29th Mar 2007 07:02
Dawnay, Day Treveria PLC29 March 2007 29 March 2007 Dawnay, Day Treveria PLC Unaudited Preliminary Results For the period ended 31st December 2006 Highlights - Admitted to AIM market in December 2005, raising gross proceeds of €444 million - A further €300 million of gross proceeds raised at €1.12 in November 2006 - Over €1.6 billion of property assets acquired since flotation - Adjusted NAV increased to 111.9c from 96.6c at admission, an increase of 15.8% - Adjusted EPS for the period of 5.2c - Proposed final dividend of 2.5c, giving a total dividend for the period of 4.5c - Basic EPS of 13.5c - Good progress towards full investment o €53 million purchases completed since the period end o €288 million notarised o €544 million in solicitors' hands Ian Henderson, Chairman of Dawnay, Day Treveria, said: "During our first year wehave made substantial progress towards full investment, and have met the targetsset out at IPO in terms of acquiring good quality income generating assets. Wewere delighted with the support received from existing and new investors, whichenabled us to raise gross proceeds of €300 million in November. The pipeline ofpotential acquisitions remains strong and we look forward to continuing togenerate value for our shareholders." Enquiries: Dawnay, Day Treveria Real Estate AssetManagement Limited Robert Goldsmith 020 7834 8060www.dawnaydaytreveria.comCardew Group Tim Robertson 020 7930 0777 Shan Shan Willenbrock Catherine Maitland Chairman's Statement I am pleased to announce the Group's first full year set of results since itsadmission to the AIM market in December 2005. In November 2006, the companycompleted a successful secondary Placing raising gross proceeds of €300 million,which together with the fund raising at the time of Admission, means the Companyhas raised gross proceeds totalling €744 million. We have been delighted withthe support shown by existing and new investors, and with their confidence inour ability to generate shareholder value. As a result, we are now working towards building a substantial German retailproperty portfolio. We continue to acquire properties in sustainable locations,which have a good mix of established tenants. As at 31 December 2006, we hadcompleted the purchase of €1.6 billion of properties with an annualised net rentroll of €106 million, after deducting ground rents and non-recoverable costs. Results Gross rental revenue for the period, less an adjustment for bad debts, was €70.8million. The rental revenue was generated from our €1.7 billion propertyportfolio, which was held for a weighted average period of 231 days. Administrative and other expenses for the period totalled €4.2 million. Thisfigure includes approximately €0.8 million of costs relating to the flotationwhich are non-recurring. Operating profit for the period was €120.9 million. The adjusted operatingprofit, which excludes any revaluation surplus, was €55.7 million. Profit before tax for the period was €87.7 million. Adjusted profit before tax,which excludes revaluation surplus, was €22.5 million. Basic and adjusted EPS were 13.5c and 5.2c respectively. Adjusted EPS excluderevaluation surplus and deferred tax. Revaluation and Net Asset Value The portfolio has been valued by DTZ Debenham Tie Leung Limited as at 31December 2006 at €1.7 billion, giving a net surplus of €65.3 million, ascompared with the purchase price after taking into account the costs ofacquisitions. Excluding acquisition costs, the corresponding surplus was €121.7million, an uplift of 7.6%. The adjusted net asset value of the Group has risento 111.9c from 96.6c at admission, an increase of 15.8%. Financing As at 31 December 2006, the Group's borrowings totalled €1.2 billion, all ofwhich were secured on the properties. The loans mature in 2011. The majority ofthe loans are on a fixed interest rate basis with an average weighted rate of4.7%. Taxation The current income tax charge for the period amounted to €1.0 million, equal toapproximately 4.4% of adjusted profit before tax. In accordance with International Financial Reporting Standards, the Group alsorecognised deferred tax liabilities of €30.6 million in the period. Thisprovision is based on the difference between the values at which the propertiesare carried in the balance sheet and the depreciated tax cost of thoseproperties. Dividend The Group's target dividend payout ratio is approximately 90% of its recurringnet income, to be distributed over the course of each financial year. I am pleased to announce that the Board has proposed a final dividend of 2.5cper share representing a total dividend for the year of 4.5c or 87% of theweighted average adjusted EPS for the period. In cash terms, the total dividendwill cost €26.7 million, which is in excess of the