24th Apr 2006 07:01
Dawnay, Day Carpathian PLC24 April 2006 Dawnay, Day Carpathian PLC Period from incorporation on 2 June 2005 to 31 December 2005 Highlights • Admitted to AIM in July 2005 and raised £140m before expenses • Acquired 3 commercial retail portfolios for a combined total of £84.3m • Delivered initial dividend and on track to meet target dividend for 2006 • Strong pipeline of acquisitions • Exploring value enhancing opportunities within existing portfolio Rupert Cottrell, Chairman of Dawnay, Day Carpathian, said "In a relatively shortperiod, we have established a strong presence amidst our target markets. TheCompany is confident that there are sufficient opportunities which meet itsinvestment criteria and expects that, as previously stated, it will besubstantially invested by the end of 2006 without having to compromise on thequality of its acquisitions. Enquiries: Dawnay, Day Carpathian PLC Peter Klimt 020 7834 8060 Paul Rogers Cardew Group Tim Robertson 020 7930 0777 Catherine Maitland CHAIRMAN'S STATEMENT Introduction I am pleased to be able to report that Dawnay, Day Carpathian plc ("Dawnay, DayCarpathian" or the "Company") continues to make good progress since it wasadmitted to the AIM market in July 2005. At the time of flotation the Companyraised £140m (before expenses) which, together with bank borrowings, willfacilitate the creation of a geared €1 billion portfolio of retail properties.Our investment strategy remains focused on acquiring suitable commercial retailproperties such as shopping centers, supermarkets and retail warehousing inCentral and Eastern Europe and we have been successfully executing thisstrategy. Operational review Since July of 2005, Dawnay, Day Carpathian has rapidly established itself as aleading presence within the Central and Eastern European commercial propertysector. As a result, the Company has generated a wide circle of contacts,including investors, developers and agents, through whom the Company is beingpresented with many suitable acquisitions. Currently we are processing asatisfactory range of suitable opportunities for inclusion in the portfolio. Ourselection criteria remain robust and are based upon identifying retail assetswith sustainable income, prospects for income and capital growth and for valueenhancement through asset management. The current portfolio comprises of five shopping centres and one warehouse park: • Varayada Shopping Centre - Karlovy Vary, Czech Republic • Tulipan Centre - Lodz, Poland• Osowa - Gdansk, Poland• Kometa - Torun, Poland• Centrum Sosnowiec - Sosnowiec, Poland• Antana Warehouse Park - Budapest, Hungary Shortly an application will be made to redevelop the Antana Warehouse Park inBudapest, from light industrial and office units into a circa 50,000 sq m retailcentre. Negotiations are commencing for the required permitting, and theexercise carried out earlier this year to canvas retail interest has receivedpositive responses. The transfer of Dawnay, Day Group's 50% share in the four shopping centres inHungary anticipated as part of the initial pipeline investments for the Company,is now to include the entire 100% interest in these properties. Completion ofthe acquisition has been delayed by tax and legal complications but is expectedto complete shortly. These Hungarian assets due for completion will add afurther £41.5 million of investment to the Company's portfolio. Financial Results During the period under review, the Company made three acquisitions for acombined total of £84.3 million. These assets generated net rental income forthe period of £1.16 million, which equates to an annualised return ofapproximately 25% on the equity invested. The acquisitions have been fundedthrough £21.2 million of equity and £63.1 million of debt. A re-valuation of theCompany's assets by DTZ took place at the period-end and resulted in a valuationincrease of £2.5 million. Basic earnings per share for the period were 4.8p. The administrative expenses amounted to approximately £701,000 for the period,which is in line with our original estimate of establishing a long-term businessin a new geographical region. In line with its stated strategy, the Company paid a dividend in December 2005of 3p per share equating to a 3% yield based upon the placing price of 100p pershare. The Company is also intending to pay a 6p per