Dci Advisors Regulatory News (DCI)

5 Dec 2007 07:01

Dolphin Capital Investors Limited05 December 2007 DOLPHIN CAPITAL INVESTORS LIMITED Q3 2007 NAV Announcement and Trading Update Dolphin Capital Investors Limited ("Dolphin" or the "Company"), the leadinginvestor in the residential resort sector in south-east Europe and the largestreal estate investment company listed on AIM, is pleased to announce its tradingupdate for the period ending 30 November 2007 and a significant uplift in its Q32007 Net Asset Value ("NAV"). Highlights: • NAV per share at 30 September 2007 (fully diluted, before deferred income tax liabilities, "DITL") at 185p, representing an 11% uplift from 30 June 2007 and a 68% uplift from 31 December 2006. For the purposes of the 30 September NAV the Aristo portfolio was revalued while the rest of the DCI assets were valued as of 30 June 2007. • Continued progress with the Company's acquisition strategy during and after Q3 2007 through: • The investment in Plaka Bay Resort ("Plaka Bay"), the Company's second major project on the island of Crete • Completion of the first two investments in southern Turkey (Port Kundu and LaVanta), in partnership with pioneering developer Kemer Group • Execution of Dolphin's tenth major project in Greece through the purchase of a 72-hectare beachfront site on the Greek island of Tzia • Ongoing expansion of Dolphin's landholdings at existing projects • Permitting progress across the portfolio with notable milestone achievements at Lavender Bay Golf Resort ("Lavender Bay"), Venus Rock Golf Resort ("Venus Rock") and Eagle Pine Golf Resort ("Eagle Pine") • Increased total unit sales volume and turnover for Aristo (increased by 9% and 7% respectively for the 11-month period ending 30 November 2007 and comparable 2006), despite the current difficulties in the UK housing market and the withdrawal from pre-sales of Aristo's major projects for the purpose of redesign • On track to be fully committed before the end of H1 2008. Invested and committed funds as at 30 September were €408 million and €584 million respectively. Corresponding figures as at 30 November were €432 million and €648 million respectively, leaving €190 million of uncommitted funds Miltos Kambourides, Managing Partner of Dolphin Capital Partners Limited ("DCP"or the "Investment Manager"), commented: "Since 30 June, the Company has continued to make significant progress with thedesign and permitting of existing projects and the expansion of its portfolio ofassets in Greece, Cyprus and Turkey. As projects start to reach permittingmilestones and the market value of sea-front land in the targeted regions rises,we are confident that Dolphin is positioned to continue to deliver strong NAVgrowth and generate value for its shareholders. As such, we believe that itsprospects are clearly differentiated from the current difficulties in othermature real estate markets." For further information, please contact: Dolphin Capital InvestorsMiltos E. Kambourides miltos@dolphincp.comPierre A. Charalambides pierre@dolphincp.com Financial Dynamics, London +44 (0)20 7831 3113Stephanie HighettNicole Marino Grant Thornton Corporate Finance +44 (0)20 7383 5100Philip SecrettFiona Kindness Net Asset Value The reported NAV for Q3 2007 is presented below: • £ Uplift Uplift Uplift since since since Admission 31 Dec 06 30 June 07Total NAV Before DITL (millions) 1,402 978 na na naTotal NAV After DITL (millions) 1,239 864 na na naNAV per Diluted Share Before DITL 2.66 1.85 185% 68% 11%NAV per Diluted Share After DITL 2.35 1.64 152% 62% 9% Note: NAV is fully diluted for warrants granted to the Investment Manager (proforma number of warrants: 10.3 million). Dolphin's real estate portfolio was valued as at 30 September by the independentvaluers Colliers International. The 30 September 2007 reported NAV is based on: • the 30 June 2007 valuation of all real estate assets of the Company, amended to reflect additional land acquisitions. Over the course of the third quarter of 2007 additional land was purchased in Kilada Hills Golf Resort ("Kilada Hills"), Seascape Hills Resort ("Seascape Hills"), Sitia Bay Golf Resort ("Sitia Bay"), Livka Bay Resort ("Livka Bay") and within the Aristo portfolio; • the valuation of the new investment in Plaka Bay; and • a revaluation of all of Aristo's assets so as to more accurately reflect the current market value of the Aristo portfolio, driven by (i) an increased availability of relevant market comparables and (ii) zoning and permitting progress with respect to some of Aristo's largest assets, namely Venus Rock and Eagle Pine. Dolphin's NAV is based on land values which the Investment Manager believes havestrong upward momentum as they do not take into account any value derived from: • future permits; • operating cash-flows or sales; • high-quality design and branding; and • subsidies or grants even in the event they have been awarded. In addition, the Company's solid business fundamentals remain