Jannock Properties Limited
TSX VENTURE : JPL.UN

Jannock Properties Limited

March 07, 2008 13:18 ET

Jannock Properties Limited Reports December 31, 2007 Results

TORONTO, ONTARIO--(Marketwire - March 7, 2008) - Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported net earnings for the year of $817,000 ($0.02 per share) compared with $802,000 ($0.02 per share) in 2006.

Operating activities for the year ended December 31, 2007 generated cash of $4,596,000 compared with $229,000 for the same period in 2006.

Real Estate

Revenue from real estate activities in 2007 consisted of the recovery of $178,000 of levy credits relating to a property that had previously been sold. This compares with recoveries of $875,000 in 2006 which included $484,000 of compensation from a municipality for an over-dedication of parkland, $241,000 in recovery of levy credits, $114,000 for a reduction in previous development cost estimates and $36,000 from a recovery of property taxes.

Interest Income

Interest earned during 2007 on outstanding mortgage receivables and cash surpluses was $322,000 compared with $354,000 in 2006.

Jancor Companies, Inc. (Jancor)

In April 2007, Jannock Properties received proceeds of US$1,003,000 (Cdn$1,162,000) as its share of an interest payment that was received by Jancor's subordinated lender. These proceeds are part of an arrangement with the owners, and the affiliated subordinated lender of Jancor, whereby Jannock Properties participates in any proceeds to the subordinated lender after they reach a threshold level equal to the principal amount of the subordinated debt of US$16,717,000. In 2006 Jannock Properties received US$118,000 (Cdn$132,000) after cumulative receipts by Jancor's subordinated lender first exceeded the threshold level.

No further payments were received in 2007 as Jancor obtained deferrals on the payments of principal and interest that were to be made later in the year on its subordinated debt. Repayment of principal on the subordinated debt has been extended until September 2011 and interest payments have been deferred until September 2008.

With the deterioration in the US residential construction markets, it is not possible to predict either the timing or the amount of proceeds that Jannock Properties may receive from its participation rights in the future.

Jannock Properties has not been able to determine how much of the proceeds that it has received to date would be taxable and has consequently made full tax provisions against the amounts received. An objection to the treatment of the proceeds received in 2006 has been filed with the Federal and Ontario tax authorities and is still pending.

Preliminary indications are that earnings before interest, taxes, depreciation and amortization at Jancor for 2007 will be a little better than the level achieved in 2006.

General and Administration Expenses

Administrative and other expenses in 2007 were $309,000 and included $27,000 for an objection that was filed on the income tax treatment of the proceeds that were received from Jancor's subordinated lender in 2006. This compares with expenses of $336,000 in 2006.

In 2007, the Corporation incurred costs of $54,000 for foreign exchange losses resulting from a delay in converting the Jancor US debt participation proceeds to Canadian funds.

Cash Flows

Net operating cash inflows in 2007 were $4,596,000 compared with $229,000 in 2006.

Cash receipts in 2007 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. In 2006 cash receipts were $1,761,000 and included the collection of a mortgage receivable of $513,000, parkland compensation of $484,000, recovery of levy credits of $241,000 and recovery of property taxes and other of $36,000, interest received on mortgages receivable and cash surpluses of $355,000 and proceeds from Jancor's subordinated lender of $132,000.

Cash payments in 2007 were $774,000 and included income tax payments on 2006 and 2007 income of $382,000, interest payments of $10,000 and administrative expenditures of $376,000. In 2006, cash payments were $1,532,000 and included income tax payments on 2005 and 2006 income of $1,177,000 and administrative expenditures of $336,000.

Distributions

In 2007 the Corporation distributed $1,781,000 (equivalent to $0.05 per Class B common share) to shareholders through the redemption of Class A special shares. This is the same amount that was distributed to shareholders in 2006.

At the present time, the Corporation does not intend to make any further distributions until it has obtained a better assessment of the likelihood of receiving further proceeds from the subordinated lender to Jancor.

Corporate Items

The Corporation will hold its Annual General Meeting at 10.00 a.m. on Thursday May 8, 2008. 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 common Class B share. The combination of one Class B common and 65 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
2007 2006
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Assets
Mortgages receivable $ - $ 3,670
Other assets 21 62
Future income tax assets 34 -
Cash and cash equivalents 5,825 3,010
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$ 5,880 $ 6,742
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Liabilities
Accounts payable and accrued liabilities $ 27 $ 47
Income taxes payable 470 91
Future income tax liabilities - 257
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$ 497 $ 395
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Shareholders' Equity
Capital stock $ 23,115 $ 24,896
Contributed surplus 6,868 6,868
Deficit (24,600) (25,417)
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$ 5,383 $ 6,347
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----------- ------------
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$ 5,880 $ 6,742
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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
-------------------------
2007 2006
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Revenue
Interest income $ 322 $ 354
Cost of sales - recovery of prior years'
cost of sales amount 178 875
Recovery on Jancor Companies, Inc. 1,162 132
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1,662 1,361
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Expenses
General and administrative expenses 309 336
Interest 10 -
Foreign exchange loss 54 (1)
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373 335
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Income before income taxes 1,289 1,026
Income taxes provided/(recovered) - current 762 321
- future (290) (97)
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- total 472 224
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Net income for the year $ 817 $ 802

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

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Deficit - End of year $(24,600) $ (25,417)
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Basic income per share $ 0.02 $ 0.02
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JANNOCK PROPERTIES LIMITED
Statement of Cash Flows
(in thousands of Canadian dollars)

Year ended December 31
------------------------
2007 2006
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Cash provided by (used in)

Operating activities
Cash receipts
Recovery of prior years' cost of sale amounts $ 178 $ 761
Collection of mortgages receivable 3,670 513
Interest received 360 355
Recovery on Jancor Companies, Inc. 1,162 132
----------- -----------
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5,370 1,761
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Cash payments
Income taxes (382) (1,177)
Interest payments (10) -
Expenditures on land development (6) (19)
Other payments (376) (336)

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(774) (1,532)
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4,596 229
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Financing activities
Redemption of capital stock (1,781) (1,781)
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(1,781) (1,781)
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----------- -----------

----------- -----------
Increase/(decrease) in cash and cash
equivalents 2,815 (1,552)

Cash and cash equivalents - Beginning of year 3,010 4,562
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Cash and cash equivalents - End of year $ 5,825 $ 3,010
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