Interim Results
Dawnay, Day Carpathian PLC
28 September 2007
Dawnay, Day Carpathian PLC
('DDC' or the 'Company')
Unaudited Interim results for the six months ended 30th June 2007
Highlights
• Successful secondary Placing raising a further £100 million (before
expenses) completed in May 2007
• Diversified portfolio spread across 6 countries in Central and Eastern
Europe
• During the six-month period ended 30th June 2007, the Company committed
£29 million of equity to a forward purchase of 55% of a development in
Riga. Since 30th June 2007, announced a further two development
transactions for a combined equity commitment of £30 million (including the
Arad development announced today)
• On track to meet the investment targets timetable set in May 2007
supported by a robust pipeline of some ten transactions which includes a
balanced mix of development and income producing opportunities
• On track to deliver dividend targets of 10p for 2007 and 2008
• Net rental income of £11.11 million (30th June 2006: £4.42 million)
• Net profit grew to £7.16million (30th June 2006: £5.18 million) excludes
any new revaluation surplus as the properties are only revalued on an annual
basis
• Basic earnings per share is 3.7 pence, while diluted earnings per share
is 3.6 pence
• NAV per share of 112.41 pence (31 December 2006: 114.15 pence). Adjusted
NAV per share of 119.67 pence (31 December 2006: 126.68 pence). The
change in NAV values largely reflects the impact of the £100m secondary
Placing and dividend declared of £10.7 million during the period.
Rupert Cottrell, Chairman of Dawnay, Day Carpathian, said: 'We are pleased to
report that the Company remains in a good position with a strong and
geographically diverse portfolio. While global market conditions have unsettled
specific markets, revenues from our operations have been unaffected and in time
should generate acquisition opportunities for the Company as some of the less
established buyers fall away thereby reducing competition. The additional funds
raised in May 2007 will enable the continued expansion of the portfolio and the
Company is pleased to confirm it remains on track to deliver on its dividend
targets of 10p for 2007 and 2008.'
Enquiries:
Dawnay, Day Carpathian PLC 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 following the successful secondary Placing completed
in May 2007, the Company is on track to build a substantial retail portfolio in
Central and Eastern Europe, within the timetable set. While market conditions
have become less predictable, the property investment manager, Dawnay, Day
PanTerra ('PanTerra') believes that the Company is well positioned given the
current transaction pipeline which in itself is sufficient to meet the Company's
investment targets together with the expectation of being able to take advantage
of more opportunistic purchases arising from reduced competition as less
established buyers find it harder to operate.
During the six-month period, the Company delivered a solid financial performance
generated currently from the income producing property portfolio which benefits
significantly from being diversified geographically as well as by target
customer groups.
The Company's investment strategy remains focused on enhancing the
diversification of the present portfolio through acquiring or developing new
properties in new locations as well as continuing to pursue the significant
asset management opportunities across the existing portfolio. Ultimately, the
Company is committed to providing shareholders with a resilient property
portfolio and delivering reliable dividend income and capital growth.
Financial results
The Company generated net rental income for the period of £11.11 million (30th
June 2006: £4.42 million) which led to a profit before tax of £7.16 million
(30th June 2006: £5.18 million).
The basic earnings per share of the Company were 3.7 pence, while the diluted
earnings per share were 3.6 pence. NAV per share was 112.41 pence (31 December
2006: 114.15 pence) and the adjusted NAV per share was 119.67 pence (31 December
2006: 126.68 pence). The change in NAV values largely reflects the impact of the
£100 million secondary Placing and dividend declared of £10.7 million during the
period.
As at 30th June 2007, the Company's borrowings totalled £256.2 million,
representing a loan to value ratio of 69%. The weighted average lengths of the
loans are approximately 2.7 years. The weighted average interest rate of the
borrowings is 5.21% for the period. The Company has hedged its interest rate
exposure by swapping the variable Euribor rate to an average fixed rate of
3.57%.
Dividends
The Board has declared its first dividend in respect of the financial year ended
31 December 2007 of 3.33 pence per share on 23 April 2007. This will be paid on
28 September 2007 to ordinary shareholders on the register at the close of
business on 4 May 2007.
