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MSP - MAS plc - Unaudited condensed interim financial statements Three months

Release Date: 15/07/2011 17:00
Code(s): MSP
Wrap Text

MSP - MAS plc - Unaudited condensed interim financial statements Three months from 1 March 2011 to 31 May 2011 MAS plc Registered in the Isle of Man Company number 2893V Registered as an external company in the Republic of South Africa Registration number 2010/000338/10 JSE share code: MSP SEDOL: B4LFGHO ISIN: IM00B4LFGH00 ("the company") Unaudited condensed interim financial statements Three months from 1 March 2011 to 31 May 2011 MAS plc reports in-line performance for the three months ended 31 May 2011 Highlights: - Dividend of 2.14 euro cents per share declared - European property market remains with a large debt re-finance overhang, exacerbated by potential sovereign defaults - MAS plc`s portfolio continues to deliver solid income in line with expectations - Metchley Hall student residential development is scheduled for completion in late August and occupation in early September 2011 - Capital raising to take place August 2011. ZAR 200 million of institutional commitments already received from Atterbury Investment Holdings and Sanlam - Strong pipeline of investment opportunities Ron Spencer, Chairman of MAS plc, commented: "The establishment of a regular dividend payment cycle is evidence of the company`s solid progress. The declaration of a dividend relating to the first five months of the new financial year is a demonstration of the directors` commitment to paying out the distributable core income on a regular basis. They believe it is appropriate to distribute such earnings immediately prior to the next round of capital raising in August 2011. In the light of available opportunities the directors believe the time is right for further investments. The ongoing turmoil in the Eurozone over the past thirty six months has created, in our opinion, generational investment opportunities, and MAS plc is well placed to capitalise on these with the proceeds of the imminent capital raising." Directors` and investment advisers` report The company`s objective is to provide investors with a high dividend yielding investment through direct exposure to European commercial property. The current focus of investment is in the jurisdictions of Germany, Switzerland and the United Kingdom. In August 2009 the company listed on both the Euro-MTF exchange in Luxembourg and the Alt-X exchange in Johannesburg. On listing Euro 9 309 821 was raised followed by a second capital raising in late March/early April 2010, which brought the capital of the company to Euro 19 398 947. Further elections for scrip dividends increased the capital base to Euro 19 762 959 at 31 May 2011. Market update Germany At the end of 2010 and the beginning of 2011 there was an increased level of activity between buyers and sellers in the German market and some further tightening of yields. While concerns about the future of the euro caused some reticence for investment, the weak currency is proving a significant benefit to the robust German export market and the economy is performing well. In contrast to the UK, the ECB has twice raised the ECB base rate in recent months in response to increasing price levels. The directors expect the market to consolidate and the volume of transactions to continue to grow, despite the broader concerns about Europe. Switzerland Economic growth in Switzerland has been severely hampered by the further appreciation of the `safe-haven` Swiss franc and internal economic developments continue to challenge a sustained recovery. The weakening of the Swiss commercial real estate market in 2010 has slowed and prime rents and prime yields have stabilised, driven in particular by the market`s continued appetite for lower risk AAA properties. The yield gap between prime and secondary properties remains wide, confirming that risk appetite remains low. As a result of the strong currency, the market opportunities that do exist are not as appealing as those in Germany or some in the UK. UK The risk appetite evident at the beginning of the year dissipated as the economic recovery stalled. Unlike its European counterparts, the Bank of England has maintained short-term rates at historic lows in a bid to stimulate growth. However, the impact of the much needed austerity measures and the reduction in government spending are being felt across all sectors of the economy. There is nonetheless clear evidence that the banking sector is starting to deal with much of the debt requiring refinancing. The distress this is causing creates the very opportunity for investors with cash on hand. Performance and dividend MAS plc is now firmly established in a semi-annual dividend payment cycle. However, given the imminent capital raising in August, the directors have declared a dividend for the 5 months to the end of July to be paid before the inflow of new investment capital. The distributable core income for the three months to 31 May 2011, together with the forecast income for the two months to 31 July 2011, amounts to 2.14 euro cents per share. The directors believe this to be a satisfying level of income generation on which they can build with additional investment funds to take advantage of opportunities in the market. Distributable core income, the effective net income from the underlying properties, is one of the key performance metrics and a focus of the company. The student residential development in Birmingham, to be known as Metchley Hall, is set for completion at the end of August in time for the autumn intake of students. The income generated by Metchley Hall will further strengthen the distributable