recurring net income for theperiod. This is because a significant number of shares was issued close to theend of the financial year each of which was entitled to the final dividend. TheBoard has proposed this dividend to demonstrate its confidence in the future. Asset Management Dawnay, Day Treveria Real Estate Asset Management Limited, (the "Asset Manager")has continued to expand its Dusseldorf-based property management team which hasbeen instrumental to the Company's success. Currently there are more than 80staff, increased from the 50 at the time we reported our Interim results inSeptember 2006. The team is responsible for managing the day to day running ofthe property portfolio, enhancing the income and improving the tenant mix.During the period under review they were responsible for 124 new lettings andlease extensions, generating an annual rental income of €3.4 million. The Asset Manager remains confident of its ability to source high qualityacquisitions originating from its large network of local contacts. Since theyear end, we have completed the purchase of a further €53 million of properties.In addition, we have notarised €288 million of acquisitions which are awaitingcompletion and have a further €544 million of potential acquisitions insolicitors' hands. No performance fee is payable to the Asset Manager for the period since therehave been no disposals. Outlook The Board is pleased with the substantial progress the Company has made to date.During this first year, we met the targets set in terms of acquiring goodquality income generating assets, which undoubtedly underpinned our ability tocomplete successfully the secondary Placing in November. Importantly, the Germanproperty market remains favourable, characterised by a positive yield gap,improving macro economic conditions and constrained retail property supply. The pipeline of potential acquisitions remains strong and we look forward tocontinuing to generate value for our shareholders. Ian HendersonChairman Asset Manager's report German Economy and Retail Market In the period since the Company's admission to AIM in December 2005, the Germanproperty market has seen significant investment activity across all sectors,particularly by foreign investors attracted by the spread between the rentalyield and the cost of financing. Jones Lang LaSalle reported transaction volumeof €49.5 billion in the German commercial property market in 2006, against €20.5billion in 2005. Retail property transaction volume constituted 38%, or €18.6billion, of the total transaction volume. The principal buyers have been acombination of quoted investment companies, large private equity houses, andprivate individuals. Domestic investors have been more cautious, and open-endedfunds suffered net redemptions during the course of 2006. We expect to see theemergence of German REITs during the course of this year. However, we believethat the increase in G-REIT investment volume will be gradual in the earlymonths of their existence. In the retail property sector, there has been intense competition for primecity-centre assets and for sale-and-leaseback transactions, particularly whenwidely marketed to international investors. In our preferred sector of highstreet shops and in-town shopping centres, we have been exposed to lesscompetition. This is because the assets that the Group purchase require moreactive day-to-day management and are hence less attractive to internationalinvestors who do not have a substantial presence on the ground in Germany.Nevertheless, as the yield on prime assets compresses, so investors are lookingfor investment opportunities further afield, increasing the competition for theassets that we seek to acquire. The German consumer remains relatively subdued, with current confidence surveyspresenting a mixed picture. We continue to believe that in time German consumerspending will increase, funded by the significant domestic savings that havebeen accumulated in recent years. This process can only be accelerated by thewelcome liberalisation of the previously restrictive shopping hours that iscurrently underway across the country. As expected, the 3% increase in the rateof VAT as of 1 January 2007 had a negative effect on retail sales following theanticipated spike in the preceding months. Although the headline drop in saleswas larger than had been forecast, a major part of the drop was due tobig-ticket items such as cars and furniture. We believe there was less of animpact at the retailers of smaller value, everyday goods that we focus on. GDP growth for 2006 at 2.7% was the highest since 2000 and was accompanied by asignificant reduction in unemployment. This trend has continued in 2007 withGermany's unemployment rate falling to a five year low of 9.3% in February 2007.GDP