The Company's intention is to pay an additional interim dividend of 3.33 pence
per share, together with a final dividend for the financial year ended 31
December 2007, which is intended to result in an aggregate dividend payment of
10 pence per share for the financial year ended 31 December 2007.
Property portfolio
During the period, the Company committed £29 million of equity to the forward
purchase of 55% of the Riga development and since then we have announced a
further two development transactions for a combined equity commitment of £30
million. In addition, all conditions were met in the early part of 2007, with
regard to the final completion of the £57.75 million acquisition of the
Interfruct portfolio in Hungary first announced in November 2006.
The underlying market conditions reflect increasing consumer spending and
affordable rents. This is feeding through to more prompt rental payments.
The development of the Galleria Patollo shopping centre in Riga, Latvia, is
continuing on track, this is a substantial project which on completion in 2009
is expected to be worth in excess of £170 million. The Company's largest asset,
the Promenada Shopping Centre in Poland is currently being extended by 7,600 sqm
to incorporate further retail space and this is also progressing to plan.
Today the Company announced the acquisition of a retail development site in
Arad, Romania for £8.3 million. This acquisition follows on from the acquisition
of the development site in Cluj-Napoca, Romania announced in August 2007 and is
the second of the four pipeline deals identified by PanTerra at the time of the
second fund raising completed in May 2007.
Share buy back
The Company continues to actively monitor share buy back opportunities, but is
equally conscious of conserving existing cash resources for its investment
commitments.
Outlook
The macroeconomic outlook within our target markets is still attractive and the
Board believe it provides the Company with excellent growth prospects in the
consumer sector in the medium and short term.
The present market turbulence experienced in the credit markets of primarily USA
and Western Europe has so far only had a slight impact on our target markets. In
addition, the slight adjustments in pricing on new debt instruments for
prospective deals are compensated by the favourable changes in the Euro swap
rates.
The Board feels that the present market conditions paired with the Company's
resources and its experience in these markets provides us with excellent
opportunities to deliver outstanding value to our shareholders.
UNAUDITED CONSOLIDATED INCOME STATEMENT 30-Jun-07 30-Jun-06 31-Dec-06
For the six months ended 30 June 2007
GROUP Note £'000 £'000 £'000
Gross rental income 13,146 4,635 15,799
Service charge income 4,825 1,449 5,946
Service charge expense (5,606) (1,355) (6,712)
Property operating expenses (1,621) (491) (2,679)
Other property income 367 184 335
_________________________________
Net rental and related income 11,111 4,422 12,689
Changes in fair value of investment
property 2 - - 36,792
Changes in fair value of financial
assets and liabilities (841) (174) (1,147)
Net Foreign Exchange (loss) / gain 1,186 (341) 1,388
Administrative expenses (1,561) (911) (2,140)
_________________________________
Net operating profit before net financing
income 9,895 2,996 47,582
_________________________________
Financial income 4,888 4,115 6,839
Financial expense (7,624) (1,935) (7,660)
_________________________________
Net financing (expense)/income 3 (2,736) 2,180 (821)
_________________________________
Net profit before tax 7,159 5,176 46,761
Tax (1,182) (618) (10,739)
_________________________________
PROFIT FOR THE PERIOD 5,977 4,558 36,022
=================================
Attributable to:
Equity holders of the Company 5,977 4,460 30,706
Minority Interests - 99 5,316
Basic and diluted earnings per share for
profit attributable to the equity holders
of the Company during the period
Basic earnings per share 4 3.7 3.1 21.1
Diluted earnings per share 4 3.6 3.0 21.0
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2007
Share Share Minority Translation Retained
Capital Premium Interest Reserve Earnings Total
GROUP Note £'000 £'000 £'000 £'000 £'000 £'000
_______________________________________________________
Balance as at 1 January
2006 1,454 125,556 230 (95) 14,675 141,820
Profit for the period - - - - 36,022 36,022
Minority interest - - 460 - (460) -
Dividend paid - - - - (2,909) (2,909)
Carried interest
allocation to
minority
shareholders - - 4,856 - (4,856) -
Translation into
presentation
currency - - - (3,372) - (3,372)
_______________________________________________________
Balance as at
