Dawnay, Day Carpathian PLC
24 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 short
period, we have established a strong presence amidst our target markets. The
Company is confident that there are sufficient opportunities which meet its
investment criteria and expects that, as previously stated, it will be
substantially invested by the end of 2006 without having to compromise on the
quality 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, Day
Carpathian" or the "Company") continues to make good progress since it was
admitted to the AIM market in July 2005. At the time of flotation the Company
raised £140m (before expenses) which, together with bank borrowings, will
facilitate the creation of a geared €1 billion portfolio of retail properties.
Our investment strategy remains focused on acquiring suitable commercial retail
properties such as shopping centers, supermarkets and retail warehousing in
Central and Eastern Europe and we have been successfully executing this
strategy.
Operational review
Since July of 2005, Dawnay, Day Carpathian has rapidly established itself as a
leading presence within the Central and Eastern European commercial property
sector. As a result, the Company has generated a wide circle of contacts,
including investors, developers and agents, through whom the Company is being
presented with many suitable acquisitions. Currently we are processing a
satisfactory range of suitable opportunities for inclusion in the portfolio. Our
selection criteria remain robust and are based upon identifying retail assets
with sustainable income, prospects for income and capital growth and for value
enhancement 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 in
Budapest, from light industrial and office units into a circa 50,000 sq m retail
centre. Negotiations are commencing for the required permitting, and the
exercise carried out earlier this year to canvas retail interest has received
positive responses.
The transfer of Dawnay, Day Group's 50% share in the four shopping centres in
Hungary anticipated as part of the initial pipeline investments for the Company,
is now to include the entire 100% interest in these properties. Completion of
the acquisition has been delayed by tax and legal complications but is expected
to complete shortly. These Hungarian assets due for completion will add a
further £41.5 million of investment to the Company's portfolio.
Financial Results
During the period under review, the Company made three acquisitions for a
combined total of £84.3 million. These assets generated net rental income for
the period of £1.16 million, which equates to an annualised return of
approximately 25% on the equity invested. The acquisitions have been funded
through £21.2 million of equity and £63.1 million of debt. A re-valuation of the
Company's assets by DTZ took place at the period-end and resulted in a valuation
increase 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 business
in a new geographical region.
In line with its stated strategy, the Company paid a dividend in December 2005
of 3p per share equating to a 3% yield based upon the placing price of 100p per
share. The Company is also intending to pay a 6p per share dividend for the year
ending 31 December 2006.
Investment Pipeline
We have a strong pipeline of acquisitions. In total, the Company is in advanced
due 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 provincial
convenience centres and range from the Baltic States, through Central and
Eastern Europe to Romania and Bulgaria. In addition, the Company has a strategic
agreement to acquire a roll out programme of supermarket developments, which are
likely to comprise approximately £70 million of assets per annum over each of
the next three years.
Management
In March 2006, Ross MacDiarmid resigned as a director of Dawnay, Day Europe
Limited. Paul Rogers and Massimo Marcovecchio continue to have managerial
responsibility for Dawnay, Day Europe Limited supported by an increased team of
14 members.
Outlook
Our focus is upon creating a superior commercial retail property portfolio.
Penetration by the Company into wider property sub markets and recognition of
the Dawnay, Day brand give rise to a broad range of opportunities and pricing
levels. Market activity to date has seen a marked increase in transactional
volumes in the territory increasing from £949 million in 2004 to £1,707 million
approximately in 2005 (source: DTZ research, March 2006).
The Company is confident that there are sufficient opportunities which meet its
investment criteria and expects that, as previously stated, it will be
substantially invested by the end of 2006 without having to compromise on the
quality of its acquisitions.
