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Interim consolidated unaudited financial statements for the six months ended 31 August 2012
MAS plc
(Incorporated in the Isle of Man)
(Registration number 2893V)
(Registered as an external company in the Republic of South Africa)
(Registration number 2010/000338/10)
JSE share code: MSP
ISIN: IM00B4LFGH00
("MAS" or "the company")
Interim consolidated unaudited financial statements for the six months ended 31 August 2012
Highlights
- Braehead property acquisition completed
- Growing portfolio delivering strong income
- Good progress with developments in the portfolio
- 817 748 adjusted core income generated
MAS is a real estate investment company with a portfolio of commercial properties in Western
Europe. The company aims to provide investors with an attractive, sustainable euro-based dividend
and strong growth in value over time through its acquisition and asset management strategy.
The company's current investment focus is on Germany, Switzerland and the United Kingdom.
The company announced its maiden dividend in December 2010 and has paid a dividend twice yearly since.
The company is a closed-end investment company with an infinite life. It was listed on the
Euro-MTF market of the Bourse de Luxembourg on 12 August 2009, where it has its primary listing,
and on the Alternative Exchange ("AltX") of the Johannesburg Stock Exchange ("JSE") on
31 August 2009, where it has its secondary listing.
Reporting currency
The company's results are reported in euros.
Market update
The weak sentiment across Europe at the beginning of the year eased as the year progressed and
it became clear that the European Central Bank remains committed to the common currency.
The euro, however, has reached new lows against the Swiss franc and British pound. The UK
continued to feel the effects of the government's austerity measures, coupled with a continued
lack of bank funding. As a result, real-estate transaction volumes remained muted except in
the case of very prime assets.
These market dislocations have continued to create unique investment opportunities
for the company. The end of April 2012 saw the completion of the Breahead acquisition,
a 10,5 acre industrial site in Braehead, Glasgow, let to James Howden and Company Limited,
at an initial yield of 9,9%. The current annual rent roll of £595 000 has contributed the
continued growth in rental income.
Overview of the portfolio
Gross
property Gross Property Net
by value rentals equity rentals
(refer 1 (After
below) interest)
Euro Euro Euro Euro
Aldi portfolio/Germany 16% 19% 3% 11%
DPD property/Switzerland 30% 28% 20% 24%
Metchley Hall/UK 14% 20% 20% 24%
Sauchiehall property/UK 9% 11% 13% 14%
Santon North/UK 12% 9% 17% 11%
Braehead property/UK 13% 13% 19% 16%
Artisan IP 10/UK 6% 0% 8% 0%
(1) Property equity is the property value less the amount of bank debt -borrowed against the property.
Carrying value Euro 28 Feb 12 31 Aug 12
DPD property 18 953 317 19 021 152
Aldi portfolio 9 930 000 9 930 000
Metchley Hall 8 632 660 9 256 610
Sauchiehall property 5 669 280 6 054 720
Santon North 6 850 380 7 857 028
Braehead property - 8 060 975
Artisan IP 10 3 581 578 3 745 424
Total 53 617 215 63 925 909
Adjusted core income for the six months of 817 748 (31 August 2011: 510 261) confirmed the
soundness of the investment strategies adopted in the various markets in which the company operates.
The directors expect to build on this income by investing additional funds that are to be
raised from shareholders.
Several of the properties in the portfolio have the benefit of being single tenanted.
The Aldi portfolio in Baden-Württemberg, Germany and the DPD logistics and office centre
outside Zürich, Switzerland continued to perform well. With long leases (20 and 15 years
respectively) and substantially fixed or capped debt, the properties provide good
visibility of income for many years into the future. Indeed, the strong Swiss franc has
led to healthy gains in the net asset value of the DPD property. Both the Aldi portfolio
and the DPD property continue to trade strongly in their respective countries. The
Sauchiehall property, located in the prime retail area of Sauchiehall Street in Glasgow,
is leased to HMV (UK), with a parent company guarantee from the EMI Group plc. Similarly,
the recently acquired Braehead property also benefits from a single, strong industrial tenant.
Metchley Hall, the student residential development in Birmingham, started generating income
from September 2011, with a guaranteed gross annual rental of £604 000. In terms of the
nomination agreement with the University of Birmingham, occupancy levels are underwritten at 97%.
The two investments with current development aspects in the portfolio have progressed
particularly well. Santon North Street in Lewes, in Sussex, has significantly improved
short-term income from its variety of small tenants, and the investment has encouraging
prospects. Change-of-use planning applications are expected to be made mid-2013.