31 December 2006 1,454 125,556 5,546 (3,467) 42,472 171,561
=======================================================
Balance as at 1 January
2007 1,454 125,556 5,546 (3,467) 42,472 171,561
Profit for the period - - - - 5,977 5,977
Purchase of minority
shareholders'
interest - - (690) - - (690)
Dividend Paid 8 - - - - (5,841) (5,841)
Dividend Declared 8 - - - - (4,868) (4,868)
Translation into
presentation
currency - - - (758) - (758)
Issue of shares 6 839 99,761 - - - 100,600
Costs of issue of
shares 6 - (3,304) - - - (3,304)
_______________________________________________________
Balance as at
30 June 2007 2,293 222,013 4,856 (4,225) 37,740 262,677
=======================================================
30-Jun-07 30-Jun-06 31-Dec-06
UNAUDITED CONSOLIDATED BALANCE SHEET
For the six months ended 30 June 2007
GROUP Note £'000 £'000 £'000
ASSETS
Non current assets
Investment property 371,148 227,459 368,692
Goodwill 18,139 9,727 16,578
Costs relating to future acquisitions 266 - 436
Deferred income tax assets 937 734 964
Other Investments 5 4,970 - -
Loans receivable 5 1,685 - -
________________________________
397,145 237,920 386,670
________________________________
Current assets
Trade and other receivables 6,809 5,462 10,368
Cash and cash equivalents 164,623 94,350 75,131
Financial assets 4,814 2,035 2,666
________________________________
176,246 101,847 88,165
________________________________
TOTAL ASSETS 573,391 339,767 474,835
================================
EQUITY
Issued Capital 6 2,293 1,454 1,454
Share Premium 6 222,013 125,556 125,556
Retained Earnings 37,740 19,135 42,472
Translation reserve ( 4,225) 672 ( 3,467)
________________________________
Total equity attributable to equity
holders of the parent 257,821 146,817 166,015
________________________________
Minority Interest 4,856 329 5,546
________________________________
TOTAL EQUITY 262,677 147,146 171,561
================================
LIABILITIES
Non-current liabilities
Bank loans 213,529 159,726 189,535
Deferred income tax liabilities 35,801 11,586 35,336
________________________________
249,330 171,312 224,871
________________________________
Current liabilities
Trade and other payables 11,290 17,097 11,838
Bank loans 42,651 4,038 64,702
Dividend Payable 4,868 - -
Provisions 729 - 729
Financial liabilities 1,846 174 1,134
________________________________
61,384 21,309 78,403
________________________________
TOTAL LIABILITIES 310,714 192,621 303,274
________________________________
TOTAL EQUITY AND LIABILITIES 573,391 339,767 474,835
________________________________
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT 30-Jun-07 30-Jun-06 31-Dec-06
For the six months ended 30 June 2007
GROUP Note £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 7 12,678 1,282 2,940
Income taxes paid (1,168) - (797)
________________________________
Net cash generated from operating
activities 11,510 1,282 2,143
________________________________
Cash flows from investing activities
Capital expenditure on investment
properties (2,259) (2,287) (34,486)
Capital expenditure on incomplete
acquisitions - - (436)
Investment in unconsolidated entities (1,685) - -
Loans advanced to unconsolidated
entities (4,970) - -
Interest received 2,273 2,598 4,593
Acquisition of subsidiaries (1,094) (6,824) (70,937)
Acquisition of minority interest in
subsidiaries (987) - -
Loans advanced to Subsidiaries before
acquisition - (19,460) (22,476)
________________________________
Net cash used in investing activities (8,722) (25,973) (123,742)
________________________________
Cash flows from financing activities
Dividends Paid (5,841) (4,363) (7,272)
New bank loans raised 28,668 - 86,045
Proceeds on issue of shares, net of issuance
costs 97,296 - -
Interest paid (6,279) (1,505) (7,075)
Repayments of borrowings (27,354) (1,766) -
________________________________
Net generated / (cash used in) from financing
activities 86,490 (7,634) 71,698
________________________________
Net increase / (decrease) in cash and cash
equivalents 89,278 (32,325) (49,900)
Cash and cash equivalents at the beginning of
the period 75,131 126,145 126,145
Exchange gains / (losses) on cash and cash
equivalents 214 530 ( 1,114)
________________________________
Cash and cash equivalents at the end of the
period 164,623 94,350 75,131
________________________________
Notes to the Unaudited Consolidated financial statements
1 General information
Dawnay, Day Carpathian PLC (the 'Company') is a company incorporated and
domiciled in the Isle of Man on the 2 June 2005 for the purpose of investing in
the retail property market in Central and Eastern Europe.
