10th May 2007 07:01
Dawnay, Day Carpathian PLC10 May 2007 Dawnay, Day Carpathian PLC ("Dawnay, Day Carpathian" or the "Company" or the "Group") Preliminary results for the twelve months ended 31 December 2006 Highlights: •Admitted to AIM in July 2005 and raised £140 million before expenses ("Admission") •On 2 April 2007, Company announced it had reached full investment target set at Admission, with over 90% of the funds invested or committed •Announced on 24 April 2007 the raising of a further £100 million: •Raised £100 million by a placing of 83,333,334 new ordinary shares ("the Placing"), subject to shareholder approval at an EGM on 17 May 2007 •Following proceeds of the Placing, intention to be substantially invested by 31 December 2008 •Substantial pipeline of potential acquisitions priced at approximately £1 billion •Financial results •Adjusted NAV increased to 126.7p from 98.2p •EPS for the period of 21.1p compared to 4.8p •Proposed final dividend of 4p, giving a total dividend for the year of 6p and first interim dividend for 2007 of 3.33p Rupert Cottrell, Chairman of Dawnay, Day Carpathian, said: "We are delighted bythe positive investor response to the recent secondary Placing. As a result, weare now focused on creating a £1.2 billion commercial property portfolio acrossCentral and Eastern Europe. We continue to see opportunities to acquireproperties as well as selecting regeneration and development opportunitiesproviding attractive total returns to our investors. Our asset manager, Dawnay,Day PanTerra, is highly regarded within our chosen markets and we believe thisgives us a significant competitive advantage." Enquiries: Dawnay, Day PanTerra Paul Rogers 020 7834 8060 Balazs Csepregi Cardew Group Tim Robertson 020 7930 0777 Catherine Maitland Chairman's Statement I am pleased to report that the Group has continued to make excellent progressin acquiring an attractive portfolio of retail properties in Central and EasternEurope in line with our objectives set at Admission. Since the year end, theCompany has announced its intention to raise approximately £100 million (beforeexpenses) by means of the Placing of 83,333,334 new ordinary shares ("thePlacing Shares") at 120p per share, which together with the funds raised at thetime of Admission, means the Company has raised gross proceeds of £240 million.As a result, the Company is now aiming to build a portfolio worth approximately£1.2 billion. The net proceeds of the Placing will be used to fund the Company'scontinuing investment programme and new business opportunities including thedevelopment and regeneration of properties while maintaining our focus on incomegeneration. The Placing is conditional upon the passing of resolutions byshareholders at the Extraordinary General Meeting scheduled for 17 May 2007.Dealings in the Placing Shares are expected to commence on or around 18 May2007. As at 31 December 2006, the Company had acquired property investments costing atotal of £332.8 million with an annualised rent roll in excess of £26.1 millionand a blended net initial yield of 7.9%. Our investment strategy has evolved in response to a developing marketenvironment, and while we continue to focus predominantly on income generatingassets, a substantial number of forward commitment opportunities exist which theCompany is seeking to pursue. The Company believes its experience in its chosenmarkets creates a significant competitive advantage and we are confident ofcontinuing to generate excellent shareholder value. Financial Results During the period under review, the Company acquired 35 retail properties in 10acquisitions for a total of approximately £249.5 million. The net rental andrelated income for the period was £12.7 million. The Company overall generated a profit before tax of £46.8 million. Adjustedprofit before tax, which excludes any revaluation surplus, was £10.0 million. The basic earnings per share of the Company were 21.1 pence. Adjusted earningsper share, which excludes any revaluation surplus, were 5.78 pence. As at 31 December 2006, the Company's borrowings totalled £254.2 millionrepresenting a loan to value ratio of 69%. The loans secured against the properties are denominated in euros and have anaverage weighted interest rate of 5.28% for the period. All loan agreements havehedging instruments in place minimising the impact of the interest rate risk, byswapping the variable Euribor rate to