growth for 2007 is expected to reach 1.9% according to consensus forecasts.Given the strength of this underlying data, we believe that the buoyant propertyinvestment market conditions of 2006 will continue in 2007, provided that theGerman economy continues to grow at a steady pace. Acquisitions and Disposals During the period from the admission in December 2005 to 31 December 2006, theGroup acquired €1.6 billion of properties. The properties acquired constituted29 portfolios purchased from 22 vendors, and totalled 308 individual propertiesin 191 towns and cities across Germany. The average net initial yield on theportfolios purchased was 6.3%. The largest purchase was the Gloria Galerie inBerlin, purchased for a net initial yield of 5.4%. Although the yield on thisacquisition was lower than our average, we believe that it is a very attractiveasset in a highly sought after part of Berlin, and we acquired it at asignificantly better yield that comparable properties in the area. The averagevalue of an individual asset in the portfolio is €5.6 million. The blended grosscurrent yield, net initial yield and fully let yield on acquisitions completedor notarised since 31 December 2006 are 7.2%, 6.1% and 6.5% respectively. We frequently review the portfolio to identify assets that are candidates fordisposal. To date, we have not recommended to the Board to dispose of anyassets. Portfolio Analysis The following analysis takes into account all properties owned as at 31 December2006. 82.1% of the properties by value are located in the former West Germany,10.2% in Berlin and 7.7% in the former East Germany. The weighted average leaselength of the portfolio is 5.9 years. The portfolio retains a diverse exposureto tenants with the top ten tenants constituting 30.6% of the total rent roll.Our largest tenant is C&A, which makes up 9.2% of the total rent roll. Thefollowing table shows the breakdown of our assets by type: USE VALUEHigh Street 2%Retail Warehouse 23%Shopping Centres 27%Mixed Commercial 8% Revaluation and Net Assets per Share The portfolio has been valued by DTZ Debenham Tie Leung Limited as at 31December 2006 at €1.7 billion, giving a net surplus of €65.3 million compared tothe purchase price after taking into account the costs of acquisitions.Excluding acquisition costs, the corresponding surplus was €121.7 million, anuplift of 7.6%. The gross valuation uplift can be attributed €85.9 million toassets acquired prior to the interim results and €35.8 million to assetsacquired subsequently. The valuation uplift equates to a rise in the adjustedNAV of the Group to 111.9c per share. DTZ does not take into account anypotential portfolio premium for the purposes of its formal valuation. We are pleased with the increase in the valuation of the portfolio. We believethat our asset management abilities and deep local knowledge are a key driver toadding value. Asset Management Our asset management team in Dusseldorf has now grown to over 80 people and hasbecome an ever increasing source of our investment pipeline. The office handlesday-to-day property management and acts as the base for our regional assetmanagers. We continue to believe that managing the properties in-house gives usa much greater ability to understand and react to the needs of our tenants. Thelocal team continues to build valuable tenant relationships and has beensuccessful in securing significant multi-site letting and lease renewals overthe last year. Whilst Dusseldorf will remain the head office for the AssetManager's German operations, an office opening is planned in Hamburg before theend of May 2007 and a strategically located office in Southern Germany is alsobeing considered. Finance As at 31 December 2006, the Group's total borrowings amounted to €1.2 billion,all of which were secured on the properties. The loans, provided by Citigroup,Deutsche Bank and ABN Amro, mature in 2011. The average blended interest rate asat 31 December 2006 was 4.7%. Finance costs for the period amounted to €39.3million which include €1.6 million of amortised bank fees and other financingcharges. Finance income, relating to cash balances held in the Isle of Man andGermany, amounted to €6.1 million. Subsequent to the year end, the Group has agreed terms for a new €500 millionfacility which is on better terms than the current facilities. Moreover, theGroup has the ability to carry out an agented securitisation which would meanadditional savings on the margin if market conditions remain conducive. Theduration of the loan has been set to seven years (rather than five years in theGroup's other facilities) as (i) there is now very little difference between thefive and seven year EURIBOR swap rates and (ii) the Group has the ability tomake significant substitutions within the facility, thus minimising potentialbreak costs over the period. 