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MDN
MDN
MDN - Madison - Unaudited Group Results For The Six Months Ended 30 June 2007
and distribution declaration
Madison Property Fund Managers Holdings Limited
Registration number 2003/021772/06
Madison Property Fund Managers Limited
Registration number 2005/021874/06
JSE Share Code: MDN & ISIN Code: ZAE000080560
("Madison" or "the company)
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Total return to linked unitholders of 95% since listing Interim distribution of
36,0 cents per linked unit 23% increase in distribution per linked unit R27,4
billion assets under management
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31
December
2007 2006 2006
R`000 R`000 R`000
Revenue 97 872 43 005 102 013
Other income 13 126 9 634 20 168
Total income 110 998 52 639 122 181
Administration (42 288) (10 669) (43 500)
costs
Profit from 68 710 41 970 78 681
operations
Interest income 2 119 3 051 6 511
Finance costs (5 333) (582) (662)
Net operating 65 496 44 439 84 530
income
Fair valuation 25 577 (3 022) 2 198
adjustments
Debenture discount (6 500) - -
Negative goodwill - 154 555 154 555
written off
Amortisation of (30 099) (18 145) (43 228)
intangible assets
54 474 177 827 198 055
Equity accounted - 10 10
income
Income before 54 474 177 837 198 065
debenture interest
and taxation
Debenture interest (70 740) - (74 100)
(Loss) profit (16 266) 177 837 123 965
before taxation
Taxation 8 888 (105 868) (93 354)
Net (loss) profit (7 378) 71 969 30 611
for the period
Attributable to:
Madison linked (7 486) 69 889 28 065
unitholders
Minority 108 2 080 2 546
(7 378) 71 969 30 611
Reconciliation -
headline earnings
and distributable
earnings
Net loss (7 486)
attributable to
Madison linked
unitholders
Headline earnings
adjustments
Debenture discount 6 500
Fair valuation (25 577)
adjustments
Headline loss (26 563)
attributable to
shareholders
Debenture interest 70 740
Headline earnings 44 177
attributable to
linked unitholders
Distributable
earnings
adjustments
- Amortisation of 21 370
intangible assets
(net of deferred
taxation)
- Minority`s share (374)
of amortisation
- Provisions for 2 444
hedged employee
incentive scheme
- Amortisation of 3 123
executives` sign on
bonuses
Distributable 70 740
earnings
attributable to
linked unitholders
Number of linked 196 500 000
units in issue
Weighted average 194 381 216
number of linked
units in issue
Earnings per linked 32.54
unit (cents)
Headline earnings 22.73
per linked unit
(cents)
Distributable 36.00
earnings per linked
unit (cents)
GROUP STATEMENT OF
CHANGES IN EQUITY
Share Retained Minority Total R`000
capital income interest
and R`000 R`000
premium
R`000
Balance at 1 * 31 863 1 745 33 608
January 2006
Issue of shares 115 975 - - 115 975
Listing expenses (11 177) - - (11 177)
Net profit for the - 69 889 2 080 71 969
period
Transactions with - - (908) (908)
minority
Dividends - (811 778) - (811 778)
Balance at 30 June 104 798 (710 026) 2 917 (602 311)
2006
Balance at 1 104 763 (751 850) 2504 (644 583)
January 2007
Listing expenses (48) - - (48)
Net loss for the - (7 486) 108 (7 378)
period
Transactions with - - (482) (482)
minority
Balance at 30 June 104 715 (759 336) 2 130 (652 491)
2007
*less than R1 000
GROUP BALANCE
SHEET
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2007 2006
ASSETS
Non - current 633 256 346 862 415 067
assets
Property plant and 1 002 1 004 861
equipment
Intangible assets 234 018 289 200 264 117
Goodwill 111 099 22 867 111 099
Financial assets 287 137 33 791 38 990
Current assets 132 106 148 057 91 997
Trade and other 41 600 9 927 14 907
receivables
Cash and cash 90 506 138 130 77 090
equivalents
Total assets 765 362 494 919 507 064
EQUITY AND
LIABILITIES
Capital and (652 490) (602 311) (644 583)
reserves
Share capital and (654 621) (605 228) (647 087)
reserves
Minority interest 2 131 2 917 2 504
Non - current 1 304 549 977 088 1 046 261
liabilities
Debentures 980 535 948 100 948 100
Interest bearing 256 237 28 381 21 669
borrowings
Deferred taxation 67 777 607 76 492
Current 113 303 120 142 105 386
liabilities
Payables 42 109 16 998 30 633
Linked unitholders 70 740 - 74 100
for distribution
Taxation 454 103 144 653
Total equity and 765 362 494 919 507 064
liabilities
GROUP CASH FLOW STATEMENT
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Cash flows from 762 (783 599) (841 622)
operating
activities
Cash generated 78 551 39 398 81 104
from operations
Interest income 2 119 3 051 6 511
Finance costs (5 333) (582) (662)
Dividends paid (74 100) (811 778) (811 778)
Cash paid to (482) (3 902) (4 790)
minorities
Taxation 7 (9 786) (112 007)
Cash flows from (221 865) (136 029) (130 598)
investing
activities
Cash flows from 234 519 1 050 187 1 041 739
financing
activities
Net increase in 13 416 130 559 69 519
cash and cash
equivalents
Cash and cash 77 090 7 571 7 571
equivalents at
beginning of
period
Cash and cash 90 506 138 130 77 090
equivalents at end
of period
COMMENTS
FINANCIAL RESULTS
Madison was a private company until its corporate restructure and subsequent
listing on the JSE Limited on 7 June 2006. The income statement for the six
months ended 30 June 2007 is therefore not comparable to that for the six months
ended 30 June 2006. Earnings and headline earnings per linked unit have not been
presented for the comparative periods as the company had a nominal share capital
until the listing of its linked units in June 2006.