an average fixed rate of 3.51%. Dividends As announced on 24 April 2007, the Board has declared, subject to shareholderapproval, a final dividend in respect of the financial year ended 31 December2006 of 4p per share ("the Final Dividend"), representing a total dividend forthat year of 6p in line with our dividend target set at Admission. The recorddate for the Final Dividend is 4 May 2007 and it will be paid on 25 May 2007. The Board has also declared a first interim dividend in respect of the financialyear ended 31 December 2007 ("the First Interim Dividend") of 3.33p per share.The Placing Shares do not qualify for the Final Dividend and the First InterimDividend but they will qualify for any further dividends, including the oneremaining interim dividend, together with the final dividend for the financialyear ended 31 December 2007, which is intended to result in an aggregatedividend payment of 10p per share for that financial year. It is the Directors'intention to continue to provide investors with substantial dividends inaddition to the confirmed potential for capital growth. In this regard and asannounced on 2 April 2007, the Board has also confirmed that it targets adividend of 10p per share for the year ending December 2008. Revaluation and Net Asset Value As announced on 12 March 2007, the portfolio has been valued as at 31 December2006 at £368.7 million by DTZ Debenham Tie Leung Limited ('DTZ'), giving a netuplift of £36.8 million compared to the 31 December 2005 valuation (or the purchase price if acquired thereafter). The net asset value per share, adjustedto exclude goodwill and any deferred tax liabilities arising on the propertyvaluations, has risen to 126.7p from 98.2p, an increase of 29%. Non adjusted, net asset value per share has risen to 114.2p from 97.4p at 31 December 2005, anincrease of 17.2%. Property Portfolio____________________________________________________________________________Country Location Property Purchase DTZ Price (£m) valuation (£m)____________________________________________________________________________Czech Republic Karlovy Varyada Shopping Centre 26.8 32.2 VaryCzech Republic Total 26.8 32.2Hungary Budaors Antana Warehouse Park 14.2 14.8 Hungary Plaza Portfolio 44.4 51.1 Budapest Ericsson Office Building Complex 11.5 11.5 Hungary Interfruct Portfolio 53.7 55.4Hungary Total 123.8 132.8Latvia Riga Blaumana 12 8.5 9.1Latvia Total 8.5 9.1Lithuania Panevezys Babilonas Shopping Centre 23.0 23.1Lithuania 23.0 23.1TotalPoland Poland Geant Portfolio 42.3 52.5 Warszawa Promenada Shopping 94.5 104.9 Centre Slupsk Biedronka Supermarket 0.8 1.0Poland Total 137.6 158.4Romania Brasov MacroMall Shopping Centre 13.1 13.1Romania Total 13.1 13.1Grand Total 332.8 368.7____________________________________________________________________________ The gross lettable area ('GLA') of the portfolio exceeds 320,000 sqm, and inaddition there is a potential increase of approximately 25% of GLA. Theseextensions could be realised by individual asset management strategies spanningtwo to three years. Differences between the purchase price and the DTZ valuation at 31 December 2006at individual property level vary due to the length of actual ownership of eachproperty. The Antana Logistic Park and the Ericsson Office Building complex wereacquired with the intention of implementing regeneration projects to maximisetheir future value while providing attractive income yields at present. The Company's property advisor, Dawnay, Day PanTerra ("DDPT") has expanded itsteam of professional personnel focused upon Central and Eastern Europe from 7 to24 since Admission, and it now has an established local presence in Warsaw, withsignificant expertise, including a team of five property professionals. Following the successful completion of the Placing, the Company will have theopportunity to significantly expand its portfolio, and DDPT has identified astrong pipeline of potential transactions across the Company's targetgeographies. The pipeline contains a mix of income producing assets as well asdevelopment opportunities. It is expected that future acquisitions will take theCompany into new markets such as Bulgaria and expand its existing presence incountries such as Romania and Lithuania. The new funds raised have positionedthe Company to capitalise upon the excellent opportunities that DDPT hasidentified. Outlook The Company has delivered on its targets set out