2008 German Tax Reform The German government have issued a first technical draft of their proposedmeasures for tax reform effective from 1 January 2008. On 14 March 2007, thegovernment initiated the legislative procedure and introduced the draft bill toparliament. This draft includes a reduction of the combined corporate and tradetax rate by about 9%, a tightening of interest expense deduction and eliminationof the deductibility of trade tax as a business expense. Under the current timetable, the parliamentary vote is scheduled for 25 May2007. Based on the new rules, we estimate that the additional tax burden on theGroup for 2006 would have been approximately €1.58 million. Pipeline Subsequent to the period end, the Group has acquired a further €53 million ofproperties, has notarised €288 million which are awaiting completion and has afurther €543 million of potential acquisitions in solicitors' hands. We maintaina healthy pipeline of potential transactions which are in line with ourinvestment criteria. Consolidated income statementFor the period from 20 October 2005 to 31 December 2006 Notes Group €000 Gross rental income 2 70,758Direct costs 3 (10,882) ---------Net rental income 59,876 ---------Surplus on revaluation of investment properties 65,253Administrative expenses 3 (3,208)Other expenses 3 (1,009) ---------Operating profit 120,912Finance revenue 5 6,061Finance expense 5 (39,264) ---------Profit before tax 87,709Income tax expense 6 (31,538) ---------Profit for the period 56,171 ========= Attributable to:Equity holders of the parent company 55,297Minority interests 874 ---------Profit for the period 56,171 ========= Earnings per shareBasic, for profit for the period attributable to ordinaryequity holders of the parent 7 13.47Diluted, for profit for the period attributable to ordinaryequity holders of the parent 7 13.45 An interim dividend of €8,888,000 was paid during the period. Balance sheet as at 31 December 2006 Notes Group €000Non-current assetsInvestment properties 9 1,715,156 --------Total non-current assets 1,715,156 Current assetsTrade and other receivables 10 11,857Prepayments 5,955Cash and short-term deposits 11 333,337 --------Total current assets 351,149 --------Total assets 2,066,305 -------- Current liabilitiesTrade and other payables 12 37,238Interest-bearing loans and borrowings 13 961Current tax liabilities 400 --------Total current liabilities 38,599 Non-current liabilitiesInterest-bearing loans and borrowings 13 1,224,126Deferred tax liabilities 6 30,560 --------Total non-current liabilities 1,254,686 --------Total liabilities 1,293,285 -------- --------Net assets 773,020 ======== EquityIssued capital 14 7,123Share premium 624,663Retained earnings and other reserves 134,400 --------Total equity attributable to the equity holders of theparent company 766,186 Minority interests 6,834 --------Total equity 773,020 ======== Consolidated statement of changes in equityFor the period ended 31 December 2006 Notes Issued Share Retained Total equity Minority Total capital premium earnings and attributable to interests Equity other reserves the equity holders of the parent company €000 €000 €000 €000 €000 €000Profit for the period - - 55,297 55,297 874 56,171Issue of share capital 14 7,123 737,278 - 744,401 - 744,401Transactioncosts of share issue - (24,624) - (24,624) - (24,624)Court approvedcapital reduction - (87,991) 87,991 - - -Minorityinterests incompanies acquired - - - - 5,960 5,960Equitydividends - - (8,888) (8,888) - (8,888) ------ ------- ------- -------- ------- ------As at 31December 2006 7,123 624,663 134,400 766,186 6,834 773,020 ====== ======= ======= ======== ======= ====== Consolidated cash flow statement for the period from 20 October 2005 to 31 December 2006 Notes Group €000Operating activities Operating profit 120,912Surplus on revaluation of investment properties 9 (65,253) --------Cash flows from operations before changes in working capital 55,659 Increase in trade and other receivables (16,840)Increase in trade and other payables 11,335 Finance costs paid (26,500)Finance income received 5,953Income tax paid (578) --------Cash flows from operating activities 29,029 -------- Investing activitiesPurchase of investment properties (1,632,066) --------Cash flows used in investing activities (1,632,066) -------- Financing activitiesDividends paid to equity holders of the parent company (8,888)Proceeds from issue of share capital 744,401Transactions costs of share issues (22,644)Proceeds from loans 1,235,838Repayment of loans (1,141)Finance charges paid (11,192) --------Cash flows from financing activities 1,936,374 -------- Increase in cash and short-term deposits 11 333,337Cash and short-term deposits at beginning of period - --------Cash and short-term deposits at 31 December 2006 333,337 -------- 1. BASIS OF PREPARATION The financial information, which is unaudited, is abridged and does notconstitute the Group's full Financial Statements for the period fromincorporation on 20 October 2005 to 31 December 2006, and has been preparedunder International Financial Reporting Standards ("IFRS"). 