| Mon 16 Feb 2009, 12:23 | | MDN - Madison - Audited Results For The Year Ended 31 December 2008 and |
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MDN
MDN
MDN - Madison - Audited Results For The Year Ended 31 December 2008 and
dividend declaration
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
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
* Final distribution of 42 cents per linked unit
* Total distribution of 81 cents for the year
* 6.6% increase in total distribution
* Proposed offer by Redefine
Group income statement
Audited Audited
31 December 31 December
2008 2007
R`000 R`000
Revenue 195 893 193 056
Other income 7 333 13 970
Total income 203 226 207 026
Administration costs (71 471) (71 251)
Profit before capital items 131 775 135 755
Changes in fair values of 9 755 14 392
investments
Amortisation of intangible (69 690) (60 199)
assets
Impairment of goodwill (16 903) -
Amortisation of debenture 1 443 721
premium
Debenture discount - (6 500)
Operating profit 56 360 84 189
Investment income 9 917 8 935
Finance costs (107) (9 133)
Profit before debenture 66 170 83 991
interest
Debenture interest (168 179) (153 791)
Loss before equity accounted (102 009) (69 800)
results
Equity accounted results of (15 456) (10 488)
associate
Loss before taxation (117 465) (80 288)
Taxation 21 472 17 473
Net loss for the year (95 993) (62 815)
Attributable to:
Madison shareholders (96 418) (63 151)
Minorities 425 336
(95 993) (62 815)
Reconciliation - headline
earnings and distributable
earnings
Net loss attributable to (96 418) (63 151)
Madison shareholders
Headline earnings
adjustments
- Impairment of goodwill 16 903 -
- Debenture discount - 6 500
- Profit on disposal of (191) (855)
investment
Headline loss attributable (79 706) (57 506)
to shareholders
Debenture interest 168 179 153 791
Headline earnings 88 473 96 285
attributable to linked
unitholders
Distributable earnings
adjustments
- Amortisation of intangible 47 140 42 007
assets (net of deferred
taxation and minority`s
share)
- Amortisation of debenture (1 443) (721)
premium
- Equity accounted results 15 456 10 488
of associate
- Dividend received from 13 623 -
associate
- Amortisation of sign on 5 187 5 716
incentive settled by issue
of units
- Other (249) -
Distributable earnings 168 187 153 775
attributable to linked
unitholders
Number of linked units in 207 628 000 207 628 000
issue
Weighted average number of 207 628 000 199 664 734
linked units in issue
Earnings per linked unit 34.56 45.40
(cents)
Headline earnings per linked 42.61 48.22
unit (cents)
Distributable earnings per 81.00 77.02
linked unit (cents)
Total distributions for the 81.00 76.00
year ended 31 December
Distribution six months 39.00 36.00
ended 30 June
Distribution six months 42.00 40.00
ended 31 December
Group balance sheet
ASSETS
Non-current assets 342 757 485 363
Property plant and equipment 1 037 1 180
Intangible assets 134 228 203 918
Goodwill 94 196 111 099
Investment in associate 60 691 86 684
Financial assets 42 760 82 482
Trade and other receivables 9 845 -
Current assets 108 398 126 569
Trade and other receivables 32 796 53 020
Cash and cash equivalents 75 602 73 549
Total assets 451 155 611 932
EQUITY AND LIABILITIES
Capital and reserves (793 131) (684 015)
Share capital and reserves (794 067) (686 027)
Minority interest 936 2 012
Non-current liabilities 1 131 512 1 171 350
Debentures and debenture 1 075 741 1 077 184
premium
Interest bearing borrowings 18 187 35 117
Deferred taxation 37 584 59 049
Current liabilities 112 774 124 597
Payables 25 432 41 409
Linked unitholders for 87 204 83 051
distribution
Taxation 138 137
Total equity and liabilities 451 155 611 932
Net asset value per linked 136.11 189.40
unit (cents)
Group cash flow statement
Cash flows from operating activities (28 560) (11 441)
Cash generated from operations 127 149 134 910
Interest income 9 917 8 935
Finance costs (107) (9 133)
Distributions paid (164 026) (144 840)
Cash paid to minorities (1 501) (828)
Taxation 8 (485)
Cash flows from investing activities 47 543 (102 816)
Cash flows from financing activities (16 930) 110 716
Net increase in cash and cash 2 053 (3 541)
equivalents
Cash and cash equivalents at beginning 73 549 77 090
of year
Cash and cash equivalents at end of 75 606 73 549
year
Group statement of changes in equity
Balance at beginning of year (686 027) (647 087)
Issue of shares - *
Issue expenses - (102)
Net (loss) profit for the year (95 993) (62 815)
Attributable to minorities (425) (336)
Fair value adjustment of cash flow hedge (14 776) 27 467
Foreign currency translation reserve 3 154 (3 154)
(794 067) (686 027)
* Less than R1000
COMMENTARY
Financial results
Madison has declared a distribution of 42 cents per linked unit for the six
months ended 31 December 2008, which, together with the interim distribution of
39 cents, amounts to a total distribution of 81 cents for the year, a 6.6%
increase on the total distribution of 76 cents for 2007. This was achieved
despite a 14% decline in the weighted average unit price of the managed funds,
being ApexHi Properties Limited ("ApexHi"), Redefine Income Fund Limited
("Redefine") and Hyprop Investments Limited ("Hyprop"), compared to 2007.