The interim report of Dawnay, Day Carpathian PLC for the six months ended 30
June 2007, comprises the Company and its subsidiaries (together referred to as
the 'Group').
The Company's registered address is IOMA House, Hope Street, Douglas Isle of
Man.
The Company was admitted to the AIM of the London Stock Exchange and commenced
trading its shares on 26 July 2005. The Company raised approximately £140m at
listing and a further £100m in May 2007 (before admission costs).
The functional currency of the consolidated financial statements is the Euro as
it is the currency of the primary economic environment in which the Group
operates. The consolidated financial statements are presented in Pounds Sterling
(presentation currency) for the convenience of readers. The translation between
the functional and presentation currency is in accordance with the Group's
accounting policies.
2 Significant accounting policies
The interim report for the six months ended 30 June 2007 is unaudited and has
been prepared based on the accounting policies set out in the statutory accounts
for the year ended 31 December 2006.
The Group's policy is to fair value investment properties annually at 31
December, as a result no fair value adjustments have been recognised in the
income statement for the six months ended 30 June 2007.
3 Net financing income
Net financing income
30-Jun-07 30-Jun-06 31-Dec-06
£'000 £'000 £'000
GROUP
Interest income from financial
institutions 2,254 2,693 4,593
Fair value adjustment of interest
rate swaps 2,276 1,422 2,246
Interest income from related party 358 - -
____________________________
Financial income 4,888 4,115 6,839
____________________________
Gross interest expenses on bank
borrowings (7,130) (1,761) (7,597)
Unwinding of unrealised direct issue
costs of borrowings (494) (174) (63)
____________________________
Financial expense (7,624) (1,935) (7,660)
____________________________
Net financing costs (2,736) 2,180 (821)
____________________________
4 Earning per share
Basic earning per share
The calculation of basic earnings per share at 30 June 2007 was based on the
profit attributable to ordinary shareholders of £5,977,000 and a weighted
average number of ordinary shares outstanding during the six month period ended
30 June 2007 of 162,425,595, calculated as follows:
30-Jun-07 30-Jun-06 31-Dec-06
GROUP
Profit attributable to ordinary £'000 £'000 £'000
shareholders
Profit for the period 5,977 4,558 36,022
Minority interest - (99) (5,316)
_________________________________
Profit attributable to ordinary
shareholders 5,977 4,459 30,706
=================================
Weighted average number of ordinary
shares
Shares in Issue at 31 December
2005 and 2006 145,430,015 145,430,015 145,430,015
Effect of shares issued on 23
February 2007 420,994 - -
Effect of shares issued on 18
May 2007 16,574,586 - -
___________________________________
Weighted average number of
ordinary shares 162,425,595 145,430,015 145,430,015
===================================
Basic earnings per share 3.7p 3.1p 21.1p
Diluted earning per share
The calculation of diluted earnings per share at 30 June 2007 was based on the
profit attributed to ordinary shareholders of £5,977,000 and a weighted average
number of ordinary shares outstanding during the period ended 30 June 2007 of
164,995,950 calculated as follows:
Profit attributable to ordinary £'000 £'000 £'000
shareholders (diluted)
Profit for the period 5,977 4,558 36,022
Minority interest - (99) (5,316)
________________________________
Profit attributable to ordinary
shareholders 5,977 4,459 30,706
================================
Weighted average number of ordinary
shares
Weighted average number of ordinary
shares 162,425,595 145,430,015 145,430,015
Effect of dilutive potential ordinary
shares: Share options 2,570,355 1,989,605 1,085,853
___________________________________
Weighted average number of ordinary
shares (diluted) 164,995,950 147,419,620 146,515,868
===================================
Diluted earnings per share 3.6p 3.0p 21.0p
5 Other Investments
On 2 April 2007 the Group agreed to the purchase of a 55% interest in SIA
Patollo, on the completion of the development of Galleria Patollo shopping
centre in Riga, Latvia. Under the agreement, the Group is committed to making
staged, conditional payments via debt and equity to partially fund the project.
