| Tue 30 Nov 2010, 10:01 | | MSP - MAS Plc - Interim Financial Statements for the six months ended 31 August |
|
MSP
MSP
MSP - MAS Plc - Interim Financial Statements for the six months ended 31 August
2010
MAS PLC
Previously Mergon Property Holdings Limited
(Incorporated in the Isle of Man)
(Registration number 2893V)
Share code: MSP
ISIN: IM00B4LFGH00
("MAS" or "the Company")
MAS plc
("MAS plc" or "the Company")
Interim Financial Statements For the six months ended 31 August 2010
Table of Contents
Interim Financial Statements for the six months ended 31 August 2010
Page
Directors` and Investment Adviser`s Report 3
Statement of Directors` Responsibilities 5
Consolidated Statement of Comprehensive Income 6
Consolidated Statement of Financial Position 7
Consolidated Statement of Cash Flows 8
Consolidated Statement of Changes in Equity 9
Notes to the Financial Statements 10 to 21
Supplementary Information 22
Directors` and Investment Advisers` Report
Introduction
The Company`s objective is to provide investors with a high dividend yielding
direct exposure to European Commercial Property. The current focus of investment
is in the jurisdictions of Germany, Switzerland and the United Kingdom.
In August 2009 the Company listed on the Euro-MTF exchange in Luxembourg and the
Alt-x exchange in Johannesburg. On listing EUR9,309,821 was raised followed by a
second fund raising in late March/early April 2010, during which a further
EUR10,079,126 was raised, bringing the capital of the Company to EUR19,388,947.
Performance & Dividend
The Company is pleased to announce the maiden interim dividend of 2.05 euro
cents per share. This distribution is funded out of Distributable Core Income
earned during this period, which is the key metric for the determination of
dividends. This is illustrated in the supplementary page attached to these
financial statements. In the first half of the current financial period this
totalled an income of EUR 397,902, being approximately 2.1% of the share issue
price. Details regarding the payment of this dividend will be disclosed shortly.
Valuation
Properties are valued annually by approved independent third party valuers. In
the interim accounts, the Directors remain comfortable with the valuations of
the properties at year end, in which the DPD property was valued at CHF 21.6M by
Wuest and Partner and the Aldi portfolio at EUR 10M by DTZ.
Interest rate hedges
Locking in positive yield spreads between rental income and interest expenditure
through hedging the cost of debt is a sound investment policy for an income
generating investment. Accordingly, the Company pursues a conservative active
hedging policy that covers a substantial portion of the debt for the entire
lease term. As the leases in the Aldi portfolio and DPD property are
particularly long, non-cash flow income statement volatility increases
substantially when marking the hedging instruments to market during these
hedges. Further weakening in the interest rate outlook for the eurozone has
resulted in mark-to-market mark-downs on the hedges to the order of EUR 1.3M in
the current period. We emphasise and remain focused on the cash generation
within the business, and not the non-cash flow income statement volatility
arising from the revaluation of long-term financial instruments.
The Board believes that it is correct to manage interest rate exposure and will
continue to do so with new investments as they are made.
Further capital raising
The Company is in the process of securing further funding. This will continue to
enhance the operational leverage of the business, diversification of the
portfolio, income returns to shareholders and liquidity of the traded shares.
Management are in the process of building further commitments and hope to
present more good news in this regard shortly.
Prospects
Operations in the second half of the year are expected to be similar to the
first, which should result in a similar level of final dividend for the year.
Lukas Nakos Ron Spencer
Chief Executive Officer Chairman
Registered Office: Registered Agent:
25 Athol Street Onyx Management Limited
Douglas, IM1 1LB
Isle of Man
Directors
Lukas Nakos
Malcolm Levy
Gideon Oosthuizen
Ron Spencer
Jaco Jansen
Secretary
Helen Cullen
Statement of Directors` responsibilities in respect of the Directors` report and
the financial statements
The directors are responsible for preparing the Directors` Report and the
financial statements in accordance with applicable law and regulations.
The directors have elected to prepare the financial statements in accordance
with International Financial Reporting Standards.
The financial statements are required by law to give a true and fair view of the
state of affairs of the Group and of the profit/loss of the Group for that
period.