at Admission. Upon successfulcompletion of the secondary Placing, we will be focused on creating a £1.2billion property portfolio across Central and Eastern Europe. This growthpotential and wide geographic coverage are strategically important to becompetitive and successful. The macroeconomic environment remains favourable and we expect to continue to beable to acquire attractive income producing assets, together with selectiveregeneration projects. The excellent pipeline of potential acquisitions providesthe Board with confidence that the Company will continue to generate anexcellent mix of income and capital growth. Rupert CottrellChairman INCOME STATEMENT 2006 2005 Note Group Group £ £Gross rental income 3 15,799,374 1,485,519Service charge income 5,946,374 494,073Service charge expense (6,712,383) (424,650)Property operating expenses (2,678,962) (418,623)Other property income 334,732 32,433Net rental and related income 12,689,135 1,168,752 ________________________Changes in fair value of investment property 8 36,791,502 2,468,706 Changes in fair value of financial assets and liabilities (1,147,166) - Excess of acquirer's interest in the net fair value of acquiree's identifiable assets, liabilities andcontingent liabilities over cost. - 69,941 Net Foreign Exchange gain / (loss) 1,387,958 608,639 Administrative expenses 4 (2,140,023) (677,093) ________________________Net operating profit before net financing income 47,581,406 3,638,945 ________________________Financial income 6,776,321 3,007,062Financial expense (7,597,219) (1,009,461) ________________________Net financing income / (expense) 5 (820,898) 1,997,601 ________________________Net profit before tax 46,760,508 5,636,546 Tax 6 (10,738,812) (702,796) ________________________PROFIT FOR THE PERIOD 36,021,696 4,933,750 ________________________Attributable to:Equity holders of the Company 30,705,369 4,909,679Minority Interests 5,316,327 24,071 Basic and diluted earnings per share for profitattributable to the equity holders of the Company during the period Basic earnings per share 7 21.1 p 4.8 pDiluted earnings per share 7 21.0 p 4.7 p 2006 2005 £ £Dividend paid for the year 2,908,600 -Dividend proposed for the year 5,817,201 4,362,900 ________________________Total Dividends for the year 8,725,801 4,362,900 ________________________ STATEMENT OF CHANGES IN EQUITY GROUP Note Share Share Minority Translation Retained Total Capital Premium Interest Reserve Earnings £ £ £ £ £ £ ___________________________________________________________________ Issue of share capital 11 1,454,300 144,468,545 - - - 145,922,845 Costs of issue ofshares - (5,389,998) - - - (5,389,998) Recognition of share-basedpayments - 605,543 - - - 605,543 Acquisition of subsidiaries - - 205,702 - - 205,702 Profit for the period - - - - 4,933,750 4,933,750 Minority interest - - 24,071 - (24,071) - Share premium release 11 - (14,127,767) - - 14,127,767 - Dividend declared - - - - (4,362,900) (4,362,900) Translation intopresentationcurrency - - - (95,033) - (95,033) Balance as at 31 December ________________________________________________________________________2005 1,454,300 125,556,323 229,773 (95,033) 14,674,546 141,819,909 ________________________________________________________________________Balance as at 1 January2006 1,454,300 125,556,323 229,773 (95,033) 14,674,546 141,819,909 Profit for the period - - - - 36,021,696 36,021,696 Minority interest - - 460,219 - (460,219) - Dividend Paid 14 - - - - (2,908,600) (2,908,600) Carried interestallocation tominorityshareholders - - 4,856,108 - (4,856,108) - Translation intopresentationcurrency - - - (3,372,131) - (3,372,131) Balance as at ________________________________________________________________________31 December 1,454,300 125,556,323 5,546,100 (3,467,164) 42,471,315 171,560,8742006 ________________________________________________________________________ 2006 2005BALANCE SHEET Note Group Group £ £ASSETSNon-current assetsInvestment in subsidiariesInvestment property 8 368,691,607 87,054,370Goodwill 16,577,691 3,698,346Costs relating to future acquisitions 436,197 -Deferred income tax assets 9 963,644 127,305 ________________________ 386,669,139 90,880,021 ________________________Current assetsTrade and other receivables 10 10,368,325 2,036,675Cash and cash equivalents 75,130,888 126,144,770Financial assets 2,665,925 399,323 ________________________ 88,165,138 128,580,768 ________________________TOTAL ASSETS 474,834,277 219,460,789 ________________________EQUITY Issued Capital 11 1,454,300 1,454,300Share Premium 11 125,556,323 125,556,323Retained Earnings 42,471,315 14,674,546Translation Reserve (3,467,164) (95,033) ________________________Total equity attributable to equity holders of the parent 166,014,774 141,590,136 ________________________ Minority Interest 5,546,100 229,773 ________________________TOTAL EQUITY 171,560,874 141,819,909 ________________________LIABILITIESNon-current liabilitiesBank loans 13 189,534,695 60,971,511Deferred income tax liabilities 9 35,335,631 4,943,082 ________________________ 224,870,326 65,914,593 ________________________Current liabilitiesTrade and other payables 12 11,838,675 4,887,286Bank loans 13 64,701,807 2,476,101Provisions 728,840 -Dividends payable - 4,362,900Financial liabilities 1,133,755 - ________________________ 78,403,077 11,726,287 ________________________TOTAL LIABILITIES 303,273,403 77,640,880 ________________________TOTAL EQUITY AND LIABILITIES 474,834,277 219,460,789 ________________________ 2006 2005CASH FLOW STATEMENT Note Group Group £ £Cash flows from operating activitiesCash (used in)/ generated from operations 15 2,940,450 2,706,408Income taxes paid (797,488) - ________________________Net cash (used in)/ generated from operating activities 2,142,962 2,706,408 ________________________Cash flows from investing activitiesCapital expenditure on investment properties (34,486,202) (22,849)Capital expenditure on incomplete acquisitions (436,197) -Investment in subsidiary - -Interest received 4,593,407 2,470,348Acquisition of subsidiaries (70,936,865) (6,483,768)Loans advanced to Subsidiaries before acquisition (22,475,812) (10,342,575) ________________________Net cash used in investing activities (123,741,669) (14,378,844) ________________________Cash flows from financing activitiesProceeds on issue of shares, net of share issuance costs 11 - 139,381,406New bank loans raised 86,045,496 -Interest paid (7,075,181) (778,495)Repayments of borrowings - (294,846)Dividends paid (7,271,500) - ________________________Net cash generated from financing activities 71,698,815 138,308,065 ________________________Net (decrease)increase in cash and cash equivalents (49,899,892) 126,635,629Cash and cash equivalents at the beginning of the period 126,144,770 -Exchange losses on cash and cash equivalents (1,113,990) (490,859) ________________________Cash and cash equivalents at the end of the period 75,130,888 126,144,770 ________________________ Abbreviated notes to the Consolidated financial statements 1. Accounting Basis Dawnay, Day Carpathian PLC (the "Company") is a company domiciled andincorporated in the Isle of Man on 2 June 2005 for the purpose of investing inthe retail property market in Central and Eastern Europe. The consolidated financial statements for Dawnay, Day Carpathian PLC ( the"Group") and financial statements for the Company have been prepared for theyear ended 31 December 2006. The financial information set out above does not constitute the Group'sstatutory accounts for the year ended 31 December 2006. The figures for the yearended 31 December 2006 are extracted from the audited Group financial statements("the financial statements"). A copy of the financial statements, on which theauditors have issued an unqualified report, will be lodged with the Registrar ofCompanies. The results for the year ended 31 December 2006 have been prepared onthe basis of the accounting policies set out in the financial statements. 2. Significant accounting policies The consolidated financial statements have been prepared in accordance with theInternational Financial Reporting Standards (IFRS), details of accountingpolicies adopted by the Group can be found in the financial statements. 3. Gross rental income 2006 2005 Group Group £ £Gross lease payments collected/accrued 15,799,374 1,485,519 ________________________ The Group leases out its investment property under operating leases. Alloperating leases are for terms of 1 - 15 years. 4. Administrative expenses 2006 2005 Group Group £ £Accounting fees 401,447 69,594Other administrative expenses 355,595 14,918Audit fees 322,858 152,047Legal fees 264,227 61,037Abortive acquisition costs 233,991 -Non-executive Directors fees 135,115 34,883Bank charges and fees 88,950 7,869Portfolio management fees 86,958 67,705Tax advisory fees 84,681 34,497Nominated advisor fees 60,902 25,376Public relation fees 56,255 45,462Custody/Trust fees 35,968 25,564Irrecoverable V.A.T. 13,076 20,196Due diligence fees - 117,945 ________________________ 2,140,023 677,093 ________________________ Other administrative expenses include items such as stationary, postage,telecommunications and travel. 