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MSP - MAS PLC - Unaudited Financial Statements 3 Months From 1 March 2009 To
31 May 2009
MAS PLC
Previously Mergon Property Holdings Limited
(Incorporated in the Isle of Man)
(Registration number 2893V)
Share code: MSP
SEDOL: B4LFGHO
ISIN: IM00B4LFGH00
("MAS" or "the Company")
Shareholders should note that the unaudited financial statements for the 3
months from 1 March 2009 to 31 May 2009 and the Directors commentary thereon,
relate to a period prior to the dual listing of the Company on the Euro MTF
market of the Luxembourg Stock Exchange (completed 12 August 2009) and on the
Alternative Exchange (Altx) of the JSE Limited (completed on 31 August 2009).
The Company is required by the Luxembourg Stock Exchange to publish this
announcement and therefore the Company is required to publish same on SENS.
UNAUDITED FINANCIAL STATEMENTS 3 MONTHS FROM 1 MARCH 2009 TO 31 MAY 2009
Director`s Report
The Directors` present their quarterly report and the unaudited financial
statements for the quarter ended 31 May 2009.
MAS plc is an Isle of Man domiciled company formed to invest in real estate and
real estate related assets. The MAS Group has obtained loans with which it has
conditionally acquired a property and has started the process of due diligence
on potential investments prior to a capital raising that shall be done through
a dual listing on the Euro-MTF market of the Luxembourg Stock Exchange (primary
listing) and on the Alternative Exchange (Altx) of the JSE Limited (secondary
listing).
The funds raised shall be invested in real estate and real estate related
assets in the primary jurisdictions of Switzerland, Germany and the United
Kingdom. The Group is a closed-ended infinite life investment, and aims to
maximize shareholder value through a high income distribution policy.
The Company aims to distribute annually all distributable cash profits taking
into account various factors including the Company`s operating results and
current and anticipated operating cash needs. Other than in exceptional
circumstances, it is not the intention to retain profits for investment
purposes.
The Group seeks investment opportunities that offer the possibility of
attaining substantial capital appreciation with low associated risks. Certain
events particular to the industry in which the Group invests, as well as
general economic and political conditions, may have a significant negative
impact on the Group`s operations and profitability.
Results and Dividend
During the quarter under review, the Group made a loss of EUR 54,365.
The Directors will not consider the payment of a dividend until after the
year-end of 28th February 2010.
Prospects
The Directors believe that MAS plc will be well positioned to capitalise on
attractive investment opportunities over the next quarter.
Registered Office:
25 Athol Street
Douglas
IM1 1LB
Isle of Man
Directors Date of Appointment
Lukas Nakos 3 July 2008
Malcolm Levy 16 February 2009
Gideon Oosthuizen 16 February 2009
Secretary Date of Appointment
Helen Cullen 13 March 2009
Statement of Directors` responsibilities in respect of the Directors` report
and the financial statements
The Directors are responsible for preparing the Directors` Report and the
financial statements in accordance with applicable law and regulations.
The Directors have elected to prepare the financial statements in accordance
with International Financial Reporting Standards.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Company and the Group and of the profit or loss of
the Group for that period.