In preparing these financial statements, the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether applicable International Financial Reporting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will not continue in business.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect
fraud and other irregularities.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 AUGUST 2010
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
Notes Euro Euro
Income
Rent received 843,488 290,999
Expenses
Investment adviser fees (110,149) (71,748)
Operating expenses (333,686) (825,676)
Audit and accounting fees (41,450) (52,251)
Company administration expenses (39,070) (58,327)
Company secretarial expenses (31,912) (81,079)
Directors fees (57,425) (111,276)
General expenses (27,137) (38,147)
Legal and professional expenses 2 (69,220) (183,228)
Listing expenses 3 (57,849) (295,705)
Property Taxes & Insurance (9,623) (5,663)
Exchange differences 96,333 82,123
Fair value adjustments 6 (1,375,639) (2,114,785)
Interest income on investment loans 101,045 -
Results from operating activities (778,608) (2,639,087)
Net interest expense (350,620) (48,863)
(Loss)/profit before taxation (1,129,228) (2,687,950)
Provision for taxation 11 (75,000) -
Net (loss)/profit after taxation (1,204,228) (2,687,950)
Other comprehensive income
Foreign currency translation differences
- foreign operations 5 714,280 -
Total comprehensive (loss)/income for the year (489,948) (2,687,950)
Earnings per share (cents per share) (6.9) (78.6)
Weighted average number of outstanding
shares 4 17,351,091 3,420,493
Distributable core income 397,902 n/a
The Directors consider that all results derive from continuing activities.
The notes on pages 10 to 21 form part of these consolidated interim financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2010
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
Notes Euro Euro
Non-current assets
Investment property 9 28,120,531 24,773,271
Current assets
Short-term loans 10 3,187,818 -
Trade and other receivables 121,368 122,499
Cash and cash equivalents 5,751,276 1,528,306
9,060,462 1,650,805
Current liabilities (amounts
falling within one year)
Short-term loans - (1,384,500)
Trade and other payables (450,323) (429,010)
(450,323) (1,813,510)
Net-current assets/(liabilities) 8,610,139 (162,705)
Non-current Liabilities
Long-term loans 7 (18,353,524) (17,261,161)
Financial instruments 8 (2,164,760) (726,197)
Net assets 16,212,386 6,623,208
Capital and reserves
Share capital 4 19,388,947 9,309,821
Retained (loss)/profit (3,890,841) (2,686,613)
Foreign currency translation reserve 5 714,280 -
Shareholder equity 16,212,386 6,623,208
Net asset value (cents per share) 83.6 71.1
The Directors consider that all results derive from continuing activities.
The notes on pages 10 to 21 form part of these consolidated interim financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 AUGUST 2010
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
OPERATING ACTIVITIES Euro Euro
(Loss)/profit before taxation (1,204,228) (2,687,950)
Finance costs 350,620 48,863
Unrealised exchange differences (771,825) -
Fair value adjustments 1,375,639 2,114,785
(249,794) (524,302)
Changes in net current position 22,445 184,098
Net interest expense (350,620) (48,863)
Cash generated from operating activities (577,969) (389,066)
INVESTING ACTIVITIES
Investment properties (1,338,618) (24,020,327)
(Repayment)/proceeds from investment loans (3,166,758) -
Cash generated from investing activities (4,505,376) (24,020,327)
FINANCING ACTIVITIES
Issuance of share capital 8,694,626 9,309,721
(Repayment)/proceeds from non-current loan
facilities (102,592) 16,606,688
Cash generated from financing activities 8,592,034 25,916,409
NET INCREASE/(DECREASE) IN CASH AND EQUIVALENTS 3,508,689 1,507,016
Cash and equivalents at the beginning of the
period 1,528,307 21,291
Translation effect on revaluation of foreign
operations 714,280 -
CASH AND EQUIVALENTS AT PERIOD END 5,751,276 1,528,307
The notes on pages 10 to 21 form part of these consolidated interim financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 AUGUST 2010
Unaudited Unaudited
31 Aug-10 31 Aug-10
Share Retained
capital income
Euro Euro
Opening balance at 28 February 2009 100 1,337
Issue of shares 9,309,721 -
Profit for period to 28 February 2010 - (2,687,950)
Closing balance as at 28 February 2010 (Audited) 9,309,821 (2,686,613)
Issue of shares 10,079,126 -
Loss for period to 31 August 2010 - (1,204,228)
Foreign currency translation reserve - -
Closing balance as at 31 August 2010 (Unaudited) 19,388,947 (3,890,841)
Unaudited Unaudited
31 Aug-10 31 Aug-10
Currency
translation Total
adjustments
Euro Euro
Opening balance at 28 February 2009 - 1,437
Issue of shares - 9,309,721
Profit for period to 28 February 2010 - (2,687,950)
Closing balance as at 28 February 2010 (Audited) - 6,623,208
Issue of shares - 10,079,126
Loss for period to 31 August 2010 - (1,204,228)
Foreign currency translation reserve 714,280 714,280
Closing balance as at 31 August 2010 (Unaudited) 714,280 16,212,386
The notes on pages 10 to 21 form part of these consolidated interim financial
statements.
