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MDN
MDN
MDN - Madison Property Fund Managers Holdings Limited - Audited results
for the year ended 31 December 2006 and distribution declaration
Madison Property Fund Managers Holdings Limited
Registration number 2003/021772/06
Madison Property Fund Managers Limited
Registration number 2005/021874/06
JSE Share Code: MDN ISIN Code: ZAE000080560
Audited results for the year ended 31 December 2006
- 47.8% total return to linked unitholders since listing
- Maiden distribution of 39,0 cents per linked unit for eight months
- Distributable earnings 16.5% ahead of forecast
- R26,2 billion assets under management
- Growth of 35.8% in assets under management since 30 June 2006
GROUP INCOME STATEMENT
Post listing Year ended
Actual Forecast 31 Dec 2006
R`000 R`000 R`000
Revenue 82 917 78 820 102 013
Other income 19 452 14 436 20 168
Total income 102 369 93 256 122 181
Administration costs (34 649) (33 292) (43 500)
Operating profit 67 720 59 964 78 681
Interest income 6 452 2 306 6 511
Finance costs (275) (640) (662)
Net operating income 73 897 61 630 84 530
Fair valuation adjustments 1 087 1 958 2 198
Negative goodwill written off 154 555 157 546 154 555
Amortisation of intangible
assets (40 133) (40 133) (43 228)
189 406 181 001 198 055
Equity accounted income - - 10
Income before debenture
interest 189 406 181 001 198 065
Debenture interest (74 100) (63 587) (74 100)
Income before taxation 115 306 117 414 123 965
Taxation 11 634 (1) (93 354)
Net income 126 940 117 413 30 611
Attributable to:
Madison linked unitholders 126 559 118 500 28 065
Minorities 381 (1 087) 2 546
126 940 117 413 30 611
Reconciliation - headline earnings and distributable earnings
Net income attributable
to Madison linked unitholders 126 559 118 500
Negative goodwill written off (154 555) (157 546)
Fair valuation adjustments (1 087) (1 958)
Minorities share of
amortisation (499) (1 087)
Headline loss attributable
to shareholders (29 582) (42 091)
Debenture interest 74 100 63 587
Headline earnings
attributable to linked
unitholders 44 518 21 496
Distributable earnings adjustment
- Amortisation of intangible
assets (net of deferred
taxation) 28 495 40 133
- Provision for incentive bonus 1 087 1 958
Distributable earnings
attributable to linked
unitholders 74 100 63 587
Number of linked units in
issue 190 000 000 190 000 000
Earnings per share (cents) 66.61 62.37
Fully diluted eanings per
share (cents) 64.41 60.31
Headline loss per share (cents) (15.57) (22.15)
Fully diluted headline
loss per share (cents) (15.05) (21.42)
Headline earnings per linked
unit (cents) 23.43 11.31
Fully diluted headline
earnings per linked
unit (cents) 22.66 10.94
Distributable earnings per
linked unit (cents) 39.00 33.47
STATEMENT OF CHANGES IN EQUITY
Share Share Retained Minority
capital capital income interest Total
R`000 R`000 R`000 R`000 R`000
Balance at
1 January 2005 - - 10 577 1 989 12 566
Net profit
for the year 47 286 6 138 53 424
Transactions
with minorities (6 382) (6 382)
Dividends (26 000) (26 000)
Balance at
1 January 2006 * - 31 863 1 745 33 608
Issue of shares 115 975 115 975
Share issue
expenses (11 212) (11 212)
Net profit
for the year 28 065 2 546 30 611
Transactions
with minorities (1 787) (1 787)
Dividends prior
to listing (811 778) (811 778)
Balance at
31 December 2006 * 104 763 (751 850) 2 504 (644 583)
Less than R1 000
GROUP BALANCE SHEET
31 Dec 2006 31 Dec 2005
R`000 R`000
ASSETS
Non - current assets 415 067 62 045
Property plant and equipment 861 425
Intangible assets 264 117 3 095
Goodwill 111 099 13 455
Financial assets 38 990 45 070
Current assets 91 997 16 260
Trade and other receivables 14 907 8 689
