| Wed 20 Feb 2008, 7:30 | | MDN - Madison - Audited Results For The Year Ended 31 December 2007 |
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MDN
MDN - Madison - Audited Results For The Year Ended 31 December 2007
and dividend 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)
Audited results for the year ended 31 December 2007
- Final distribution of 40 cents per linked unit
- 30% increase in total distribution
- 53% total return to linked unitholders
GROUP INCOME STATEMENT
Year ended Year ended
31 December 31 December
2007 2006
R`000 R`000
Revenue 193 056 102 013
Other income 13 970 20 168
Total income 207 026 122 181
Administration costs (71 251) (43 500)
Profit from operations 135 775 78 681
Investment income 8 935 6 511
Finance costs (9 133) (662)
Net operating income 135 577 84 530
Changes in fair values and net loss on 14 392 2 198
disposal of investments
Debenture discount (6 500) -
Negative goodwill written off - 154 555
Amortisation of intangible assets (60 199) (43 228)
Amortisation of debenture premium 721 -
- Income before equity accounted results 83 991 198 055
Equity accounted results of associate (10 488) 10
Income before debenture interest and 73 503 198 065
taxation
Debenture interest (153 791) (74 100)
(Loss) profit before taxation (80 288) 123 965
Taxation 17 473 (93 354)
(Loss) profit for the year (62 815) 30 611
Attributable to:
Madison linked unitholders (63 151) 28 065
Minority 336 2 546
(62 815) 30 611
Reconciliation - headline earnings and
distributable earnings
Net loss attributable to Madison linked (63 151)
unitholders
Headline earnings adjustments
- Debenture discount 6 500
- Profit on disposal of investment in (855)
associate (net of CGT)
Headline loss attributable to shareholders (57 506)
Debenture interest 153 791
Headline earnings attributable to linked 96 285
unitholders
Distributable earnings adjustments
- Amortisation of intangible assets (net
of deferred taxation and minority`s
share) 42 007
- Amortisation of debenture premium (721)
- Equity accounted results of associate 10 488
- Amortisation of sign-on incentive 5 716
settled by issue of units
Distributable earnings attributable to 153 775
linked unitholders
Number of linked units in issue 207 628 000
Weighted average number of linked units in 199 664 734
issue
Cents
Earnings per linked unit 45.40
Headline earnings per linked unit 48.22
Distributable earnings per linked unit 77.02
Total distribution for the year ended 31 76.00
December 2007 (per linked unit)
Distribution no.3 for six months ended 31 40.00
December 2007 (per linked unit)
Distribution no.2 for six months ended 30 36.00
June 2007 (per linked unit)
GROUP BALANCE SHEET
31 December 31 December
2007 2006
R`000 R`000
Non - current assets 485 363 415 067
Property plant and equipment 1 180 861
Intangible assets 203 918 264 117
Goodwill 111 099 111 099
Investment in associate 86 683 -
Financial assets 82 483 38 990
Current assets 126 569 91 997
Receivables 53 020 14 907
Cash and cash equivalents 73 549 77 090
Total assets 611 932 507 064
Equity and Liabilities
Capital and reserves (684 015) (644 583)
Share capital and reserves (686 027) (647 087)
Minority interest 2 012 2 504
Non - current liabilities 1 171 350 1 046 261
Debenture and debenture premium 1 077 184 948 100
Interest bearing borrowings 35 117 21 669
Deferred taxation 59 049 76 492
Current liabilities 124 597 105 386
Payables 41 409 30 633
Linked unitholders for distribution 83 051 74 100
Taxation 137 653
Total equity and liabilities 611 932 507 064
Net asset value (cents per linked unit) 189.40 159.75
GROUP CASH FLOW STATEMENT
Year ended Year ended
31 December 31 December
2007 2006
R`000 R`000
Cash flows from operating activities (11 441) (841 622)
Cash generated from operations 134 910 81 104
Interest income 8 935 6 511
Finance costs (9 133) (662)
Distributions paid (144 840) (811 778)
Cash paid to minority (828) (4 790)
Taxation (485) (112 007)
Cash flows from investing activities (102 816) (130 598)
Cash flows from financing activities 110 716 1 041 739
Net increase in cash and cash equivalents (3 541) 69 519
Cash and cash equivalents at beginning of 77 090 7 571
year
Cash and cash equivalents at end of year 73 549 77 090
GROUP STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
31 December 31 December
2007 2006
R`000 R`000
Balance at beginning of year (647 087) 31 863
Issue of shares * 115 975
Issue expenses (102) (11 212)
Net (loss) profit for the year (62 815) 30 611
Attributable to minority (336) (2 546)
Dividends - (811 778)
Fair value adjustment of cash flow hedge 27 467 -
Foreign currency translation reserve (3 154) -
Balance at end of year (686 027) (647 087)
* Less than R1 000
FINANCIAL RESULTS
Madison has declared a final distribution of 40 cents per linked unit which,
together with the interim distribution of 36 cents, amounts to a total
distribution of 76 cents per linked unit for the year ended 31 December 2007,
30% higher than the annualised maiden distribution of 39 cents for 2006.
