Jannock Properties Limited
TSX VENTURE : JPL.UN

Jannock Properties Limited

February 01, 2007 16:23 ET

Jannock Properties Limited Reports December 31, 2006 Results

TORONTO, ONTARIO--(CCNMatthews - Feb. 1, 2007) - Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported net earnings for the year of $802,000 ($0.02 per share) compared with $1,394,000 ($0.04 per share) in 2005.

Operating activities for the year ended December 31, 2006 generated cash of $229,000 compared with $8,003,000 for the same period in 2005.

Real Estate

There were no land sales in 2006 as all remaining properties were sold in 2005. In 2005 land sales amounted to $2,700,000 for the two remaining Milton properties.

Cash receipts from real estate activities in 2006 were $1,630,000 and included $513,000 from the collection of a mortgage receivable, $484,000 as compensation for some parkland, $241,000 from the recovery of some levy credits and $355,000 of interest received on mortgages receivable and cash surpluses. In 2005, cash receipts from real estate activities were $8,914,000 and included $2,700,000 from property sales and $5,338,000 from mortgages receivable. At December 31, 2006, the mortgages receivable held by the Corporation amounted to $3,670,000, which is all due in 2007.

Cash Flows

Cash provided by operating activities in 2006 amounted to $1,762,000 and included $1,630,000 from real estate activities and proceeds of $132,000 received from Jancor - see "Jancor Companies, Inc" below. Total expenditures in 2006 were $1,533,000 and included income tax payments of $1,177,000 of which $916,000 related to 2005 earnings.

In 2006 the Corporation distributed $1,781,000 ($0.05 per unit) to shareholders through the redemption of Class A special shares (2005 $5,345,000 ($0.15 per unit)).

Jancor Companies, Inc. (Jancor)

Preliminary indications are that earnings before interest, taxes, depreciation and amortization (EBITDA) at Jancor for 2006 will be about the same level as the US$5.6 million achieved in 2005. Earnings in the first half of 2006 were significantly better than in 2005 but fell off in the second half that has been attributed by management to a sharp slump in the US housing markets and the impact of lower consumer confidence on the repair and replacement housing market. The outlook for operating results in 2007 is unclear due to the continuing weakness in the US housing markets and the degree of uncertainty over the US economic outlook.

Senior debt obligations at Jancor at the end of 2006 are expected to be approximately US$30 million which is US$20 million higher than at the end of 2005, mainly due to the acquisition of a vinyl siding plant during the year.

In 2006, the Corporation received US$118,000 as its share of a payment of that was made by Jancor to its subordinated lender in September 2006. When Jannock Properties sold its interests in Jancor in 2001, it became entitled 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 plus,

- the next US$5,572,000 of any payments of principal and interest on Jancor's subordinated bank debt after total payments on this debt reached US$16,717,000. Cumulative total payments exceeded this level by US$118,000 in 2006.

In 2007, Jannock Properties should receive two payments of US$1,003,000 that are scheduled to be made by Jancor on its subordinated debt in March and September. In addition, Jancor's subordinated debt agreements currently call for 50% of the principal outstanding to be repaid in September 2007 and the balance a year later. If the repayments are made as set out, Jannock Properties will receive an additional US$4,676,000 in 2007 and US$2,340,000 in 2008. Jannock Properties has not been able to determine how much of these payments, if any, would be taxable.

It is not possible to predict either the timing or the amount of proceeds that Jannock Properties may receive in the future.

Corporate Items

General and administrative expenses of $336,000 for 2006 were 19% lower than the 2005 level of $414,000. Efforts are continuing to achieve further reductions in 2007.

Income tax provisions were $224,000 in 2006 compared with $789,000 in 2005.

The Corporation will hold its Annual General Meeting at 10.30 a.m. on Wednesday May 9, 2006.

The number of Class B common shares outstanding is 35,631,932. Currently there are 70 Class A special shares that are associated with each common Class B share. The combination of one Class B common and 75 Class A special shares is listed as a unit on the TSX Ventures Exchange (trading symbol:JPL.UN).

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
2006 2005
-------------- ---------------

Assets
Mortgages receivable $ 3,670 $ 4,183
Other assets 62 68
Cash and cash equivalents 3,010 4,562
-------------- ---------------
$ 6,742 $ 8,813
-------------- ---------------

Liabilities
Accounts payable and accrued liabilities $ 47 $ 186
Income taxes payable 91 947
Future income tax liabilities 257 354
-------------- ---------------
$ 395 $ 1,487
-------------- ---------------

Shareholders' Equity
Capital stock $ 24,896 $ 26,677
Contributed surplus 6,868 6,868
Deficit (25,417) (26,219)
-------------- ---------------
$ 6,347 $ 7,326
-------------- ---------------

-------------- ---------------
$ 6,742 $ 8,813
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JANNOCK PROPERTIES LIMITED
Statement of Income and Deficit
(in thousands of Canadian dollars, except per
share amounts)

Year ended December 31
-----------------------------
2006 2005
----------- ---------------

Land sales $ - $ 2,700
Cost of sales (recovery of prior years'
cost of sales amount) (875) 979
----------- ---------------
Gross profit 875 1,721
Interest income 355 876
Recovery on Jancor 132 -
General and administrative expenses (336) (414)
----------- ---------------
Income before income taxes 1,026 2,183
Income taxes provided/(recovered) - current 321 917
- future (97) (128)
----------- ---------------
- total 224 789
----------- ---------------
Net income for the year $ 802 $ 1,394

Deficit - Beginning of year $ (26,219) $ (27,613)
----------- ---------------
Deficit - End of year $ (25,417) $ (26,219)
----------- ---------------
----------- ---------------

Basic income per share $ 0.02 $ 0.04
----------- ---------------
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JANNOCK PROPERTIES LIMITED
Statement of Cash Flows
(in thousands of Canadian dollars)

Year ended December 31
-----------------------------
2006 2005
----------- ---------------

Cash provided by (used in)

Operating activities
Cash receipts
Receipts from land sales closed during
the year $ - $ 2,700
Recovery of prior years' cost of
sale amounts 762 -
Collection of mortgages receivable 513 5,338
Interest received 355 876
Recovery on Jancor 132 -
----------- ---------------
1,762 8,914
----------- ---------------

Cash payments
Real estate commissions - (155)
Expenditures on land development (19) (364)
Payments of general, administrative
and other costs (337) (406)
Income taxes recovered/(paid) (1,177) 14
----------- ---------------
(1,533) (911)
----------- ---------------

----------- ---------------
229 8,003
----------- ---------------

Financing activities
Redemption of capital stock (1,781) (5,345)
----------- ---------------
(1,781) (5,345)
----------- ---------------

----------- ---------------
Increase in cash and cash equivalents (1,552) 2,658

Cash and cash equivalents
- Beginning of year 4,562 1,904
----------- ---------------
Cash and cash equivalents - End of year $ 3,010 $ 4,562
----------- ---------------
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