| Wed 15 Mar 2006, 8:00 | | Marshalls - Provisional report for the year ended |
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MSS
MSS
Marshalls - Provisional report for the year ended 31 December 2005 and dividend
declaration
Marshalls Limited
(Reg no: 1987/002656/06)
(Share code: MSS & ISIN: ZAE000066684)
Provisional report for the year ended 31 December 2005 and dividend declaration
The unaudited reviewed results for the year ended 31 December 2005
for Marshalls Limited and its subsidiaries are as follows:
INCOME STATEMENT
Restated
Unaudited Audited
31.12.2005 31.12.2004
R `000 R `000
Confirming fees and interest 658 1 071
Investment income 449 379
Rental and parking income 17 606 17 091
Cash flows inherent in leases and supplies 17 707 17 039
Lease smoothing effect (note 1) (101) 52
Other sundry income 52 145
Revenue 18 765 18 686
Operating profit before interest 5 512 5 738
Interest received 289 28
Interest paid (3 111) (2 534)
2 690 3 232
Unrealised surplus on revaluation of
investment properties 8 836 6 320
Realised net surplus on disposal of
listed investments 96 180
Surplus on disposal of investment
property 1 814 -
Cost of disposal of investment property (197) -
Cost of capital restructure (234) -
Realised surplus on disposal of
unlisted investments - 312
Profit before taxation 13 005 10 044
Taxation 2 442 1 684
Profit for the year 10 563 8 360
Earnings per share (cents) 60,8 48,1
Headline earnings per share (cents) 9,3 12,8
Dividends per share (cents) 12,0 10,0
Dividend cover (times) 5,1 4,8
Shares in issue 17 372 300 17 372 300
Net asset value per share (cents) 476 409
Headline earnings calculation
Profit for the year 10 563 8 360
Unrealised surplus on revaluation of
investment properties after taxation (7 755) (5 698)
Realised net surplus on disposal of
listed investments after taxation (82) (142)
Surplus on disposal of investment
property after taxation (1 592) -
Cost of disposal of investment
property after taxation 243 -
Cost of capital restructure after taxation 234 -
Realised surplus on disposal of
unlisted investments after taxation - (304)
Headline earnings for the year 1 611 2 216
ABRIDGED BALANCE SHEET
Investment properties 68 059 65 727
Other non-current asset 3 608 -
Listed investments 18 203 15 174
Property, plant and equipment 3 242 931
Non-current portion of amortised
lease receivables (note 1) 453 408
Available for sale assets 6 729 -
Current assets 5 902 5 046
Bank and cash balances 3 248 3 502
Total assets 109 444 90 788
Equity and reserves 82 726 71 096
Interest bearing borrowings 18 589 15 589
Deferred taxation 1 373 162
Current liabilities 3 012 2 872
Bank overdraft and short-term borrowings 3 744 1 069
Total equity and liabilities 109 444 90 788
STATEMENT OF CHANGES IN EQUITY
Stated capital 26 809 26 809
Non-distributable reserves 36 782 28 872
Balance at beginning of year 28 872 26 191
As previously reported 29 336 21 324
Lease smoothing effect (note 1) (464) (518)
Effect of change in accounting policy - 5 385
Transfer from distributable reserves 7 333 3 508
Currency translation movement 577 (827)
Distributable reserves 19 135 15 415
Balance at beginning of year 15 415 12 731
As previously reported 15 073 12 207
Lease smoothing effect (note 1) 342 404
Effect of change in accounting policy - 120
Profit for the year 10 563 8 360
Transfer of property revaluation to
non-distributable reserves (5 984) (3 508)
Net deficit on dispsosal
of listed investments - (187)
Transfer of net surplus on disposal
of investment properties to
non distibutable reserves (1 349) -
Surplus on revaluation of
listed investments 2 575 (244)
Dividends paid (2 085) (1 737)
Total equity and reserves at the end of the year 82 726 71 096
Note 1: Lease smoothing effect
This arose due to the application of the accepted interpretation of IAS17
(Leases). This resulted in the recognition of rental income on a straight line
basis whereas it was previously recognised in terms of the cash flows inherent
in lease agreements. A corresponding lease receivable has been recognised on
the balance sheet appropriately disclosed as a non-current and current asset.