Revenue of R97,9 million comprises contractual income of R74,1 million and
development and leasing fees of R23,8 million. Contractual income accounts for
66.8% of total income. Other income of R13,1 million includes a fee of R10
million earned on the successful acquisition of Spearhead Property Holdings
Limited by Redefine Income Fund Limited ("Redefine").
Administration costs predominantly comprise salaries and associated costs for
management and staff engaged in leasing and development functions and in the
asset management of ApexHi Properties Limited ("ApexHi"), Redefine and Hyprop
Investments Limited ("Hyprop").
Finance costs have increased as a
result of borrowings raised for the acquisition, in terms of a vendor
placement, of 6 000 000 ApexHi A, B and C units at a cost of R35 per combined
unit and 5 000 000 ApexHi C units at a cost of R4.63 per unit from Clearwater
Property Holdings No.3 (Proprietary) Limited. The ApexHi A and B units will be
held for trading. The ApexHi C units will be held to hedge a bonus scheme
liability, linked to the performance of the ApexHi C unit, payable over three
years to management and staff seconded to ApexHi and for trading.
Surplus cash was applied against debt during the period, effectively increasing
the interest rate from 9.25% to 11.50%.
Madison has declared an interim distribution of 36,0 cents per linked unit,
23.1% higher than the pro-rated distribution of 39,0 cents for the eight months
ended 31 December 2006 and 10.8% higher than the distribution of 32,5 cents
forecast on 13 February 2007.
Based on the listing price of 500 cents per linked unit, the total capital and
income return to linked unitholders since listing amounts to 94.8%.
SHARE AND DEBENTURE CAPITAL
In February 2007, Madison issued 6 500 000 linked units, in terms of its general
authority to issue units for cash, to pay sign-on bonuses to two executives
appointed in the latter half of 2006. In terms of accounting practice, the
debenture discount of R6,5 million arising on the issue of the linked units has
been written off in the income statement during the current period and the sign
on bonuses, amounting to R25,9 million, have been raised as a prepayment which
will be amortised over the five year period of the executives` contracts. The
amortisation of this prepayment for the six months ended 30 June 2007 amounts to
R3,1 million. These charges do not affect the distributable income of Madison.
Linked unit liquidity and tradeability
The units traded at a high of 1070 cents and a low of 695 cents during the
period. The price of Madison`s linked units closed at 899 cents on 30 June 2007,
equating to a market capitalisation of R1,767 billion.
47,8 million linked units traded for R418,8 million on the JSE Limited during
the period, equating to 24.4% of the weighted average number of linked units in
issue.
POST BALANCE SHEET EVENTS
Agreement has been reached for Madison to acquire 40% of Corovest Fund Managers,
the management company of Coronation International Real Estate Fund ("CIREF"),
with effect from 1 July 2007 for R100,15 million. Other than approval from the
South African Reserve Bank, all conditions precedent have been met.
CIREF is listed on the London Stock Exchange`s AIM and has a current market
capitalisation of GBP85,0 million. The impact on Madison`s earnings is initially
expected to be neutral but will be enhancing in the future.
Madison has acquired at a nominal cost, 50% of Property Index Tracker Managers
(Proprietary) Limited ("PITM") which has been appointed as the manager of the
newly approved Property Index Tracker Collective Investment Scheme in
Securities, an exchange traded fund which will track the performance of the
FTSE/JSE SAPY index. Income earned by PITM will be directly related to the value
of the fund.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and the requirements of the
South African Companies Act. The accounting policies used are consistent with
those applied in the annual financial statements for the year ended
31 December 2006. These results have not been audited or reviewed by the
company`s auditors.
PROSPECTS
ApexHi, Hyprop and Redefine are continuing to expand their portfolios which
should enhance their enterprise values and consequently increase the asset
management fees to be earned by Madison. The development and leasing divisions,
which were established during the period, are expected to significantly
contribute to Madison`s earnings. The market capitalisation of CIREF is expected
to increase substantially over the next year.
The Board anticipates that, subject to market conditions remaining stable,
Madison`s distribution for the six months ending 31 December 2007 should exceed
36,0 cents per linked unit. This forecast has not been reviewed or reported on
by the auditors.
DISTRIBUTION
Unitholders are advised that interest distribution number 2 of 36,0 cents per
linked unit for the six months ended 30 June 2007 has been declared.
The distribution will be payable to Madison linked unitholders in accordance
with the abbreviated timetable set out below:
2007
Last date to trade "cum" interest distribution Fri, 24 Aug
Linked units to commence trade "ex"
interest distribution Mon, 27 Aug
Record date to participate in the
interest distribution Fri, 31 Aug
Payment of interest distribution no. 2 Mon, 3 Sept
There may be no de-materialisation or re-materialisation of linked units between
Monday, 27 August 2007 and Friday, 31 August 2007, both days inclusive.
On behalf of the board
HK Mehta WE Cesman
Chairman Director
7 August 2007
Registered office
3rd Floor, 2 Arnold Road, Rosebank, 2196
PO Box 55266, Parklands, 2121
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg, 2001
P O Box 61763, Johannesburg, 2000
Sponsor
Java Capital (Proprietary) Limited
Company secretary
Probity Business Services (Proprietary) Limited
Directors
WE Cesman*, MN Flax*, MK Khumalo, HK Mehta, B Nackan, M Wainer*,
G Heron (alternate)
(*Executive director)
www.madisonproperty.co.za
Date: 07/08/2007 17:12:04 Produced by the JSE SENS Department.
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