| Fri 8 Aug 2008, 15:31 | | MDN - Madison - Unaudited Results For The Six Months Ended 30 June 2008 |
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MDN
MDN
MDN - Madison - Unaudited Results For The Six Months Ended 30 June 2008
Madison Property Fund Managers Holdings Limited
Registration number 2003/021772/06
Madison Property Fund Managers Limited
Registration number 2005/021874/06
("Madison" or "the group")
Share Code: MDN & ISIN Code: ZAE000080560
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
- Interim distribution of 39 cents per linked unit
- 8.3% increase in interim distribution
- International expansion
Group income statements
Unaudited 6 Unaudited 6 Audited
months months ended year
ended 30 30 June 2007 ended 31
June 2008 R`000 Dec 2007
R`000 R`000
Revenue 98 762 94 007 193 056
Other income 4 683 13 126 13 970
Total income 103 445 107 133 207 026
Administration costs (32 141) (38 423) (71 251)
Profit from operations 71 304 68 710 135 775
Investment income 4 664 2 119 8 935
Finance costs - (5 333) (9 133)
Net operating income 75 968 65 496 135 577
Changes in fair values and net loss on (9 960) 25 577 14 392
disposal of investments
Amortisation of intangible assets (30 099) (30 099) (60 199)
Amortisation of debenture premium 721 - 721
Debenture discount - (6 500) (6 500)
36 630 54 474 83 991
Equity accounted results of associate (7 955) - (10 488)
Income before debenture interest and 28 675 54 474 73 503
taxation
Debenture interest (80 975) (70 740) (153 791)
Loss before taxation (52 300) (16 266) (80 288)
Taxation 10 389 8 888 17 473
Net loss for the period (41 911) (7 378) (62 815)
Attributable to:
Madison shareholders (42 142) (7 486) (63 151)
Minorities 231 108 336
(41 911) (7 378) (62 815)
Reconciliation - headline earnings and
distributable earnings
Net loss attributable to Madison (42 142) (7 486) (63 151)
shareholders
Headline earnings adjustments
- Changes in fair values and net loss on 9 960 (25 577) -
disposal of investments
- Debenture discount - 6 500 6 500
- Profit on disposal of investment in - (855)
associate (net of CGT) -
Headline loss attributable to shareholders (32 182) (26 563) (57 506)
Debenture interest 80 975 70 740 153 791
Headline earnings attributable to linked 48 793 44 177 96 285
unitholders
Distributable earnings adjustments
- Amortisation of intangible assets (net 19 345 20 996 42 007
of deferred taxation and minorities`
share)
- Amortisation of debenture premium (721) - (721)
- Equity accounted results of associate 7 955 - 10 488
- Dividend received from associate 7 700 - -
- Provision for hedged employee incentive (4 681) 2 444 -
schemes
- Amortisation of sign-on incentive 2 594 3 123 5 716
settled by issue of units
Distributable earnings attributable to 80 985 70 740 153 775
linked unitholders
Number of linked units in issue 207 628 000 196 500 000 207 628 000
Weighted average number of linked units in
issue
- for earnings and headline earnings 207 628 000 194 381 216 199 664 734
- for distributable earnings 207 628 000 196 500 000 202 109 732
Earnings per linked unit (cents) 18.70 32.54 45.40
Headline earnings per linked unit (cents) 23.50 22.73 48.22
Distributable earnings per linked unit 39.01 36.00 76.08
(cents)
Total distribution 39.00 36.00 76.00
Distribution for the six months ended 30 39.00 36.00 36.00
June
Distribution for the six months ended 31 - - 40.00
December
GROUP BALANCE SHEETS
Unaudited Unaudited Audited
30 June 30 June 2007 31 Dec 2007
2008 R`000 R`000
R`000
ASSETS
Non-current assets 426 569 633 256 485 363
Property plant and equipment 1 171 1 002 1 180
Intangible assets 173 819 234 018 203 918
Goodwill 111 099 111 099 111 099
Investment in associate 84 361 - 86 683
Financial assets 56 119 287 137 82 483
Current assets 118 165 132 106 126 569
Receivables 41 148 41 600 53 020
Cash and cash equivalents 77 017 90 506 73 549
Total assets 544 734 765 362 611 932
EQUITY AND LIABILITIES
Capital and reserves (723 784) (652 490) (684 015)
Share capital and reserves (725 396) (654 621) (686 027)
Minority interest 1 612 2 131 2 012
Non-current liabilities 1 159 735 1 304 549 1 171 350
Debentures and debenture premium 1 076 462 980 535 1 077 184
Interest bearing borrowings 34 604 256 237 35 117
Deferred taxation 48 669 67 777 59 049
Current liabilities 108 783 113 303 124 597
Payables 27 646 42 109 41 409
Linked unitholders for distribution 81 010 70 740 83 051
Taxation 127 454 137
Total equity and liabilities 544 734 765 362 611 932
Net asset value 169,08 165,86 189,40
ABRIDGED GROUP CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 2007 31 Dec 2007
2008 R`000 R`000
R`000
Cash flows from operating activities (9 252) 762 (11 441)
Cash generated from operations 69 731 78 551 134 910
Interest income 4 664 2 119 8 935
Finance costs - (5 333) (9 133)
Distributions paid (83 016) (74 100) 144 840
Cash paid to minorities (631) (482) (828)
Taxation - 7 (485)
Cash flows from investing activities 13 233 (221 865) (102 816)
Cash flows from financing activities (513) 234 519 110 716
Net increase in cash and cash equivalents 3 468 13 416 (3 541)
Cash and cash equivalents at beginning of 73 549 77 090 77 090
period
Cash and cash equivalents at end of period 77 017 90 506 73 549
ABRIDGED GROUP STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months year ended
ended ended 31 Dec 2007
30 June 30 June 2007 R`000
2008 R`000
R`000
Balance at beginning of period (686 027) (647 087) (647 087)
Issue of shares - * *
Issue expenses - (48) (102)
Net loss for the period (41 911) (7 378) (62 815)
Attributable to minorities (231) (108) (336)
Fair value adjustment of cash flow hedge (10 560) - 27 467
Foreign currency translation reserve 13 333 - (3 154)
(725 396) (654 621) (686 027)
* Less than R1 000
COMMENTARY
Financial results
Revenue of R98,8 million (2007: R94,0 million)comprises asset management fees of
R67,8 million (2007: R68,5 million), property management fees of R7,0 million
(2007: R5,6 million), development fees of R19,5 million (2007: R12,0 million),
and leasing commissions of R4,5 million (2007: R7,9 million). Although the unit
prices of the managed funds decreased by 30% during the period under review,
asset management fees decreased by a marginal 1% as a significant portion of the
decrease occurred towards the end of the period and Madison earned additional
fees from the asset management of joint ventures with BEE partners.
