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MCP
MCP
MICC Property Income Fund Limited - Abridged Audited Results For
the 18 Months Ended 31 March 2006
MICC PROPERTY INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/013376/07)
South African share code: MCP
Namibian share code: MCO
ISIN: ZAE000050175
ABRIDGED AUDITED RESULTS
for the 18 months ended 31 March 2006
ABRIDGED GROUP INCOME STATEMENT
18 months 12 months
ended ended
31 March 30 September
2006 2004
Group
R"000 R"000
Property revenue 287 936 182 497
Straight-line rental income
accrual 5 629 4 953
Gross property revenue 293 565 187 450
Property expenses (98 328) (60 876)
Net profit from property
operations 195 237 126 574
Administrative expenses (5 979) (8 696)
Investment income 2 073 1 709
Operating profit before finance
charges 191 331 119 587
Finance costs (86 018) (57 066)
Net profit before debenture
interest 105 313 62 521
Debenture interest (94 711) (48 962)
Net profit before fair value
changes 10 602 13 559
Fair Value Adjustment 201 139 76 021
Gross change in fair value of
investment properties 206 768 80 974
Straight-line rental income
adjustment (5 629) (4 953)
Net profit before taxation 211 741 89 580
Taxation (58 010) (31 516)
Net profit 153 731 58 064
Reconciliation 18 months ended 12 months ended
of net profit to 31 March 2006 30 September 2004
headline earnings Group Group Group Group
Cents Cents
per per
linked linked
R"000 unit R"000 unit
Attributable profit
after taxation 153 731 229.47 58 064 86.67
Adjusted for:
Change in fair
value of investment
properties (206 768) (308.64) (80 974) (120.87)
Straight-line
rental accrual
net of deferred
taxation 3 997 5.97 3 467 5.18
Deferred taxation
on fair value
adjustment of
investment
properties 58 523 87.36 26 887 40.13
Debenture interest
- Current year 94 711 141.37 48 962 73.09
Headline earnings
of linked units 104 194 155.53 56 406 84.20
Straight-line
rental accrual
net of deferred
taxation (3 997) (5.97) (3 467) (5.18)
Accumulated loss
from prior year (599) (0.89) - -
Available for
distribution 99 598 148.67 52 939 79.02
Distributions for
the period 94 732 141.4 48 968 73.1
Total number of
linked units in
issue 66 992 698 66 992 698
Weighted average
number of linked
units in issue 66 992 698 66 992 698
Distributions to MICC Total Interest Dividend
unitholders distribution distribution
to linked to linked
unitholders unitholders
Cents Cents
per per
linked linked
R"000 R"000 unit R"000 unit
2004 Top-up 2 617 2 616 3.9 1 -
Current year - First 27 802 27 796 41.5 6 -
Current year - Second 30 147 30 140 45.0 7 -
Current year - Third 34 166 34 159 51.0 7 -
Total distribution 94 732 94 711 141.4 21 -
ABRIDGED GROUP BALANCE SHEET
As at As at
31 March 30 September
2006 2004
Group Group
R"000 R"000
ASSETS
Non-current assets 954 053 985 117
Investment properties 901 919 936 278
Investment properties - at fair
value 910 312 941 231
Straight-line rental income
adjustment (8 393) (4 953)
Other non-current assets 52 134 48 839
Straight-line rental income
asset 8 393 4 953
Furniture, fittings and computer
equipment 104 249
Goodwill 43 637 43 637
Current assets 30 615 27 514
Trade and other receivables 7 812 5 871
Cash and cash equivalents 22 803 21 643
Non-current assets held for sale 244 770 -
Investment properties 242 581 -
Investment properties at fair
value 244 770 -
Straight-line rental income
adjustment (2 189) -
Straight-line rental income asset 2 189 -
Total assets 1 229 438 1 012 631
EQUITY AND LIABILITIES
Equity and reserves 244 208 90 498
Share capital 67 67
Share premium 32 373 32 373
Reserves 211 768 58 058
Non-current liabilities 930 353 873 463
Linked debentures and premium 301 467 301 467
Interest bearing borrowings 502 445 502 445
Deferred taxation 126 441 69 551
Current liabilities 54 877 48 670
Trade and other payables 13 171 14 357
Tenant deposits 6 869 4 943
Taxation payable 670 5 190
Linked unitholders for
distribution 34 167 24 180
Total equity and liabilities 1 229 438 1 012 631
ABRIDGED GROUP CASH FLOW STATEMENT
18 months 12 months
ended ended
31 March 30 September
2006 2004
Group Group
R"000 R"000
CASH FLOW FROM OPERATING
ACTIVITIES 8 098 46 016
Cash generated from operations 182 428 126 573
Investment and other income 2 073 1 709
Finance costs (86 018) (57 066)
Distributions paid (84 745) (24 788)
Taxation paid (5 640) (412)
CASH FLOW UTILISED IN INVESTING
ACTIVITIES (6 938) (591 821)
CASH FLOW FROM FINANCING
