Northland Changes to IFRS Accounting Standards
Luxembourg, June 30, 2010: Northland Resources S.A. ("Northland" or "the Company") announces that as a Luxembourg domiciled company with shares listed on an exchange in the European Economic Area "EEA" the Company is subject to the rules and regulations of the Commission de Surveillance du Secteur Financier ("CSSF"). These regulations include a requirement to file information in accordance with IFRS. Accordingly, as further described in the interim consolidated financial statements and the Management's Discussion & Analysis filed on June 30, 2010, the Company has advanced its IFRS conversion and has selected an IFRS transition date of February 1, 2007. The April 30, 2010 Interim consolidated financial statements are the Company's first set of IFRS financial statements and, as a result, includes notes disclosing extensive transitional information for first time adopters and full disclosure of all new IFRS accounting policies.
Initial Adoption of International Accounting Standards
IFRS 1 ''First Time Adoption of International Accounting Standards'' sets forth guidance for the initial adoption of IFRS. Under IFRS 1 the standards are applied retrospectively at the transitional balance sheet date with all adjustments to assets and liabilities as stated under GAAP taken to retained earnings unless certain exemptions are applied. The exemptions applied on first-time adoption have been described in the note 6 ("Transition to IFRS") to the interim consolidated financial statements as at April 30, 2010.
Since the Group is currently seeking financing with a potential combination of debt, equity and off-take agreements, it may be required to provide financial statements under IFRS with three years of comparative data. Therefore, the Group elected to adopt IFRS with an adoption date of February 1, 2010 and a transition date of February 1, 2007.
Impact of IFRS
IFRS employs a conceptual framework that is similar to Canadian GAAP; however significant differences exist in certain matters of recognition, measurement and disclosure. While the adoption of IFRS did not change actual cash flows, the adoption resulted in changes to the reported financial position and results of operation. In order to allow the users of the financial statements to better understand these changes, the Company has provided reconciliations between Canadian GAAP and IFRS for the total assets, total liabilities, shareholders equity and net earnings in the note 6 ("Transition to IFRS") to the interim consolidated financial statements as at April 30, 2010.
The only significant difference resulting in a reconciling item between Canadian GAAP and IFRS, as presented in the reconciliations included in the Transition to IFRS note to the April 30, 2010 IFRS interim consolidated financial statements, relates to the translation of foreign operations. Under Canadian GAAP, the subsidiaries have been considered to be integrated and as a result, their functional currencies are the same as the parent's functional currency (Canadian dollar). Accordingly, the temporal method of translation was used in order to translate the non-monetary assets at historical exchange rates. Under IFRS each entity's functional currency is determined with reference to the primary economic environment. This has resulted in foreign subsidiaries functional currencies being assessed as Swedish Krona for the Swedish subsidiaries and Euro for the Finnish subsidiaries. Under this method the subsidiaries are consolidated by translating their assets and liabilities at the rate of exchange prevailing at the reporting date and their income statements are translated at the average rate of exchange for the period.
The effect of the differences described above mainly impacted the exploration assets, the foreign currency translation reserve and the net financial items and are summarized as follows as at 31 January of each financial year:
(CAD millions) 2007 2008 2009 2010
Exploration assets Canadian GAAP 17.9 43.1 83.1 107.6
IFRS 17.3 42.8 79.9 100.4
Foreign currency translation reserve Canadian GAAP - - - -
IFRS - 0.7 0.6 1.1
Net financial items1 Canadian GAAP NA 4.8 5.8 1.1
IFRS NA 3.3 2.8 (3.5)
1: caption of the statement of comprehensive income
The Company's consolidated annual financial statements were prepared in accordance to Canadian GAAP until January 31, 2010. For the fiscal period February 1, 2010 to April 30, 2010, the Company has prepared its financial results according to Canadian GAAP and IFRS. The financial results prepared according to Canadian GAAP were released to the market June 14th; today the Company has released its financial results prepared in accordance with IFRS. Going forward, the Company will only prepare IFRS-compliant financial results.
For further information, please contact:
Eva Kaijser, Chief Financial Officer, tel. +46 70 932 09 01
Or visit our website at: www.northland.eu