Notes to the interim consolidated financial statements
1. Significant accounting policies
MAS plc has prepared its financial statements in accordance with International
Financial Reporting Standards ("IFRS"). IFRS comprise accounting standards
issued by the International Accounting Standards Board ("IASB") and its
predecessor body as well as interpretations issued by the International
Financial Reporting Interpretations Committee ("IFRIC") and its predecessor
body.
Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset investments, and
in accordance with IFRS without exception.
The Group applies the revised standard IAS 1 Presentation of Financial
Statements (2007), which became effective as of 1 January 2009. As a result, the
Group presents in the consolidated statement of changes in equity all owner
changes in equity. This presentation has been applied in these financial
statements as of and for the six months ended 31 August 2010. Comparative
information has been re-presented so that it also is in conformity with the
revised standard.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are
effective for the year ended 28 February 2011, and have been applied in
preparing these consolidated financial statements:
New/Revised International Accounting Standards/
International Financial Effective date
Reporting Standards (IAS/IFRS) (accounting periods
commencing after)
IAS 1 Presentation of Financial Statements (Revised 2009) 1 January 2010
IAS 7 Statement of Cash Flows (Revised 2009) 1 January 2010
IAS 24 Related Party Disclosures - Revised definition of
related parties 1 January 2011
IAS 27 Consolidated and Separate Financial Statements -
Amendment relating to cost of an investment on first-time
adoption (Revised 2008) 1 July 2009
IAS 32 Financial Instruments: Presentation - Amendments
relating to classification of rights issues 1 February 2010
IAS 39 Financial Instruments: Recognition and Measurement -
Amendments for embedded derivatives when reclassifying
financial instruments 30 June 2009
IAS 39 Financial Instruments: Recognition and Measurement -
Amendments for eligible hedged items 1 July 2009
IAS 39 Financial Instruments: Recognition and Measurement
(Revised 2009) 1 January 2010
IFRS 8 Operating Segments (Revised 2009) 1 January 2010
IFRS 9 Financial Instruments 1 January 2013
IFRIC Interpretation
IFRIC 9 Reassessment of Embedded Derivatives 30 June 2009
The directors do not expect the adoption of the other standards and
interpretations to have a material impact on the Group`s financial statements in
the period of initial application.
Going concern
The Group has financial resources in the form of realisable investments and
adequate working capital. Accordingly, the directors continue to adopt the going
concern basis.
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings for the period under review. The
acquisition method of accounting has been adopted. Under this method, the
results of subsidiary undertakings acquired or disposed of in the year are
included in the consolidated income statement from the date of acquisition or up
to the date of disposal. Subsidiaries are those enterprises controlled by the
Company. Control exists where the Company has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that presently are
exercisable are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases. Intra-group balances and any
unrealised income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements. Unrealised losses
are eliminated in the same way as unrealised gains, but to the extent that there
is no evidence of impairment.
Revenue recognition
Revenue is accounted for on an accrual basis and includes rent received and
interest income, which are separately disclosed.
Investments
Investment Property ("IAS 40"): direct real estate investments are classified as
Investment Properties and comprise both freehold and leasehold land and
buildings and installed equipment held for the purpose of earning rental income
and for capital appreciation. Investment property is treated as a long-term
investment and is initially recognised at cost (including related transaction
costs) and subsequently carried at fair value. Subsequent additions that produce
future economic benefit to the Group are capitalised. Investment property under
construction is valued at cost.
Maintenance and repairs which neither materially add to the value of the
properties nor prolong their useful lives are expensed in the income statement.
