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MIP - Merchant - Unaudited Interim Report for the six months ended 31 March
2011, Dividend Declaration and Withdrawal of Cautionary
MERCHANT AND INDUSTRIAL PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/002656/06)
Share code: MIP
ISIN number: ZAE000102265
("Merchant")
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 MARCH 2011,
DIVIDEND DECLARATION AND WITHDRAWAL OF CAUTIONARY
STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 March 31 March 30 September
2011 2010 2010
R`000 R`000 R`000
Confirming fees and interest 43 50 83
Investment income 302 231 574
Rental and parking income 11 477 10 900 21 790
Cash flows inherent in leases and
parking income 11 415 10 875 21 827
Lease smoothing effect 62 25 (37)
Revenue 11 822 11 181 22 447
Operating profit 4 761 4 659 9 444
Unrealised surplus on fair value
adjustment of investment properties - - 2 062
Cost of corporate restructuring - - (2)
Realised net (loss)/profit on
disposal of listed investments (65) 105 257
Profit/(loss) on fair value adjustment
of derivative instruments 81 (179) (318)
Profit before interest 4 777 4 585 11 443
Interest received 51 107 189
Interest expense (981) (1 277) (2 554)
Profit before taxation 3 847 3 415 9 078
Taxation 1 344 1 141 2 872
Profit for the period 2 503 2 274 6 206
Other comprehensive income/(loss) 1 855 909 (292)
Loss on fair value adjustment of property - - (179)
Unrealised surplus/(loss) on
revaluation of listed investments 1 855 909 (113)
Total comprehensive income for the
period 4 358 3 183 5 914
Earnings per share (cents) 14,4 13,1 35,7
Headline earnings per share (cents) 14,7 12,5 25,4
Dividend per share - ordinary (cents) 11,0 9,0 20,0
Shares in issue 17 372 300 17 372 300 17 372 300
Net asset value per share (cents) 719 700 705
Reconciliation of headline earnings
net of taxation
Profit for the period 2 503 2 274 6 206
Surplus on sale of property, plant
and equipment (22) - (39)
Unrealised surplus on fair value
adjustment of investment properties - - (1 501)
Realised loss/(profit) on disposal
of listed investments 65 (105) (252)
Headline earnings for the period 2 546 2 169 4 414
STATEMENT OF FINANCIAL POSITION
Investment properties 131 082 128 867 130 964
Listed investments 26 176 23 473 22 623
Property, plant and equipment 5 120 5 435 5 248
Straight-line lease assets 857 572 974
Current assets 885 3 510 1 131
Bank and cash balances 4 788 2 025 1 615
Total assets 168 908 163 882 162 555
Equity and reserves 124 948 121 681 122 501
Interest-bearing borrowings 19 527 15 547 5 152
Derivative instruments 392 334 473
Deferred taxation 19 660 19 026 19 261
Current liabilities 4 381 4 837 15 168
Bank overdraft and short-term
borrowings - 2 457 -
Total equity and liabilities 168 908 163 882 162 555
STATEMENT OF CHANGES IN EQUITY
Stated capital 26 809 26 809 26 809
Non-distributable reserves 71 005 70 308 71 005
Balance at beginning of period 71 005 70 308 70 308
Transfer of unrealised surplus on
fair value adjustment of
investment property from
distributable reserves - - 876
Loss on fair value adjustment of
property - - (179)
Distributable reserves 27 134 24 564 24 687
Balance at beginning of period 24 687 22 945 22 945
Profit for the period 2 503 2 274 6 206
Transfer of unrealised surplus on
fair value adjustment of
investment property to
non-distributable reserves - - (876)
Unrealised surplus on fair
value adjustment of listed investments 1 790 1 014 144
Realised loss /(surplus) on disposal
of listed investments
reclassified as income in the period 65 (105) (257)
Dividends paid (1 911) (1 564) (3 475)
Total equity and reserves at the
end of the period 124 948 121 681 122 501
SUMMARISED STATEMENT OF CASH FLOW
Cash inflow from operating activities 4 543 4 525 9 237
Net interest and taxation paid (2 115) (2 892) (5 417)
Operating cash inflow 2 428 1 633 3 820
Dividends paid (1 911) (1 564) (3 475)
Net cash inflow from operating
activities 517 69 345
Net cash (outflow)/inflow from
investing activities (1 564) (7 426) (5 968)
Net cash (outflow)/inflow from
financing activities 4 220 (525) (212)
Net cash inflow /(outflow) for
the period 3 173 (7 882) (5 835)
SEGMENTAL ANALYSIS
Revenue
Properties division 11 477 10 900 21 790
Confirming division 43 50 83
Investment division 302 231 574
11 822 11 181 22 447
Operating profit
Properties division 4 698 4 550 9 121
Confirming division 42 158 190
Investment division 21 (49) 133
4 761 4 659 9 444
REVIEW OF OPERATING RESULTS
Review of operating results
The unaudited results for the six months ended 31 March 2011 reflect operating
profit of R4 761 000 (2010: R4 659 000). The majority of this profit remains
derived from the group`s property division. Headline earnings per share have
increased to 14,7 cents from 12,5 cents. Interest expense amounted to R981 000
(2010: R1 277 000).