SUMMARISED CASH FLOW STATEMENT
Restated
Unaudited Audited
31.12.2005 31.12.2004
R `000 R `000
Cash inflow/(outflow) from operating activities 5 245 7 852
Net interest and taxation paid (3 387) (3 520)
Operating cash inflow/(outflow) 1 858 4 332
Dividends paid (2 085) (1 737)
Net cash inflow/(outflow) from
operating activities (227) 2 595
Net cash inflow/(outflow) from
investing and financing activities (2 702) (460)
Net cash inflow/(outflow) for the year (2 929) 2 135
SEGMENTAL ANALYSIS
Revenue
Properties division 17 658 17 236
Confirming division 658 1 071
Investment division 449 379
18 765 18 686
Operating profit before interest
Properties division 4 836 4 689
Confirming division 439 903
Investment division 237 146
5 512 5 738
COMMENTS
The results for the year ended 31 December 2005 reflect operating profit
before interest of R5 512 000 (2004: R5 738 000 restated). Headline earnings
per share have decreased to 9,3 cents from 12,8 cents (restated) for the
comparative year. Interest paid amounted to R3 111 000 (2004: R2 534 000).
However, included in this amount is R741 000, which represents interest
recognised on interest swap derivative agreements entered into by the Group
which fixed the rate of interest for the years ahead. The fall in headline
earnings is also as a result of the disposal of investment properties and the
inability to reinvest in the short-term the entire proceeds there from.
The demand for leased light industrial property has been well documented in
the financial press and all indications are that this increased demand will
remain in place. During the financial year the Group disposed of two
investment properties in Durban. The reason for these disposals were that it
was considered prudent to exit from investments that were not considered to
have future revenue growth in line with market conditions and that did not
meet the Group"s investment profile. The Group acquired one additional
property in Cape Town during the year and another one has been transferred in
the current financial year. Excluding these transactions, year on year growth
in property revenue has approximated 15,7%, highlighting the good returns
presently being attained in the property sector. At present the Group"s
portfolio of buildings has a vacancy level less than 2% of current fully let
value.
CB Richard Ellis has valued the Group"s property portfolio on an open market
basis as at 31 December 2005 at R69 215 000 (2004: R67 110 000). Properties
held at both year ends were valued at R63 315 000 (2004: R54 810 000)
representing an increase in value of 15,5%.
The Group has geared up in anticipation of acquiring additional investment
properties. Although reinvesting is a priority, the Board of Directors will
remain patient and ensure that surplus funds are invested in investment
properties that will achieve a suitable yield and are suited to the long-term
strategy of the Group. In the final quarter of the year reported on, the Group
acquired its Durban head office. The Group has initiated the creation of a
sectional title register and will shortly dispose of the non-required sections
to third parties. These assets have been appropriately disclosed in the
balance sheet as available for sale.
The Group"s portfolio of shares in foreign listed investments reflects a
market value in South African currency of R18 197 000 (2004: R15 170 000). In
sterling currency, the portfolio value has appreciated by approximately 20%
during the year under review.
The Confirming Division has seen a continued fall off in trade. This planned
situation is likely to persist in 2006.
These provisional financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) consistent with that of the
prior year except for the effects of applying the accepted interpretation of
IAS17 (Leases). This standard requires that lease revenue be recognised on a
straight line basis and not in terms of the cash flows that are inherent in
the leases. The effect of this compliance on non-distributable reserves and
distributable reserves is reflected in the statement of changes in equity.
Total dividends declared and paid for the year ended 31 December 2005 were
12,0 cents per share (2004: 10,0 cents).
INDEPENDENT AUDITORS" REVIEW
The financial information set out in the provisional results has been
reviewed, but not audited, by the Group"s auditors, Messrs. PKF David Strachan
and Tayler. Their unqualified review report is available for inspection at the
registered office.
DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 6,5 cents per ordinary share
has been declared in respect of the year ended 31 December 2005.
In accordance with the settlement procedures of STRATE, Marshalls has
determined the last date to trade to participate in the final dividend shall
be Friday, 31 March 2006. The shares will commence trading ex-dividend from
Monday, 3 April 2006, and the record date will be Friday, 7 April 2006.
Dividends will be paid on Monday, 10 April 2006.
Share certificates may not be dematerialised, or rematerialised, between
Monday, 3 April 2006 and Friday, 7 April 2006, both days inclusive.
BY ORDER OF THE BOARD
DC Marshall, PN Lonsdale (Directors) 15 March 2006
Registered Office
11 Sunbury Park
La Lucia Ridge Office Estate, La Lucia 4319
Sponsors
Imara Corporate Finance
South Africa (Pty) Limited
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg 2001
Directors: DC Marshall (Chairman), PN Lonsdale*, BA Hose*, ME Stewart*
* non-executive directors
Date: 15/03/2006 08:00:11 AM Produced by the JSE SENS Department
