Jannock Properties Limited (TSX VENTURE: JPL.UN) today reported net
earnings for the year of $423,000 ($0.01 per share) compared with
$817,000 ($0.02 per share) in 2007.
Operating activities for the year ended December 31, 2008 used
cash of $12,000 compared with a generation of cash of $4,596,000
for the same period in 2007.
The Corporation will seek shareholder approval at an Annual and
Special Meeting expected to be held on May 14, 2009 for the
voluntary dissolution of the Corporation and delisting from the TSX
Venture Exchange.
Revenue
Income in 2008 consisted of interest earned on investments of
surplus cash of $172,000 and interest received on income tax
recoveries of $11,000. In the same period last year, interest
earnings of $322,000 included interest earned on cash surpluses of
$169,000 plus interest earned on mortgages receivable of $153,000.
Also in 2007 the Corporation received $178,000 from a recovery of
levy credits on a property that had previously been sold and
$1,162,000 under its debt participation rights related to the sale
of its interests in Jancor in 2001.
Jancor Companies, Inc. (Jancor)
In October 30, 2008 Jancor made a voluntary Chapter 11
bankruptcy filing after it had ceased operations at its
manufacturing plants a few days earlier. On January 22nd, 2009 this
bankruptcy filing was converted to Chapter 7 and a trustee has been
appointed to administer the liquidation of Jancor's assets. A
meeting of the trustee with Jancor's creditors is expected to take
place in March. Jannock Properties' debt participation rights are a
contractual arrangement with Jancor's subordinated lender and as a
result Jannock Properties is not a creditor of Jancor.
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.
In 2008, Jannock Properties did not receive any amounts relating
to proceeds received by Jancor's subordinated lender (2007 -
$1,162,000).
General and Administration Expenses
In 2008 general and administrative expenses were $236,000 which
was a reduction of 24% from the $309,000 incurred in 2007.
Income taxes
In 2007, Jannock Properties filed an objection with the Federal
and Ontario tax authorities on the income tax treatment of the
proceeds from the Jancor debt participation rights that were
received in 2006. This objection was resolved in favour of the
Corporation in 2008 and recoveries of $451,000 were received for a
portion of the income taxes that were paid in 2006 and 2007. These
recoveries have been treated as a reversal of previous
provisions.
Total income tax recoveries in 2008 including these refunds were
$477,000.
Net income
Net income for 2008 was $423,000 ($0.01 per share) compared with
$817,000 ($0.02 per share) for the same period in 2007.
Cash Flows
Net operating cash used by operating activities in 2008 amounted
to $12,000 compared to cash generated by operating activities of
$4,596,000 in 2007.
- Cash receipts in 2008 were $643,000 and included $451,000 of
income tax recoveries, $181,000 of interest received from the
investment of cash surpluses and $11,000 interest on income tax
refunds. In 2007 cash receipts were $5,370,000 and included the
collection of mortgages receivable of $3,670,000, recovery of levy
credits of $178,000, interest received on mortgages receivable and
cash surpluses of $360,000 and proceeds from Jancor's subordinated
lender of $1,162,000.
- Cash payments in 2008 were $655,000 and included income tax
payments on 2007 income of $443,000 and administrative expenditures
of $212,000. In 2007, cash payments were $774,000 and included
income tax payments on 2007 and 2006 income of $382,000, interest
payments of $10,000 and administrative expenditures of
$376,000.
Distributions
There were no distributions to shareholders in 2008. In 2007 the
Corporation made a distribution to shareholders through the
redemption of 178,159,660 Class A Special Shares at $0.01 per Class
A Special Share amounting to $1,781,000, which is equivalent to
$0.05 per Class B Common Share.
Capital Structure
The number of Class B Common Shares outstanding is 35,631,932.
Currently there are 65 Class A Special Shares that are associated
with each Class B Common Share. The combination of one Class B
Common Share and 65 Class A Special Shares is listed as a unit on
the TSX Venture Exchange (trading symbol: JPL.UN).
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.