The total capital and income return to linked unitholders for the year amounts
to 53%. Based on the issue price of 500 cents, the total return since listing in
June 2006 amounts to 122%.
Revenue of R193,1 million comprises asset management fees of R141,5 million,
development fees of R22,8 million, leasing commissions of R17,1 million and
property management fees of R11,7 million. Other income of R14,0 million
includes transaction and consulting fees.
Administration costs consists of salaries and associated costs for management
and staff engaged in the asset management of ApexHi Properties Limited
("ApexHi"), Redefine Income Fund Limited ("Redefine"), Hyprop Investments
Limited ("Hyprop") and in the leasing and development divisions.
Finance costs of R9,1 million were incurred on borrowings for the acquisition
of linked units in ApexHi to provide a hedge against an incentive bonus
obligation to management and staff seconded to ApexHi. The incentive is linked
to the performance of the ApexHi C unit, payable over three years and is fully
hedged.
Surplus cash was applied against borrowings during the year, effectively
reducing the cost of borrowings by approximately 2% on portion of the debt.
Investment income of R8,9 million comprises interest on surplus cash and
distributions of R4,7 million on the ApexHi units.
Prior to its corporate restructure and listing on the JSE Limited on 7 June
2006, Madison was a private company. The income statement for the year ended 31
December 2007 is therefore not comparable to that for the previous period and
accordingly, no earnings reconciliation is presented.
SEGMENTAL ANALYSIS
ASSET MAANGEMENT FEES
COROVEST FUND MANAGERS LIMITED ("COROVEST")
Effective 1 July 2007, Madison acquired a 40% interest in Corovest, the
management company of CIREF Limited ("CIREF"), for R100,15 million. CIREF is
listed on the London Stock Exchange`s AIM and has a market capitalisation of
GBP107 million.
The cost of the investment, which is attributable to the value of Madison`s
share of Corovest`s management contract with CIREF, will be amortised over four
years. The amortisation charge of R12,5 million for the six months since
acquisition, included in the equity accounted results, does not affect
distributable income. Madison`s share of attributable profits of R2 million from
date of acquisition to Corovest`s financial year end of 30 September 2007 has
been equity accounted.
Income from Madison`s strategic investment in Corovest is expected to contribute
significantly to future income based on expected growth in CIREF by way of
acquisitions and developments in the UK and Europe.
LINKED UNITS
In February 2007, Madison issued 6 500 000 linked units as executive sign-on
incentives. The debenture discount of R6,5 million arising on these units has
been written off in the income statement and the value of the incentives has
been treated as a prepayment to be amortised over the five year period of the
executives` contracts. These charges do not affect the distributable income of
Madison.
On 28 August 2007, Madison issued 11 128 000 linked units, at a price of 875
cents per unit, to fund the acquisition of its interest in Corovest. The balance
of the purchase price of R2,78 million was paid in cash.
LIQUIDITY AND TRADEABILITY
Based on the year-end linked unit closing price of 995 cents, Madison`s market
capitalisation at 31 December 2007 was R2,066 billion compared with R1,330
billion at the end of 2006.
During the year 71,7 million linked units traded for R732,8 million on the JSE
Limited, equivalent to 39,7% of the weighted average number of linked units in
issue during the year.
PROSPECTS
The business fundamentals of Madison remain sound. The economic and market
volatality currently being experienced is expected to continue during the
current year and could provide Madison with potential for corporate action and
its managed funds with opportunities to expand their property portfolios.
The Board anticipates that, subject to market conditions remaining stable and
based on the current unit prices of the managed funds, Madison`s distribution
per linked unit, for the year ending 31 December 2008 will increase by between
10% and 12% compared to 2007. This forecast has not been reviewed or reported on
by the auditors.
WITHDRAWAL OF CAUTIONARY
Linked unitholders are referred to the cautionary announcement dated 18 December
2007 and are advised that, due to market conditions, negotiations have been
terminated and caution is no longer required to be exercised when dealing in
Madison linked units.
DISTRIBUTIONS
Unitholders are advised that interest distribution number 3 of 40 cents per
linked unit has been declared for the six months ended 31 December 2007. The
distribution will be payable to Madison linked unitholders in accordance with
the abbreviated timetable set out below:
March 2008
Last day to trade "cum" interest distribution Friday 7
Linked units "ex" interest distribution Monday 10
Record date Friday 14
Payment date Monday 17
Unitholders may not de-materialise or re-materialise their linked units between
Monday, 10 March 2008 and Friday, 14 March 2008, both days inclusive.
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. This report has been prepared in terms of IAS 34 -
"Interim Financial Reporting". These results have been audited by PKF (Jhb) Inc.
and their unqualified opinion is available for inspection at the company`s
registered office.
The accounting policies used are consistent with those applied in the annual
financial statements for the year ended 31 December 2006.
On behalf of the board
HK Mehta WE Cesman
Chairman Director
19 February 2008
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 61051, Marshalltown, 2107
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: 20/02/2008 07:30:01 Produced by the JSE SENS Department.
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