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MSS
MSS
MSS - Marshalls Limited - Provisional report for the year ended 31 December
2006 and dividend declaration
Marshalls Limited
(Registration number: 1987/002656/06)
(Share code: MSS & ISIN-number: ZAE000066684)
Provisional report for the year ended 31 December 2006
and dividend declaration
The unaudited reviewed results for the year ended 31 December 2006
for Marshalls Limited and its subsidiaries are as follows -
INCOME STATEMENT
Unaudited
31.12.2006 Audited
R`000 31.12.2005
R`000
Confirming fees and interest 443 658
Investment income 548 449
Rental and parking income 15,866 16,767
Cash flows inherent in leases and 15,956 16,868
supplies
Lease smoothing effect (90) (101)
Revenue 16,857 17,874
Operating profit before interest 6,496 5,512
Interest received 445 289
Interest expense (2,323) (3,111)
Operating profit after interest 4,618 2,690
Unrealised surplus on revaluation 24,959 8,836
of investment properties
Realised net surplus/(loss) on (1) 96
disposal of listed investments
Realised net surplus on disposal - 1,617
of investment properties
Cost of capital restructure - (234)
Profit before taxation 29,576 13,005
Taxation 3,460 2,484
Profit for the year 26,116 10,521
Earnings per share (cents) 150.3 60.6
Headline earnings per share 16.3 9.0
(cents)
Dividends per share (cents) 13.5 12.0
Dividend cover (times) 2.0 1.3
Shares in issue 17,372,300 17,372,300
Net asset value per share (cents) 654 476
Headline earnings calculation net
of taxation
Profit for the year 26,116 10,521
Unrealised surplus on revaluation (23,283) (7,754)
of investment properties
Realised net (surplus)/loss on 1 (81)
disposal of listed investments
Realised net surplus on disposal - (1,349)
of investment properties
Cost of capital restructure - 234
Headline earnings for the year 2,834 1,571
ABRIDGED BALANCE SHEET
Investment properties 104,007 71,667
Listed investments 25,783 18,203
Property, plant and equipment 3,192 3,242
Non current portion of amortised 378 453
lease receivables
Available for sale assets - 6,729
Current assets 3,639 5,902
Bank and cash balances 7,255 3,248
Total assets 144,254 109,444
Equity and reserves 113,608 82,684
Interest bearing borrowings 17,161 18,589
Deferred taxation 3,966 1,415
Current liabilities 3,441 3,012
Bank overdraft and short term 6,078 3,744
borrowings
Total equity & liabilities 144,254 109,444
STATEMENT OF CHANGES IN EQUITY
Stated capital 26,809 26,809
Non-distributable reserves 60,787 36,782
Balance at beginning of year 36,782 28,872
As previously reported 36,782 29,336
Lease smoothing effect - (464)
Transfer from distributable 23,398 7,333
reserves
Transfer to distributable reserves (86) -
Currency translation movement 693 577
Distributable reserves 26,012 19,093
Balance at beginning of year 19,093 15,415
As previously reported 19,093 15,073
Lease smoothing effect - 342
Profit for the year 26,116 10,521
Transfer of unrealised surplus on
property revaluations
to non-distributable reserves (23,398) (5,984)
Transfer from non-distributable 86 -
reserves
Transfer of net surplus on - (1,349)
disposal of investment properties
Unrealised surplus on revaluation 6,460 2,575
of listed investments
Dividends paid (2,345) (2,085)
Total equity and reserves at the 113,608 82,684
end of the year
SUMMARISED CASH FLOW STATEMENT
Cash inflow / (outflow) from 9,768 5,243
operating activities
Net interest and taxation paid (4,174) (3,388)
Operating cash inflow / (outflow) 5,594 1,855
Dividends paid (2,345) (2,085)
Net cash inflow / (outflow) from 3,249 (230)
operating activities
Net cash inflow / (outflow) from (1,575) (2,700)
investing and financing
activities
Net cash inflow / (outflow) for 1,674 (2,930)
the year
SEGMENTAL ANALYSIS
Revenue
Properties division 15,866 16,767
Confirming division 443 658
Investment division 548 449
16,857 17,874
Operating profit before interest
Properties division 5,893 4,836
Confirming division 83 439
Investment division 520 237
6,496 5,512
COMMENTS
The results for the year ended 31 December 2006 reflect operating profit
before interest of R 6 496 000 (2005: R 5 512 000). Headline earnings per
share have increased to 16.3 cents from 9.0 cents for the comparative year.
Net interest expense amounted to R 1 878 000 (2005: R 2 822 000). The four
successive interest rate increases during 2006 have justified the Board`s
decision to fix the rate of interest for the Group`s borrowings during the
final quarter of 2005.
The Group has again been frustrated in its attempts to invest surplus cash
resources. Only one additional investment property was acquired towards the
end of the financial year. The industrial property market has been
characterised by low yield rates due to polarised levels of demand and
supply. Although new opportunities are constantly being investigated the
ability to invest in new properties that meet the Board`s investment
criteria is expected to be limited. However, the buoyant market should also
assist as inflationary pressures continue to push up market rentals and
capital appreciation.
The overall fall in property revenue is not indicative of the Group`s true
performance. For properties owned and managed throughout both financial
periods reported on gross revenue has grown by 9%. Furthermore, substantial
cost efficiencies have been realised thus negating the drop in revenue as
evidenced by a 21% increase in operating profit before interest.
CB Richard Ellis has valued the Group`s property portfolio on an open
market basis as at 31 December 2006 at R 105 750 000 (2005: R 69 215 000).
Properties held at both year ends were valued at R 94 900 000 (2005: R69
215 000).
The Group`s portfolio of shares in foreign listed investments reflects a
market value in South African currency of R 25 783 000 (2005: R 18 197
000). This substantial increase in value is not solely due to the weakening
of the Rand but also includes solid appreciation in market value. In
sterling currency, the portfolio value has appreciated by approximately 12%
and dividend income from the underlying investments has increased by 13%
during the period under review.
It was announced on 10 January 2007 that the Group had entered into
negotiations with Marshall Monteagle Holdings Societe Anonyme regarding a
possible merger of the two groups. At this stage nothing further may be
reported thereon and shareholders are advised that an announcement relevant
to these negotiations will duly be issued.
These provisional financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) consistent with
that of the prior year.
Total dividends declared and paid for the year ended 31 December 2006 were
13,5 cents per share (2005: 12,0 cents).
INDEPENDENT AUDITORS` REVIEW
The financial information set out in these provisional results has been
reviewed, but not audited, by the Group`s auditors, PKF Durban. Their
unqualified review report is available for inspection at the registered
office.
DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 7,0 cents per ordinary
share has been declared in respect of the year ended 31 December 2006.
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, 2 March. The shares will commence trading ex-dividend from
Monday 5 March 2007, and the record date will be Friday, 9 March 2007.
Dividends will be paid on Monday, 12 March 2007.
Share certificates may not be dematerialised, or rematerialised, between
Monday, 5 March 2007 and Friday, 9 March 2007, both days inclusive.
12 February 2007
BY ORDER OF THE BOARD
DC Marshall, PN Lonsdale (Directors)
Sponsor
Imara Corporate Finance South Africa (Pty) Ltd
Date: 09/02/2007 12:19:32 Produced by the JSE SENS Department.
