Jannock Properties Limited Announces March 31, 2008 Results
20 Mai 2008 - 3:58PM
Marketwired Canada
Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported a net loss of
$6,000 ($0.00 per share) for the First Quarter of 2008 compared with earnings of
$6,000 ($0.00 per share) for the same period in 2007.
Revenue
Income in the three months to March 31, 2008 consisted of interest earned on
short term investments of surplus cash of $53,000. This compares with interest
earnings of $85,000 in the same period last year which included interest earned
on cash surpluses of $31,000 plus interest earned on mortgages receivable of
$54,000.
General and Administrative Expenses
In the First Quarter of this year, general and administrative expenses were
$62,000, which is 18% lower than $75,000 for the First Quarter of last year.
Cash Flows from Operations
Cash used for operating activities in the First Quarter of this year amounted to
$462,000 compared with a cash usage of $154,000 for the same period last year.
The major differences are due to:
- Cash receipts for the First Quarter this year were $62,000 and were all from
interest received from the investment of cash surpluses. This compares with
$48,000 of interest receipts for the First Quarter last year.
- Cash payments for the First Quarter this year were $524,000 and included
$443,000 for the final income tax installments on 2007 earnings. In the same
period last year cash payments were $202,000 and included income tax
installments of $66,000.
Jancor Companies, Inc. (Jancor)
Recent public statements have shown that the ongoing problems in the US housing
markets and higher raw material and transportation costs have hurt revenues and
margins for suppliers of building products. It appears unlikely that the
building products companies will experience any significant recovery until these
problems in the US markets are resolved or abate.
Jannock Properties has the right to participate in subordinated debt payments
received by Jancor's subordinated lender. In 2007, Jancor obtained deferrals on
the payments of principal and interest that were to be made on its subordinated
debt in September 2007 and March 2008. At this time it is not possible to
predict whether further deferrals will be made on payments due later this year.
In addition to its participation in payments on Jancor's subordinated debt,
Jannock Properties has the right to receive 25% of any net proceeds, after
repayment of senior debt, if and when the equity holders decide to sell their
interest in Jancor.
Corporate Items
The interest earned on cash balances currently offsets a large portion of the
ongoing administrative costs while the Corporation assesses the likelihood of
receiving further proceeds from the subordinated lender to Jancor and resolves
the issues relating to its other potential recoveries. It is not possible
therefore, to predict when the Corporation will make any further distributions
to its shareholders.
The mandate for the Company is to dispose of its assets in a manner that
maximizes value and distributes the net proceeds realized from those assets to
shareholders in a timely fashion.
The Company's common shares are listed on the Canadian Venture Exchange (trading
symbol: JPL.UN). Currently each Unit consists of one Class B common share and 65
Class A special shares.
Forward-looking statements contained in this news release involve risks and
uncertainties that could cause actual results to differ materially from those
contemplated by such statements. Factors that could cause such differences
include local real estate markets, zoning applications, changes in interest
rates and general economic conditions. In addition there are risk factors
described from time to time in the reports and disclosure documents filed by
Jannock Properties Limited with Canadian and U.S. securities regulatory agencies
and commissions.
NOTICE
The accompanying interim unaudited financial statements have not been reviewed
by the Company's auditors.
Interim Balance Sheet
(in thousands of Canadian dollars)
March 31 December 31
2008 2007
---------- -----------
(unaudited)
Assets
Cash and cash equivalents (note 2) $ 5,363 $ 5,825
Other assets 16 21
Future income taxes 32 34
---------- -----------
$ 5,411 $ 5,880
---------- -----------
---------- -----------
Liabilities
Accounts payable and accrued liabilities $ 10 $ 27
Income taxes payable 24 470
---------- -----------
$ 34 $ 497
---------- -----------
Shareholder's Equity
Capital stock (note 4) $ 23,115 $ 23,115
Contributed surplus 6,868 6,868
Deficit (24,606) (24,600)
---------- -----------
$ 5,377 $ 5,383
---------- -----------
---------- -----------
$ 5,411 $ 5,880
---------- -----------
---------- -----------
Interim Statement of Income, Comprehensive Income and Deficit
(in thousands of Canadian dollars, except per share amounts)
Three Months
Ended March 31
2008 2007
---------- -----------
(unaudited) (unaudited)
Revenue
Interest income $ 53 $ 85
Expenses
General and administrative costs (62) (75)
---------- -----------
Income (loss) before income taxes (9) 10
Income tax provision (recovery) (note 3)
- current (4) 2
- future 1 2
---------- -----------
(3) 4
---------- -----------
Net income (loss) and comprehehensive income
(loss)
for the period $ (6) $ 6
Deficit - Beginning of period $ (24,600) $ (25,417)
---------- -----------
Deficit - End of period $ (24,606) $ (25,411)
---------- -----------
---------- -----------
Basic and diluted income (loss) per share $ (0.00) $ 0.00
Interim Statement of Cash Flows
(in thousands of Canadian dollars)
Three Months
Ended March 31
2008 2007
---------- -----------
(unaudited) (unaudited)
Cash provided by (used in)
Operating activities
Cash receipts
Interest received $ 62 $ 48
Cash payments
Expenditures on land development (0) (3)
Income taxes paid (443) (66)
Other payments (81) (133)
---------- -----------
Total operating activities (462) (154)
---------- -----------
Increase (decrease) in cash and cash equivalents $ (462) $ (154)
---------- -----------
Cash and cash equivalents - beginning of period $ 5,825 $ 3,010
---------- -----------
---------- -----------
Cash and cash equivalents - end of period $ 5,363 $ 2,856
---------- -----------
Cash and cash equivalents are comprised of:
Cash 138 125
Short term investments (note 2) 5,225 5,700
NOTES TO INTERIM FINANCIAL STATEMENTS (unaudited - in thousands of dollars)
1. Summary of significant accounting policies
These interim unaudited financial statements have been prepared in accordance
with Canadian generally accepted accounting principles for interim financial
statements in Canada. The disclosures contained in these unaudited interim
financial statements do not include all disclosures required for annual
financial statements. They have been prepared using the same accounting policies
as set out in Note 2 to the financial statements for the year ended December 31,
2007 and should be read in conjunction with those financial statements.