Total revenue of R195,9 million for the year (2007: R193,1 million) comprises
asset management fees of R138,1 million (2007: R141,5 million), development fees
of R27,4 million (2007: R22,8 million), property management fees of
R14,2 million (2007: R11,7 million), trading income of R4,2 million (2007: nil)
and net leasing commissions of R12,0 million (2007: R17,1 million). Leasing
commissions decreased as fewer transactions were concluded due to prevailing
market conditions.
Other income of R7,3 million was lower than in 2007 due to reduced corporate
activity.
Included in administration costs is amortisation of R5,2 million relating to
executive sign-on incentives and an increase in share incentive provisions of
R11,4 million which do not affect distributable earnings.
Investment income of R9,9 million comprises net interest of R6,3 million and
distributions of R3,6 million on ApexHi and Redefine units held. In 2007, net
finance costs of R9,1 million were incurred in the implementation of an
effective hedge against a liability for incentives for staff seconded to ApexHi.
Segmental analysis
Total income
Asset management 68%
Development 13%
Leasing commissions 6%
Property management 7%
Trading 2%
Other 4%
Asset management fees
ApexHi 39%
Hyprop 24%
Redefine 32%
Other 5%
International interests
Effective 1 April 2008, Madison`s interest in Corovest Fund Managers Limited
("Corovest") was diluted from 40% to 34% to facilitate the acquisition by
Corovest of a 50% interest in Wichford Property Management Limited ("WPML") for
GBP11.0 million.
Madison`s equity accounted results from its associate, Corovest, comprise an
amortisation charge of R26,8 million less Madison`s attributable share of
Corovest`s profit of R11,3 million. The net charge of R15,5 million has no
affect on distributable earnings as Madison only distributes its share of
Corovest income to the extent of dividends received.
Dividends of R13,6 million (2007: nil) received from Corovest have been included
in distributable earnings for the year.
Property Index Tracker Managers (Pty) Ltd ("Proptrax")
Subsequent to the listing of Property Index Tracker Collective Investment Scheme
on 25 September 2007, the Proptrax managed fund experienced minimal growth due
to the deterioration in market conditions. Madison disposed of its 50% interest
in Proptrax in September 2008, at a nominal profit.
Contingencies
Madison had issued a guarantee, to a maximum of R20 million, in respect of a
loan advanced to Clearwater Property Holdings (Pty) Ltd ("Clearwater") to fund
its subscription of 20 million linked units in Madison on its listing in 2006.
At year end, Clearwater had met all its obligations to in respect of the loan.
Madison has issued a guarantee, to a maximum of GBP2,68 million, for 40% of the
final tranche of the purchase price, plus interest thereon, to the seller of the
50% interest in WPML. An amount of GBP1,78 million will become payable in April
2010 in the event that Wichford PLC has not given notice to cancel the asset
management agreement with WPML before that date.
Asset management contracts
Madison`s asset management agreement with Hyprop expires on 31 December 2009.
Discussions for the renewal of this contract are in progress. Asset management
contracts with Redefine and ApexHi expire on the 31 August 2010 and 31 December
2012 respectively.
Cautionary
As more fully detailed in the joint Redefine, ApexHi and Madison announcement
released on SENS on 15 January 2009, Redefine has advised the Madison Board of
its firm intention to make an offer to acquire all of the issued linked units in
Madison and ApexHi pursuant to Schemes of Arrangement in terms of section 311 of
the Companies Act in return for Redefine linked units ("the Redefine
transaction").
Madison has appointed Grant Thornton to provide the Board with independent
advice on the Redefine transaction and this advice will be detailed in a
circular which will be posted to Madison unitholders in due course.
Linked unit liquidity and tradeability
During the year, 88,5 million linked units, equivalent to 42.6% of the number of
linked units in issue during the year, traded on the JSE Limited.
Prospects
Unit prices of the managed funds are expected to increase during 2009 as the
market responds to anticipated reductions in interest rates. However, in line
with current international trends, conditions in the property sector are
tightening which could impact performance.
The Board anticipates that, barring unforeseen changes in market conditions, the
total distribution for the year ending 31 December 2009 will be between 85 cents
and 87 cents per linked unit, an increase of between 5% and 7% on 2008. This
forecast has not been reviewed or reported on by the auditors.
Distributions
Unitholders are advised that interest distribution number 5 of 42 cents per
linked unit has been declared for the six months ended 31 December 2008. The
distribution will be payable to Madison linked unitholders in accordance with
the abbreviated timetable set out below:
March 2009
Last day to trade "cum" interest distribution Friday 6
Linked units "ex" interest distribution Monday 9
Record date Friday 13
Payment date Monday 16
There may be no de-materialisation or re-materialisation of linked units between
Monday, 9 March 2009 and Friday, 13 March 2009, both days inclusive.
Basis of preparation and accounting policies
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), JSE listing requirements and
the Companies Act. This report has been prepared in terms of IAS 34 - "Interim
Financial Reporting".
The accounting policies used are consistent with those applied in the annual
financial statements for the year ended 31 December 2007.
The independent auditors PKF (Jhb) Inc. have audited these results. Their
unqualified opinion is available for inspection at the company`s registered
office.
On behalf of the board
HK Mehta WE Cesman
Chairman Director
16 February 2009
Registered office
3rd Floor, 2 Arnold Road, Rosebank, 2196
PO Box 55266, Parklands, 2121
Transfer secretaries:
Computershare Investor Services (Proprietary) 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
HK Mehta (Chairman), WE Cesman*, MN Flax*,
MK Khumalo, B Nackan, M Wainer*, G Heron (alternate)
(*Executive director)
www.madisonproperty.co.za
Date: 16/02/2009 12:23:01 Produced by the JSE SENS Department.
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