Dawnay, Day Carpathian PLC
10 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 by
the positive investor response to the recent secondary Placing. As a result, we
are now focused on creating a £1.2 billion commercial property portfolio across
Central and Eastern Europe. We continue to see opportunities to acquire
properties as well as selecting regeneration and development opportunities
providing attractive total returns to our investors. Our asset manager, Dawnay,
Day PanTerra, is highly regarded within our chosen markets and we believe this
gives 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 progress
in acquiring an attractive portfolio of retail properties in Central and Eastern
Europe in line with our objectives set at Admission. Since the year end, the
Company has announced its intention to raise approximately £100 million (before
expenses) by means of the Placing of 83,333,334 new ordinary shares ("the
Placing Shares") at 120p per share, which together with the funds raised at the
time 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's
continuing investment programme and new business opportunities including the
development and regeneration of properties while maintaining our focus on income
generation. The Placing is conditional upon the passing of resolutions by
shareholders at the Extraordinary General Meeting scheduled for 17 May 2007.
Dealings in the Placing Shares are expected to commence on or around 18 May
2007.
As at 31 December 2006, the Company had acquired property investments costing a
total of £332.8 million with an annualised rent roll in excess of £26.1 million
and a blended net initial yield of 7.9%.
Our investment strategy has evolved in response to a developing market
environment, and while we continue to focus predominantly on income generating
assets, a substantial number of forward commitment opportunities exist which the
Company is seeking to pursue. The Company believes its experience in its chosen
markets creates a significant competitive advantage and we are confident of
continuing to generate excellent shareholder value.
Financial Results
During the period under review, the Company acquired 35 retail properties in 10
acquisitions for a total of approximately £249.5 million. The net rental and
related income for the period was £12.7 million.
The Company overall generated a profit before tax of £46.8 million. Adjusted
profit before tax, which excludes any revaluation surplus, was £10.0 million.
The basic earnings per share of the Company were 21.1 pence. Adjusted earnings
per share, which excludes any revaluation surplus, were 5.78 pence.
As at 31 December 2006, the Company's borrowings totalled £254.2 million
representing a loan to value ratio of 69%.
The loans secured against the properties are denominated in euros and have an
average weighted interest rate of 5.28% for the period. All loan agreements have
hedging instruments in place minimising the impact of the interest rate risk, by
swapping 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 shareholder
approval, a final dividend in respect of the financial year ended 31 December
2006 of 4p per share ("the Final Dividend"), representing a total dividend for
that year of 6p in line with our dividend target set at Admission. The record
date 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 financial
year 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 Interim
Dividend but they will qualify for any further dividends, including the one
remaining interim dividend, together with the final dividend for the financial
year ended 31 December 2007, which is intended to result in an aggregate
dividend payment of 10p per share for that financial year. It is the Directors'
intention to continue to provide investors with substantial dividends in
addition to the confirmed potential for capital growth. In this regard and as
announced on 2 April 2007, the Board has also confirmed that it targets a
dividend 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 December
2006 at £368.7 million by DTZ Debenham Tie Leung Limited ('DTZ'), giving a net
uplift of £36.8 million compared to the 31 December 2005 valuation (or the
purchase price if acquired thereafter). The net asset value per share, adjusted
to exclude goodwill and any deferred tax liabilities arising on the property
valuations, 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, an
increase of 17.2%.
Property Portfolio
____________________________________________________________________________
Country Location Property Purchase DTZ
Price (£m) valuation
(£m)
____________________________________________________________________________
Czech Republic Karlovy Varyada Shopping Centre 26.8 32.2
Vary
Czech Republic
Total 26.8 32.2
Hungary 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 55.4
Hungary Total 123.8 132.8
Latvia Riga Blaumana 12 8.5 9.1
Latvia Total 8.5 9.1
Lithuania Panevezys Babilonas Shopping
Centre 23.0 23.1
Lithuania 23.0 23.1
Total
Poland Poland Geant Portfolio 42.3 52.5
Warszawa Promenada Shopping 94.5 104.9
Centre
Slupsk Biedronka Supermarket 0.8 1.0
Poland Total 137.6 158.4
Romania Brasov MacroMall Shopping
Centre 13.1 13.1
Romania Total 13.1 13.1
Grand Total 332.8 368.7
____________________________________________________________________________
The gross lettable area ('GLA') of the portfolio exceeds 320,000 sqm, and in
addition there is a potential increase of approximately 25% of GLA. These
extensions could be realised by individual asset management strategies spanning
two to three years.
Differences between the purchase price and the DTZ valuation at 31 December 2006
at individual property level vary due to the length of actual ownership of each
property. The Antana Logistic Park and the Ericsson Office Building complex were
acquired with the intention of implementing regeneration projects to maximise
their future value while providing attractive income yields at present.