share dividend for the yearending 31 December 2006. Investment Pipeline We have a strong pipeline of acquisitions. In total, the Company is in advanceddue diligence on a number of substantial transactions which, once completed,will bring the Company well in line with its target acquisition plan. These transactions vary between properties in primary city centres to provincialconvenience centres and range from the Baltic States, through Central andEastern Europe to Romania and Bulgaria. In addition, the Company has a strategicagreement to acquire a roll out programme of supermarket developments, which arelikely to comprise approximately £70 million of assets per annum over each ofthe next three years. Management In March 2006, Ross MacDiarmid resigned as a director of Dawnay, Day EuropeLimited. Paul Rogers and Massimo Marcovecchio continue to have managerialresponsibility for Dawnay, Day Europe Limited supported by an increased team of14 members. Outlook Our focus is upon creating a superior commercial retail property portfolio.Penetration by the Company into wider property sub markets and recognition ofthe Dawnay, Day brand give rise to a broad range of opportunities and pricinglevels. Market activity to date has seen a marked increase in transactionalvolumes in the territory increasing from £949 million in 2004 to £1,707 millionapproximately in 2005 (source: DTZ research, March 2006). The Company is confident that there are sufficient opportunities which meet itsinvestment criteria and expects that, as previously stated, it will besubstantially invested by the end of 2006 without having to compromise on thequality of its acquisitions. Rupert CottrellChairman INCOME STATEMENT Note Company Group £ £ Gross rental income 3 - 1,485,519Service charge income - 494,073Service charge expense - (424,650)Property operating expenses - (394,614) ___________ ___________ Net rental and related income - 1,160,328 Changes in fair value of investment property 7 - 2,468,706 Excess of acquirer's interest in the net fair value ofacquiree's identifiableassets, liabilities andcontingent liabilities overcost - 69,941 Net Foreign Exchange gain 433,933 608,639 Administrative expenses (362,417) (701,102) Net other income - 32,433 ___________ ___________ Net operating profit before net financing income 71,516 3,638,945 ___________ ___________ Financial income 2,795,106 3,007,062Financial expense - (1,009,461) ___________ ___________ Net financing income 4 2,795,106 1,997,601 ___________ ___________ Net profit before tax 2,866,622 5,636,546 Income tax expense 5 - (702,796) ___________ ___________ PROFIT FOR THE PERIOD 2,866,622 4,933,750 Attributable to: ___________ ___________ Equity holders of the Company 2,866,622 4,909,679Minority Interests - 24,071 Basic and diluted earnings pershare for profit attributableto the equity holders of theCompany during the year(expressed as pence per share) Basic earnings per share 6 4.8Diluted earnings per share 6 4.7 BALANCE SHEET Note Company Group £ £ASSETSNon current assetsInvestment in subsidiaries 8,603 -Investment property 7 - 87,054,370Loan to subsidiary 20,430,343 -Goodwill - 3,698,346Deferred income tax assets 8 - 127,305 ___________ ___________ 20,438,946 90,880,021 ___________ ___________ Current assetsTrade and other receivables 9 353,993 2,036,675Cash and cash equivalents 123,466,020 126,144,770Financial assets - 399,323 ___________ ___________ 123,820,013 128,580,768 ___________ ___________ TOTAL ASSETS 144,258,959 219,460,789 ___________ ___________ EQUITYIssued Capital 10 1,454,300 1,454,300Share Premium 10 125,556,323 125,556,323Distributable Reserves 12,631,489 14,674,546Foreign Exchange Movement - (95,033) ___________ ___________ Total equity attributable to equity holders of the parent 139,642,112 141,590,136 ___________ ___________ Minority Interest - 229,773 ___________ ___________ TOTAL EQUITY 139,642,112 141,819,909 ___________ ___________ LIABILITIESNon-current liabilitiesBank loans - 60,971,511Deferred income tax liabilities 8 - 4,943,082 ___________ ___________ - 65,914,593 ___________ ___________ Current liabilitiesTrade and other payables 11 253,947 4,887,286Bank loans - 2,476,101Dividends payable 12 4,362,900 4,362,900 ___________ ___________ 4,616,847 11,726,287 ___________ ___________ ___________ ___________ TOTAL LIABILITIES 4,616,847 