Independent valuations are obtained on an annual basis. The directors shall
value the investment properties on an interim basis. Investment properties are
classified as held for sale when the directors have approved the disposal of the
properties. The valuation calculations are based on the aggregate of the net
annual rents receivable and associated costs, using the discounted cash flow
method. The discounted cash flow method takes projected cash flow and discounts
it at a rate which is consistent with comparable market transactions. Any gains
or losses arising from changes in fair value are included in the net profit or
loss for the year. The net gains or losses are transferred to a revaluation
reserve and are not available for distribution. These fair value adjustments are
excluded from the computation of distributable profit. Gains or losses arising
from the disposal of investment properties, being the difference between the net
disposal proceeds and the carrying value, are brought to account in the
determination of the net profit for the year.
Investments
Considerable judgment is required in interpreting market data to determine the
estimates of value; accordingly the estimates of value presented in the
financial statements are not necessarily indicative of the amounts that the
Group could realise in a market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair values.
Foreign currency
Transactions in currencies other than Euro are recorded at the rate of exchange
prevailing at the dates of the transactions. At each Statement of Financial
Position date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the Statement of
Financial Position date. Non-monetary assets and liabilities carried at fair
value that are denominated in foreign currencies are translated at the rates at
the Statement of Financial Position date. Other non-monetary assets and
liabilities denominated in foreign currencies are translated at the initial
drawdown rate. Gains and losses arising on translation are included in the net
profit or loss for the period.
Functional and Presentational Currency
The consolidated financial statements are presented in euros, which is the
Company`s functional and presentational currency. The financial statements of
entities that use a functional currency other than the euro, are translated into
euros. Assets and liabilities are translated using the exchange rates on the
respective balance sheet dates. Items in the Consolidated statement of
comprehensive income and Consolidated statement of cash flows are translated
into euros using the actual, or approximate average, rates of exchange for the
transactions. The resulting translation adjustments are recorded in other
comprehensive income. Cumulative translation adjustments are recognized as
income or expense upon partial or complete disposal or liquidation of a foreign
entity.
Net investment in foreign operations
Exchange differences arising from the translation of the net investment in
foreign operations are taken to other comprehensive income. They are recycled
and taken to profit and loss upon disposal of the operation.
Cash and cash equivalents
Cash and cash equivalents consist of cash at bank.
Other assets
Other assets consist of short term assets. The directors consider that the
carrying value of the other assets approximates to their fair value.
Borrowings
Interest bearing bank loans are recorded at the proceeds received, net of direct
issue costs. Borrowing costs are amortised over the term of the loan.
Derivatives
The Group has currency exposures related to its investments and may enter into
portfolio level and investment specific foreign exchange contracts and other
derivatives to hedge such exposures. Movements in the fair value of derivatives
are accounted for in the statement of comprehensive income.
The Group may also use interest rate derivatives to hedge interest rate exposure
on the underlying debt of the property portfolio.
Risk management
Liquidity Risk - the risk that arises when the maturity of assets and
liabilities do not match. An unmatched position potentially enhances
profitability, but can also increase the risk of losses.
The Group has internal procedures focused on ensuring the efficient but prudent
use of cash and availability of working capital. The liquidity risk inherent in
the Group is mainly as a result of the tenant risk in the property portfolio.
Should a tenant default, liquidity risk may result in the inability of the Group
to cover the interest payments. As a result adequate cash buffers are
maintained, and tenant strength is reviewed on a continual basis.
Market Price Risk - the risk that the market price of an investment or financial
instrument will fluctuate due to changes in foreign exchange rates, market
interest rates, market factors specific to the security or its issuer or factors
generally affecting all investments.
The risk to the Group relates to an imbalance between demand and supply for the
relevant investments and financial instruments in the portfolio, which could
potentially result in a disorderly market. This risk is mitigated through the
use of a dedicated Investment Manager, MAS Property Advisors Limited, focussed
on continual assessment of the portfolio and its movements in relation to the
broader market.
Foreign Exchange Risk - the Group holds both assets and liabilities denominated
in currencies other than euro, the functional and presentation currency. It is
therefore exposed to currency risk, as the value of the assets denominated in
other currencies will fluctuate due to changes in exchange rates. The Group`s
policy is to hedge, on a case-by-case basis, all foreign exchange exposures and
commitments.