In addition, Artisan IP 10 continues to receive a positive response. The potential
profitability on this large-scale development on the Royal Mile in Edinburgh is substantial
for a combination of reasons: a favourable acquisition price, a prime location and the high
level of interest shown by potential tenants. Further updates on this development in
particular are expected to be announced in the coming months.
Interest rate hedges
The commercial benefit of the interest rate hedges is considerable, as highly visible
positive yield spreads are locked in over the life of the investment. However, 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 therefore
remain focused on the cash generation within the business, and not the volatility arising
from the revaluation of long-term financial hedging instruments.
Prospects
The company continues to progress well and significant headway has been made with securing
investment opportunities for the capital the board expects to raise early in 2013.
Dividend
The directors have approved an interim dividend for the six months ended 31 August 2012
of 1,91 euro cents per share relating to the adjusted core income generated in the first
half of the year. Details and timing of the final dividend will be published in due course.
Basis of preparation and accounting policies
These interim consolidated unaudited financial statements have been prepared in accordance
with the measurement and recognition requirements of International Financial Reporting
Standards (IFRS), the principles of IAS 34: Interim Financial Reporting, and the Listings
Requirements of the JSE Limited. The accounting policies adopted in the preparation of the
interim consolidated unaudited financial statements are consistent with those applied in
the financial statements for the year ended 28 February 2012. The interim consolidated
financial statements have not been reviewed or reported on by the company's external auditors.
The directors are not aware of any matters or circumstances arising subsequent to the
interim period that require any additional disclosure or adjustment to the interim consolidated
unaudited financial statements.
By order of the board
Ron Spencer Lukas Nakos
Chairman Chief executive
Douglas, Isle of Man
Monday, 5 November 2012
Registered office
Isle of Man
25 Athol Street, Douglas, Isle of Man, IM1 1LB
South Africa
Emwil House West, 15 Pony Street, Tiger Valley Office Park, Silver Lakes, 0081
Transfer secretary
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001, South Africa
Directors
Jaco Jansen
Non-executive
Malcolm Levy
Chief financial officer
Lukas Nakos
Chief executive officer
Gideon Oosthuisen
Non-executive
Ron Spencer
Non-executive chairman
CREST Registrar and paying agent
Computershare Investor Services (IOM) Limited
International House, Castle Hill, Victoria Road, Douglas, Isle of Man, IM2 4RB
JSE sponsor
Java Capital
Company secretary
Helen Cullen
Abridged consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Aug 12 31 Aug 11 28 Feb 12
Euro Euro Euro
Revenue
Gross rental income 1 969 075 902 461 2 242 381
Expenses
Property related expenses (295 343) (124 058) (432 204)
Investment adviser fees (305 760) (147 990) (457 195)
Other operating expenses (257 998) (476 517) (746 905)
Net operating income 1 109 974 153 896 606 077
Net fair value adjustments on
investment property - - (16 389)
Loss from financial instruments (339 718) (818 377) (1 606 081)
Equity accounted earnings 20 409 - 74 460
Exchange differences 1 906 005 82 658 167 095
Profit/(loss) before net
finance expense 2 696 670 (581 823) (774 838)
Finance income 8 067 372 200 713 690
Finance expense (435 798) (339 787) (672 850)
Profit/(loss) before taxation 2 268 939 (549 410) (733 998)
Taxation (102 809) - (36 721)
Profit/(loss) for the period 2 166 130 (549 410) (770 719)
Other comprehensive income
Foreign currency translation
differences 114 249 353 144 264 028
Total comprehensive income/(loss)
for the period 2 280 379 (196 266) (506 691)
Earnings/(loss) per share
(euro cents)* 5.13 (2.75) (2.18)
Headline earnings/(loss)
per share (euro cents)* 5.13 (2.75) (2.46)
Weighted average number of
ordinary shares in issue 42 203 345 19 955 783 35 420 878
Adjusted core income 817 748 510 261 1 108 070
*The company has no dilutionary instruments in issue
Abridged consolidated statement of financial position
