Jannock Properties Limited
TSX VENTURE : JPL.UN

Jannock Properties Limited

November 20, 2009 10:56 ET

Jannock Properties Limited Reports September 30, 2009 Results and Interim Distribution of $0.10 to Shareholders

TORONTO, ONTARIO--(Marketwire - Nov. 20, 2009) - Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported a net loss for the Third Quarter of 2009 of $260,000 ($0.01 per share) compared with net earnings of $413,000 ($0.01 per share) for the Third Quarter of 2008. The losses in the Third Quarter were mainly due to providing for expenses that will be incurred relating to the expected dissolution of the Corporation. As set out in the notes to the financial statements the Corporation has changed the basis of preparing its financial statements from a going concern basis to a liquidation basis.

Operating activities for the three months ended September 30, 2009 used cash of $38,000 compared with cash generated of $433,000 for the same period in 2008.

At this time, the voluntary dissolution approved by unitholders earlier this year, is being delayed while the Corporation endeavors to recover some municipal fees estimated at $217,000 and to then obtain a clearance from the Canada Revenue Agency (CRA).

As a result of this ongoing delay in the dissolution of the Corporation, the Board of Directors has approved an interim cash distribution equivalent to $0.10 per unit to be paid to shareholders on December 21, 2009.

Revenue
Income in the three months to September 30, 2009 consisted of interest earned on short term investments of surplus cash of $2,000 compared with interest earnings of $50,000 in the same period last year.

General and Administrative Expenses
In the Third Quarter of this year, general and administrative expenses were $197,000, compared with $45,000 for the Third Quarter of last year. This increase is mainly due to provisions for the full amount of costs that will be incurred in relation to the dissolution of the Corporation. These costs include ordinary course debts, obligations and liabilities, including the administrative costs related to the dissolution and delisting (the "Dissolution Costs"). These Dissolution Costs include, but are not limited to, the estimated costs and expenses of: (i) the legal fees for the dissolution and delisting, (ii) tax return preparation and filing; (iii) auditor fees; (iv) mailing costs; and (v) all other amounts whatsoever required to satisfy the expenses, liabilities and obligations of the Corporation.

Income Taxes
Income tax provisions in the Third Quarter of 2009 amount to $65,000 compared to recoveries of $431,000 in 2008. The provisions in 2009 primarily result from the elimination of tax assets relating to current years losses as there is no assurance that any amounts will be recovered. In 2008 the recoveries related to refunds of taxes paid on prior years earnings.

Cash Flows from Operations
Cash used for operating activities in the Third Quarter of 2009 amounted to $38,000 compared with cash generation of $433,000 for the same period last year. The major differences are due to:

  • Cash receipts for the Third Quarter of this year were $16,000 and included income tax recoveries of $14,000 and $2,000 of interest receipts. This compares with an income tax recoveries of $432,000 and $50,000 of interest receipts for the Third Quarter of last year.
  • Cash payments for administrative and other expenses in the Third Quarter of this year were $54,000 compared with $49,000 in the same period last year.

Corporate Items
Shareholders at the Annual General and Special Meeting on May 14, 2009 approved a voluntary dissolution of the Corporation and its eventual delisting from the TSX-V exchange and had anticipated a dissolution date of October 30, 2009. This process is taking longer than originally expected and the Corporation is continuing to work with the Canada Revenue Agency (CRA) to obtain the necessary consents to the dissolution and the subsequent delisting of its units.
In addition the Corporation has filed a claim with a municipality for $217,000 of levy credits relating to a property that it had previously sold. Although there is no assurance of the ultimate amount that may be realized and the timing of that recovery, the Corporation will delay the dissolution process until this matter is resolved.
In recognition of these delays, the Board of Directors has approved an interim cash distribution equivalent to $0.10 per unit through the redemption of 10 of the 65 Class A Special shares that are currently included in each unit. This distribution will be paid on December 21, 2009 to the unit holders of record as at the close of business on December 7, 2009. The ex-redemption date for trading of the Units will be December 3, 2009 and each Unit will then consist of 55 Class A Special shares and one Class B Special share.
Cash balances that would remain after the payment of accounts payable and accrued liabilities and the above mentioned interim cash distribution would be:

Cash at September 30, 2009  $ 5,581,000 
 Less accounts payable and accrued liabilities(162,000
 Less interim distribution(3,563,000
Estimated cash prior to municipal recovery $ 1,856,000 
 Claim for recovery of municipal expenses       217,000 
Estimated cash including municipal recovery $ 2,073,000 

This amount will comprise the remaining property and assets of the Corporation and will be distributed to shareholders on the dissolution in accordance with their holdings of Special Shares.

The Corporation does not intend to make its final distribution to Shareholders until after the Corporation has obtained the consents from CRA, and satisfied all of its debts, obligations and liabilities.

The Corporation's shareholders hold Units which currently consists of a combination of one Class B common share and 65 Class A special shares. There are a total of 35,631,932 Units outstanding. The combination of the Corporation's Common and Special Shares are listed as Units on the TSX-V Exchange (trading symbol: JPL.UN).

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.