Interest Rate Risk - a significant part of the funding of the companies`
portfolios derives from debt. Debt is managed on an active basis, hedging
against adverse movements in interest rates. Note 8 details the hedging
activities taken in the current year.
At the 31 August 2010 the Group had the following currency exposures:
Currency Risk Exposures
GBP CHF ZAR
Closing exchange rate 0.8266 1.2871 9.3805
MONETARY ITEMS
Cash at Bank GBP CHF ZAR
Foreign currency 902,148 585,672 243,562
Euro equivalent 1,091,396 455,032 25,965
Payables GBP CHF ZAR
Foreign currency 107,748 87,153 958,726
Euro equivalent 130,351 67,713 102,204
Receivables GBP CHF ZAR
Foreign currency 308,857 393,370 -
Euro equivalent 373,647 305,625 -
Short-term loans GBP CHF ZAR
Foreign currency 2,635,050 - -
Euro equivalent 3,187,818 - -
Long-term borrowings GBP CHF ZAR
Foreign currency - 12,850,000 -
Euro equivalent - 9,983,684 -
Interest Rate Swaps GBP CHF ZAR
Foreign currency - 1,189,580 -
Euro equivalent - 924,233 -
Total monetary exposure
Foreign currency 1,103,256 13,147,691 715,164
Euro equivalent 1,334,692 10,214,973 76,239
NON-MONETARY ITEMS
Investment property GBP CHF ZAR
Foreign currency 1,075,253 21,600,000 -
Euro equivalent 1,300,814 16,781,913 -
Taxation
Taxation on the profit or loss for the year comprises current and deferred tax
relating to operations in taxable jurisdictions. Income tax is recognised in
profit or loss except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year in
each taxable jurisdiction, using tax rates enacted or substantively enacted at
the Statement of Financial Position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the Statement of Financial Position liability
method, based on temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax bases. The amount
of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the Statement of Financial Position date.
Distributable Income
Distributable Income is the funds that have been generated by the business, as
represented by the cash rental received, less interest expenses, operating
expenses and taxation paid, that can be distributed to shareholders.
2. Legal and professional expenses
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
Legal Services - MAS Property Advisers Ltd 45,922 122,011
Independent property valuations 13,061 -
Independent taxation and professional advice 10,237 50,877
Due diligence costs and other - 10,340
69,220 183,228
3. Listing expenses
Unaudited Audited
Six Months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
Corporate advisers 31,307 251,085
Transfer secretaries 11,163 5,380
Other 5,453 13,402
JSE 5,376 5,078
Bourse de Luxembourg 4,550 20,760
57,849 295,705
One-off expenses included in the six month results relating to the second
capital raising in March 2010 amount to EUR 28,015.
4. Share capital
During the period under review, the Company issued EUR 10,079,126 ordinary
shares of no par value at EUR 1 each (period ended 28 February 2010: 9,309,821
shares of no par value at EUR 1 each). The current issued share capital of the
Company is 19,388,947 ordinary shares of no par value at 1 each. The Company
does not have authorised share capital as it is registered under the Companies
Act 2006 of the Isle of Man.
Unaudited Audited
Six months ended Year ended
31 August 2010 28 February 2010
Number Euro Number Euro
Share capital 19,388,947 19,388,947 9,309,821 9,309,821
5. Foreign currency translation reserve
The movement in the foreign currency translation reserve relates to the
following:
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
Translation of foreign operations 4,687 -
Net investment in foreign operations 709,593 -
714,280 -
6. Fair value adjustments
Fair value adjustments relate to:
Unaudited Audited
Six months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
DPD property
Fair value adjustment - DPD property - 137,308
Fair value adjustment - Credit Suisse interest
rate swap (584,643) (276,667)
(584,643) (139,359)
Aldi Portfolio
Fair value adjustment - Aldi portfolio - (1,525,896)
Fair value adjustment - Sparkasse interest rate
swap/cap (790,996) (449,530)
(790,996) (1,975,426)
Total (1,375,639) (2,114,785)
7. Long-term loans
Save for the loans set out below, no other material loans, including the issue
of debentures, have been made to MAS plc or the subsidiaries. Long-term loans
comprise the following:
Long-term loans
Unaudited Audited
Six Months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
Sparkasse Bank - Aldi Portfolio a (8,369,840) (8,369,840)
Credit Suisse - DPD Property b (9,983,684) (8,891,321)
Total (18,353,524) (17,261,161)
a) Inventive Capital S.a.r.l. (a subsidiary) received a loan of EUR 8,369,840 on
1 December 2009 from Sparkasse Bank. This is a 20-year term floating rate loan
at 95bps above Euribor. The Aldi Portfolio purchased by Inventive Capital
S.a.r.l. is held as security against this loan. There are no conversion or
redemption rights for this loan. Amortisation payments are expected to begin at
the end of 2014.