2. REVENUE Group €000Rental income from investment properties 70,758Finance revenue (see note 5) 6,061 ------ 76,819 ====== 3. OPERATING PROFIT The following items have been charged or (credited) in arriving at operatingprofit Direct costs Group €000Direct operating expenses arising on rental-earning investmentproperties 1,111Service charge expense recoverable 8,634Service charge income (8,634)Non-recoverable property costs 2,449Property management fee 2,988Asset management fee 4,334 ------ 10,882 ====== Administrative expenses Group €000Audit fee 752Transactions costs relating to AIM admission 801Directors' fees and expenses - subsidiary companies 163Legal and professional fees and other administration costs 1,492 ------ 3,208 ====== Other expenses Group €000Directors' fees and expenses 326Net foreign exchange loss 44Other expenses 639 ------ 1,009 ====== 4. EMPLOYEE COSTS The Group had one employee during the period. The salary of this employee was€55,000 and no other benefit is payable to this employee. 5. FINANCE REVENUE AND EXPENSE Group €000Bank interest receivable 6,061 ------ Bank loan interest payable (37,682)Amortisation of capitalised finance charges (1,582) ------Finance expense (39,264) -------Net finance expense (33,203) ======= 6. INCOME TAX The major components of income tax expense for the period ended 31 December 2006are: Consolidated income statement Group €000Current income taxCurrent income tax charge 978Deferred taxRelating to origination and reversal of temporary differences 30,560 -------Income tax expense reported in the income statement 31,538 ======= The tax rate applicable to the Company in the Isle of Man is nil. The currenttax charge of €978,000 represents tax charges on rental income arising inGermany, that is subject to corporate income tax of 26.375%. Deferred income tax Deferred income tax at 31 December relates to the following: Consolidated Consolidated Balance sheet Income statement €000 €000Deferred tax liabilityRevaluation of investment properties tofair value and tax depreciation 30,560 30,560 --------- -----------Deferred tax expense 30,560 30,560 ========= =========== Deferred tax assets have not been recognised in respect of these losses as theymay not be used to offset taxable profits elsewhere in the Group and they havearisen in subsidiaries that have been loss-making for some time. In the interim accounts as at 30 June 2006, €41,100,000 of deferred taxliabilities was provided in respect of the difference between the tax base andthe carrying value of investment properties that arose upon the acquisition ofsubsidiaries. At that time the market interpretation of IAS 12 varied and thedirectors chose to adopt a conservative interpretation. The users of IFRS havenow reached a consensus and as such the directors consider that, as assetpurchases, the initial recognition exemption in paragraph 24 of IAS 12 isavailable for this temporary difference and consequently this deferred taxliability is now disclosed as an unprovided amount as at 31 December 2006. Tothe extent that any taxation is payable in respect of this temporary differenceit will be recognised as current tax in the period it becomes payable. There are no income tax consequences for the Company attaching to the payment ofdividends in 2006 by the Company to its shareholders. 7. EARNINGS PER SHARE Basic earnings per share Basic earnings per share for the period ended 31 December 2006 is based on theprofit attributable to equity holders of the parent company of €55,297,000 andthe weighted average number of ordinary shares outstanding during the periodended 31 December 2006 of 410,536,493. Group €000Profit attributable to equity holders of the parent company 55,297Revaluation surpluses net of deferred tax (attributable toequity holders) (34,136) --------Adjusted earnings 21,161 -------- Weighted average number of ordinary shares 410,536,493 Earnings per share Cents Basic earnings per share 13.47Adjusted earnings per share 5.15 The Directors have chosen to disclose adjusted earnings per share in order toprovide a better indication of the Group's underlying business performance;accordingly it excludes the effect of revaluation surplus and deferred tax. There have been no other transactions involving ordinary shares or potentialordinary shares between the reporting date and the date of completion of thesefinancial statements. Diluted earnings per share Diluted