Best regards
Tower Group A/S
Jens Erik Christensen
Chairman of the Board
Questions regarding this release can be directed to Jens Erik Christensen, CEO, on tel.: +45 40 61 90 90.
