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Abridged audited consolidated results for the year ended 28 February 2013
MAS Real Estate Inc. (formerly MAS plc)
(Registered in the British Virgin Islands)
(Registration number 1750199)
(Registered as an external company in the Republic of South Africa)
(Registration number 2010/000338/10)
JSE share code: MSP / SEDOL (XLUX): B96VLJS / SEDOL (ALTX): B96TSD2
ISIN: VGG5884M1041
("MAS" or "the company" or "the group")
Abridged audited consolidated results for the year ended 28 February 2013
Highlights
- Final dividend of 1,50 euro cents per share approved
- Adjusted core income of 4,21 euro cents per share
- Capital of 23 797 426 raised in February 2013
- Migration to main board of the JSE targeted for second half of 2013
MAS is a real estate investment company with a portfolio of commercial properties in Western Europe.
It aims to provide investors with a sustainable attractive euro denominated dividend.
The current investment focus is in the United Kingdom, Germany and Switzerland.
The company has its primary listing on the Euro MTF market of the Luxembourg Stock Exchange and a secondary listing on the Alternative Exchange of the JSE.
Reporting Currency
The company's results are reported in euro.
Business Review
Growth across all sectors of the real estate market remained subdued, with the exception of the very best located and tenanted properties,
which is where the majority of investors have sought refuge in 2012. Our argument for investing in European real estate remains as strong as ever.
We believe that now is a most opportune time to be building a portfolio of well-located property investments.
Value can be uncovered, not by following the herd, but by seeking opportunity where others are not looking - and the opportunities currently
available across Europe, and in particular the UK, are indeed substantial. The company is diligently taking advantage of these on behalf of shareholders,
with our currently available investment capital.
Redomiciliation
The last quarter has been a particularly busy period for management. Before embarking on the capital raising in February, the corporate registration of the company was migrated from the Isle of Man
to the British Virgin Islands. This was an important step as the longer-term tax structuring of the company was thereby secured. It also means that the company is no longer subject to the UK Takeover Code.
As the descriptive "plc" is not permitted under BVI law, the company was renamed MAS Real Estate Inc. but will continue to be referred to simply as MAS.
This action allowed the company to undertake the private placement of 22,7 million new shares in MAS with existing shareholders and specific other investors.
The new capital will enable it to take advantage of some of the excellent investment opportunities that have become available.
The current portfolio of properties, is as follows:
Valuation
As at 28 Feb 13
Property Sector Currency '000
DPD Logistics CHF 22 740
Aldi portfolio Food retail EUR 9 750
Metchley Hall Student residential GBP 6 200
Santon North Industrial/development GBP 7 314
Sauchiehall Retail GBP 4 700
Braehead Industrial GBP 6 500
Artisan IP 10 Development GBP 3 010
Total EUR 60 548
The current portfolio continues to perform well with conservative gearing at 21% loan to total assets.
The company has no pre-crisis legacy assets or debt or re-financing pressures. This stands in sharp positive
contrast to many of its European peers.
The DPD property in Switzerland and the Aldi portfolio in Germany continued to trade well and generate strong
cash yields. The debt on these properties has been substantially hedged, locking in the positive spread between
the cost of debt and the yield on the property, and is amortising over the debt term.
The UK portfolio has also performed well. The lease with the tenant on the 42 500 m² Braehead property in Glasgow
acquired in April 2012 has been extended to 2025 with a near 10% increase in the base rental. Future rental increases are linked to the Retail Price Index.
The nominations agreement on Metchley Hall, the student property in Birmingham, demonstrated the importance of security of income in a year of headwinds for the student sector,
which experienced the combined effect of the reduction of student subsidies and more stringent requirements for visas for foreign students.
The directors are pleased with the considerable progress made during the year in respect of the development properties Santon North Street and Artisan IP 10.
Financial results
Adjusted core income grew strongly to 1 811 492 which equates to 4,21 euro cents per share. This was due mainly to the acquisition of the Braehead
property. In line with company policy, no hedging of currencies is undertaken between the euro, sterling and the Swiss franc. This has resulted in currency losses in the current year.
The strengthening of the euro has reduced the net asset value ("NAV") per share, which now stands at 96,9 euro cents from a restated 98,5 euro cents last year.
This type of fluctuation is an expected component of the investment process given that currency hedging is not undertaken, but is particularly extreme in the current year due to the unusually volatile
fluctuations between European currencies experienced in the period under review. The actual impact of these fluctuations on shareholders is not significant as they are eliminated in
the computation of adjusted core income.
Prospects and Outlook
MAS is realising the innate value of the properties in the portfolio in line with the strategy devised for each of them when they were acquired.
The directors are confident they will be able to continue investing the capital of the company in the excellent opportunities available in the markets in which it operates.
They intend migrating MAS to the main board of the JSE in the second half of 2013, subject to all necessary approvals. Such a move will, in the opinion of the directors,
increase the profile of the company and enhance its ability to raise capital to take advantage of the numerous investment opportunities available in Europe at this time.
Dividend
The directors have approved a final dividend for the year of 1,50 euro cents per share. Details and timing of the final dividend will be published in due course.