Property division
Despite slightly increased vacancy levels, the group`s portfolio of commercial
and light industrial properties in Durban and Cape Town has managed to maintain
consistent returns due to effective management of properties and tenants. The
group is confident that its portfolio remains well positioned and vacancy levels
are currently well below the regional averages.
Investment division
The group`s permanent portfolio of shares in foreign listed investments and
currencies reflects a market value in South African currency of R26 346 000
(2010: R24 539 000).
Basis of preparation
This report has been prepared in accordance with International Financial
Reporting Standards and complies with IAS 34 - Interim Financial Reporting
Standards, AC 500 standards as issued by the Accounting Practices Board, the
Companies Act of South Africa and the JSE Listings Requirements. Except for the
revaluation of investment properties, the same accounting policies were used as
those applied in the annual financial statements for the period ended 30
September 2010 in which these policies are fully described.
Outlook
The operating outlook for the rest of the financial year is positive as the
group has a manageable vacancy rate and guaranteed lease rental income.
Operating and financing costs are within budget, and the group is easily able to
meet its cash flow requirements.
Marshall Monteagle plc
On 23 May 2011, Marshall Monteagle plc ("Marshall") announced a firm intention
to make an offer to acquire the entire issued share capital of Merchant &
Industrial Properties Limited ("Merchant") not held by Marshall. Upon successful
implementation of the offer Merchant will become a wholly owned subsidiary of
Marshall and its JSE Limited listing will be terminated.
Withdrawal of cautionary
Further to the firm intention announcement published on 23 May 2011, as this
announcement was a detailed announcement on the offer being made by Marshall to
acquire the entire issued share capital of Merchant, the cautionary announcement
is withdrawn and accordingly shareholders are no longer required to trade with
caution in their Merchant shares on the JSE Limited.
Dividend declaration
Notice is hereby given that an interim dividend of 11,0 cents per ordinary share
has been declared in respect of the six months ended 31 March 2011.
In accordance with the settlement procedures of Strate, Merchant has determined
that the last date to trade to participate in the interim dividend shall be
Friday, 8 July 2011. The shares will commence trading ex-dividend from Monday,
11 July 2011, and the record date will be Friday, 15 July 2011. Dividends will
be paid on Monday, 18 July 2011.
Share certificates may not be dematerialised, or rematerialised, between Monday,
11 July 2011 and Friday, 15 July 2011, both days inclusive.
By order of the board
DC Marshall, PN Lonsdale (Directors)
20 June 2011
Registered office
11 Sunbury Park
La Lucia Ridge Office Estate
La Lucia
4319
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
29 Scott Street
Waverley, Johannesburg, 2090
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001
Directors: DC Marshall (Chairman), PN Lonsdale*, BA Hose*, ME Stewart*,
SM Mylrea (Financial) *Non-executive directors
Date: 20/06/2011 14:25:39 Supplied by www.sharenet.co.za
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