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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Jannock Pptys Ltd | TSXV:JPL.UN | TSX Venture | Ordinary Share |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
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Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported net earnings for
the Third Quarter of 2008 of $436,000 ($0.01 per share) compared with a net loss
of $13,000 ($0.00 per share) for the Third Quarter of 2007. The earnings in the
Third Quarter were mainly due to income tax recoveries of $432,000 that were
received during the period.
Operating activities for the three months ended September 30, 2008 generated
cash of $433,000 compared with cash used of $105,000 for the same period in
2007.
Revenue
Income in the three months to September 30, 2008 consisted of interest earned on
short term investments of surplus cash of $39,000 plus interest on income tax
refunds of $11,000. This compares with interest earnings of $78,000 in the same
period last year which included interest earned on cash surpluses of $41,000
plus interest earned on mortgages receivable of $37,000.
General and Administrative Expenses
In the Third Quarter of this year, general and administrative expenses were
$45,000. In the same period last year administrative and other expenses were
$83,000 which included an amount of $27,000 relating to the successful appeal of
the income tax treatment of the Jancor proceeds that were received in prior
years.
For the year-to-date, administrative expenses reflect the Corporation's efforts
to reduce all areas of costs and are 31% less than for the same period in 2007.
Income taxes
In the Third Quarter of this year, the Corporation received refunds of $432,000
from Federal and Ontario tax authorities relating to income tax payments that
had previously been made on the recoveries from Jancor in 2006 and 2007. An
additional $11,000 of interest that accompanied the refunds has been included in
revenue.
Cash Flows from Operations
Cash generated from operating activities in the Third Quarter of this year
amounted to $433,000 compared with cash used by operating activities of $105,000
for the same period last year. The major differences are due to:
- Cash receipts for the Third Quarter this year were $482,000 and consisted of
income tax refunds of $432,000 plus interest receipts of $50,000 which consisted
of $39,000 interest on cash surpluses and $11,000 interest on the income tax
recoveries. This compares with $41,000 of cash receipts in the Third Quarter of
last year which were all from interest income on cash surpluses.
- Cash payments for the Third Quarter this year were $49,000 and were primarily
related to general and administrative expenses. In the same period last year,
cash payments were $146,000 and included $75,000 for income tax payments,
$58,000 for administrative and other expenses and $10,000 for interest costs.
Jancor Companies, Inc. (Jancor)
Jannock Properties sold all of its equity interest in Jancor in 2001 in return
for debt participation rights relating to payments received by Jancor's
subordinated lender and to equity participation rights to proceeds received by
Jancor's shareholders from a sale of Jancor.
In April 2007 the Corporation received proceeds of US$1,003,000 (Cdn$1,162,000)
under the terms of the agreement on its debt participation rights. No further
proceeds have been received since that time under either the debt participation
rights or the equity participation rights. Jannock Properties had previously
disclosed that it was unlikely that it would receive any recoveries from these
participation rights in the foreseeable future.
On October 30, 2008 Jancor made a voluntary Chapter 11 filing after it had
ceased operations at its manufacturing plants a few days earlier.
Jannock Properties believes that the current economic downturn and the closure
of the Jancor operations means that it is highly unlikely that proceeds from the
Jancor assets will exceed Jancor's senior debt. Consequently the Corporation
believes that there will not be any value in either the debt participation
rights or the equity participation rights.
Corporate Items
Following the sale of its real estate properties, the Corporation's remaining
assets are its cash balances and the potential recovery of levy credits on a
previously sold property. The cash balances at September 30, 2008 are equivalent
to approximately $0.16 per unit.
The Corporation is now investigating methods for maximizing shareholder values
including the orderly liquidation of the Corporation in a timely manner.
The interest earned on cash balances currently offsets a large portion of the
ongoing administrative costs.