2. Cash and cash equivalents
Investments are held in either banker's acceptances or term deposits with major
Canadian banks in order to minimize any credit risk.
3. Income taxes
The following table reconciles income taxes calculated at the current Canadian
federal and provincial tax rates with the Company's income tax expense.
Three months ended
------------------
March 31, 2008 March 31, 2007
--------------- --------------
Earnings (loss) before income taxes $ (9) $ 10
--------------- --------------
--------------- --------------
Expected income taxes (recovery) $ (3) $ 4
--------------- --------------
4. Capital Stock
The Company's capital stock consists of Class A special shares and Class B
common shares. The Class A special shares are transferable with and only with
the associated Class B common shares and trade as one unit (JPL.UN).
Accordingly, the Company's earnings per share have been calculated using the
number of Class B common shares outstanding of 35,631,932. There have been no
changes to the shares outstanding during the three months to March 31, 2008
Number of shares
----------------
Class B Class A special Amount
------- --------------- ------
Common
-------
Issued and outstanding at March 31, 2008 35,631,932 2,316,075,580 23,115
5. Capital Management
The mandate for the Corporation is to dispose of its assets in a manner that
maximizes value and distributes the net proceeds realized from those assets to
shareholders in a timely fashion.
The Corporation's remaining assets relate to its cash balances, the potential
recovery of levy credits and to its interests in the Jancor rights. In addition
it has a significant interest in the resolution of the uncertainty regarding the
income tax treatment of the proceeds that it received in 2006 and 2007 under the
Jancor rights - see note 9.
The interest earned on cash balances currently offsets a large portion of the
ongoing administrative costs while the Corporation assesses the likelihood of
receiving further proceeds from the Jancor rights and resolves the issues
relating to its other potential recoveries.
It is not possible to predict when the Corporation will make any further
distributions to its shareholders.
6. Commitments
Security in the amount of $300 which was required for any potential
environmental liabilities that may arise for three years after the sale of the
Milton quarry in March 2005 expired in March 2008. Security in the amount of
$1,200 which was required for the sale of the Britannia site in September 2004
expired in September 2007. The Corporation is not aware of any liabilities for
environmental issues at these sites.
7. Related Party Transactions
The Corporation pays a nominal amount as its share of rent and expenses to a
former president of the Corporation as a sub-tenant in office space that it
shares with him and a third party.
In the first three months of 2007, the former President was paid $1 for
consulting services provided to the Corporation ($nil in 2008)
8. Potential Recoveries
The Corporation has identified approximately $281 of potential recoveries of
development charges that are contingent upon actions of other developers. Any
amounts received will be treated as a recovery of development costs charged to
cost of sales in prior years.
The ultimate amounts realized and the timing of recovery are uncertain and could
differ from current estimates.
9. Jancor Companies, Inc (Jancor)
In 2001, Jannock Properties sold all of its equity interest in Jancor, a US
manufacturer of residential vinyl siding, windows and outdoor fence and deck
products and no longer has any influence over the business. Jannock Properties
does not have any carrying value on its balance sheet as it made a provision in
2000 to fully write down its investment to reflect plant closures and a decline
in value that was other than temporary.
Under the terms of the sale of the Jancor equity interest, Jannock Properties
has the right to receive:
- debt participation right --a participation in any receipts of principal and
interest by Jancor's subordinated lender (an affiliate of Jancor's majority
owner) after they reach a threshold level equal to the principal amount of the
subordinated debt of US$16,717,000. Jannock Properties is to receive 100% of all
receipts between US$16,717,000 and US$22,289,000 and 25% of amounts over
US$22,289,000. This arrangement is to restore Jannock Properties to a 25%
participation in any such receipts; and
- equity participation right - 25% of any net proceeds to the owners, after
repayment of senior debt, if and when the equity holders sell their interest in
Jancor.
Jannock Properties received proceeds of US$1,003,000 (Cdn$1,162,000) under the
terms of the agreement on its debt participation right in April 2007. No further
proceeds have been received as Jancor obtained deferrals on the payments of
principal and interest that were to be made in September 2007 and in March 2008
on its subordinated debt. Repayment of principal on the subordinated debt has
been extended until September 2011 and interest payments currently have been
deferred until September 2008.
At this time it is not possible to predict when or if the deferred interest and
principal payments will be made by Jancor.
10. Accounting policy changes
Effective January 1, 2008 the Corporation adopted CICA Handbook Section 1535,
Capital Disclosures. Also, in fiscal 2008, the Company has adopted Section 3862,
"Financial Instruments - Disclosures", and Section 3863, Financial Instruments -
Presentation". These sections replace Section 3861, "Financial Instruments -
Disclosure and Presentation", revising and enhancing disclosure requirements,
and carrying forward unchanged presentation requirements. These new Sections
place increased emphasis on disclosures about the nature and extent of risks
arising from financial instruments and how the entity manages those risks.
These standards impact the Company's disclosures provided but do not affect the
Company's results or financial position.
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