The Company's property advisor, Dawnay, Day PanTerra ("DDPT") has expanded its
team of professional personnel focused upon Central and Eastern Europe from 7 to
24 since Admission, and it now has an established local presence in Warsaw, with
significant expertise, including a team of five property professionals.
Following the successful completion of the Placing, the Company will have the
opportunity to significantly expand its portfolio, and DDPT has identified a
strong pipeline of potential transactions across the Company's target
geographies. The pipeline contains a mix of income producing assets as well as
development opportunities. It is expected that future acquisitions will take the
Company into new markets such as Bulgaria and expand its existing presence in
countries such as Romania and Lithuania. The new funds raised have positioned
the Company to capitalise upon the excellent opportunities that DDPT has
identified.
Outlook
The Company has delivered on its targets set out at Admission. Upon successful
completion of the secondary Placing, we will be focused on creating a £1.2
billion property portfolio across Central and Eastern Europe. This growth
potential and wide geographic coverage are strategically important to be
competitive and successful.
The macroeconomic environment remains favourable and we expect to continue to be
able to acquire attractive income producing assets, together with selective
regeneration projects. The excellent pipeline of potential acquisitions provides
the Board with confidence that the Company will continue to generate an
excellent mix of income and capital growth.
Rupert Cottrell
Chairman
INCOME STATEMENT
2006 2005
Note Group Group
£ £
Gross rental income 3 15,799,374 1,485,519
Service charge income 5,946,374 494,073
Service charge expense (6,712,383) (424,650)
Property operating expenses (2,678,962) (418,623)
Other property income 334,732 32,433
Net 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 and
contingent 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 3,007,062
Financial 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 4,909,679
Minority Interests 5,316,327 24,071
Basic and diluted earnings per share for profit
attributable to the equity holders of the Company
during the period
Basic earnings per share 7 21.1 p 4.8 p
Diluted 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 of
shares - (5,389,998) - - - (5,389,998)
Recognition
of share-based
payments - 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
into
presentation
currency - - - (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 January
2006 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
interest
allocation to
minority
shareholders - - 4,856,108 - (4,856,108) -
Translation
into
presentation
currency - - - (3,372,131) - (3,372,131)
Balance as at ________________________________________________________________________
31 December 1,454,300 125,556,323 5,546,100 (3,467,164) 42,471,315 171,560,874
2006 ________________________________________________________________________
2006 2005
BALANCE SHEET Note Group Group
£ £
ASSETS
Non-current assets
Investment in subsidiaries
Investment property 8 368,691,607 87,054,370
Goodwill 16,577,691 3,698,346
Costs relating to future acquisitions 436,197 -
Deferred income tax assets 9 963,644 127,305
________________________
386,669,139 90,880,021
________________________
Current assets
Trade and other receivables 10 10,368,325 2,036,675
Cash and cash equivalents 75,130,888 126,144,770
Financial 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 1,454,300
Share Premium 11 125,556,323 125,556,323
Retained Earnings 42,471,315 14,674,546
Translation 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
________________________
LIABILITIES
Non-current liabilities
Bank loans 13 189,534,695 60,971,511
Deferred income tax liabilities 9 35,335,631 4,943,082
________________________
224,870,326 65,914,593
________________________
Current liabilities
Trade and other payables 12 11,838,675 4,887,286
Bank loans 13 64,701,807 2,476,101
Provisions 728,840 -
Dividends payable - 4,362,900
Financial 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 2005
CASH FLOW STATEMENT Note Group Group
£ £
Cash flows from operating activities
Cash (used in)/ generated from operations 15 2,940,450 2,706,408
Income taxes paid (797,488) -
________________________
Net cash (used in)/ generated from operating activities 2,142,962 2,706,408
________________________
Cash flows from investing activities
Capital expenditure on investment properties (34,486,202) (22,849)
Capital expenditure on incomplete acquisitions (436,197) -
Investment in subsidiary - -
Interest received 4,593,407 2,470,348
Acquisition 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 activities
Proceeds on issue of shares, net of share issuance
costs 11 - 139,381,406
New 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) 126,635,629
Cash 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 and
incorporated in the Isle of Man on 2 June 2005 for the purpose of investing in
the 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 the
year ended 31 December 2006.
The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 December 2006. The figures for the year
ended 31 December 2006 are extracted from the audited Group financial statements
("the financial statements"). A copy of the financial statements, on which the
auditors have issued an unqualified report, will be lodged with the Registrar of
Companies. The results for the year ended 31 December 2006 have been prepared on
the 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 the
International Financial Reporting Standards (IFRS), details of accounting
policies 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. All
operating leases are for terms of 1 - 15 years.