 JANNOCK PROPERTIES LIMITED
    
Interim Balance Sheet   
(in thousands of Canadian dollars)   
 September 30 December 31
 2009 2008
 (unaudited)  
    
Assets   
Cash and cash equivalents (note 2) $     5,581   $  5,813
Other assets            11             5
Future income taxes            -             37
  $     5,592   $  5,855
    
Liabilities   
Accounts payable and accrued liabilities $       162   $      44
Income taxes payable            -               5
  $       162   $      49
    
Shareholders' Equity   
Capital stock (note 4) $   23,115   $23,115
Contributed surplus       6,868       6,868
Deficit     (24,553)   (24,177)
  $     5,430   $  5,806
    
  $     5,592   $  5,855
   
   
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
  2009 2008 2009 2008
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Revenue       
 Interest Income $           2   $         50   $         18   $       145
 Total             2              50              18            145
         
Expenses       
 General and administrative costs          197              45            388            175
 Foreign exchange gains/ (losses)            -                -                (2)             -  
            197              45            386            175
         
Income/(loss) before income taxes         (195)              5           (368)            (30)
         
Income tax provision (recovery) (note 3)       
 - current            63           (432)            (29)          (445)
 - future             2               1              37               2
Net income (loss) and comprehensive income       
 (loss) for the period $      (260)  $       436   $      (376)  $       413
         
Deficit - beginning of period $  (24,293)  $  (24,623)  $  (24,177)  $  (24,600)
Deficit - end of period $  (24,553)  $  (24,187)  $  (24,553)  $  (24,187)
         
Basic and diluted  earnings (loss) per share $     (0.01)  $      0.01   $     (0.01)  $      0.01
         
         
Interim Statement of Cash Flows       
(in thousands of Canadian dollars)       
  Three Months Nine Months
  Ended September 30 Ended September 30
  2009 2008 2009 2008
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Cash provided by (used in)       
         
Operating activities       
Cash receipts       
 Income tax recoveries $         14   $       432   $         23   $       432
 Interest received             2              50              18            154
Cash payments       
 Income taxes            -                -                -             (443)
 Other payments           (54)            (49)          (273)          (178)
 Total operating activities           (38)           433           (232)            (35)
         
Increase (decrease) in cash equivalents           (38)           433           (232)            (35)
         
         
Cash and cash equivalents - beginning of period $    5,619   $    5,357   $    5,813   $    5,825
Cash and cash equivalents - end of period $    5,581   $    5,790   $    5,581   $    5,790
         
Cash and cash equivalents are comprised of:       
 Cash             75              40     
 Short term investments (note 2)       5,506         5,750     
         

NOTES TO INTERIM FINANCIAL STATEMENTS
(unaudited – in thousands of dollars)

  1. Change in basis of presentation

Shareholders at the Annual General and Special Meeting on May 14, 2009 approved a voluntary dissolution of the Corporation and its eventual delisting from the TSX-V exchange and had anticipated a dissolution date of October 30, 2009. This process is taking longer than originally expected and the Corporation is continuing to work with the Canada Revenue Agency (CRA) to obtain the necessary consents to the dissolution and the subsequent delisting of its units.
In addition the Corporation has filed a claim with a municipality for $217,000 of levy credits relating to a property that it had previously sold. Although there is no assurance of the ultimate amount that may be realized and the timing of that recovery, the Corporation will delay the dissolution process until this matter is resolved. This potential recovery will be recorded when received, given the uncertainty of any collection.
In accordance with Section 1400 of the Canadian Institute of Chartered Accountants Handbook, General Standards of Financial Statement Presentation, effective June 30, 2009, the Company changed the basis of preparing its financial statements from a going concern basis to a liquidation basis.
The financial statements for periods prior to June 30, 2009, have been prepared on a going concern basis. The going concern basis of presentation assumes continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business, and does not purport to show, reflect or provide for the consequences of the Company's intention to liquidate.
The Company has presented on a liquidation basis the balance sheet as at September 30, 2009, and the statement of operations and comprehensive income and deficit, and cash flows for the three and nine months ended September 30, 2009. The comparative balance sheet figures as at December 31, 2008, and the results of operations for the three and nine months ended September 30, 2008 are not comparable because they were prepared based on a going concern basis.

  1. 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.

  1. 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, 2009 September 30, 2008 
Income (loss) before income taxes$ (368$ (30
Expected income taxes (recovery)$ (133$ (11
Permanent differences141 $ (432
Income tax provision/(recovery)$   8 $ (443

As there is no assurance that the Corporation will be able to recover any further amounts relating to current years losses, it has eliminated the assets relating to income tax recoveries.

  1. 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, 2009.

 Number of shares  
 Class B CommonClass A
Special

Amount
Issued and outstanding at September 30, 200935,631,9322,316,075,580$23,115
  1. 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 are almost entirely its cash balances.

  1. Subsequent event

The Board of Directors has approved an interim cash distribution equivalent to $0.10 per unit through the redemption of 10 of the 65 Class A Special shares that are currently included in each unit. This distribution will be paid on December 21, 2009 to the unit holders of record as at the close of business on December 7, 2009. The ex-redemption date for trading of the Units will be December 3, 2009 and each Unit will then consist of 55 Class A Special shares and one Class B Special share.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release

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