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MIP
MIP
MIP - Merchant & Industrial Properties Limited - Audited results for the year
ended 30 September 2010, dividend declaration and notice of Annual General
Meeting
Merchant & Industrial Properties Limited
(Registration number: 1987/002656/06)
(Share code: MIP ISIN-number: ZAE000102265)
Audited results for the year ended 30 September 2010, dividend declaration
and notice of annual general meeting
STATEMENT OF COMPREHENSIVE INCOME
Year Year ending Year ending
ending
30.09.2010 30.09.2009 30.09.2008
R `000 R `000 R `000
Confirming fees and interest 83 133 282
Investment income 574 626 807
Rental and parking income 21,790 20,672 18,224
Cash flows inherent in leases and 21,827 20,520 18,071
parking income
Lease smoothing effect (37) 152 153
Revenue 22,447 21,431 19,313
Operating profit 9,444 8,029 7,836
Unrealised surplus on fair value 2,062 57 4,075
adjustment of investment properties
Cost of corporate restructuring (2) (301) (25)
Foreign currency translation - - 2,406
reserve now realised
Realised net profit/(loss) on 257 (166) (976)
disposal of listed investments
(Loss)/profit on fair value (318) (375) 94
adjustment of derivative
instruments
Profit before interest 11,443 7,244 13,410
Interest received 189 139 437
Interest expense (2,555) (2,544) (2,407)
Profit before taxation 9,077 4,839 11,440
Taxation 2,871 1,881 2,454
Profit for the year 6,206 2,958 8,986
Other comprehensive loss
(Devaluation)/revaluation of (178) 1,718 -
property
- Gross (248) 2,386
- Tax effect 70 (668)
Unrealised loss on revaluation of (114) (3,127) (699)
investments
- Gross 89 (3,725) (1,886)
- Tax effect 54 432 211
- Reclassification (257) 166 976
Foreign currency translation - - (2,402)
reserve movement
- Gross - - (2,402)
- Tax effect - - -
Total comprehensive income for the 5,914 1,549 5,885
year
Earnings per share (cents) 35.7 17.0 51.7
Headline earnings per share (cents) 25.4 17.6 40.2
Dividend per share - ordinary 20.0 14.0 16.0
(cents)
Dividend cover - ordinary (times) 1.8 1.2 3.2
Shares in issue 17,372,300 17,372,300 17,372,300
Net asset value per share (cents) 705 691 696
Reconciliation of headline earnings
Headline earnings calculation net
of taxation
Profit for the year 6,206 2,958 8,986
Surplus on sale of property, plant (39)
and equipment
Unrealised surplus on revaluation (1,501) (70) (2,973)
of investment properties
Realised net (profit)/loss on (252) 166 976
disposal of listed investments
Headline earnings for the year 4,414 3,054 6,989
ABRIDGED STATEMENT OF FINANCIAL POSITION
Year ending Year ending Year ending
30.09.2010 30.09.2009 30.09.2008
R `000 R `000 R `000
Investment properties 130,964 128,820 128,447
Listed investments 22,623 17,189 26,374
Property, plant and equipment 5,248 5,201 2,949
Derivative instruments - - 220
Straight-line lease assets 974 773 631
Current assets 1,131 1,408 1,699
Bank and cash balances 1,615 7,450 1,425
Total assets 162,555 160,841 161,745
Equity and reserves 122,501 120,062 120,945
Interest-bearing borrowings 5,152 16,103 17,165
Deferred taxation 19,261 18,972 18,862
Derivative instruments 473 156 -
Current liabilities 15,168 5,548 4,773
Total equity & liabilities 162,555 160,841 161,745
STATEMENT OF CHANGES IN EQUITY
Stated Non- Distributable Total
distributable
capital reserves reserves Equity
Balance at 1 October 26,809 65,616 25,414 117,839
2007
Total Comprehensive - (2,402) 8,288 5,886
income for the year
- Profit for the period - - 8,986 8,986
- Other comprehensive - (2,402) (698) (3,100)
loss
Transfer of reserves - 4,477 (4,478) (1)
-Unrealised surplus on - 4,336 (4,337) (1)
revaluation of
investment property
-Duplicate asset reserve - 141 (141) -
Dividends (2,780) (2,780)
Balance at 1 October 26,809 67,691 26,444 120,944
2008
Total Comprehensive - 1,718 (168) 1,550
income for the year
- Profit for the period - - 2,958 2,958
- Other comprehensive - 1,718 (3,126) (1,408)
loss
Transfer of reserves - 899 (899) -
-Unrealised surplus on - 799 (799) -
revaluation of
investment property
-Duplicate asset reserve - 100 (100) -
Dividends (2,432) (2,432)
Balance at 1 October 26,809 70,308 22,945 120,062
2009
Total Comprehensive - (179) 6,092 5,913
income for the year
- Profit for the period - - 6,206 6,206
- Other comprehensive - (179) (114) (293)
loss
Transfer of reserves - 876 (876) -
-Unrealised surplus on - 819 (819) -
revaluation of
investment property
-Duplicate asset reserve - 57 (57) -
Dividends (3,474) (3,474)
Balance at 30 September 26,809 71,005 24,687 122,501
2010
SUMMARISED CASH FLOW STATEMENT
Cash generated by 9,236 9,216 7,893
operating activities
Net interest and (5,417) (4,295) (3,638)
taxation paid
Operating cash inflow 3,819 4,921 4,255
Dividends paid (3,474) (2,432) (2,780)
Net cash inflow from 345 2,489 1,475
operating activities
Net cash inflow (6,180) 3,536 (5,878)
/(outflow) from
investing and financing
activities
Net cash inflow (5,835) 6,025 (4,403)
/(outflow) for the year
SEGMENTAL ANALYSIS
Revenue
Property division 21,790 20,672 18,224
Confirming division 83 133 282
Investment division 574 626 807
22,447 21,431 19,313
Operating profit
Property division 9,121 8,557 6,971
Confirming division 190 126 245
Investment division 133 (654) 620
9,444 8,029 7,836
COMMENTARY
Accounting policies
The financial results for the year ended 30 September 2010 are prepared in
accordance with International Financial Reporting Standards
("IFRS"),International Accounting Standard 34 (IAS 34), AC 500 standards,
schedule 4 of the South African Companies Act and the JSE Limited Listings
Requirements.
