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MIP
MIP
MIP - Merchant - Audited Abridged Report For The Year Ended 30 September 2008
And Dividend Declaration
Merchant & Industrial Properties Limited
(Formerly Marshalls Limited)
Share Code: "MIP" ISIN: "ZAE000102265
("Merchant")
AUDITED ABRIDGED REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2008 AND DIVIDEND
DECLARATION
Twelve Nine months
months
Audited Audited nine
Year ended months ended
30.09.2008 30.09.2007
R `000 R `000
INCOME STATEMENT
Confirming fees and
interest 282 207
Investment income
807 559
Rental and parking
income 18,224 12,472
Cash flows inherent
in leases and parking 18,071 12,396
income
Lease smoothing
effect 153 76
Revenue
19,313 13,238
Profit before
interest 7,836 5,100
Interest received
437 464
Surplus on
revaluation of 94 369
derivative
instruments
Interest expense
(2,407) (2,108)
Profit after interest
5,960 3,825
Unrealised surplus on
revaluation of 4,075 19,216
investment properties
Realised net
surplus/(loss) on (976) (230)
disposal of listed
investments
Realised net loss on
disposal of - (40)
investment properties
Foreign currency
translation reserve 2,406 -
now realised
Cost of corporate
restructuring (25) (589)
Profit before
taxation 11,440 22,182
Taxation
2,454 7,065
Profit for the period
8,986 15,117
Earnings per share
(cents) 51.7 87.0
Headline earnings per
share (cents) 40.2 10.2
Dividend per share -
ordinary (cents) 16.0 7.0
Dividend per share -
special (cents) - 12.0
Dividend cover -
ordinary (times) 3.2 2.1
Shares in issue
17,372,300 17,372,300
Net asset value per
share (cents) 696 678
Headline earnings
calculation net of
taxation
Profit for the period
8,986 15,117
Unrealised surplus on
revaluation of (2,973) (14,184)
investment properties
Realised net
surplus/(loss) on 976 230
disposal of listed
investments
Realised net loss on
disposal of - 607
investment properties
Headline earnings for
the period 6,989 1,770
ABRIDGED BALANCE
SHEET
Investment properties
128,447 117,734
Listed investments
26,374 27,927
Property, plant and
equipment 2,949 3,147
Derivative
instruments 220 126
Non current amortised
lease receivables 631 444
Current assets
1,699 2,051
Bank and cash
balances 1,425 6,721
Total assets
161,745 158,150
Equity and reserves
120,945 117,839
Interest bearing
borrowings 17,165 16,164
Deferred taxation
18,862 18,389
Current liabilities
4,773 4,865
Bank overdraft and
short term borrowings - 893
Total equity &
liabilities 161,745 158,150
STATEMENT OF CHANGES
IN EQUITY
Stated capital
26,809 26,809
Non-distributable
reserves 67,691 65,616
Balance at beginning
of period 65,616 51,882
As previously
reported - 60,788
Prior year adjustment
- (8,906)
Transfer to
distributable 141 (97)
reserves
Transfer from
distributable 4,336 13,626
reserves
Currency translation
movement (2,402) 205
Distributable
reserves 26,445 25,414
Balance at beginning
of period 25,414 25,744
As previously
reported - 26,011
Prior year adjustment
- (267)
Profit for the period
8,986 15,117
Transfer of surplus
on investment
property revaluations
to non-distributable
reserves (4,336) (13,620)
Transfer from non-
distributable (141) 97
reserves
Transfer to non-
distributable - (6)
reserves
Unrealised surplus on
revaluation of listed (1,674) 1,153
investments
Realised deficit on
disposal of listed 976 230
investments
Dividends paid
(2,780) (3,301)
Total equity and
reserves at the end 120,945 117,839
of the period
SUMMARISED CASH FLOW
STATEMENT
Cash generated by
operating activities 7,893 8,159
Net interest and
taxation paid (3,638) (3,367)
Operating cash inflow
4,255 4,792
Dividends paid
(2,780) (3,301)