In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company and the Group will not continue
in business.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
Group and Company. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
CONSOLIDATED INCOME STATEMENT
FOR THE QUARTER ENDING 31 MAY 2009
Notes Group Group
Quarter - Inception -
May-09 Feb-09
Euros Euros
Expenses
Registered Office and Management Fees 0 (1,167)
Administration Expenses and
Disbursements (8,101) (14,261)
Legal and Professional Expenses (16,182) 0
General Expenses (5,280) (1,438)
Exchange Differences 2 (5,388) 23,504
Earnings before Interest and Taxation (34,951) 6,638
Interest Expense (19,414) (5,301)
Net (Loss) / Profit (54,365) 1,337
CONSOLIDATED BALANCE SHEET
AS AT 31 MAY 2009 Group Group
Quarter - Inception -
May-09 Feb-09
Notes Euros Euros
Non-Current Assets
Investment Property under Construction 5 2,148,869 2,141,532
Current Assets
VAT 1,767 858
Cash and Cash Equivalents 1,920 21,291
3,687 22,149
Current Liabilities (amounts falling
within one year)
Payables (180,959) (123,271)
Net Current Liabilities (177,272) (101,122)
1,971,597 2,040,410
Non Current Liabilities
Loans 4 (2,024,525) (2,038,973)
Net Liabilities / Assets (52,928) 1,437
Capital and Reserves
Share Capital 3 100 100
Retained Loss / Profit (53,028) 1,337
Shareholder Equity (52,928) 1,437
CASH FLOW STATEMENT
FOR THE QUARTER ENDING 31 MAY 2009
Notes Group Group
Quarter - Inception -
May-09 Feb-09
Euros Euros
OPERATING ACTIVITIES
Earnings before Interest and Taxation (34,951) 6,638
Exchange Differences 5,388 (23,504)
Cash Generated From Operations (29,563) (16,866)
Changes in Working Capital 56,779 122,413
Interest Expense (19,414) (5,301)
Cash Generated From Operating Activities 7,802 100,246
INVESTING ACTIVITIES
Investment Properties under Construction (7,337) (2,141,532)
Cash Generated from Investing Activities (7,337) (2,141,532)
FINANCING ACTIVITIES
Issuance of Share Capital 0 100
Proceeds from Loan Facilities (14,448) 2,038,973
Cash Generated from Financing Activities (14,448) 2,039,073
NET (DECREASE)/INCREASE IN CASH AND
EQUIVALENTS (13,983) (2,213)
Cash and Equivalents at the beginning
of the period 21,291 0
Translation Effect on Revaluation of
Monetary Assets and Liabilities (5,388) 23,504
CASH AND EQUIVALENTS AT PERIOD END 1,920 21,291
STATEMENT OF CHANGES IN EQUITY
FOR THE QUARTER ENDING 31 MAY 2009
Group Group Group
May-09 May-09 May-09
Euros Euros Euros
Share Retained
Capital Income Total
Opening Balance at 3 July 2008 (date of
incorporation) 0 0 0
Issue of Shares of 1 each 100 0 100
Profit for period to 28 February 2009 0 1,337 1,337
Closing Balance as at 28 February 2008 100 1,337 1,437
Loss for period to 31 May 2009 0 (54,365) (54,365)
Closing Balance as at 31 May 2009 100 (53,028) (52,928)
Notes to the Financial Statements
1. Significant Accounting Policies
MAS plc has prepared its financial statements in accordance with International
Financial Reporting Standards ("IFRS`s"). IFRS`s comprise accounting standards
issued by the International Accounting Standards Board ("IASB") and its
predecessor body as well as interpretations issued by the International
Financial Interpretations Committee ("IFRIC") and its predecessor body.
Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset investments, and
in accordance with International Financial Reporting Standards without
exception.
Going concern
The Group has financial resources in the form of commitments from investors and
investments that can be realised. Accordingly, the directors continue to adopt
the going concern basis.
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiary undertakings for the quarter from 1 March 2009 to 31
May 2009. The acquisition method of accounting has been adopted. Under this
method, the results of subsidiary undertakings acquired or disposed of in the
year are included in the consolidated income statement from the date of
acquisition or up to the date of disposal. Subsidiaries are those enterprises
controlled by the Group. Control exists where the Group has the power to govern
the financial and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, potential voting rights that presently
are exercisable are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases. Intra-group
balances and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial
statements. Unrealised losses are eliminated in the same way as unrealised
gains, but to the extent that there is no evidence of impairment.
Revenue recognition
Revenue includes the rent received on Real Estate Investments, including
interest and dividends and is accounted for on an accruals basis.
Investments
Direct Real Estate Investments are classified as Investment Properties and
comprise both freehold and leasehold land and buildings and installed equipment
held for the purpose of earning rental income and for capital appreciation.