The eventual cost of the acquisition of the investment in SIA Patollo is
dependent on the value of the shopping centre on completion of the development.
As at 30 June 2007, the funding committed to the project, comprised of
£4,970,000 paid for 17.7% of the share in SIA Patollo and a loan of £1,685,000
to SIA Patollo bearing interest of 25% per annum.
6 Share capital and share premium
AUTHORISED: Number of £'000
Ordinary
Shares of
1 p each
30 June 2006 and 31 December 2006 200,000,000 2,000
17 May 2007 - Increase of authorised
share capital 150,000,000 1,500
____________ _________
30 June 2007 350,000,000 3,500
____________ _________
On the 17th of May 2007 the authorised share capital of the Company was
increased to £3,500,000 by the creation of 150,000,000 ordinary shares of 1p
each
ISSUED: Number of
Shares Share Share
Issued and Capital Premium
Fully Paid £'000 £'000
Ordinary shares of 1p each
_____________________________
Balance at 30 June 2006 and 31
December 2006 145,430,015 1,454 125,556
_____________________________
23 February 2007 - share option
exercised 600,000 6 594
18 May 2007 - issue for cash 83,333,334 833 99,167
18 May 2007 - placing cost - - (3,304)
_____________________________
Balance at 30 June 2007 229,363,349 2,293 222,013
_____________________________
On the 23 February 2007, Numis Securities Limited exercised a portion of their
option, and purchased 600,000 ordinary shares at £1 per share.
On the 18 May 2007, the Company issued 83,333,334 ordinary shares in relation to
its public offering at £1.20 per share. The Company incurred costs of £
3,304,000 relating to the issue of shares. These equity transaction costs were
deducted from equity in accordance with IAS 32, Financial Instruments Disclosure
and Presentation.
7 Notes to the Cash Flow Statement
30-Jun-07 30-Jun-06 31-Dec-06
GROUP
Cash generated from operations £'000 £'000 £'000
Profit for the period 5,977 4,558 36,022
Adjustments for:
Increase in fair value of interest
rate swaps (2,276) (1,624) (2,246)
Increase in fair value of financial
liabilities 841 - 1,147
Unwinding of unrealised direct issue
costs of borrowings 494 174 63
Net other finance (income) / expense 4,518 (556) 3,004
Increase in fair value of investment
property - - (36,792)
Income tax expense 1,183 618 10,739
Unrealised foreign exchange (loss)/gain (1,186) - (1,388)
_____________________________
Operating cash flows before movements in
working capital 9,551 3,170 10,549
_____________________________
Decrease/(Increase) in receivables 3,897 1,579 (3,091)
Increase in payables (770) (3,467) (4,518)
_____________________________
Cash generated from operations 12,678 1,282 2,940
_____________________________
8 Dividends
30-Jun-07 31-Dec-06
£'000 £'000
GROUP
Dividend paid in 2006 for the year - 2,909
Dividend paid in 2007 for the year - 5,841
Dividend declared for the year 4,868 -
_____________________
4,868 8,750
_____________________
An interim dividend of 3.33p per share for the year ended 31 December 2007 was
declared on the 24 April 2007 and will be paid on 28 September 2007 to ordinary
shareholders on the register at close of business on 4 May 2007.
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