5. Net financing income Group Group £ £Interest income from financial institutions 4,593,407 2,470,348Fair value adjustment of interest rate swaps 2,245,782 200,290Unwinding of unrealised direct issue costs of borrowings (62,868) 336,424 ________________________Financial income 6,776,321 3,007,062 ________________________Gross interest expenses on bank borrowings (7,597,219) (1,009,461) ________________________Net financing costs (820,898) 1,997,601 ________________________ 6. Income Tax expense 2006 2005Recognised in the income statement Group Group £ £Current tax expenseCurrent year 1,108,057 228,976 Deferred tax expenseOrigination of temporary differences 9,630,755 473,820 ________________________Total income tax expense in the income statement 10,738,812 702,796 ________________________ 7. Earnings per share Basic earnings per share The calculation of basic earnings per share for the year ended 31 December 2006was based on the profit attributable to ordinary shareholders of £ 30,705,369(2005: £ 4,909,679) and a weighted average number of ordinary shares outstandingduring the period ended 31 December 2006 of 145,430,015 (2005: 102,101,808). Diluted earnings per share The calculation of diluted earnings per share for the year ended 31 December2006 was based on the profit attributable to ordinary shareholders of £30,705,369 (2005: £ 4,909,679) and a weighted average number of ordinary sharesoutstanding during the period ended 31 December 2006 of 146,515,868 (2005:103,356,615). 8. Investment property 2006 2005 Group Group £ £Balance at 1 January 87,054,370Acquisitions through business combinations (see note 25) 215,530,101 83,265,238 Acquisitions through direct asset purchases 33,832,517 -Additions 653,685 22,849Increase in fair value 36,791,502 2,468,706Foreign exchange effect (5,170,568) 1,297,577 ________________________Balance at 31 December 368,691,607 87,054,370 ________________________ The fair value of the Group's investment property at 31 December 2006 has beenarrived at on the basis of a valuation carried out at that date by DTZ DebenhamTie Leung, independent valuers. The Group has pledged each of its investment properties to secure relatedinterest bearing debt facilities granted to the Group for the purchase of suchinvestment properties. 9. Deferred tax assets and liabilities Deferred tax assets and liabilities areattributable to the following items: 2006 2006 2005 2005 Group Group Group Group Assets Liabilities Assets Liabilities £ £ £ £Investment property valuation - 34,798,474 - 4,917,106Interest rate swap valuation - 323,835 - 25,976Accrued interest payable 54,832 - 44,136 -Tax loss's brought forward 908,812 - 29,706 -Other temporary differences - 213,322 53,463 - ________________________________________ 963,644 35,335,631 127,305 4,943,082 ________________________________________ 10. Trade and other receivables 2006 2005 Group Group £ £Trade receivables 9,016,584 1,197,635Prepayments 1,351,741 666,868Accrued interest on intercompany loans - -Tenant deposits - 172,172 _______________________ 10,368,325 2,036,675 _______________________ 11. Share capital and share premiumAuthorised: Number of £ Ordinary Shares of 1 p each 31 December 2005 and 2006 200,000,000 2,000,000 ________________________ The Company was incorporated on 2 June 2005 with an authorised share capital of£ 2,000, comprising 100 founder shares of £ 1 each and 190,000 unclassifiedshares of 1p each. On 17 June 2005 the authorised share capital was restructured to 200,000 sharesof 1p each by conversion of the founder shares to 10,000 ordinary shares of 1peach and conversion of the unclassified shares to 190,000 ordinary shares of 1peach. On the same day the authorised share capital of the Company was increased to £2,000,000 by the creation of 199,800,000 ordinary shares of 1p each. Issued: Number of Shares Issued and Fully Share Share Paid Capital Premium £ £Founder shares of £ 1 each2 June 2005 Founder Shares 100 100 ________________________________________Ordinary shares of 1p each17 June 2005 conversion of founder shares 10,000 100 -1 August 2005 - issue for cash 