Cash and cash equivalents 77 090 7 571
Total assets 507 064 78 305
EQUITY AND LIABILITIES
Capital and reserves (644 583) 33 608
Share capital and reserves (647 087) 31 863
Minority interest 2 504 1 745
Non - current liabilities 1 044 724 21 190
Debentures 948 100 -
Interest bearing borrowings 21 669 20 166
Deferred taxation 74 955 1 024
Current liabilities 106 923 23 507
Trade and other payables 30 633 16 862
Linked unitholders for
distribution 74 100 -
Taxation 2 190 6 645
Total equity and liabilities 507 064 78 305
GROUP CASH FLOW STATEMENT
Year ended Year ended
31 Dec 2006 31 Dec 2005
R`000 R`000
Cash flows from operating
activities (841 622) 17 219
Cash generated from operations 81 104 65 363
Interest income 6 511 2 752
Finance costs (662) (2 767)
Dividends paid (811 778) (26 000)
Cash paid to minorities (4 790) (5 750)
Taxation (112 007) (16 379)
Cash flows from investing
activities (130 598) (9 861)
Cash flows from financing
activities 1 041 739 (5 533)
Net increase in cash and
cash equivalents 69 519 1 825
Cash and cash equivalents
at beginning of year 7 571 5 746
Cash and cash equivalents
at end of year 77 090 7 571
COMMENTS
Profile
Madison Property Fund Managers ("Madison") is South Africa`s largest listed
property asset manager and derives its income predominantly from the asset
management of three leading and highly differentiated listed property funds
- ApexHi Properties Limited ("ApexHi"), Hyprop Investments Limited
("Hyprop") and Redefine Income Fund Limited ("Redefine") - which had a
combined market capitalisation of R20,4 billion and a combined enterprise
value of R26,2 billion at year end.
Madison listed on the Financial Real Estate - "Real Estate Holdings and
Development Sub - Sector" of the JSE Limited on 7 June 2006.
Financial results
For statutory purposes, Madison`s financial results are in respect of the
year ended 31 December 2006. Earnings attributable to the linked
unitholders of Madison comprise income and expenditure from 1 May 2006, the
date on which the corporate restructure in terms of the prospectus dated 23
May 2006 was effective, to 31 December 2006. These results, which are
relevant to linked unitholders, have been stated separately and also
reflect the comparison to the forecast included in the prospectus.
Revenue, comprising contractual income, of R82,9 million and other income
of R19,5 million exceeded forecast by 5.2% and 34.8% respectively.
Contractual income accounted for 81.0% of total income compared with the
forecast of 84.5%. Net interest income of R6,2 million was significantly
higher than forecast. Administration costs were 4.1% greater than forecast.
Negative goodwill reflects the excess of the fair value of net assets
acquired over the consideration paid on acquisition of additional interests
in the ApexHi and Canal Walk management companies. In terms of IFRS3 -
"Business Combinations", negative goodwill has been recognised in the
results for the year.
The post listing taxation credit of R11,6 million comprises deferred
taxation relating to the amortisation of the intangible assets. The
taxation expense of R93,4 million for the year includes R101,3 million STC
paid on the dividend declared prior to listing.
Distributable earnings of R74,1 million exceeded forecast distributable
earnings of R63,6 million by 16,5%.
Madison has declared a maiden distribution of 39.0 cents per linked unit,
16.5% higher than the forecast distribution of 33.47 cents.
Earnings per share
The earnings for the period 1 January 2006 to 30 April 2006 were those of a
private company. Accordingly, no earnings per share or headline earnings
per share have been reflected for the period.