Rupert Cottrell
Chairman
INCOME STATEMENT Note Company Group
£ £
Gross rental income 3 - 1,485,519
Service charge income - 494,073
Service 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 of
acquiree's identifiable
assets, liabilities and
contingent liabilities over
cost - 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 3,007,062
Financial 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 4,909,679
Minority Interests - 24,071
Basic and diluted earnings per
share for profit attributable
to the equity holders of the
Company during the year
(expressed as pence per share)
Basic earnings per share 6 4.8
Diluted earnings per share 6 4.7
BALANCE SHEET Note Company Group
£ £
ASSETS
Non current assets
Investment in subsidiaries 8,603 -
Investment property 7 - 87,054,370
Loan to subsidiary 20,430,343 -
Goodwill - 3,698,346
Deferred income tax assets 8 - 127,305
___________ ___________
20,438,946 90,880,021
___________ ___________
Current assets
Trade and other receivables 9 353,993 2,036,675
Cash and cash equivalents 123,466,020 126,144,770
Financial assets - 399,323
___________ ___________
123,820,013 128,580,768
___________ ___________
TOTAL ASSETS 144,258,959 219,460,789
___________ ___________
EQUITY
Issued Capital 10 1,454,300 1,454,300
Share Premium 10 125,556,323 125,556,323
Distributable Reserves 12,631,489 14,674,546
Foreign 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
___________ ___________
LIABILITIES
Non-current liabilities
Bank loans - 60,971,511
Deferred income tax liabilities 8 - 4,943,082
___________ ___________
- 65,914,593
___________ ___________
Current liabilities
Trade and other payables 11 253,947 4,887,286
Bank loans - 2,476,101
Dividends 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 activities
Cash (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 activities
Capital expenditure on investment
property - (22,849)
Investment in subsidiary (8,603) -
Interest received 2,795,106 2,470,348
Acquisition 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 activities
Proceeds on issue of shares, net of
share issuance costs 12 139,381,406 139,381,406
Interest 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 123,466,020 126,635,629
Cash 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 Total
GROUP Note £ £ £ £ £ £
_________ ____________ __________ __________ __________ _____________
Issue of
share
capital 10 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 10 - (14,127,767) - - 14,127,767 -
Dividend
declared 12 - - - - (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
_________ ____________ __________ __________ __________ _____________
Share Share Minority Translation Retained
Capital Premium Interest Reserve Earnings Total
COMPANY Note £ £ £ £ £ £
_________ ____________ __________ __________ __________ _____________
Issue of
share
capital 10 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
Profit for
the period - - - - 2,866,622 2,866,622
Share
premium
release 10 - (14,127,767) - - 14,127,767 -
Dividend
declared 12 - - - - (4,362,900) (4,362,900)
_________ ____________ __________ __________ __________ _____________
Balance as
at
31 December
2005 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 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 and company accounts for Dawnay, Day Carpathian PLC (The
"Group") have been prepared for the period from incorporation on 2 June 2005 to
31 December 2005.
The financial information set out above does not constitute the Group's or
Company's statutory accounts for the period from incorporation on 2 June 2005 to
31 December 2005. The figures for the period from incorporation on 2 June 2005
to 31 December 2005 are extracted from the audited Group and Company 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 period from incorporation on 2 June
2005 to 31 December 2005 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
International Financial Reporting Standards (IFRS), details of accounting
policies 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. All
operating leases are for terms of 1 - 10 years.
4 Net financing income
Company Group
£ £
Interest income from financial
institutions 2,464,648 2,470,348
Interest income from
subsidiary 330,458 -
Fair value adjustment of
interest rate swaps - 200,290
Fair 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 expense
Current year 228,976
Deferred tax expense
Origination 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 December
2005 was based on the profit attributable to ordinary shareholders of £
4,909,679 and a weighted average number of ordinary shares outstanding during
the 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 December
2005 was based on the profit attributable to ordinary shareholders of £
4,909,679 and a weighted average number of ordinary shares outstanding during
the period ended 31 December 2005 of 103,356,615.
7 Investment property
£
Acquisitions through business
combinations 83,265,238
Additions 22,849
Increase in fair value 2,468,706
Foreign 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 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.
8 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
Group Assets Group Liabilities
£ £
Property valuation - 4,917,106
Swap valuation - 25,976
Accrued 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 - 1,197,635
Prepayments 19,448 666,868
Accrued 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 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 Share Share
Fully 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)
_____________ _________ ___________
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 2,532,906
Tenant deposits - 610,903
Related party payables 8,603 608,515
Income received in advance - 452,983
Tax payable - 258,424
Accrued interest - 230,966
Accrued 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 was
declared on the 15 December, and paid on 6 January 2006 to ordinary shareholders
on 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 4,933,750
Adjustments 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) 5,864,791
Increase / (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 soon
as practical. Copies of these documents will be available to the public at the
offices of the company: St James's Chambers, Athol Street, Douglas, Isle of Man.
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