Investment property is treated as a long-term investment and is initially
recognised at cost (including related transaction costs) and subsequently
carried at fair value. Subsequent additions that produce future economic
benefit to the Group are capitalised. Investment property under
construction is valued at cost.
Maintenance and repairs which neither materially add to the value of the
properties nor prolong their useful lives are expensed in the income statement.
Independent valuations are obtained on an annual basis. The Directors shall
value the properties on an interim semi-annual basis. Investment Properties are
classified as held for sale when the investment committee has approved the
disposal of the properties. The valuation calculations are based on the
aggregate of the net annual rents receivable and associated costs, using the
discounted cash flow method. The discounted cash flow method takes projected
cash flow and discounts it at a rate which is consistent with the comparable
market transactions. Any gains or losses arising from changes in fair value are
included in the net profit or loss for the year. The net gains or losses are
transferred to a revaluation reserve and are not available for distribution.
These fair value adjustments are excluded from the computation of distributable
profit.
Gains or losses arising from the disposal of investment properties, being the
difference between the net disposal proceeds and the carrying value, are
brought to account in the determination of the net profit for the year.
Indirect Real Estate Investments are initially recorded at the purchase price,
including capitalised costs of acquisition. Following the guidelines of
International Accounting Standard 39 `Financial Instruments: Recognition and
Measurement` ("IAS 39"), the real estate investments are classified as held for
trading. The investments are initially recognised at cost and are subsequently
re-measured at fair value. For non-publicly traded investments, fair value is
determined by means of a directors valuation on a semi-annual basis, and by
external recognised third party valuers at the end of each financial year. The
valuation methods will include generally accepted valuation methodologies for
the types of asset, including but not limited to internally prepared discounted
cash flow estimates, residual valuation, cost method, third-party appraisals
and recent transaction comparables. Unrealised gains and losses arising from
the revaluation of investments will be included in the Income Statement.
Publicly-traded investments in active markets are reported at the market
closing price less a discount, as appropriate, determined by management to
reflect any sale restrictions.
Indirect investments that are not publicly traded are reported at fair value,
as determined by management. The amount determined to be fair value may
incorporate management`s own assumptions, including appropriate risk
adjustments for non-performance and lack of marketability. The methods used
to estimate the fair value of private investments include: (1) an income
approach, such as discounted cash flows, (2) a market approach, such
as fair value derived by reference to observable valuation measures or key
performance metrics for comparable companies or assets, sales contracts and
letters of intent to buy, third party appraisals, option pricing models or
other comparable market data, and (3) acquisition cost, excluding transaction
costs, when determined by management to be the best indicator of fair value.
Considerable judgment is required in interpreting market data to determine the
estimates of value; accordingly the estimates of value presented in the
financial statements are not necessarily indicative of the amounts that
the Group could realise in a market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on
the estimated fair values.
Foreign currency
Transactions in currencies other than Euros are recorded at the rate of
exchange prevailing at the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date.
Non-monetary assets and liabilities carried at fair value that are denominated
in foreign currencies are translated at the rates at the balance sheet date.
Other non-monetary assets and liabilities denominated in foreign currencies are
translated at the initial drawdown rate. Gains and losses arising on
translation are included in the net profit or loss for the period.
Functional and Presentational Currency
The financial statements are presented in Euros, which is the functional
currency of the Group.
Cash and Cash Equivalents
Cash and cash equivalents consists of cash at bank.
Other Assets
Other assets consist of short term assets. The directors consider the carrying
value of the other assets approximates to their fair value.
Borrowings
Interest bearing bank loans are recorded at the proceeds received, net of
direct issue costs. Borrowing costs are amortised over the term of the loan.
Derivatives
The Group has currency exposures related to its investments and may enter into
portfolio level and investment specific foreign exchange contracts and other
derivatives to hedge such exposures.
Movements in the fair value of derivatives are accounted for in the income
statement. The Group may also use interest rate derivatives to hedge interest
rate exposure on the underlying debt of the property portfolio.