Net cash inflow from
operating activities 1,475 1,491
Net cash inflow from
investing and (5,878) 3,160
financing activities
Net cash inflow for
the period (4,403) 4,651
SEGMENTAL ANALYSIS
Revenue
Properties division
18,224 12,472
Confirming division
282 207
Investment division
807 559
19,313 13,238
Profit before
interest
Properties division
6,971 4,398
Confirming division
245 290
Investment division
620 412
7,836 5,100
COMMENTARY
Introduction
The group has produced a very satisfactory set of results for the past financial
year. The results presented are for the full twelve months ended 30 September
2008, whereas the comparable period represents only the nine-month period ended
30 September 2007.
Basis of preparation and accounting policies
This financial report complies with International Accounting Standard 34 -
Interim Financial Reporting as well as with Schedule 4 of the South African
Companies Act and the disclosure requirements of the JSE Limited`s Listings
Requirements. The financial report has been prepared using accounting policies
that comply with International Financial Reporting Standards. The accounting
policies are consistent with those applied in the financial statements for the
nine-month period ended 30 September 2007.
Review of operating results
Operating profit before interest amounted to R7 836 045 (2007: R5 100 342). This
is a 15% increase on the 2007 annualised operating profit of R6 800 456.
Interest expense was R2 406 567 (2007: R2 107 826). This is a 14% decrease on
the 2007 annualised interest expense of R2 810 435. Headline earnings per share
have increased to 40,2 cents per share (2007: 10,2 cents per share). Excluding
the non-recurring realisation of the foreign currency translation reserve of R2
406 280, due to the deregistration of Marshalls Confirming (Jersey) Limited, the
effective headline earnings per share is 26,4 cents per share, a 94% increase on
the 2007 annualised headline earnings per share of 13,6 cents per share.
The substantial inflationary impact on operating expenditure has been offset by
increased efficiencies within the group, resulting in a commendable slight
decrease in the efficiency ratio to 62% (2007: 63%). Total assets under
management at the year end amounted to R161 744 718 (2007: R158 149 940), within
excess of 96% of this value being represented by tangible and marketable assets
and cash.
Property division
As part of the group`s continual drive to improve the quality of its property
portfolio, it acquired a service station in Jacobs, Durban for R6,5 million at a
projected initial yield of 11% during the financial year. At the year end the
group`s property portfolio was valued by CB Richard Ellis at R129 775 000 (2007:
R119 050 000). Properties held at both reporting financial period ends were
valued at R123 675 000 (2007: R119 050 000). For properties owned and managed
throughout both reporting financial periods, the gross rental income (excluding
parking income) has grown by 9,3%. At present the vacancy level based on fully
let value is 3%, well below the regional averages for Durban and Cape Town.
Further investments have been hampered by the shortage of suitable properties
and falling yields.
Confirming division
This segment`s income remains a small part of the group`s results, with the only
significant development during the year being the deregistration of Marshalls
Confirming (Jersey) Limited on 4 December 2007.
Investment division
The market value of the foreign listed share portfolio was R26 374 395, being
GBP1 777 412 translated at 1: R14,839 (2007: R27 927 427, being GBP1 987 412
translated at 1: R14,052). Despite its fall in value, the portfolio generated an
increase in revenue of 37%. The group`s portfolio is well diversified between
the United Kingdom - 40% (2007: 43%), United States of America - 13% (2007: 12%)
and Western Europe - 47% (2007: 45%). The portfolio is considered by the group
to be an investment of a long-term nature, and thus the decrease in global
equities values since 30 September 2008 has not been cause for undue concern.
Additionally, the weakening Rand has largely mitigated the portfolio`s Sterling
decline.
Marshall Monteagle Holdings Societe Anonyme
Your directors are recommending that shareholders accept the current offer being
made of 33 shares in Marshall Monteagle Holdings SA for every 100 Merchant
shares presently held. Full details will be included in a circular which will be
distributed to all shareholders in due course.
Dividend declaration
Notice is hereby given that a final cash dividend of 7 cents per ordinary share
has been declared in respect of the financial year ended 30 September 2008.
In accordance with the settlement procedures of Strate, Merchant has determined
that the last date to trade to participate in the interim dividend shall be
Friday, 16 January 2009. The shares will commence trading ex-dividend from
Monday, 19 January 2009, and the record date will be Friday, 23 January 2009.
Dividends will be paid on Monday, 26 January 2009.
Share certificates may not be dematerialised, or rematerialised, between Monday,
19 January 2009 and Friday, 23 January 2009, both days inclusive.
By order of the Board
DC Marshall, PN Lonsdale (Directors)
Durban
23 December 2008
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 23/12/2008 07:05:23 Produced by the JSE SENS Department.
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