unchanged asfurther summarized below: • undersupply of high-end product in a region with high barriers to entry; • favourable demographic and mobility patterns; • increasing spending power from the strong local target markets and upcoming sources of demand such as Russia and the Middle-East; • a debt-free land portfolio and low levels of financing on the construction portfolio of Aristo; • reduced risk by adopting the 'pre-sell and build' approach; and • strong cash balance of c. €427 million as of 30 September 2007. Trading Update Quarter ended 30 September 2007 In the three months ending 30 September 2007, Dolphin made continued progress inits investment and development activities, with the Company investing andcommitting €29 million and €66 million respectively. Notable achievementsinclude the following: (1) Acquisition of a 60% shareholding in Plaka Bay, the Company's secondinvestment on the island of Crete, Greece, by committing a total of €26 million.The 430-hectare site is being designed as a sea-front, master-plannedleisure-integrated resort incorporating a residential development of over100,000 buildable m2. The site lies in close proximity to Dolphin's Sitia Bay. (2) The acquisition of further land within existing project boundaries, aswell as in the immediate surrounding areas. During the reporting period, theCompany allocated an additional €20 million each to Kilada Hills and SeascapeHills (over and above the current commitment of €65 million and €30 millionrespectively), with the intention of expanding the land available fordevelopment. Since 30 June, close to 122,000m2 have been acquired in KiladaHills, and 178,000m2 near Seascape Hills, including c.130,000m2 of beachfront toaccommodate an Aman beach-club. (3) Aristo, Dolphin's largest subsidiary and the largest holiday homedeveloper in the region, has continued its strong performance. Total unit salesfor the 9-month period to end of September 2007 were 524, approximately 17%higher than for the same period in 2006, with corresponding revenues up 16%, at€137 million. Gross reported turnover and net profit (under IFRS) for the sameperiod were €91 million and €16 million respectively. This is despite a relativeslowdown in Q3 primarily attributed to reduced sales from the UK market as aresult of difficult credit markets and the withdrawal from pre-sales of Aristo'smajor projects in order to redesign them so to maximize future selling prices. (4) Aristo's continued acquisition of prime land in strategic locationsprincipally around the Paphos and Limassol areas in Cyprus, funded by the €85million debt facility secured in late August. Post 30 September 2007 In the post Q3 period, Dolphin made further strides both in terms of landacquisition and in the permitting process for existing projects, with theCompany investing and committing €24 million and €65 million respectively.Achievements of note include: (5) Completion of the first foray in the Turkish holiday home market inpartnership with the pioneering Kemer Group. Port Kundu and LaVanta representthe first two in a series of investments the Company is intending to make insouthern Turkey. Port Kundu, a 25-hectare zoned site near Belek area, is alreadybeing designed as a waterfront residential community where most of the 453-unitsare connected through water canals. LaVanta, an 8-hectare site near Kalkan, is ahill-top residential community comprising close to 200 villas and townhousesoverlooking the Aegean Sea. Dolphin holds an 80% stake in Port Kundu and 60% inLaVanta and has committed €28.6 million to these two projects and an additional€21.4 million to the partnership's pipeline. (6) The acquisition of the Company's tenth major project in Greece through an€11 million purchase of a c. 72-hectare site on the island of Tzia, one of thebiggest islands of the Cyclades, only 25 nautical miles from Lavrio harbour,which is a 15-minute drive from Athens International airport. The Company iscommitting €15 million of capital to this project which benefits from aspectacular sandy beach. (7) Significant permitting and development progress with regards to LavenderBay in Greece. The project recently received a governmental certificate for a38-hectare portion of the site, which subject to the approval of finalconstruction plans, will allow the Company to build up to 90,000m2 of freeholdresidential real estate in addition to the resort permits that were originallyenvisioned and which are underway. The prospect of Lavender Bay hosting the golfcompetition of the 2013 Mediterranean Games that was awarded on 27 October 2007to the nearby cities of Volos and Larissa, has also given a significant boost tothe Lavender Bay project and brought it further into the spotlight. (8) Both Seascape Hills and the new designs of Kilada Hills were grantedapproval of their respective preliminary environmental impact study. Thisrepresents an important intermediate milestone within the permitting process.Project expansion continues with additional land acquisition on both projects. (9) The water applications for the major golf projects of Aristo, namely VenusRock and Eagle Pine, were approved, one of the key final approvals beforeconstruction permits are typically granted. (10) Total Aristo unit sales for the 11-month period to end of November 2007were 619, approximately 9% higher than in 2006, with corresponding sales valueup 7% over 2006, at €160 million. 