Share and debenture capital
In terms of the listing, Madison raised R950 million, net of costs, by the
issue of 190 million linked units. Each linked unit comprises one ordinary
share of 0.000125 cents in Madison Property Fund Managers Holdings Limited
that is indivisibly linked to one debenture of 499 cents in Madison
Property Fund Managers Limited. The purpose of the issue was inter alia to
fund the acquisition of the management agreements with ApexHi, Hyprop and
Redefine.
Subsequent to year end, Madison has issued 6 500 000 linked units, in terms
of its general authority to issue units for cash, as sign-on bonuses to two
newly appointed executives. These linked units do not rank for the maiden
distribution.
Linked unit liquidity and tradeability
Madison`s linked units closed at 700 cents on 31 December 2006, an increase
of 40% on the listing price of 500 cents and a recovery of 79% from the low
of 390 cents on 18 July 2006. The linked units achieved a notable total
capital and income return of 47.8% since listing.
75,2 million units traded on the JSE Limited from date of listing on 7 June
2006 to 31 December 2006, equal to 39.6% of the actual number and 69.4% of
the weighted average number of linked units in issue during the period.
Directorate
Michael Flax was appointed to the board of Madison on 13 February 2007.
Stewart Shaw-Taylor and Dave Tungay resigned on 7 April and 10 April 2006
respectively.
Distribution
Unitholders are advised that interest distribution number 1 of 39.0 cents
per linked unit for the eight month period ended 31 December 2006 has been
declared.
The distribution will be payable to Madison linked unitholders in
accordance with the abbreviated timetable set out below:
2007
Last date to trade "cum" interest distribution Friday, 2 March
Linked units to commence trading "ex" interest
distribution Monday, 5 March
Record date to participate in the interest
distribution Friday, 9 March
Payment of interest distribution no. 1 Monday, 12 March
There may be no de-materialisation or re-materialisation of linked units
between Monday, 5 March 2007 and Friday, 9 March 2007, both days inclusive.
Post balance sheet event
Agreement has been reached, subject to South African Reserve Bank and
Madison Board approval, to acquire 50% of the management company of
Coronation International Real Estate Fund ("CIREF") which is listed on the
London Stock Exchange`s AIM. Earnings are initially expected to be neutral
but will be enhancing in the future.
Prospects
ApexHi, Hyprop and Redefine are continuing to grow their portfolios which
should enhance their enterprise values and consequently increase the asset
management fees to be earned by Madison. The development and leasing
divisions, absorbed as part of the acquisition of Spearhead by Redefine,
will contribute to other income in the forthcoming year.
The Board anticipates that, subject to market conditions remaining stable,
Madison`s distribution per linked unit for the six months ending 30 June
2007 should be approximately 32.5 cents, an increase of 11% relative to the
prorated distribution for the comparable period in 2006. This forecast has
not been reviewed or reported on by the auditors.
Basis of preparation and accounting policies
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and the requirements of
the South African Companies Act. These results have been audited by PKF
(Jhb) Inc. and their unqualified opinion is available for inspection at the
company`s registered office.
The accounting policies used are consistent with those applied in the
annual financial statements for the year ended 31 December 2005.
On behalf of the board
HK Mehta WE Cesman
Chairman Director
13 February 2007
Registered office
3rd Floor, 2 Arnold Road, Rosebank, 2196. PO Box 55266, Northlands, 2116
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg 2001. PO Box 61763, Johannesburg 2000
Sponsor
Java Capital (Proprietary) Limited
Company secretary
Probity Business Services (Proprietary) Limited
Directors
WE Cesman*, MN Flax*, MK Khumalo, HK Mehta, B Nackan, M Wainer*,
G Heron (alternate) (*Executive director)
Madison Property Fund Managers Holdings Limited
Registration number 2003/021772/06
Madison Property Fund Managers Limited
Registration number 2005/021874/06
JSE Share Code: MDN ISIN Code: ZAE000080560
www.madisonproperty.co.za
Date: 14/02/2007 10:30:02 Produced by the JSE SENS Department.
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