ACTIVITIES - 567 448
Net increase in cash and cash
equivalents 1 160 21 643
Cash and cash equivalents at the
beginning of the period 21 643 -
Cash and cash equivalents at the
end of the period 22 803 21 643
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
for the eighteen months ended 31 March 2006
Share Share Non- Retained Total
capital premium distribu- income
table
reserves
R"000 R"000 R"000 R"000 R"000
Balance at
1 October 2003 - - - - -
Linked units
issued in
acquiring
properties 54 26 837 - - 26 891
Linked units
issued in terms
of private
placing 13 5 536 - - 5 549
Net profit for
the year - - - 58 064 58 064
Transfer to non
distributable
reserves - - 58 657 (58 657) -
Dividend
distribution - - - (6) (6)
Restated Balance
at 30 September
2004 67 32 373 58 657 (599) 90 498
Balance at
30 September
2004 as
previously
stated 67 33 324 58 657 (27) 92 021
Prior Year
Adjustments - (951) - (572) (1 523)
Linked unit
issue cost - (951) - - (951)
Letting
commission
capitalised net
of deferred
taxation - - - 1 196 1 196
Consolidation
adjustments - - - (1 768) (1 768)
Net profit for
the year - - - 153 731 153 731
Transfer to non
distributable
reserve - - 149 877 (149 877) -
Dividend
distribution - - - (21) (21)
Balance at
31 March 2006 67 32 373 208 534 3 234 244 208
COMMENTS
1. BASIS OF PREPARATION
The results for the eighteen months ended 31 March 2006, as well as the
comparative information, have been prepared in terms of International Financial
Reporting Standards (IFRS). The results also comply with the relevant sections
of the South African Companies Act 1973, as amended.
The financial statements have been audited by Grant Thornton, whose unqualified
audit report is available for inspection at the company"s registered office.
2. FINANCIAL RESULTS FOR MICC
MICC"s net profit before tax, debenture interest and fair value adjustment
amounted to R 105,3 million for the eighteen months ended 31 March 2006 compared
to the R 62,5 million for the previous year, an increase of 68%.
These results have been achieved on the back of a strong performance by the
underlying properties and reduced administration expenditure. The overall
vacancy of the MICC portfolio as a percentage of gross rentals has decreased
from 6.1% at 30 September 1994 to 5.9% at 31 March 2006.
SUMMARY OF FINANCIAL PERFORMANCE
18 months 12 months
ended ended
March 2006 Sept 2004
Net asset value attributable
to equity holders of MICC
per linked unit 815 cents 585 cents
Distribution per linked unit 141.4 cents 73.1 cents
Loan to value ratio 43.5% 53.4%
The Board approved a final distribution of 51 cents per linked unit for the
period from 1 October 2005 to 31 March 2006, an increase of 22.9% over the
comparable period. This distribution was paid to unitholders on Monday, 19 June
2006.
3. ACQUISITION OF MICC PROPERTY INCOME FUND LIMITED ("MICC")BY VUKILE PROPERTY
FUND LIMITED
Vukile owned 98.9% of MICC"s issued linked units at 31 March 2006 and gave
notice of its intention to invoke the provisions of section 440K of the
Companies Act to compulsorily acquire the remaining linked units in MICC.
The company issued a SENS announcement on 4 May 2006, advising that a linked
unitholder owning 9 825 MICC linked units (representing 0.01% of MICC"s total
issued capital), filed an application with the High Court on Friday 28 April
2006 opposing Vukile"s notice to invoke the provisions of section 440K. Vukile
intends opposing such application. A date for the hearing of the application
has not yet been determined. Accordingly, the listing of MICC"s linked units on
the JSE and the Namibian Stock Exchange was not terminated on Friday, 5 May
2006, but will continue to be suspended until further notice.
4. BORROWINGS
The salient terms of the bank funding are as follows:
DETAILS OF INTEREST BEARING BORROWINGS - 31 March 2006
Fixed Rate Loans
Nedbank
Amount R251 million
Date of repayment September 2008
Term 3 Years - Extendable to 5 years
Fixed Interest Rate 11.51 %(NACM)
Repayment Terms Interest only, monthly in arrears.
Capital on maturity
Standard Bank
Amount R251 million
Date of repayment September 2006
Term 3 Years - Extendable to 5 years
Fixed Interest Rate 11.22 % (NACM)
Repayment Terms Interest only, monthly in arrears.
Capital on maturity
Financial Covenants
Loan to investment
property valuation
ratio 51% (currently 44%)
Interest cover ratio 1.8:1 times(currently 2.2:1)after
intercompany adjustment.