b) Petrusse Capital S.a.r.l. (a subsidiary) received a loan of CHF 13,000,000 on
15 January 2010 from Credit Suisse. This is a 15-year term floating rate loan at
90bps above Swiss LIBOR. The DPD Property purchased by Petrusse Capital Sa.r.l.
is held as security against this loan. There are no conversion or redemption
rights for this loan. Amortisation repayments of CHF 150,000 per quarter began
in June 2010 on this loan and the amount outstanding is therefore CHF 12,850,000
as at 31 August 2010. Such amortisation payments are to be financed by the
rentals received from the property.
8. Financial instruments
Reconciliation of financial instruments
Aldi DPD Total
Euro Euro Euro
Year ended 28 February 2010 (Audited)
Fair valuation of hedging instruments (449,530) (276,667) (726,197)
Six months ended 31 August 2010
(Unaudited)
Fair valuation of hedging instruments (790,997) (584,643) (1,375,640)
Foreign currency translation reserve - (62,923) (62,923)
(1,240,527) (924,233) (2,164,760)
The Group has hedged the interest rate exposure on the loans disclosed in Note
7.
75% of the Sparkasse Bank debt used to purchase the `Aldi portfolio` was hedged
with Bayern LB via an interest rate swap at a fixed rate of 4.2%, and 25% fixed
via an interest rate cap with a strike at 4.0%, on 20th October 2009. Both the
hedge and the cap started on 1st December 2009, the completion date of the
property. The mark-to-market valuation of this hedge was a negative (EUR
1,240,527) as at 31st August 2010.
70% of the Credit Suisse debt used to purchase the `DPD Property` was hedged
directly with Credit Suisse via a forward-starting interest rate swap at 2.76%
on 14th September 2009. The start date was the 15th June 2010. The mark-to-
market valuation of this hedge was a negative (EUR 924,233) as at 31st August
2010.
9. Investment property
Investment property comprises Investment properties held for rental income of
EUR 26,819,717 and Investment property under construction of EUR 1,300,814 which
are carried at cost.
Reconciliation of Investment Properties
Aldi DPD
Portfolio Property
Euro Euro
Year ended 28 February 2010
Property purchase price 10,462,300 13,950,904
Capitalised expenses:
Legal and professional costs 200,887 186,928
Notary and land registration taxes 465,019 10,663
Commissions 293,067 207,642
Transaction fees 104,623 139,137
Exchange difference - 140,689
Fair value adjustment (1,525,896) 137,308
Net Book Value 28 February 2010 (Audited) 10,000,000 14,773,271
Six months ended 31 August 2010
Foreign currency translation reserve - 2,008,642
Capitalised expenses:
Legal and professional costs - -
Net Book Value 31 August 2010 (Unaudited) 10,000,000 16,781,913
Prospective
acquisitions Total
Euro Euro
Year ended 28 February 2010
Property purchase price - 24,413,204
Capitalised expenses:
Legal and professional costs - 387,815
Notary and land registration taxes - 475,682
Commissions - 500,709
Transaction fees - 243,760
Exchange difference - 140,689
Fair value adjustment - (1,388,588)
Net Book Value 28 February 2010 (Audited) - 24,773,271
Six months ended 31 August 2010
Foreign currency translation reserve - 2,008,642
Capitalised expenses:
Legal and professional costs 37,804 37,804
Net Book Value 31 August 2010 (Unaudited) 37,804 26,819,717
Investment Property Under Construction
Golden Cross Total
Euro Euro
Property purchase price 1,209,800 1,209,800
Capitalised expenses:
Legal and professional costs 20,301 20,301
Notary, land registration taxes and stamp duty 40,468 40,468
Commissions 18,147 18,147
Transaction fees 12,098 12,098
Net Book Value 31 August 2010 (Unaudited) 1,300,814 1,300,814
Aldi DPD Golden Cross
Property details Portfolio Property Property
Birmingham,
United
Various, Zurich, Kingdom
Location Germany Switzerland
Currency EUR CHF GBP
Purchase price 10,462,300 20,535,431 1,000,000
Rent 732,108 1,304,000 -
Initial Purchase Yield 7.00% 6.35% -
Debt 8,369,840 13,000,000 -
Completion date/ Expected
Completion Date 01-Dec-09 15-Jan-10 30-Jun-10
The DPD and Aldi properties are valued at the same valuations as the third party
external valuations in the audited year end accounts. The DPD Property was
valued by Wuest and Partner at CHF 21.6 million and the Aldi portfolio by DTZ at
10 million at 28 February 2010. The Golden Cross Property (Investment property
under construction) is valued at cost.
