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MIP
MIP
MIP - Merchant & Industrial Properties Limited - Preliminary report for the
nine months ended 30 september 2007 and dividend declaration
Merchant & Industrial Properties Limited
(formerly Marshalls Limited)
(Registration number: 1987/002656/06)
(Share code: MIP & ISIN-number: ZAE000102265)
Preliminary Report For The Nine Months Ended 30 September 2007 And Dividend
Declaration
INCOME STATEMENT
Restated
Nine months ended Twelve months
30 .09.2007 Ended
R `000 31.12.2006
R`000
Confirming fees and 207 443
interest
Investment income 559 548
Rental and parking income 12,472 15,866
Cash flows inherent in 12,396 15,956
leases and parking income
Lease smoothing effect 76 (90)
Revenue 13,238 16,857
Profit before interest 5,100 6,496
Interest received 464 445
Surplus on revaluation of 369 498
derivative instruments
Interest expense (2,108) (2,821)
Profit after interest 3,825 4,618
Unrealised surplus on 19,216 24,959
revaluation of investment
properties
Realised net surplus/(loss) (230) 586
on disposal of listed
investments
Realised net loss on (40) -
disposal of investment
properties
Cost of corporate (589) -
restructuring
Profit before taxation 22,182 30,163
Taxation 7,065 7,343
Profit for the period 15,117 22,820
Earnings per share (cents) 87.0 131.4
Headline earnings per share 10.2 16.8
(cents)
Dividend per share - 7.0 13.5
ordinary (cents)
Dividend per share - 12.0 -
special (cents)
Dividend cover - ordinary 2.1 1.2
(times)
Shares in issue 17,372,300 17,372,300
Net asset value per share 678 601
(cents)
Headline earnings
calculation net of taxation
Profit for the period 15,117 22,820
Unrealised surplus on (14,184) (19,399)
revaluation of investment
properties
Realised net surplus/(loss) 230 (510)
on disposal of listed
investments
Realised net loss on 607 -
disposal of investment
properties
Headline earnings for the 1,770 2,911
period
ABRIDGED BALANCE SHEET
Restated
30.09.2007 31.12.2006
R `000 R`000
Investment properties 117,734 104,007
Listed investments 27,927 25,783
Property, plant and 3,147 3,192
equipment
Derivative instruments 126 -
Non current amortised lease 444 378
receivables
Current assets 2,051 3,639
Bank and cash balances 6,721 7,255
Total assets 158,150 144,254
Equity and reserves 117,839 104,435
Interest bearing borrowings 16,164 17,161
Deferred taxation 18,389 13,139
Current liabilities 4,865 3,441
Bank overdraft and short 893 6,078
term borrowings
Total equity & liabilities 158,150 144,254
STATEMENT OF CHANGES IN EQUITY
Nine months Restated
Ended Twelve
30.09.2007 months
R `000 Ended
31.12.2006
R`000
Stated capital 26,809 26,809
Non-distributable reserves 65,616 51,882
Balance at beginning of 51,882 31,739
period
As previously reported 60,788 36,783
Prior year adjustment (8,906) (5,044)
Transfer to distributable (97) (86)
reserves
Transfer from distributable 13,626 19,536
reserves
Currency translation 205 693
movement
Distributable reserves 25,414 25,744
Balance at beginning of 25,744 18,847
period
As previously reported 26,011 19,093
Prior year adjustment (267) (246)
Profit for the period 15,117 22,820
Transfer of surplus on
investment property
revaluations
to non-distributable (13,620) (19,536)
reserves
Transfer from non- 97 86
distributable reserves
Transfer to non- (6) -
distributable reserves
Unrealised surplus on 1,153 5,872
revaluation of listed
investments
Realised deficit on 230 -
disposal of listed
investments
Dividends paid (3,301) (2,345)
Total equity and reserves 117,839 104,435
at the end of the period
SUMMARISED CASH FLOW STATEMENT
Nine Restated
months Twelve months
Ended Ended
30.09.2007 31.12.2006
R `000 R`000
Cash generated by operating 8,159 10,178
activities
Net interest and taxation (3,367) (4,174)
paid
Operating cash inflow 4,792 6,004
Dividends paid (3,301) (2,345)
Net cash inflow from 1,491 3,659
operating activities
Net cash inflow from 3,160 (1,985)
investing and financing
activities
Net cash inflow for the 4,651 1,674
period
SEGMENTAL ANALYSIS
Nine Restated
months Twelve months
Ended Ended
30.09.2007 31.12.2006
R `000 R`000
Revenue
Properties division 12,472 15,866
Confirming division 207 443
Investment division 559 548
13,238 16,857
Profit before interest
Properties division 4,398 5,893
Confirming division 290 83
Investment division 412 520
5,100 6,496
COMMENTS
Introduction
The results presented are for the nine month period ended 30th September
2007 while the comparable period represents a full twelve months` results
for the year ended 31st December 2006. During the reporting period Marshall
Monteagle Holdings Societe Anonyme increased its interest in the Group to
69,7% via a share for share exchange. Furthermore, the company changed its
name from Marshalls Limited to Merchant & Industrial Properties Limited.
