Final Results

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: â€¢Admitted to AIM in July 2005 and raised Â£140 million before expenses ('Admission') â€¢On 2 April 2007, Company announced it had reached full investment target set at Admission, with over 90% of the funds invested or committed â€¢Announced on 24 April 2007 the raising of a further Â£100 million: â€¢Raised Â£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 â€¢Following proceeds of the Placing, intention to be substantially invested by 31 December 2008 â€¢Substantial pipeline of potential acquisitions priced at approximately Â£1 billion â€¢Financial results â€¢Adjusted NAV increased to 126.7p from 98.2p â€¢EPS for the period of 21.1p compared to 4.8p â€¢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 Â£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 Â£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 Â£240 million. As a result, the Company is now aiming to build a portfolio worth approximately Â£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 Â£332.8 million with an annualised rent roll in excess of Â£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 Â£249.5 million. The net rental and related income for the period was Â£12.7 million. The Company overall generated a profit before tax of Â£46.8 million. Adjusted profit before tax, which excludes any revaluation surplus, was Â£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 Â£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 Â£368.7 million by DTZ Debenham Tie Leung Limited ('DTZ'), giving a net uplift of Â£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 (Â£m) valuation (Â£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 Â£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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ Â£ Â£ Â£ Â£ ___________________________________________________________________ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ 30,705,369 (2005: Â£ 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 Â£ 30,705,369 (2005: Â£ 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 Â£ Â£ 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 Â£ Â£ Â£ Â£ 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 Â£ Â£ 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 Â£ 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 Â£ 2,000, comprising 100 founder shares of Â£ 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 Â£ 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 Â£ Â£ Founder shares of Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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 Â£ Â£ 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

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