earnings per share for the period ended 31 December 2006 is calculatedby dividing the profit attributable to equity holders of the parent company andthe weighted average number of ordinary shares plus the effects of all dilutivepotential ordinary shares; share options. This has no material impact on theearnings per share of the Group. Group €000Profit attributable to equity holders of the parent company 55,297Revaluation surpluses net of deferred tax (attributable toequity holders) (34,136) --------Adjusted earnings 21,161 -------- Weighted average number of ordinary shares 410,536,493Adjustment in respect of shares under option 753,947 --------Weighted average number of shares (diluted) 411,290,440 -------- Diluted earnings per share CentsDiluted earnings per share 13.45Adjusted diluted earnings per share 5.15 8. NET ASSETS PER SHARE Net assets per share is calculated by dividing the net assets attributable tothe equity holders of the parent of €766,186,000 and the number of ordinaryshares as at 31 December 2006 of 712,257,423 Group €000Net assets attributable to equity holders of the parent 766,186Deferred tax arising on revaluation surpluses 30,560 --------Adjusted net assets attributable to equity holders of the parent 796,746 -------- Number of ordinary shares 712,257,423 Net assets per share CentsNet assets per share 107.57Adjusted net assets per share 111.86 The effect of share options has no material impact on the net assets per shareof the Group. 9. INVESTMENT PROPERTIES Group €000Additions during the period 1,649,903Surplus on revaluation 65,253 -------Closing balance as at 31 December 2006 1,715,156 ======== The fair value of the Group's investment properties at 31 December 2006 has beenarrived at on the basis of a valuation carried out at that date by DTZ DebenhamTie Leung Limited, an independent valuer. The value of each of the properties has been assessed in accordance with theAppraisal and Valuation Standards of RICS on the basis of market value. Marketvalue represents the figure that would appear in a hypothetical contract of salebetween a willing buyer and a willing seller. Market value is estimated withoutregard to any liability and costs associated with disposals. In addition,deductions have been made to adjust the acquisition costs to costs that would beincurred in the market. 10. TRADE AND OTHER RECEIVABLES Group €000Trade receivables 10,601Other receivables 1,256 ------- 11,857 ======= Trade receivables are net of provisions for doubtful debts of €1,520,000. 11. CASH AND SHORT-TERM DEPOSITS Group €000Cash at banks and in hand 89,193Short-term deposits 244,144 ------- 333,337 ======= Cash at banks earns interest at floating rates based on daily bank depositrates. Short-term deposits are made for varying periods of between one day andtwo months, depending on the immediate cash requirements of the Group, and earninterest at the respective short-term deposit rates. The weighted averageeffective interest rate on short-term deposits is 3.6%. The fair value of cashand short-term deposits is €333,337,000. As at 31 December 2006, €24,600,000 of cash is held in blocked accounts. Thesebalances are under the control of lenders who have made loans to the Group. Thecash is specifically segregated so as to be able to pay financing costsincluding interest. 12. TRADE AND OTHER PAYABLES Group €000Trade payables 2,760Accrued operating expenses 6,719Accrued interest 11,182Other payables 16,577 ------- 37,238 ======= Terms and conditions of the above financial liabilities: • Trade payables are non-interest bearing and it is the Group's policy to pay within the stated terms which vary from 14 - 60 days. • Other payables are non-interest bearing and as above are paid within stated terms. 13. INTEREST-BEARING LOANS AND BORROWINGS Effective interest Maturity Group rate % €000 CurrentDB and Citigroup Loan - secondfacility 4.79 20 July 2011 2,883Capitalised finance charges (1,922) ------- 961 -------Non-currentDB and Citigroup Loan - secondfacility 4.79 20 July 2011 228,843DB and Citigroup Loan - firstfacility 4.58 20 January 2011 577,810ABN Amro Loan 4.75 15 July 2011 382,645ABN Amro Loan Floating 15 July 2011 42,516Capitalised finance charges (7,688) ------- 1,224,126 ------- -------Total 1,225,087 ======= The borrowings are repayable asfollows:On demand or within one year 961In the second year 1,757In the third to fifth yearsinclusive 1,222,369 -------Total 1,225,087 ======= The Group has pledged investment properties to secure related interest bearingdebt facilities granted to the Group for the purchase of such investmentproperties. Deutsche Bank AG and Citigroup Global Markets Limited. The first facility has a total amount of €577,810,000 drawndown at the periodend. The interest rate on this loan is fixed at 