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Aug 12 31 Aug 11 28 Feb 12
Euro Euro Euro
Non-current assets
Investment property 60 180 485 35 019 620 50 035 637
Investment in associate 1 096 484 - 1 101 268
Loans to associate 2 648 940 - 2 480 310
Plant and equipment 66 572 - 27 423
Total non-current assets 63 992 481 35 019 620 53 644 638
Current assets
Short-term loans receivable 253 497 3 421 272 3 782 783
Trade and other receivables 1 053 212 504 850 563 745
Cash and cash equivalents 852 377 11 469 566 5 742 861
Total current assets 2 159 086 15 395 688 10 089 389
Total assets 66 151 567 50 415 308 63 734 027
Equity
Share capital 42 811 728 20 173 271 42 154 015
Retained loss (576 982) (1 847 306) (2 068 646)
Foreign currency translation reserve 798 184 773 051 683 935
Shareholder equity 43 032 930 19 099 016 40 769 304
Non-current liabilities
Long-term loans 17 735 184 18 413 305 17 813 364
Financial instruments 2 822 659 1 721 300 2 478 405
Total non-current liabilities 20 557 843 20 134 605 20 291 769
Current liabilities
Short-term loans payable 499 680 517 260 497 898
Trade and other payables 2 061 114 10 664 427 2 175 056
Total current liabilities 2 560 794 11 181 687 2 672 954
Total liabilities 23 118 637 31 316 292 22 964 723
Total equity and liabilities 66 151 567 50 415 308 63 734 027
Actual number of ordinary
shares in issue 42 798 832 20 173 271 42 154 015
Net asset value per share
(euro cents) 100.5 94.7 96.7
Abridged consolidated statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Aug 12 31 Aug 11 28 Feb 12
Euro Euro Euro
Cash generated from operating
activities 405 537 10 097 809 1 020 670
Cash (used in) investing
activities (4 030 643) (4 061 796) (22 288 818)
Cash (used in)/generated from
financing activities (1 379 627) (1 034 831) 20 398 504
Cash and equivalents at the
beginning of the period 5 742 861 6 611 800 6 611 798
Effect of exchange rate fluctuations 114 249 (143 416) 707
Cash and equivalents at
the end of the period 852 377 11 469 566 5 742 861
Abridged consolidated statement of changes in equity
Foreign
currency
Share Retained translation
capital loss reserve Total
Euro Euro Euro Euro
Opening balance as at
28 February 2011
- audited 19 762 959 (451 170) 419 907 19 731 696
Loss for the period - (549 410) - (549 410)
Other comprehensive
income - - 353 144 353 144
Total comprehensive
income - (549 410) 353 144 (196 266)
Issue of shares 410 312 - - 410 312
Dividends paid - (846 757) - (846 757)
Closing balance as at
31 August 2011
- unaudited 20 173 271 (1 847 337) 773 051 19 098 985
Loss for the period - (221 309) - (221 309)
Other comprehensive loss - - (89 116) (89 116)
Total comprehensive loss - (221 309) (89 116) (310 425)
Issue of shares 21 980 744 - - 21 980 744
Dividends paid - - - -
Closing balance as at
28 February 2012
- audited 42 154 015 (2 068 646) 683 935 40 769 304
Profit for the period - 2 166 130 - 2 166 130
Other comprehensive income - - 114 249 114 249
Total comprehensive income - 2 166 130 114 249 2 280 379
Issue of shares 657 713 - - 657 713
Dividends paid - (674 466) - (674 466)
Closing balance as at
31 August 2012
- unaudited 42 811 728 (576 982) 798 184 43 032 930
Reconciliation of (loss)/profit for the period to headline (loss)/earnings
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 Aug 12 31 Aug 11 28 Feb 12
Euro Euro Euro
Profit/(loss) for the period 2 166 130 (549 410) (770 719)
Adjusted for:
Revaluation of investment property - - (19 044)
Revaluation of investment property
in associate - - (82 861)
Headline earnings/(loss) 2 166 130 (549 410) (872 624)
Weighted average number of
ordinary shares in issue 42 203 345 19 955 783 35 420 878
Headline earnings/(loss)
per share (cents) 5.13 (2.75) (2.46)
Supplementary information
Reconciliation of profit to core income - unaudited
Six months Six months Year
ended ended ended
31 Aug 12 31 Aug 11 28 Feb 12
Euro Euro Euro
Profit/(loss) for the period 2 166 130 (549 410) (770 719)
Adjusted for:
Movement in fair value adjustments 339 718 818 377 1 622 470
Fair value adjustments in associate - - (82 861)
Exchange differences (1 906 005) (82 658) (167 095)
Capital raising fees and
structure costs 85 987 323 952 481 322
Non-distributable interest expense - - -
Core income 685 830 510 261 1 083 117
Income shortfall guarantee 131 918 - 24 953
Adjusted core income 817 748 510 261 1 108 070
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