| Fri 15 Jul 2011, 17:00 | | MSP - MAS plc - Unaudited condensed interim financial statements Three months |
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MSP
MSP
MSP - MAS plc - Unaudited condensed interim financial statements Three months
from 1 March 2011 to 31 May 2011
MAS plc
Registered in the Isle of Man
Company number 2893V
Registered as an external company in the Republic of South Africa
Registration number 2010/000338/10
JSE share code: MSP
SEDOL: B4LFGHO
ISIN: IM00B4LFGH00
("the company")
Unaudited condensed interim financial statements
Three months from 1 March 2011 to 31 May 2011
MAS plc reports in-line performance for the three months ended 31 May 2011
Highlights:
- Dividend of 2.14 euro cents per share declared
- European property market remains with a large debt re-finance overhang,
exacerbated by potential sovereign defaults
- MAS plc`s portfolio continues to deliver solid income in line with
expectations
- Metchley Hall student residential development is scheduled for completion in
late August and occupation in early September 2011
- Capital raising to take place August 2011. ZAR 200 million of institutional
commitments already received from Atterbury Investment Holdings and Sanlam
- Strong pipeline of investment opportunities
Ron Spencer, Chairman of MAS plc, commented:
"The establishment of a regular dividend payment cycle is evidence of the
company`s solid progress. The declaration of a dividend relating to the first
five months of the new financial year is a demonstration of the directors`
commitment to paying out the distributable core income on a regular basis. They
believe it is appropriate to distribute such earnings immediately prior to the
next round of capital raising in August 2011. In the light of available
opportunities the directors believe the time is right for further investments.
The ongoing turmoil in the Eurozone over the past thirty six months has created,
in our opinion, generational investment opportunities, and MAS plc is well
placed to capitalise on these with the proceeds of the imminent capital
raising."
Directors` and investment advisers` report
The company`s objective is to provide investors with a high dividend yielding
investment through 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 both the Euro-MTF exchange in Luxembourg
and the Alt-X exchange in Johannesburg. On listing Euro 9 309 821 was raised
followed by a second capital raising in late March/early April 2010, which
brought the capital of the company to Euro 19 398 947. Further elections for
scrip dividends increased the capital base to Euro 19 762 959 at 31 May 2011.
Market update
Germany
At the end of 2010 and the beginning of 2011 there was an increased level of
activity between buyers and sellers in the German market and some further
tightening of yields. While concerns about the future of the euro caused some
reticence for investment, the weak currency is proving a significant benefit to
the robust German export market and the economy is performing well. In contrast
to the UK, the ECB has twice raised the ECB base rate in recent months in
response to increasing price levels. The directors expect the market to
consolidate and the volume of transactions to continue to grow, despite the
broader concerns about Europe.
Switzerland
Economic growth in Switzerland has been severely hampered by the further
appreciation of the `safe-haven` Swiss franc and internal economic developments
continue to challenge a sustained recovery. The weakening of the Swiss
commercial real estate market in 2010 has slowed and prime rents and prime
yields have stabilised, driven in particular by the market`s continued appetite
for lower risk AAA properties. The yield gap between prime and secondary
properties remains wide, confirming that risk appetite remains low. As a result
of the strong currency, the market opportunities that do exist are not as
appealing as those in Germany or some in the UK.
UK
The risk appetite evident at the beginning of the year dissipated as the
economic recovery stalled. Unlike its European counterparts, the Bank of England
has maintained short-term rates at historic lows in a bid to stimulate growth.
However, the impact of the much needed austerity measures and the reduction in
government spending are being felt across all sectors of the economy. There is
nonetheless clear evidence that the banking sector is starting to deal with much
of the debt requiring refinancing. The distress this is causing creates the very
opportunity for investors with cash on hand.
Performance and dividend
MAS plc is now firmly established in a semi-annual dividend payment cycle.