4.58% per annum. Interest ispayable quarterly and the loan will be repayable on the final repayment date of20 January 2011. This loan is secured over assets and undertakings includingover real property, various contracts, insurance policies and bank accounts. Theterms of the facility include various covenants with which the Group hascomplied. The second facility has a total amount of €231,726,000 drawndown at the periodend. The interest rate on this loan is fixed at 4.79% per annum. The terms ofthe facility are as the first facility with a final repayment date of 20 July2011. ABN Amro N.V. This facility has a total amount of €538,040,000 of which €425,161,000 had beendrawndown at the period end. The interest on 90% of the loan is fixed at 4.75%per annum, with the interest on the remaining 10% capped at 5.35% per annum bymeans of an interest rate cap. The final repayment date is 15 July 2011. Thisloan is secured over assets and undertakings and is subject to various covenantswith which the Group has complied. 14. ISSUED CAPITAL Authorised: Number of Share Shares Capital •Founder shares of €1 each20 October 2005 founder shares 10,000 10,000 ========= ========= Ordinary shares of €0.01 each 1,000,000 10,000 ===========Conversion of founder sharesIncrease in authorised share capital 1,499,000,000 14,990,000 --------- ---------As at 31 December 2006 1,500,000,000 15,000,000 ========= ========= Issued and fully paid: Number of Share Shares Capital •Founder shares of €1 each20 October 2005 founder shares 2 2 ========= =========Ordinary shares of €0.01 each 200 2Conversion of founder sharesIssue of ordinary shares 712,257,223 7,122,572 --------- ---------As at 31 December 2006 712,257,423 7,122,574 ========= ========= Holders of the ordinary shares are entitled to receive dividends and otherdistributions and to attend and vote at any general meeting. Founder shareswhich were converted to ordinary shares had exactly the same rights as ordinaryshares. On 20 October 2005, the date of incorporation, 2 ordinary shares of €1.00 eachwere allotted and issued at a price of €1.00 each. On 25 November 2005, all 10,000 of the issued and unissued founder shares of€1.00 each in the capital of the Company were sub-divided into 1,000,000ordinary shares of €0.01 each and the authorised share capital of the Companywas increased from €10,000 to €6,500,000 by the creation of 649,000,000 ordinaryshares of €0.01 each. On 14 December 2005, 410,529,000 new ordinary shares were allotted and issued onthe Company's admission to AIM (including 35,529,000 new ordinary shares whichwere issued and allotted to Dawnay Day Deutschland Limited and Kynnersley AssetManagement Limited) for consideration of €410,529,000. On 23 December 2005, a further 33,871,080 new ordinary shares were allotted andissued shortly after the Company's admission to AIM on exercise of anover-allotment option for consideration of €33,871,080. On 19 April 2006, the Company passed a resolution, which was approved by theHigh Court of Justice of the Isle of Man, to cancel 20% of the Company's sharepremium account. On 22 November 2006, 205,599,720 new ordinary shares were allotted and issuedfor consideration of €230,271,686. On 29 November 2006, the authorised share capital of the Company was increasedfrom €6,500,000 to €15,000,000 by the creation of 850,000,000 ordinary shares of€0.01 each. On 30 November 2006, a further 62,257,423 new ordinary shares were allotted andissued on exercise of an over-allotment option for consideration of €69,728,314. The Company has incurred costs of €24,623,889 relating to the issue of shares.The costs were primarily for underwriting, brokerage and professional advisoryfees. These equity transaction costs have been charged to the share premiumaccount. 15. RETAINED EARNINGS AND OTHER RESERVES Reserve The other reserve is a distributable reserve that was created for the payment ofdividends. 16. CONTINGENCIES Carried interest Arba Investment Sarl, has a right to a carried interest. In any year ArbaInvestment Sarl is not entitled to any carried interest in which the Group'sproperty assets in aggregate show a cash on equity return of less than 8 % perannum (cumulative) has been achieved by the group. If the hurdle is achieved then Arba Investments Sarl will be entitled to 25% ofthe cumulative return in excess of 8% achieved on assets sold (or, in certaincircumstances, refinanced) by the Group during that financial period. Thecarried interest will also be payable on the occurrence of certain other events,such as a take-over or liquidation of the Group. No amount has been provided as at 31 December 2006 as the minimum hurdle raterequired has not been achieved. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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