Other income is lower than in 2007 which included a Spearhead transaction fee of
R10,0 million.
Included in administration costs is amortisation of R2,6 million relating to
executive sign-on incentives and a reduction in share incentive provisions of
R4,7 million which do not affect distributable earnings.
Investment income of R4,7 million comprises interest of R2,8 million and
distributions on ApexHi and Redefine units of R1,9 million. During the
comparable period, net finance costs of R3,2 million were incurred primarily as
a result of borrowings for the acquisition of ApexHi units to hedge a bonus
scheme liability.
Madison only distributes its share of income from Corovest Fund Managers
Limited ("Corovest") to the extent of dividends received. Dividends amounting to
R7,7 million (2007: nil) have been included in distributable earnings for the
period.
Madison has declared an interim distribution of 39 cents per linked unit, 8.3%
higher than the distribution of 36 cents per linked unit for the six months
ended 30 June 2007.
The growth in distribution is lower than the forecast for the year of between
10% and 12% mainly as development fees and leasing commissions were less than
anticipated due to adverse market conditions.
SEGMENTAL ANALYSIS
TOTAL INCOME ASSET MANAGEMENT FEES
Asset management 65% ApexHi 39%
Development 19% Redefine 32%
Leasing 4% Hyprop 24%
commissions
Property 7% Other 5%
management
Other 5%
International expansion
Effective 1 April 2008, Corovest acquired a 50% interest in Wichford Property
Management Limited ("WPML") for GBP11.0 million. WPML is the asset manager of
Wichford plc, a listed property investment company valued at GBP600 million with
a portfolio of 78 properties totalling 322,000m2 leased, in the main, to central
and state government bodies in the UK and Europe.
GBP5,5 million of the purchase price was paid as an initial tranche on
acquisition, of which 50% was geared, and a final tranche, which bears interest,
is payable in 2010. As part of the transaction, Standard Bank`s Real Estate
Investment Division acquired 10% of Corovest and the vendor of the 50% interest
in WPML acquired 5%, as a result of which Madison`s holding in Corovest was
diluted from 40% to 34%. This dilution relieved Madison of any obligation to
provide Corovest with funding for the initial tranche of the purchase price.
Corovest intends to fund 50% of the final tranche with borrowings, the balance
to be provided by Corovest shareholders pro-rata to their shareholdings.
Madison`s equity accounted results from its associate has no effect on
distributable earnings and comprises an amortisation charge of R13,4 million
less Madison`s attributable share of Corovest`s profit amounting to R5,4
million.
Linked unit liquidity and tradeability
During the period, 45,6 million linked units traded on the JSE Limited for
R321,1 million, equivalent to 21.9% of the number of linked units in issue.
Prospects
Property fundamentals remain sound. A continuation of current market volatility
and economic uncertainty could have an impact on asset management and
development fees and leasing commissions. Rand hedged earnings from Corovest are
anticipated to grow and Madison is pursuing local and offshore opportunities for
the company and its managed funds.
The Board anticipates that, barring unforeseen changes in market conditions and
based on current unit prices of the managed funds, Madison`s distribution for
the six months ending 31 December 2008 will be between 41 cents and 43 cents per
linked unit. This forecast has not been reviewed or reported on by the auditors.
Interim distribution
Unitholders are advised that interest distribution number 4 of 39 cents per
linked unit has been declared for the six months ended 30 June 2008. The
distribution will be payable to Madison linked unitholders in accordance with
the abbreviated timetable set out below:
2008
Last day to trade "cum" interest Friday, 22 August
Linked units "ex" interest Monday, 25 August
Record date Friday, 29 August
Payment date Monday, 1 September
There may be no de-materialisation or re-materialisation of linked units between
Monday, 25 August 2008 and Friday, 29 August 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 not been audited or reviewed
by the company`s auditors.
The accounting policies used are consistent with those applied in the annual
financial statements for the year ended 31 December 2007.
On behalf of the board
HK Mehta WE Cesman
Chairman Director
8 August 2008
Registered office
3rd Floor, 2 Arnold Road, Rosebank, 2196
PO Box 55266, Parklands, 2121
Transfer secretaries:
Computershare Investor Services(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)
Madison Property Fund Managers Holdings Limited
Registration number 2003/021772/06
Madison Property Fund Managers Limited
Registration number 2005/021874/06
("Madison" or "the company)
JSE Share Code: MDN
ISIN Code: ZAE000080560
www.madisonproperty.co.za
Date: 08/08/2008 15:31:02 Produced by the JSE SENS Department.
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