However, given the imminent capital raising in August, the directors have
declared a dividend for the 5 months to the end of July to be paid before the
inflow of new investment capital. The distributable core income for the three
months to 31 May 2011, together with the forecast income for the two months to
31 July 2011, amounts to 2.14 euro cents per share. The directors believe this
to be a satisfying level of income generation on which they can build with
additional investment funds to take advantage of opportunities in the market.
Distributable core income, the effective net income from the underlying
properties, is one of the key performance metrics and a focus of the company.
The student residential development in Birmingham, to be known as Metchley Hall,
is set for completion at the end of August in time for the autumn intake of
students. The income generated by Metchley Hall will further strengthen the
distributable core income.
Property investments
The property portfolio continues to perform well. Due to the secure nature of
the single-tenant lease agreements, vacancy rates are not applicable and the
tenants continue to trade positively.
Properties are valued annually by approved independent third-party valuers. The
most recent valuation was performed for the annual accounts for the year ending
28 February 2011. The directors remain comfortable with those valuations of the
properties, in which the DPD property was valued at CHF 21.75 million by Wuest
and Partner, the Aldi portfolio at EUR 10.06 million by DTZ and Metchley Hall at
GBP 2.7 million by Savills.
Interest rate hedges
The economic benefit of the interest rate hedges is substantial, as highly
visible positive yield spreads are locked in over the life of the investment.
The yield spread is effectively the difference between what is earned through
rentals, less the fixed or capped interest expense on debt funding. However, it
is highlighted that extremely long leases, and hence very long interest rate
hedges, result in unusually substantial non-cash mark-to-market valuations for
the hedging instruments. The directors emphasise and remain focused on the cash
generation within the business, and not the volatility arising from the
revaluation of long-term financial hedging instruments.
Further capital raising
MAS plc is undertaking a capital raising in August 2011. This will enhance the
operational leverage of the business, aid diversification of the portfolio,
improve income returns to shareholders and increase liquidity of the traded
shares. The company is in the process of building initial capital commitments
for this raising and has a strong and attractive investment pipeline. In
particular, the directors are pleased to confirm that the commitments of
Atterbury Investment Holdings and Sanlam in the upcoming capital raising have
now been irrevocably signed.
Prospects
The directors are pleased with the progress of the portfolio to date and remain
confident about future investment prospects.
Lukas Nakos Malcolm Levy
Chief Executive Director
MAS plc MAS Property Advisors Limited
15 July 2011
Further information
Helen Cullen +44 1624 625000
Lukas Nakos +44 1624 653707
Malcolm Levy +44 1624 653706
JSE Sponsor Java Capital
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
Three Three
months months Year
ended ended ended
31 May 11 31 May 10 28 Feb 11
Notes Euro Euro Euro
Income
Rental income 2 439 969 407 743 1 710 966
Finance income 206 672 - 329 918
Expenses
Investment adviser fees (73 995) (47 515) (235 417)
Operating expenses (222 710) (188 357) (689 291)
Fair value adjustments 3 (97 050) (598 545) 1 929 864
Exchange differences (41 500) 190 201 276 148
Results from operating activities 211 386 (236 473) 3 322 188
Net interest expense (165 874) (196 350) (686 023)
Profit/(loss) before taxation 45 512 (432 823) 2 636 165
Taxation - - (4 679)
Profit/(loss) for the period 45 512 (432 823) 2 631 486
Other comprehensive income
Foreign currency translation differences
123 079 - 419 907
Total comprehensive income/(loss)
for the year 168 591 (432 823) 3 051 393
Earnings per share (cents) 0.2 (2.8) 14.1
Headline earnings
per share (cents) 6 0.2 (2.8) 3.4
Weighted average number of
ordinary shares in issue 19 762 959 15 290 841 18 665 728
Distributable core income 261 009 198 951 812 782
The directors consider that all results derive from continuing activities
The notes on pages 8 to 9 form part of these consolidated financial statements
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
As at As at As at
31 May 11 31 May 10 28 Feb 11
Notes Euro Euro Euro