140,000,000 1,400,000 138,600,0001 August 2005 - placing costs - - (5,389,998)1 August 2005 - recognition of share-based payments - - 605,54316 October 2005 - issued for cash 3,856,862 38,569 4,127,19216 November 2005 - acquisition of BHA Czech s.r.o. 1,563,153 15,631 1,741,353 ________________________________________ 145,430,015 1,454,300 139,684,090 ________________________________________14 December 2005 - Transfer to distributable reserves - - (14,127,767) ________________________________________Balance at 31 December 2005 and 2006 145,430,015 1,454,300 125,556,323 ________________________________________ 12. Trade and other payables 2006 2005 Group Group £ £Trade payables 5,559,125 2,532,906Tenant deposits 1,812,527 610,903Accrued interest 1,289,874 230,966Related party payables (see note 27) 1,139,890 608,515Tax payable 869,369 258,424Accrued expenses 704,475 192,589Income received in advance 390,627 452,983Subsidiary purchase price adjustment payable 72,788 - _______________________ 11,838,675 4,887,286 _______________________ 13. Interest-Bearing loans and Borrowings This note provides information about the contractual terms of the Group'sinterest-bearing loans and borrowings. 2006 2005 Group Group £ £ Bank Loans - non-current 189,534,695 60,971,511Bank Loans - current 64,701,807 2,476,101 ________________________ 254,236,502 63,447,612 ________________________The borrowings are repayable as follows:On demand or within one year 65,147,290 2,476,101In the second year 23,506,634 1,438,971In the third to fifth years inclusive 137,759,091 59,873,125After five years 29,132,843 - ________________________ 255,545,858 63,788,197 ________________________Unrealised direct issue cost of borrowings ( 1,309,356) ( 336,424)Foreign exchange effect - ( 4,161) ________________________ 254,236,502 63,447,612 ________________________Less: Amount due for settlement within 12 months (shown under current liabilities) (64,701,807) ( 2,476,101) ________________________Amount due for settlement after 12 months 189,534,695 60,971,511 ________________________ The Group has pledged each of its investment properties and its shares in thespecial purpose vehicles holding the investment properties to secure relatedinterest-bearing debt facilities granted to the Group for the purchase of suchinvestment properties. The weighted average cost of debt of the year was 5.28%. 14. Dividends 2006 2005 £ £Dividends paid during the year 2,908,600 4,362,900 ________________________ An interim dividend of 2p per share for the year ended 31 December 2006 wasdeclared on 28 September 2006, and paid on 3 November 2006 to ordinaryshareholders on the register at close of business on 6 October 2006. A final dividend of 4p for the year ended 31 December 2006 has been declared on23 April 2007 and will be paid on 25 May 2007 to ordinary shareholders on theregister at close of business on 4 May 2007. As required by IFRS this dividendis not recognised in the financial statements until appropriately authorised. 15. Notes to the cash flow statement 2006 2005 Group GroupCash generated from operations £ £ Profit for the period 36,021,696 4,933,750Adjustments for:Excess of acquirer's interest in the net fair value of acquiree's identifiable assets, liabilities andcontingent liabilities over cost. - (69,941)Increase in fair value of interest rate swaps (2,245,782) (200,290)Increase in fair value of financial liabilities 1,147,166 -Unwinding of unrealised direct issue costs of borrowings 62,868 (336,424)Net other finance income 3,003,812 (1,460,887)Increase in fair value of investment property (see note 12) (36,791,502) (2,468,706)Income tax expense 10,738,812 702,796Unrealised foreign exchange loss/ (gain) (1,387,958) - ________________________Operating cash flows before movements in working capital 10,549,112 1,100,298 ________________________Decrease/ (increase) in receivables (3,091,073) 5,864,791(Decrease)/ increase in payables (4,517,589) (4,258,681) ________________________Cash (used in)/ generated from operations 2,940,450 2,706,408 ________________________ 16. Financial Statements Copies of the 2006 financial statements will be sent to all shareholders as soonas practical. These documents will be available to the public at the offices ofthe company: IOMA House, Hope Street, Douglas, Isle of Man, as well as on ourwebsite www.dawnaydaycarpathian.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Adams