10. Short-term loans
Unaudited Audited
Six Months Year
ended ended
31-Aug-10 28-Feb-10
Euro Euro
Argosy Capital Limited a 1,345,058 -
Mergon Property Investments 4 Limited b 1,842,760 -
Total 3,187,818 -
The Group made the following short term loans during the period:
MAS (BVI) Holdings Limited made a short term loan to Argosy Capital Ltd.
GBP1,100,000 was a) transferred in July 2010. The loan bears interest at 6.5%
per annum and is payable on the repayment of the loan. The interest receivable
for the period up to 31st August 2010 is GBP11,825. Repayment is expected before
the end of
2010.
b) MAS (BVI) Holdings Limited made a loan of GBP 1,500,000 to Mergon Property
Investments 4 Limited. The interest receivable for the period up to 31st August
is GBP 23,226. The loan bears interest at a rate of 1% for 6 months, 1.25% for
three months thereafter and 1.5% for the remaining months until the loan is
repaid within 2 years.
c) MAS (IOM) Holdings Ltd made a short term loan of GBP 600,000 to Keresforth
Limited with effect from 1st April 2010. The loan amount, including interest of
GBP 38,226, was repaid on the 14th of July 2010.
11. Taxation
Taxation is payable in the jurisdictions in which the Company owns Investment
property. 75,000 is provided for taxation in the 6 months to 31August 2010.
12. Related party transactions
During the period, the Group made the following payments to the Investment
Adviser, MAS Property Advisors Limited:
- Management fees were paid of 110,149.
- 45,922 was paid for the provision of legal services by the Investment
Adviser.
- 68,351 was paid to the Investment Adviser for the provision of a Financial
Director, Group Secretary and Group Accountant.
In addition, the loan referred to in Note 10 b) is to a related party due to
Lukas Nakos being a director of MAS plc, as well as a director of Mergon
Property Investments 4 Limited.
13. The following entities are all subsidiaries of MAS plc:
Company Name Domicile
MAS (BVI) Holdings Ltd British Virgin Islands
MAS (IOM) Holdings Ltd Isle of Man
Golden Cross Properties Ltd Isle of Man
European Property Holdings S.a.r.l. Luxembourg
Petrusse Capital S.a.r.l. Luxembourg
Inventive Capital S.a.r.l. Luxembourg
Magliaso Capital S.a.r.l. Luxembourg
Egerkingen Capital S.a.r.l. Luxembourg
14. Comparative period
The comparative period is from 1 March 2009 to 28 February 2010.
15. Beneficial Ownership
The major beneficial owners of MAS plc are as follows:
Mergon Foundation 37.11%
BNF Investments (Pty) Limited 25.74%
Amplain Limited 17.66%
Mertech Investments (Pty) Limited 9.01%
Mertech Services (Pty) Limited 6.48%
SUPPLEMENTARY INFORMATION
Reconciliation of net loss to distributable core income
Comprehensive Income (1,204,228)
Adjusted for:
Fair value adjustments 1,375,639
Capital raising and set up expenses 144,771
316,182
Interest expense a 81,720
Distributable core income 397,902
a)Standard Bank fees incurred in transferring capital raised out of South
Africa.
30 November 2010
Isle of Man
Sponsor
PSG Capital (Pty) Limited
Date: 30/11/2010 10:01:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