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)
September 30 December 31
2008 2007
---- ----
(unaudited)
-----------
-----------
Assets
Cash and cash equivalents $ 5,790 $ 5,825
Other assets 10 21
Future income taxes 31 34
------------ ------------
------------ ------------
$ 5,831 $ 5,880
------------ ------------
Liabilities
Accounts payable and accrued liabilities $ 20 $ 27
Income taxes payable 15 470
------------ ------------
------------ ------------
$ 35 $ 497
------------ ------------
Shareholders' Equity
Capital stock (note 4) $ 23,115 $ 23,115
Contributed surplus 6,868 6,868
Deficit (24,187) (24,600)
------------ ------------
$ 5,796 $ 5,383
------------ ------------
------------ ------------
------------ ------------
$ 5,831 $ 5,880
------------ ------------
Interim Statement of Income, Comprehensive Income and deficit
(in thousands of Canadian dollars, except per share amount)
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- ------------------------
2008 2007 2008 2007
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
Interest Income $ 50 $ 78 $ 145 $ 252
Recovery of prior years
cost of sales - - - 178
Recovery on Jancor
(note 9) - - - 1,162
---------- ---------- ---------- ----------
Total 50 78 145 1,592
---------- ---------- ---------- ----------
Expenses
General and
administrative costs (45) (83) (175) (255)
Interest (10) (10)
Foreign exchange loss (54)
---------- ---------- ---------- ----------
Total (45) (93) (175) (319)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Income/(loss) before
income taxes 5 (15) (30) 1,273
Income tax provision
(recovery) (note 3)
- current (432) (3) (445) 507
- future 1 1 2 (44)
---------- ---------- ---------- ----------
Net income (loss) and
comprehensive income
(loss) for the period $ 436 $ (13) $ 413 $ 810
---------- ---------- ---------- ----------
Deficit - beginning of
period $ (24,623) $ (24,594) $ (24,600) $ (25,417)
Deficit - end of period $ (24,187) $ (24,607) $ (24,187) $ (24,607)
Basic and diluted
earnings (loss) per
share $ 0.01 $ 0.00 $ 0.01 $ 0.02
Interim Statement of Cash Flows
(in thousands of Canadian dollars)
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- ------------------------
2008 2007 2008 2007
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
Cash provided by (used
in)
Operating activities
Cash receipts
Recovery of prior years
cost of sales $ - $ - $ - $ 178
Collection of mortgages
receivable - - - 1,590
Income tax recoveries 432 432
Interest received 50 41 154 226
Recovery on Jancor
(note 9) - - - 1,162
Cash payments
Income taxes - (75) (443) (301)
Interest payments (10) (10)
Expenditures on land
development - (3) - (6)
Other payments (49) (58) (178) (309)
---------- ---------- ---------- ----------
Total operating
activities 433 (105) (35) 2,530
---------- ---------- ---------- ----------
Financing activities
Redemption of capital
stock - - - (1,781)
---------- ---------- ---------- ----------
Increase (decrease) in
cash equivalents 433 (105) (35) 749
---------- ---------- ---------- ----------
Cash and cash equivalents
- beginning of period $ 5,357 $ 3,864 $ 5,825 $ 3,010
Cash and cash equivalents
- end of period $ 5,790 $ 3,759 $ 5,790 $ 3,759
Cash and cash equivalents
are comprised of:
Cash 40 99
Short term investments
(note 2) 5,750 3,660
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.
Nine Months ended
-----------------
September 30, 2008 September 30, 2007
------------------- -------------------
Income (loss) before income taxes $ (30) $ 1,273
------------ ------------
Expected income taxes (recovery) $ (11) $ 460
Permanent differences (432) 3
------------ ------------
Income tax provision (recovery) $ (443) $ 463
------------ ------------
The permanent differences relate to the refunds of prior years taxes resulting
from the successful appeal of the treatment of the proceeds received from the
Jancor participation rights.
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 Nine months to September 30, 2008.
Number of shares
----------------
Class B
Common Class A special Amount
------- --------------- ------
Issued and outstanding at
September 30, 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 and the potential
recovery of levy credits.
The Corporation is now investigating methods for maximizing shareholder value
including orderly liquidation of the Corporation in a timely manner.
The interest earned on cash balances currently offsets a large portion of the
ongoing administrative costs.
6. Commitments
Security in the amount of $300 which was required for any potential
environmental liabilities that may have arisen 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 Nine 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 has not had any influence over the business since that time.
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.
In April 2007 the Corporation received proceeds of US$1,003,000 (Cdn$1,162,000)
under the terms of the agreement on its debt participation rights. No further
proceeds have been received since that time under either the debt participation
rights or the equity participation rights.
On October 30, 2008 Jancor made a voluntary Chapter 11 filing after it had
ceased operations at its manufacturing plants a few days earlier. Jannock
Properties had previously disclosed that it was unlikely that it would receive
any recoveries from its Jancor participation rights in the foreseeable future.
Jannock Properties believes that the current economic downturn and the closure
of the Jancor operations means that it is highly unlikely that proceeds from the
Jancor assets will exceed Jancor's senior debt. Consequently the Corporation
believes that there will not be any value in either the debt participation
rights or the equity participation rights.
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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