core income. Property investments The property portfolio continues to perform well. Due to the secure nature of the single-tenant lease agreements, vacancy rates are not applicable and the tenants continue to trade positively. Properties are valued annually by approved independent third-party valuers. The most recent valuation was performed for the annual accounts for the year ending 28 February 2011. The directors remain comfortable with those valuations of the properties, in which the DPD property was valued at CHF 21.75 million by Wuest and Partner, the Aldi portfolio at EUR 10.06 million by DTZ and Metchley Hall at GBP 2.7 million by Savills. Interest rate hedges The economic benefit of the interest rate hedges is substantial, as highly visible positive yield spreads are locked in over the life of the investment. The yield spread is effectively the difference between what is earned through rentals, less the fixed or capped interest expense on debt funding. However, it is highlighted that extremely long leases, and hence very long interest rate hedges, result in unusually substantial non-cash mark-to-market valuations for the hedging instruments. The directors emphasise and remain focused on the cash generation within the business, and not the volatility arising from the revaluation of long-term financial hedging instruments. Further capital raising MAS plc is undertaking a capital raising in August 2011. This will enhance the operational leverage of the business, aid diversification of the portfolio, improve income returns to shareholders and increase liquidity of the traded shares. The company is in the process of building initial capital commitments for this raising and has a strong and attractive investment pipeline. In particular, the directors are pleased to confirm that the commitments of Atterbury Investment Holdings and Sanlam in the upcoming capital raising have now been irrevocably signed. Prospects The directors are pleased with the progress of the portfolio to date and remain confident about future investment prospects. Lukas Nakos Malcolm Levy Chief Executive Director MAS plc MAS Property Advisors Limited 15 July 2011 Further information Helen Cullen +44 1624 625000 Lukas Nakos +44 1624 653707 Malcolm Levy +44 1624 653706 JSE Sponsor Java Capital Condensed consolidated statement of comprehensive income Unaudited Unaudited Audited Three Three
months months Year ended ended ended 31 May 11 31 May 10 28 Feb 11 Notes Euro Euro Euro
Income Rental income 2 439 969 407 743 1 710 966 Finance income 206 672 - 329 918 Expenses Investment adviser fees (73 995) (47 515) (235 417) Operating expenses (222 710) (188 357) (689 291) Fair value adjustments 3 (97 050) (598 545) 1 929 864 Exchange differences (41 500) 190 201 276 148 Results from operating activities 211 386 (236 473) 3 322 188 Net interest expense (165 874) (196 350) (686 023) Profit/(loss) before taxation 45 512 (432 823) 2 636 165 Taxation - - (4 679) Profit/(loss) for the period 45 512 (432 823) 2 631 486 Other comprehensive income Foreign currency translation differences 123 079 - 419 907
Total comprehensive income/(loss) for the year 168 591 (432 823) 3 051 393 Earnings per share (cents) 0.2 (2.8) 14.1 Headline earnings per share (cents) 6 0.2 (2.8) 3.4 Weighted average number of ordinary shares in issue 19 762 959 15 290 841 18 665 728 Distributable core income 261 009 198 951 812 782 The directors consider that all results derive from continuing activities The notes on pages 8 to 9 form part of these consolidated financial statements Condensed consolidated statement of financial position Unaudited Unaudited Audited
As at As at As at 31 May 11 31 May 10 28 Feb 11 Notes Euro Euro Euro Non-current assets Investment property 4 32 630 242 25 294 201 30 202 039 Current assets Short term loans receivable 5 160 824 - 2 275 139 Trade and other receivables 1 811 921 780 330 233 425 Cash and cash equivalents 1 041 771 9 634 464 6 611 798 Total current assets 8 014 516 10 414 794 9 120 362 Total assets 40 644 758 35 708 995 39 322 401 Equity Share capital 5 19 762 959 19 388 947 19 762 959 Retained earnings (405 658) (3 119 436) (451 170) Foreign currency translation reserve 542 986 - 419 907 Shareholder equity 19 900 287 16 269 511 19 731 696 Non-current liabilities Long term loans 18 457 240 17 574 683 17 689 032 Financial instruments 968 955 1 334 499 852 667 Total non-current liabilities 19 462 195 18 909 182 18 541 699 Current liabilities (amounts falling within one year) Short term loans payable - 68 647 467 909 Trade and other payables 1 318 276 461 655 581 097 Total current liabilities 1 318 276 530 302 1 049 006 Total liabilities 20 744 471 19 439 484 19 590 705 Total equity and liabilities 40 644 758 35 708 995 39 322 401 Net asset value (cents per share) 100.7 83.9 99.8 These financial statements were approved by the board of directors on 15 July 2011 and signed on their behalf by: Lukas Nakos Malcolm Levy The directors consider that all results derive from continuing activities The notes on pages 8 to 9 form part of these consolidated financial statements Condensed consolidated statement of cash flows Unaudited Unaudited Audited Three Three months months Year