Risk management
Liquidity Risk - the risk that arises when the maturity of assets and
liabilities do not match. An unmatched position potentially enhances
profitability, but can also increase the risk of losses.
The Group has internal procedures focused on ensuring the efficient but prudent
use of cash and availability of working capital. The Liquidity risk inherent in
the Group is mainly as a result of the tenant risk in the property portfolio.
Should a tenant default, liquidity risk may result in the inability of the
Group to cover the interest payments. As a result adequate cash buffers are
maintained, and tenant strength is reviewed on a continual basis.
Market price risk - the risk that the market price of an investment or
financial instrument will fluctuate due to changes in foreign exchange rates,
market interest rates, market factors specific to the security or its issuer or
factors generally affecting all investments.
The risk to the Group relates to an imbalance between demand and supply for the
relevant investments and financial instruments in the portfolio, that could
potentially result in a disorderly market. This risk is mitigated through the
use of a dedicated Asset Manager dedicated to continual assessment of the
portfolio and its movements in relation to the broader market.
Foreign exchange risk - the Group holds both assets liabilities denominated in
currencies other than Euros, the functional and presentational currency. It is
therefore exposed to currency risk, as the value of the assets denominated in
other currencies will fluctuate due to changes in exchange rates. The Group`s
policy is to hedge, on a case-by-case basis, all foreign exchange exposures and
commitments.
Interest rate risk - a significant part of the funding of the companies
portfolios shall derive from debt. Debt will be managed on an active basis,
hedging against adverse movements in interest rates.
Taxation
Taxation on the profit or loss for the year comprises current and deferred tax
relating to operations in taxable jurisdictions. Income tax is recognised in
profit or loss except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year in
each taxable jurisdiction, using tax rates enacted or substantively enacted at
the Balance Sheet date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided using the Balance Sheet liability method, based on
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and their tax bases. The amount of deferred
tax provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the Balance Sheet date.
2. Exchange Gains
Exchange gains arise from the revaluation of the monetary liabilities. The
movements in the current period under review relate to sterling denominated
liabilities of EUR120,000 for expenses incurred on behalf of the Company.
3. Share Capital
At the end of the quarter MAS plc had capitalised share capital of EUR100.
Further capitalisation of the Group shall be completed upon the successful
listing of the Group on the aforementioned exchanges.
4. Loans
EUR 2,001,334 of the loan liability relates to the capital value of a loan from
Amplain Ltd for the amount of CHF 3,000,000 for the payment of the deposit of
the property acquisition discussed in Note 5. Interest accrues on the loan at a
rate of the ECB base rate plus a 2% margin. Administration and working capital
requirements have been separately financed through a loan facility repayable
upon a successful listing of the Group. Interest accrues on the loan at a rate
of the ECB base rate plus a margin of 2%.
5. Investment Property Under Construction
As previously reported, the Group has transacted to acquire a logistic and
office property near Zurich. A deposit of CHF3 million was paid for this
property. Ownership shall not pass until completion of the development. This
is expected in the first quarter of 2010. The exchange of contracts
effectively binds the Group to take ownership of the property shortly after
its completion at a total amount of CHF20.3million. Financing has been
pre-arranged with Credit Suisse at 90bps above Swiss LIBOR for an amount
of CHF13 million. The remainder of the acquisition price shall be equity
financed following further capitalisation of the Group upon listing. This
deposit has been translated into Euros at the appropriate ruling rate.
The additions to the investment property relate to the capitalisation of
ongoing acquisition costs.
6. Taxation
The Group is ultimately resident in the Isle of Man for taxation purposes. The
Isle of Man has a 0% rate of corporate income tax to which the Company is
subject, and no taxation was payable in any jurisdiction for the period under
review.
7. Financial Support
The Company has been provided with a commitment to provide financial support
from Mergon Services Limited, should they require, in order to allow it to meet
its liabilities as they fall due until at least the end of the current
financial year.
17 November 2009
Isle of Man
Sponsor
PSG Capital (Pty) Limited
Date: 17/11/2009 11:00:01 Supplied by www.sharenet.co.za
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