4. Administrative expenses
2006 2005
Group Group
£ £
Accounting fees 401,447 69,594
Other administrative expenses 355,595 14,918
Audit fees 322,858 152,047
Legal fees 264,227 61,037
Abortive acquisition costs 233,991 -
Non-executive Directors fees 135,115 34,883
Bank charges and fees 88,950 7,869
Portfolio management fees 86,958 67,705
Tax advisory fees 84,681 34,497
Nominated advisor fees 60,902 25,376
Public relation fees 56,255 45,462
Custody/Trust fees 35,968 25,564
Irrecoverable V.A.T. 13,076 20,196
Due 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 2,470,348
Fair value adjustment of interest rate swaps 2,245,782 200,290
Unwinding 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 2005
Recognised in the income statement Group Group
£ £
Current tax expense
Current year 1,108,057 228,976
Deferred tax expense
Origination 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 2006
was based on the profit attributable to ordinary shareholders of £ 30,705,369
(2005: £ 4,909,679) and a weighted average number of ordinary shares outstanding
during 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 December
2006 was based on the profit attributable to ordinary shareholders of £
30,705,369 (2005: £ 4,909,679) and a weighted average number of ordinary shares
outstanding 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 87,054,370
Acquisitions through business combinations (see note 25) 215,530,101 83,265,238
Acquisitions through direct asset purchases 33,832,517 -
Additions 653,685 22,849
Increase in fair value 36,791,502 2,468,706
Foreign 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 been
arrived at on the basis of a valuation carried out at that date by DTZ Debenham
Tie Leung, independent valuers.
The Group has pledged each of its investment properties to secure related
interest bearing debt facilities granted to the Group for the purchase of such
investment properties.
9. Deferred tax assets and liabilities
Deferred tax assets and liabilities are
attributable to the following items:
2006 2006 2005 2005
Group Group Group Group
Assets Liabilities Assets Liabilities
£ £ £ £
Investment property valuation - 34,798,474 - 4,917,106
Interest rate swap valuation - 323,835 - 25,976
Accrued 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 1,197,635
Prepayments 1,351,741 666,868
Accrued interest on intercompany loans - -
Tenant deposits - 172,172
_______________________
10,368,325 2,036,675
_______________________
11. Share capital and share premium
Authorised: 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 unclassified
shares of 1p each.
On 17 June 2005 the authorised share capital was restructured to 200,000 shares
of 1p each by conversion of the founder shares to 10,000 ordinary shares of 1p
each and conversion of the unclassified shares to 190,000 ordinary shares of 1p
each.
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 each
2 June 2005 Founder Shares 100 100
________________________________________
Ordinary shares of 1p each
17 June 2005 conversion of founder shares 10,000 100 -
1 August 2005 - issue for cash 140,000,000 1,400,000 138,600,000
1 August 2005 - placing costs - - (5,389,998)
1 August 2005 - recognition of share-based
payments - - 605,543
16 October 2005 - issued for cash 3,856,862 38,569 4,127,192
16 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 2,532,906
Tenant deposits 1,812,527 610,903
Accrued interest 1,289,874 230,966
Related party payables (see note 27) 1,139,890 608,515
Tax payable 869,369 258,424
Accrued expenses 704,475 192,589
Income received in advance 390,627 452,983
Subsidiary 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's
interest-bearing loans and borrowings.
2006 2005
Group Group
£ £
Bank Loans - non-current 189,534,695 60,971,511
Bank 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 2,476,101
In the second year 23,506,634 1,438,971
In the third to fifth years inclusive 137,759,091 59,873,125
After 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 the
special purpose vehicles holding the investment properties to secure related
interest-bearing debt facilities granted to the Group for the purchase of such
investment 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 was
declared on 28 September 2006, and paid on 3 November 2006 to ordinary
shareholders 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 on
23 April 2007 and will be paid on 25 May 2007 to ordinary shareholders on the
register at close of business on 4 May 2007. As required by IFRS this dividend
is not recognised in the financial statements until appropriately authorised.
15. Notes to the cash flow statement
2006 2005
Group Group
Cash generated from operations £ £
Profit for the period 36,021,696 4,933,750
Adjustments for:
Excess of acquirer's interest in the net fair value of
acquiree's identifiable assets, liabilities and
contingent 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 10,738,812 702,796
Unrealised 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 soon
as practical. These documents will be available to the public at the offices of
the company: IOMA House, Hope Street, Douglas, Isle of Man, as well as on our
website www.dawnaydaycarpathian.com.
This information is provided by RNS
The company news service from the London Stock Exchange