Review of operating results
Profit before interest amounted to R5,100,000 (2006: R6,496,000 restated).
Interest expense decreased to R2,108,000 (2006: R2,821,000 restated).
Headline earnings per share has been based on Circular 8/2007 and equates to
10,2 cents per share (2006: 16,8 cents per share restated). A comparison
between the periods disclosed is distorted because of the change of year end
but should the current period`s results be annualised then there is a
comparable decrease of 12,5% to 14,7 cents per share. Excluding the
corporate transaction costs of R589,000, which are effectively once off
charges, a true earnings number of 18,1 cents per share results for the
current period.
Property division
As reported on in the 2006 annual report, the Group disposed of one property
for a net disposal price of R13 million. During the same period it acquired
one light industrial property in Durban for R7,3 million.
Yields offered by sellers for properties on the market have not increased as
a result of the recent increases in the prime interest rate. Consequently
the Group has again found it difficult to acquire suitable stock within its
operational areas of Cape Town and Durban.
At the period end the Group`s property portfolio was valued by CB Richard
Ellis at R119,050,000 (2006: R105,150,000 restated). Properties held at both
reporting period ends were valued at R111,150,000 (2006: R92,100,000).
Certain properties in central Durban have been considered as possible
development opportunities. The Group`s valuation referred to above reflected
a value of R37,200,000 for these properties based on a current rental use
basis. Taking into account the current climate of property development in
South Africa, these properties may have an alternative development value of
up to double the current use value.
Investment division
The market value of the foreign listed share portfolio was R27,927,000
(2006: R25,783,000 restated). In Sterling terms the portfolio value has
increased by approximately 6,5% through a combination of new acquisitions
and market gains.
Prior year adjustment
There has been uncertainty and disagreement on the correct tax rate to use
on revaluations of investment properties above cost. The Group has decided
to use the company tax rate as opposed to the capital gains tax rate. The
effect of this change on opening equity is as follows -
Increase in taxation charge for 2006 R3,883,000
Decrease in equity at beginning of 2006 R5,290,000
Total decrease in equity for 2006 R9,173,000
International Financial Reporting Standards (IFRS)and IAS 34
These provisional financial statements have been prepared in accordance with
IFRS and IAS 34 consistent with that of the prior period except for the
effect of the prior year adjustment referred to above.
Dividend declaration
Notice is hereby given that a final dividend of 9,0 cents per ordinary share
has been declared in respect of the period ended 30 September 2007.
In accordance with the settlement procedures of STRATE, Merchant has
determined the last date to trade to participate in the final dividend shall
be Friday, 18 January 2008. The shares will commence trading ex-dividend
from Monday, 21 January 2008, and the record date will be Friday, 25 January
2008.
Dividends will be paid on Monday, 28 January 2008.
Share certificates may not be dematerialised, or rematerialised, between
Monday, 21 January 2008 and Friday, 25 January 2008, both days inclusive.
By order of the Board
DC Marshall, PN Lonsdale (Directors)
19 December 2007
Sponsor: Sasfin Capital
Date: 19/12/2007 15:00:01 Produced by the JSE SENS Department.
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