On a like-for-like basis and eliminating the effect of the capital raising immediately before year-end, the dividend for the second half would have been an encouraging 2,28 euro cents per share.
The total dividend for the year reached 3,41 euro cents per share, and the adjusted core income per share for the same period is 4,21 euro cents.
Basis Of Preparation
These results have been prepared in accordance with International Financial Reporting Standards, including IAS 34-Interim Financial Reporting, the rules of the Luxembourg Stock Exchange
and the Listings Requirements of the JSE Limited.
Accounting Policies
The financial statements on which these abridged results have been based, have been audited by the group's auditors, KPMG Audit LLC, and their unqualified audit report is available on request
from the company secretary and will be released together with the annual report. The accounting policies adopted are consistent with those of the previous year, with the exception of investment property under construction.
The directors believe the most appropriate accounting treatment for these assets is the cost basis until practical completion, at which point they will be carried at independent valuation on the balance sheet.
2 May 2013
JSE sponsor: Java Capital
Abridged consolidated statement of comprehensive income
Audited Audited
Year ended Year ended
28 Feb 13 28 Feb 12
('000) Restated
Revenue
Gross rental income 4 090 2 242
Expenses
Property-related expenses (676) (432)
Investment adviser fees (619) (457)
Administrative expenses (685) (747)
Net operating income 2 110 606
Net fair value adjustments of investment property (1 171) 839
Net fair value adjustments of financial instruments (60) (1 606)
Equity accounted earnings/(losses) 20 (8)
Exchange differences (848) 167
Profit/(loss) before net financing costs 51 (2)
Finance income 11 714
Finance expense (756) (673)
(Loss)/profit before taxation (694) 39
Taxation (193) (37)
(Loss)/profit for the year (887) 2
Other comprehensive (loss)/income
Currency translation differences (217) 264
Total comprehensive (loss)/income for the year (1 104) 266
(Loss)/earnings per share (euro cents)* (2,06) 0,01
Headline earnings/(loss) per share (euro cents)* 0,66 (2,46)
Adjusted core income per share 4,21 3,13
Weighted average number of ordinary
shares in issue ('000's) 43 055 35 421
Adjusted core income 1 811 1 108
* There are no potentially dilutive instruments in issue.
Abridged consolidated statement of financial position
Audited Audited
As at As at
28 Feb 13 28 Feb 12
('000) Restated
Investment property 57 012 50 892
Investment in associate 1 055 1 019
Loan to associate 2 433 2 480
Fixed assets 48 27
Current assets 25 719 10 089
Total assets 86 267 64 507
Share capital 67 423 42 154
Retained losses (3 674) (1 296)
Foreign currency translation reserve 467 684
Shareholder equity 64 216 41 542
Long-term loans payable 17 465 17 813
Financial instruments 2 523 2 479
Current liabilities 2 063 2 673
Total liabilities 22 051 22 965
Total equity and liabilities 86 267 64 507
Net asset value per share (euro cents) 96.9 98.5
Number of shares in issue ('000's) 66 238 42 154
Abridged consolidated statement of cash flows
Audited Audited
Year ended Year ended
28 Feb 13 28 Feb 12
('000) Restated
Cash generated from operating activities 1 947 938
Cash utilised in investing activities (5 755) (22 206)
Cash generated from financing activities
- debt and capital raised 22 673 20 398
Cash and equivalents at the beginning of the year 5 743 6 612
Currency translation differences 100 1
Cash and equivalents at year-end 24 708 5 743
Abridged consolidated statement of changes in equity
Currency
Share Retained translation
('000) Capital (losses) reserve Total
28 February 2011 19 763 (451) 420 19 732
Issue of shares 22 391 - - 22 391
Restated profit for year - 2 - 2
Interim dividend paid - (847) - (847)
Restated other
comprehensive income - - 264 264
28 February 2012
(restated) 42 154 (1 296) 684 41 542
Issue of shares 25 269 - - 25 269
Loss for the year - (887) - (887)
Dividends paid - (1 491) - (1 491)
Other comprehensive (loss) - - (217) (217)
28 February 2013 67 423 (3 674) 467 64 216
Reconciliation of (loss)/profit for the year to headline earnings/(loss)
Audited Audited
Year ended Year ended
28 Feb 13 28 Feb 12
('000) Restated
(Loss)/profit for the year (887) 2
Adjusted for:
- Revaluation of investment property 1 171 (875)
Headline earnings/(loss) 284 (873)
Weighted average number of ordinary
shares in issue ('000's) 43 055 35 421
Headline earnings/(loss) per share (euro cents) 0,66 (2,46)
Supplementary Information
Reconciliation of (loss)/profit for the year to core income and adjusted core income - unaudited
Year ended Year ended
28 Feb 13 28 Feb 12
('000) Restated
(Loss)/profit after taxation (887) 2
Adjusted for:
- Movement in fair value adjustments 1 231 767
- Exchange differences 848 (167)
- Capital raising fees and structure costs 359 481
Core income 1 551 1 083
- Santon North income shortfall guarantee 260 25
Adjusted core income 1 811 1 108
Date: 02/05/2013 12:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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