77,640,880 ___________ ___________ TOTAL EQUITY AND LIABILITIES 144,258,959 219,460,789 ___________ ___________ CASH FLOW STATEMENT Note Company Group £ £Cash flows from operating activitiesCash (used in) / generated from operations 13 (28,530) 2,706,408 ___________ ___________ Net cash (used in) / generated from operating activities (28,530) 2,706,408 ___________ ___________ Cash flows from investing activitiesCapital expenditure on investment property - (22,849)Investment in subsidiary (8,603) -Interest received 2,795,106 2,470,348Acquisition of subsidiaries - (6,483,768)Loans advanced to subsidiaries before acquisition - (10,342,575)Loan to subsidiary (18,673,359) - ___________ ___________ Net cash used in investing activities (15,886,856) (14,378,844) ___________ ___________ Cash flows from financing activitiesProceeds on issue of shares, net of share issuance costs 12 139,381,406 139,381,406Interest paid - (778,495)Repayments of borrowings - (294,846) ___________ ___________ Net cash generated from financing activities 139,381,406 138,308,065 ___________ ___________ Net increase in cash and cash equivalents 123,466,020 126,635,629Cash and cash equivalents at the beginning of the period - -Exchange losses on cash and cash equivalents - (490,859) ___________ ___________ Cash and cash equivalents at the end of the period 123,466,020 126,144,770 ___________ ___________ STATEMENT OF CHANGES IN EQUITY Share Share Minority Translation Retained Capital Premium Interest Reserve Earnings TotalGROUP Note £ £ £ £ £ £ _________ ____________ __________ __________ __________ _____________ Issue of sharecapital 10 1,454,300 144,468,545 - - - 145,922,845Costs of issue ofshares - (5,389,998) - - - (5,389,998)Recognition ofshare-basedpayments - 605,543 - - - 605,543Acquisition ofsubsidiaries - - 205,702 - - 205,702Profit for the period - - - - 4,933,750 4,933,750Minority interest - - 24,071 - (24,071) -Share premiumrelease 10 - (14,127,767) - - 14,127,767 -Dividend declared 12 - - - - (4,362,900) (4,362,900)Translation intopresentationcurrency - - - (95,033) - (95,033) _________ ____________ __________ __________ __________ _____________ Balance as at31 December2005 1,454,300 125,556,323 229,773 (95,033) 14,674,546 141,819,909 _________ ____________ __________ __________ __________ _____________ Share Share Minority Translation Retained Capital Premium Interest Reserve Earnings TotalCOMPANY Note £ £ £ £ £ £ _________ ____________ __________ __________ __________ _____________ Issue of sharecapital 10 1,454,300 144,468,545 - - - 145,922,845Costs of issue ofshares - (5,389,998) - - - (5,389,998)Recognition ofshare-basedpayments - 605,543 - - - 605,543Profit for the period - - - - 2,866,622 2,866,622Share premiumrelease 10 - (14,127,767) - - 14,127,767 -Dividend declared 12 - - - - (4,362,900) (4,362,900) _________ ____________ __________ __________ __________ _____________ Balance as at31 December2005 1,454,300 125,556,323 - - 12,631,489 139,642,112 _________ ____________ __________ __________ __________ _____________ 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 and company accounts for Dawnay, Day Carpathian PLC (The"Group") have been prepared for the period from incorporation on 2 June 2005 to31 December 2005. The financial information set out above does not constitute the Group's orCompany's statutory accounts for the period from incorporation on 2 June 2005 to31 December 2005. The figures for the period from incorporation on 2 June 2005to 31 December 2005 are extracted from the audited Group and Company financialstatements ("the financial statements"). A copy of the financial statements, onwhich the auditors have issued an unqualified report, will be lodged with theRegistrar of Companies. The results for the period from incorporation on 2 June2005 to 31 December 2005 have been prepared on the basis of the accountingpolicies set out in the financial statements. 2 Significant accounting policies The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS), details of accountingpolicies adopted by the Group can be found in the financial statements. 3 Gross rental income £ Gross lease payments collected/accrued 1,485,519 The Group leases out its investment property under operating leases. Alloperating leases are for terms of 1 - 10 years. 