The accounting policies applied are consistent with those of the previous
financial year.
Audit Report
The financial results for the year ended 30 September 2010 have been audited by
PKF (Durban) and their unqualified audit report is available for inspection at
the Company`s registered office.
Review of operating results
Operating profit is up 18% to R9 444 104 for the year under review, compared to
R8 028 665 for the preceding twelve months. Interest expenses was R2 554 683
(2009: R2 544 243). Headline earnings per share have increased to 25,4 cents
per share (2009: 17,6 cents per share) and earnings per share to 35,7 cents per
share (2009: 17,0 cents per share).
The efficiency ratio which measures operating expenses as a percentage of
revenue has decreased to 60% (2009: 64%). This pleasing decrease is as a direct
result of active property and cost management during the year under review.
Total assets under management at the year-end amounted to R162 554 961 (2009:
R160 841 058), with in excess of 98% of this value being represented by tangible
and marketable assets and cash.
Property Division
No properties were acquired or disposed of during the financial year. At the
year-end, the group`s investment property portfolio was valued by CB Richard
Ellis at R132 250 000 (2009: R130 200 000) and the average annualised yield of
the group`s portfolio was 10,9% (2009: 10,1%).
Certain properties in central Durban have been considered as possible
development opportunities. The group`s valuation referred to above reflected a
value of R40 900 000 (2009: R40 100 000) for these properties based on a current
rental use basis. These properties may have a greater development value in the
event of realisation.
The gross rental income (excluding parking income) has grown by 8%. At present
the vacancy level based on fully let value is 1,4% (2009: 2,5%), well below the
regional averages for Durban and Cape Town. Further investments have been
hampered by the shortage of suitable properties with reasonable yields.
Confirming division
This segment`s results remain a small part of the group`s results with no
significant developments during the year.
Investment division
The group`s permanent portfolio of shares in foreign listed investments and
currencies reflects a market value of R23 957 593, being GBP2 181 751 translated
at GBP1: R10,98 (2009: R23 387 300, being GBP1 976 215 translated at GBP1:
R11,83). The increase is due to the slight steadying of international equity
markets overcoming a strengthening Rand. The group continues to hold a strong
portfolio of quality equities which is well diversified between the United
Kingdom: 26% (2009: 42%), United States of America: 28% (2009: 16%) and Western
Europe: 46% (2009: 42%).
Appreciation
On behalf of the board of directors and shareholders I wish to extend my sincere
appreciation and thanks to the entire group`s staff for their efforts during the
past year. Their dedication and support have contributed greatly to the success
of the group.
Dividend declaration
Notice is hereby given that a final dividend of 11,0 cents per ordinary share
has been declared in respect of the year ended 30 September 2010. In accordance
with the settlement procedures of Strate, Merchant has determined the last date
to trade to participate in the final dividend shall be Friday, 14 January 2011.
The shares will commence trading ex-dividend from Monday, 17 January 2011, and
the record date will be Friday, 21 January 2011. Dividends will be paid on
Monday, 24 January 2011. Share certificates may not be dematerialised, or
rematerialised, between Monday, 17 January 2011 and Friday, 21 January 2011,
both days inclusive.
Posting of annual report and notice of annual general meeting
The annual financial statements will be posted to shareholders on or about
Tuesday, 21 December 2010.
The annual general meeting of the company will be held in the Boardroom, 11
Sunbury Park, La Lucia Ridge Office Estate Durban, 4319 on 8 February 2011 at
09H00 to transact the business as stated in the annual general meeting notice
forming part of the annual financial statements.
By order of the Board
DC Marshall, PN Lonsdale (Directors)
17 December 2010
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 17/12/2010 15:20:01 Produced by the JSE SENS Department.
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