ended ended ended 31 May 11 31 May 10 28 Feb 11 Euro Euro Euro Operating activities Profit / (loss) before taxation 45 512 (432 823) 2 636 165 Net interest expense 165 874 196 350 686 023 Finance income (206 672) - (329 918) Movement in fair value adjustments 97 050 598 545 (1 929 864) Changes in working capital position (1 309 227) (1 941 039) 509 073 Taxation - - (4 679) Cash generated from/(used in) operating activities (1 207 463) (1 578 967) 1 566 800 Investing activities Acquisitions of investment property/ capitalised development costs (1 818 207) - (1 363 705) Issuance of short term loans (2 885 685) - (2 095 587) Interest received 206 672 - 122 119 Cash (used in) investing activities (4 497 220) - (3 337 173) Financing activities Proceeds from issuance of share capital - 10 079 126 9 068 638 Proceeds from loan facilities - - - Repayment of loan facilities (118 165) - (577 035) Net interest paid (165 874) (196 350) (686 023) Dividends paid - - (396 043) Cash generated from financing activities (284 039) 9 882 776 7 409 537 Net increase in cash and equivalents (5 988 722) 8 303 809 5 639 164 Cash and equivalents at the beginning of the year 6 611 800 1 528 307 1 528 306 Effect of exchange rate fluctuations 418 693 (197 652) (555 670) CASH AND EQUIVALENTS AT PERIOD END 1 041 771 9 634 464 6 611 800 The directors consider that all results derive from continuing activities The notes on pages 8 to 9 form part of these consolidated financial statements Condensed consolidated statement of changes in equity Currency Share Retained translation capital income adjustments Total Euro Euro Euro Euro
Opening balance at 28 February 2010 (audited) 9 309 821 (2 686 613) - 6 623 208 Loss for period to 31 May 2010 - (432 823) - (432 823) Issue of shares 10 079 126 - - 10 079 126 Closing balance at 31 May 2010(unaudited) 19 388 947 (3 119 436) - 16 269 511 Profit for the period to 28 February 2011 - 3 064 309 - 3 064 309 Other comprehensive income - - 419 907 419 907 Total comprehensive income - 3 064 309 419 907 3 484 216 Issue of shares 374 012 - - 374 012 Dividends paid - (396 043) - (396 043) Closing balance as at 28 February 2011 (audited) 19 762 959 (451 170) 419 907 19 731 696 Profit for the three months to 31 May 2011 - 45 512 - 45 512 Other comprehensive income - - 123 079 123 079 Total comprehensive income - 45 512 123 079 168 591 Closing balance as at 31 May 2011 (unaudited) 19 762 959 (405 658) 542 986 19 900 287 The directors consider that all results derive from continuing activities The notes on pages 8 to 9 form part of these consolidated financial statements Notes to the interim consolidated financial statements 1. Significant accounting policies This condensed consolidated interim financial information for the three months ended 31 May 2011 has been prepared in accordance with IAS 34, `Interim Financial Reporting`. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 28 February 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS). Basis of accounting The group`s results for the three months to 31 May 2011 have been prepared on a basis consistent with the group`s accounting policies published in the financial statements for the year ended 28 February 2011. 2. Rentals received The rentals received consist of Euro 256 942 received from the DPD property and Euro 183 027 received from the Aldi portfolio. Gross annual rentals of GBP504 750 relating to Metchley Hall, the Birmingham University student residential development, are expected to begin to be received from September 2011. 3. Fair value adjustments Fair value adjustments relate to: Unaudited Unaudited Audited Three Three months months year
ended ended ended 31 May 11 31 May 10 28 Feb 11 Euro Euro Euro DPD property Fair value adjustment - - 116 977 Fair value adjustment - Credit Suisse interest rate swap (54 173) (260 153) (106 403) (54 173) (260 153) 10 574
Aldi portfolio Fair value adjustment - - 60 000 Fair value adjustment - Sparkasse interest rate swap/cap (42 877) (338 392) 42 665 (42 877) (338 392) 102 665 Metchley Hall Fair value adjustment - - 1 816 625 Total (97 050) (598 545) 1 929 864 4.Investment property Investment property is carried at the same valuations as the last audited financial statements for the year ended 28 February 2011. Those valuations were performed by stock exchange approved independent professional valuers. The current investment property consists of the following: the Aldi portfolio; the DPD property; and Metchley Hall, the Birmingham student residential development. 5.Share capital During the three months to 31 May 2011 the company did not issue any ordinary shares (three months ended 31 May 2010: 10 079 126 shares of no par value at Euro 1 each). The current issued share capital of the company is 19 762 959 ordinary shares of no par value. The company does not have authorised share capital as it is registered under the Companies Act 2006 of the Isle of Man. Number of Share shares capital Euro Balance at 28 February 2010 9 309 821 9 309 821 Issued during three months to 31 May 2010 10 079 126 10 079 126 Balance at 31 May 2010 19 388 947 19 388 947 Issued during the remainder of the year 374 012 374 012 Balance at 28 February 2011 19 762 959 19 762 959 Issued during three months to 31 May 2011 - - Balance at 31 May 2011 19 762 959 19 762 959 6.Reconciliation of profit/(loss) for the period to headline earnings Unaudited Unaudited Audited
Three Three months months Year ended ended ended 31 May 11 31 May 10 28 Feb 11
Euro Euro Euro Profit/(loss) for the year 45 512 (432 823) 2 631 486 Adjusted for: Revaluation of investment property - - (1 993 602) Headline earnings 45 512 (432 823) 637 884 Headline earnings per share is based on a weighted average number of shares in issue of 19 762 959 (three months ended 31 May 2010: 15 290 841). SUPPLEMENTARY INFORMATION 1.Reconciliation of profit for the three months to 31 May 2011 to distributable core income - Unaudited Euro Profit for the period 45 512 Adjusted for: Movement in fair value adjustments 97 050 Exchange differences 41 500 Capital raising and structure costs 76 947 Distributable core income 261 009 Date: 15/07/2011 17:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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