4 Net financing income Company Group £ £ Interest income from financial institutions 2,464,648 2,470,348Interest income from subsidiary 330,458 -Fair value adjustment of interest rate swaps - 200,290Fair value adjustment of loans held to maturity - 336,424 __________ ___________Financial income 2,795,106 3,007,062 __________ ___________Gross interest expenses - (1,009,461) __________ ___________Net financing costs 2,795,106 1,997,601 __________ ___________ 5 Income tax expense Recognised in the income statement Group £Current tax expenseCurrent year 228,976 Deferred tax expenseOrigination of temporary differences 473,820 ___________Total income tax expense in the income statement 702,796 ___________ 6 Earnings per share Basic earnings per share The calculation of basic earnings per share for the period ended 31 December2005 was based on the profit attributable to ordinary shareholders of £4,909,679 and a weighted average number of ordinary shares outstanding duringthe period ended 31 December 2005 of 102,101,808. Diluted earnings per share The calculation of diluted earnings per share for the period ended 31 December2005 was based on the profit attributable to ordinary shareholders of £4,909,679 and a weighted average number of ordinary shares outstanding duringthe period ended 31 December 2005 of 103,356,615. 7 Investment property £ Acquisitions through business combinations 83,265,238Additions 22,849Increase in fair value 2,468,706Foreign exchange effect 1,297,577 ___________Balance at 31 December 2005 87,054,370 ___________ The fair value of the Group's investment property at 31 December 2005 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. 8 Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following items: Group Assets Group Liabilities £ £Property valuation - 4,917,106Swap valuation - 25,976Accrued interest 44,136 -Tax loss 29,706 -Other temporary differences 53,463 - _________ __________ 127,305 4,943,082 _________ __________ 9 Trade and other receivables Company Group £ £Trade receivables - 1,197,635Prepayments 19,448 666,868Accrued interest on intercompany loans 334,545 -Tenant deposits - 172,172 _________ __________ 353,993 2,036,675 _________ __________ 10 Share capital and share premium Authorised: Number of £ Ordinary Shares of 1 p each 31 December 2005 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 Share Share Fully 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) _____________ _________ ___________At the end of the year 145,430,015 1,454,300 125,556,323 _____________ _________ ___________ 11 Trade and other payables Company Group £ £Trade payables 82,659 2,532,906Tenant deposits - 610,903Related party payables 8,603 608,515Income received in advance - 452,983Tax payable - 258,424Accrued interest - 230,966Accrued expenses 162,685 192,589 __________ ___________ 253,947 4,887,286 __________ ___________ 12 Dividends £ Special dividend for the period ended 31 December 2005 of 3p per share. 4,362,900 A special dividend of 3p per share for the period ended 31 December 2005 wasdeclared on the 15 December, and paid on 6 January 2006 to ordinary shareholderson the register at close of business on 23 December 2005. 13 Notes to the cash flow statement Company Group Cash generated from operations £ £ Profit for the period 2,866,622 4,933,750Adjustments for:Excess of acquirer's - (69,941)Increase in fair value of interest rate swaps - (200,290)Increase in fair value of bank loan - (336,424)Net other finance income (2,795,106) (1,460,887)Increase in fair value of investment property - (2,468,706)Income tax expense - 702,796 ____________ ____________Operating cash flows before movements in working capital 71,516 1,100,298 ____________ ____________(Increase) / decrease in receivables (353,993) 5,864,791Increase / (decrease) in payables 253,947 (4,258,681) ____________ ____________Cash generated from operations (28,530) 2,706,408 ____________ ____________ 14 Events after the balance sheet date There were no significant events after balance sheet date. 15 Financial statements Copies of the 2005 financial statements will be sent to all shareholders as soonas practical. Copies of these documents will be available to the public at theoffices of the company: St James's Chambers, Athol Street, Douglas, Isle of Man. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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