Non-current assets
Investment property 4 32 630 242 25 294 201 30 202 039
Current assets
Short term loans receivable 5 160 824 - 2 275 139
Trade and other receivables 1 811 921 780 330 233 425
Cash and cash equivalents 1 041 771 9 634 464 6 611 798
Total current assets 8 014 516 10 414 794 9 120 362
Total assets 40 644 758 35 708 995 39 322 401
Equity
Share capital 5 19 762 959 19 388 947 19 762 959
Retained earnings (405 658) (3 119 436) (451 170)
Foreign currency translation reserve 542 986 - 419 907
Shareholder equity 19 900 287 16 269 511 19 731 696
Non-current liabilities
Long term loans 18 457 240 17 574 683 17 689 032
Financial instruments 968 955 1 334 499 852 667
Total non-current liabilities 19 462 195 18 909 182 18 541 699
Current liabilities (amounts falling within one year)
Short term loans payable - 68 647 467 909
Trade and other payables 1 318 276 461 655 581 097
Total current liabilities 1 318 276 530 302 1 049 006
Total liabilities 20 744 471 19 439 484 19 590 705
Total equity and liabilities 40 644 758 35 708 995 39 322 401
Net asset value (cents per share) 100.7 83.9 99.8
These financial statements were approved by the board of directors on 15 July
2011 and signed on their behalf by:
Lukas Nakos Malcolm Levy
The directors consider that all results derive from continuing activities
The notes on pages 8 to 9 form part of these consolidated financial statements
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
Three Three
months months Year
ended ended ended
31 May 11 31 May 10 28 Feb 11
Euro Euro Euro
Operating activities
Profit / (loss) before taxation 45 512 (432 823) 2 636 165
Net interest expense 165 874 196 350 686 023
Finance income (206 672) - (329 918)
Movement in fair value adjustments 97 050 598 545 (1 929 864)
Changes in working capital position (1 309 227) (1 941 039) 509 073
Taxation - - (4 679)
Cash generated from/(used in)
operating activities (1 207 463) (1 578 967) 1 566 800
Investing activities
Acquisitions of investment property/
capitalised development costs (1 818 207) - (1 363 705)
Issuance of short term loans (2 885 685) - (2 095 587)
Interest received 206 672 - 122 119
Cash (used in) investing activities (4 497 220) - (3 337 173)
Financing activities
Proceeds from issuance of
share capital - 10 079 126 9 068 638
Proceeds from loan facilities - - -
Repayment of loan facilities (118 165) - (577 035)
Net interest paid (165 874) (196 350) (686 023)
Dividends paid - - (396 043)
Cash generated from
financing activities (284 039) 9 882 776 7 409 537
Net increase in cash
and equivalents (5 988 722) 8 303 809 5 639 164
Cash and equivalents at the
beginning of the year 6 611 800 1 528 307 1 528 306
Effect of exchange rate fluctuations 418 693 (197 652) (555 670)
CASH AND EQUIVALENTS AT PERIOD END 1 041 771 9 634 464 6 611 800
The directors consider that all results derive from continuing activities
The notes on pages 8 to 9 form part of these consolidated financial statements
Condensed consolidated statement of changes in equity
Currency
Share Retained translation
capital income adjustments Total
Euro Euro Euro Euro
Opening balance at
28 February 2010
(audited) 9 309 821 (2 686 613) - 6 623 208
Loss for period to
31 May 2010 - (432 823) - (432 823)
Issue of shares 10 079 126 - - 10 079 126
Closing balance at
31 May 2010(unaudited) 19 388 947 (3 119 436) - 16 269 511
Profit for the period
to 28 February 2011 - 3 064 309 - 3 064 309
Other comprehensive income - - 419 907 419 907
Total comprehensive income - 3 064 309 419 907 3 484 216
Issue of shares 374 012 - - 374 012
Dividends paid - (396 043) - (396 043)
Closing balance as at
28 February 2011
(audited) 19 762 959 (451 170) 419 907 19 731 696
Profit for the three
months to 31 May 2011 - 45 512 - 45 512
Other comprehensive income - - 123 079 123 079
Total comprehensive income - 45 512 123 079 168 591
Closing balance as at
31 May 2011
(unaudited) 19 762 959 (405 658) 542 986 19 900 287
The directors consider that all results derive from continuing activities
The notes on pages 8 to 9 form part of these consolidated financial statements
Notes to the interim consolidated financial statements
1. Significant accounting policies
This condensed consolidated interim financial information for the three months
ended 31 May 2011 has been prepared in accordance with IAS 34, `Interim
Financial Reporting`. The condensed consolidated interim financial information
should be read in conjunction with the annual financial statements for the year
ended 28 February 2011, which have been prepared in accordance with
International Financial Reporting Standards (IFRS).