Security Secured by way of mortgage bonds
over the investment properties
5. PROPERTY PORTFOLIO
5.1 The MICC property portfolio currently comprises 39 properties with a gross
lettable area of 390 897m2.
5.2. DISPOSALS
Name of Property Purchase Sale Expected/
Price Price actual
transfer
R000 R000 date
9 Fredman Drive 60,100 60,250 April 2006
Overport City 33,200 45,000 May 2006
Hoskens House* 2,336 2,486 June 2006
Hi Tech Mini Units* 5,050 3,387 June 2006
WJM House* 8,350 4,499 June 2006
Middelburg SAP* 9,000 7,048 June 2006
Middelburg Plaza* 24,363 26,000 June 2006
Welkom Sanlam* 6,500 11,890 June 2006
Mkuze Boxer Stores* 15,900 21,752 June 2006
Taung Forum* 16,800 24,888 June 2006
Ermelo Mall* 15,000 34,570 June 2006
Luderitz Pep Stores 3,600 3,000 April 2006
Concor House 3,392 3,800 February 2006
* Portfolio sold to ApexHi Properties Limited.
6. VALUATION OF PORTFOLIO
The MICC portfolio has been valued by the directors of MICC and Vukile, at R1.15
billion as at 31 March 2006. Approximately 50% of the MICC portfolio was valued
at 31 March 2006 by sworn independent appraisers, Derrick Griffith and Peter
Parfitt, at R11 million (1.9%) higher than the directors" valuation of the
relevant properties.
7. SEGMENTAL ANALYSIS
Industrial Commercial Retail Corporate Total
R000 R000 R000 R000 R000
Group income for the eighteen months ended 31 March 2006
Rental
income 27 247 52 687 208 002 - 287 936
Straight-
line income
adjustment 539 1 043 4 047 - 5 629
Property
expenses (7 901) (20 179) (70 248) - (98 328)
Net profit
from
property
operations 19 885 33 551 141 801 - 195 237
Group balance sheet at 31 March 2006
Non-current
assets 110 391 97 576 745 982 104 954 053
Non-current
assets held
for sale 3 387 86 173 155 210 - 244 770
Current
assets 149 494 6 675 23 297 30 615
Current
liabilities 252 682 19 113 34 830 54 877
Segment assets and liabilities
Segment assets include all operating assets and consist principally of
investment properties, receivables and cash. Assets not directly attributable to
a particular segment are allocated to the corporate segment. Segment liabilities
include all operating liabilities of a segment and consist principally of
outstanding accounts. Segment assets and liabilities do not include goodwill,
deferred and other taxes.
8. COMMITMENTS
Guarantees
Guarantees in lieu of municipal service deposits amount to R1.5 million (2004
R1.2m).
9. SHARE CAPITAL AND DEBENTURES
Each linked unit comprises 1 share of 0.1 cent (and a share premium of 49.9
cents) linked to one debenture of R 4.50. Interest payable on one debenture is
4 500 times greater than the dividend payable per share.
The company had 66 992 698 linked units in issue at
31 March 2006.
10. CHANGE OF YEAR END
MICC changed its year end to 31 March to bring it in line with that of its
holding company, Vukile Property Fund Limited. These annual financial
statements, therefore, cover an 18 month period to 31 March 2006.
11. RELATED PARTY TRANSACTIONS
During the period, the group, in the ordinary course of business, entered into
various transactions with related parties. These transactions occurred on terms
that are no more favourable than those arranged with third parties.
At 31 March
18 months 2006
ended Amounts owing
31 March 2006 to related
Nature of Expenses parties
Group transaction R000 R000
Sanlam Asset management fees/
Properties lease rentals/
(Pty) Ltd IT costs 5 215 -
Gensec Property management/
Property lease commissions &
Services Ltd other fees 9 856 662
Vukile
Property Property management
Fund Ltd fees 2 158 458
On behalf of the Board
Hardie Joubert G van Zyl
Chairman Director
Roodepoort
30 June 2006
Sponsor: Bridge Capital Services (Pty) Limited, Woodmead, Johannesburg
Namibian Sponsor: Irwin, Jacobs, Green & Associates (Pty) Limited, Member of NSX
Non-executive directors: SG Joubert (Chairman), AB du Toit, MA Brey, WJ Kruger,
G van Zyl, MJ Potts
Registered office: 2nd floor Meersig Building, Constantia Boulevard, Constantia
Kloof, 1709.
Company Secretary: M Blakeway
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited,
Marshalltown, Johannesburg.
Investor and media relations: Contact Helen McKane on vukile@dpapr.com, or Tel:
011 728-4701.
Date: 30/06/2006 05:02:59 PM Produced by the JSE SENS Department
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