Annual General and a Special Meeting
The Corporation expects to hold its Annual General and a Special
Meeting at 10.00 a.m. on Thursday May 14, 2009. At this meeting
shareholders will be asked to pass special resolutions approving
the voluntary dissolution of the Corporation and a delisting of the
units from the TSX Venture Exchange in order that the Corporation
can ultimately distribute its cash to its shareholders. Prior to
the actual dissolution and distribution of cash by the Corporation
however, clearance certificates and a dissolution consent must be
obtained from the Canada Revenue Agency (CRA). As this process is
expected to take some time beyond the Annual and Special Meeting,
the Corporation intends to submit its request for these approvals
from CRA in advance of the Annual General and Special Meeting.
The Corporation is headquartered in Mississauga, Ontario. 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.
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.
JANNOCK PROPERTIES LIMITED
Balance Sheet
(in thousands of Canadian dollars)
December 31 December 31
2008 2007
----------- -----------
Assets
Other assets $ 5 $ 21
Future income tax assets 37 34
Cash and cash equivalents 5,813 5,825
----------- -----------
$ 5,855 $ 5,880
----------- -----------
----------- -----------
Liabilities
Accounts payable and accrued liabilities $ 44 $ 27
Income taxes payable 5 470
----------- -----------
----------- -----------
$ 49 $ 497
----------- -----------
Shareholders' Equity
Capital stock $ 23,115 $ 23,115
Contributed surplus 6,868 6,868
Deficit (24,177) (24,600)
----------- -----------
----------- -----------
$ 5,806 $ 5,383
----------- -----------
----------- -----------
----------- -----------
$ 5,855 $ 5,880
----------- -----------
JANNOCK PROPERTIES LIMITED
Statement of Income and Deficit
(in thousands of Canadian dollars, except per share amounts)
Year ended December 31
---------------------------
2008 2007
---------- ----------
Revenue
Interest income $ 183 $ 322
Cost of sales - recovery of prior years' cost
of sales amount - 178
Recovery on Jancor Companies, Inc. - 1,162
---------- ----------
183 1,662
---------- ----------
Expenses
General and administrative expenses 236 309
Interest - 10
Foreign exchange loss 1 54
---------- ----------
237 373
---------- ----------
---------- ----------
Income before income taxes (54) 1,289
Income taxes provided/(recovered) - current (473) 762
- future (4) (290)
---------- ----------
- total (477) 472
---------- ----------
Net income for the year $ 423 $ 817
Deficit - Beginning of year $ (24,600) $ (25,417)
---------- ----------
Deficit - End of year $ (24,177) $ (24,600)
---------- ----------
---------- ----------
Basic income per share $ 0.01 $ 0.02
---------- ----------
---------- ----------
JANNOCK PROPERTIES LIMITED
Statement of Cash Flows
(in thousands of Canadian dollars)
Year ended December 31
---------------------------
2008 2007
---------- ----------
Cash provided by (used in)
Operating activities
Cash receipts
Recovery of prior years' cost of sale amounts $ - $ 178
Collection of mortgages receivable - 3,670
Interest received 192 360
Income taxes recoveries 451 -
Recovery on Jancor Companies, Inc. - 1,162
---------- ----------
643 5,370
---------- ----------
Cash payments
Income taxes paid (443) (382)
Interest payments - (10)
Expenditures on land development - (6)
Other payments (212) (376)
---------- ----------
(655) (774)
---------- ----------
---------- ----------
---------- ----------
(12) 4,596
---------- ----------
Financing activities
Redemption of capital stock - (1,781)
---------- ----------
- (1,781)
---------- ----------
---------- ----------
---------- ----------
Increase/(decrease) in cash and cash equivalents (12) 2,815
Cash and cash equivalents - Beginning of year 5,825 3,010
---------- ----------
---------- ----------
Cash and cash equivalents - End of year $ 5,813 $ 5,825
---------- ----------
---------- ----------
Contacts: Jannock Properties Limited Brian Jamieson (905)
821-4464 Email: bjamie@jannockproperties.com
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