Basis of accounting
The group`s results for the three months to 31 May 2011 have been prepared on a
basis consistent with the group`s accounting policies published in the financial
statements for the year ended 28 February 2011.
2. Rentals received
The rentals received consist of Euro 256 942 received from the DPD property and
Euro 183 027 received from the Aldi portfolio. Gross annual rentals of GBP504
750 relating to Metchley Hall, the Birmingham University student residential
development, are expected to begin to be received from September 2011.
3. Fair value adjustments
Fair value adjustments relate to:
Unaudited Unaudited Audited
Three Three
months months year
ended ended ended
31 May 11 31 May 10 28 Feb 11
Euro Euro Euro
DPD property
Fair value adjustment - - 116 977
Fair value adjustment -
Credit Suisse interest rate swap (54 173) (260 153) (106 403)
(54 173) (260 153) 10 574
Aldi portfolio
Fair value adjustment - - 60 000
Fair value adjustment -
Sparkasse interest rate swap/cap (42 877) (338 392) 42 665
(42 877) (338 392) 102 665
Metchley Hall
Fair value adjustment - - 1 816 625
Total (97 050) (598 545) 1 929 864
4.Investment property
Investment property is carried at the same valuations as the last audited
financial statements for the year ended 28 February 2011. Those valuations were
performed by stock exchange approved independent professional valuers. The
current investment property consists of the following: the Aldi portfolio; the
DPD property; and Metchley Hall, the Birmingham student residential development.
5.Share capital
During the three months to 31 May 2011 the company did not issue any ordinary
shares (three months ended 31 May 2010: 10 079 126 shares of no par value at
Euro 1 each). The current issued share capital of the company is 19 762 959
ordinary shares of no par value. The company does not have authorised share
capital as it is registered under the Companies Act 2006 of the Isle of Man.
Number of Share
shares capital
Euro
Balance at 28 February 2010 9 309 821 9 309 821
Issued during three months to 31 May 2010 10 079 126 10 079 126
Balance at 31 May 2010 19 388 947 19 388 947
Issued during the remainder of the year 374 012 374 012
Balance at 28 February 2011 19 762 959 19 762 959
Issued during three months to 31 May 2011 - -
Balance at 31 May 2011 19 762 959 19 762 959
6.Reconciliation of profit/(loss) for the period to headline earnings
Unaudited Unaudited Audited
Three Three
months months Year
ended ended ended
31 May 11 31 May 10 28 Feb 11
Euro Euro Euro
Profit/(loss) for the year 45 512 (432 823) 2 631 486
Adjusted for:
Revaluation of investment property - - (1 993 602)
Headline earnings 45 512 (432 823) 637 884
Headline earnings per share is based on a weighted average number of shares in
issue of 19 762 959 (three months ended 31 May 2010: 15 290 841).
SUPPLEMENTARY INFORMATION
1.Reconciliation of profit for the three months to 31 May 2011 to distributable
core income - Unaudited
Euro
Profit for the period 45 512
Adjusted for:
Movement in fair value adjustments 97 050
Exchange differences 41 500
Capital raising and structure costs 76 947
Distributable core income 261 009
Date: 15/07/2011 17:00:01 Produced by the JSE SENS Department.
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