2007 Aristo sales are expected to surpassthose of 2006 despite the relative slowdown in the second half of the yearprimarily attributed to reduced sales from the UK market, in the wake of thedifficult credit markets, and the withdrawal from pre-sales of Aristo's majorprojects for the purpose of redesign. The following table summarises Dolphin's key projects and levels of commitmentand investment, as at 30 November 2007. Land site Dolphin Dolphin Dolphin (hectares) (% stake) investment commitment 30 Nov 2007 30 Nov 2007 (•m) (•m)GreeceKilada Hills 250 89 66 85Seascape Hills 89 99 32 50Lavender Bay 294 96 13 46Scorpio Bay 172 100 10 16Amanmila 200 25 - 50 1 5Sitia Bay 250 77 12 24Rebranded Hotels 1 100 1 30Plaka Bay 430 60 7 26Tsilivi - Aristo 11 85 3 3Douneika - Aristo 27 85 1 1Other - Aristo 3 85 1 1 Tzia 72 100 11 15CyprusApollo Heights 460 100 17 21Venus Rock - Aristo 1,000 85 84 84Eagle Pine - Aristo 301 85 16 16Magioko - Aristo 11 85 7 7Other - Aristo 541 85 135 135CroatiaLivka Bay 59 90 10 35TurkeyKundu 4 80 6 23 LaVanta 8 60 na 5 Partnership Pipeline na na na 21 TOTAL 4,177 432 648 Outlook The Investment Manager believes that, in addition to the achievements describedabove and progress in the existing portfolio, significant NAV growth can beexpected from the following key developments achieved post 30 September 2007: • After 30 September 2007, considerable progress has been made on a number of projects with respect to master-planning, design and permitting. As a result, the Investment Manager believes that final construction permits for the first phases of Dolphin's major leisure-integrated projects in Greece should be expected in 2008, which is earlier than the typical European resort development timelines given that land acquisition activities only began in 2006. • The recent water supply approvals of the major Aristo golf-integrated projects of Venus Rock and Eagle Pine are expected to fast-track the process of obtaining construction permits. In addition, the value of Venus Rock is expected to be significantly enhanced from imminent improvements to its current zoning status. • Notable progress was also made in partnering some of Dolphin's attractive coastal sites with some of the world's most renowned luxury hotel operators. The Company has agreed terms and is close to signing final hotel management agreements with such operators for Lavender Bay, Sitia Bay and Scorpio Bay Resort and expects to announce these developments in the coming months. • Aristo has received compelling offers for the sale of certain assets in its portfolio. Some of these early exit opportunities are being considered. • With approximately €190 million of uncommitted funds as of the end of November 2007, the Investment Manager is confident in being able to commit the remaining capital before the end of H1 2008. Notes to Editors Dolphin Capital Investors Dolphin, currently the largest real estate investment company listed on AIM,seeks to provide shareholders with strong capital growth combined with a lowrisk profile through investing in early-stage, large-scale, leisure-integratedresidential resorts mainly in south-east Europe in partnership with worldleading designers and operators. Dolphin's shares commenced trading on AIM inDecember 2005 raising £70.7 million (€104 million) at an issue price of 68p,followed by a £202.7 million (€300 million) secondary offering at a price of 93pper share in October 2006. In June 2007, Dolphin raised a further £303 million(€450 million) in a follow-on issuance priced at 170p per common share. Dolphin has to date invested €432 million and committed €648 million to variousprojects in Greece, Cyprus, Croatia and Turkey. Dolphin is also the 85% owner ofAristo, one of the region's largest and most experienced holiday homedevelopers. Dolphin Capital Partners DCP is an independent investment management business founded in 2004 by MiltosKambourides and Pierre Charalambides after leaving Soros Real Estate Partners. The DCP professionals combine extensive local knowledge and contacts withexpertise gained at some of the world's leading financial institutions. Theyspecialise in providing capital to rigorously selected real estate developmentsmainly in the eastern Mediterranean, typically through joint ventures with localdevelopers. DCP cooperates with an international and sophisticated network ofoperators, designers, master-planners and marketing agents for each of itsdevelopments. This information is provided by RNS The company news service from the London Stock Exchange