Jannock Properties Limited
TSX VENTURE : JPL.UN

Jannock Properties Limited

August 25, 2005 13:00 ET

Jannock Properties Limited Reports June 30, 2005 Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 25, 2005) - Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported net earnings of $73,000 ($0.00 per share) for the Second Quarter of 2005 compared with earnings of $1,348,000 ($0.04 per share) for the same period in 2004. The reduction in earnings was due to there being no sales of real estate properties compared with the sale of some land in Milton in the Second Quarter of last year.

For the six months to June 30, 2005, net earnings were $1,109,000 ($0.03 per share) compared with earnings of $1,278,000 ($0.04 per share) for the same period last year.

Real Estate

As previously reported, the sale of the Company's real estate properties was completed in the First Quarter of this year.

In the Second Quarter of 2005, a total of $4,658,000 was received in early repayments from three mortgages that were due in December of this year.

At June 30, 2005 the Company was holding mortgages receivable of $4,863,000 relating to properties that had previously been sold.

In August 2005, the Company received a refund of property taxes of $413,000 which will be recorded as income in the Third Quarter.

Cash Flows from (used in) Operations

Cash generated by operating activities in the Second Quarter of this year amounted to $4,399,000, mainly due to $4,658,000 of early repayments of mortgages receivable. In the comparable period last year there was a cash usage by operating activities of $1,355,000 which included a refund of a deposit of $1,052.000.

General and administrative expenditures reflect the actions that have been taken to reduce costs and were $86,000 compared with $207,000 in 2004.

Jancor Companies, Inc.

Unaudited operating results in the Second Quarter continued to be below last year's levels, primarily due to the impact of higher resin costs. Some improvement should occur in the balance of the year as resin costs are expected to decline.

Debt levels were flat during the Second Quarter after the normal seasonal increase experienced in the First Quarter. Debt levels are expected to decrease during the rest of the year.

Corporate Items

A distribution equivalent to $0.15 per unit was made to shareholders in June 2005 through the redemption of fifteen Class A Special shares. Following this redemption, each Unit now consists of 75 Class A Special shares and one Class B Common share.

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 TSX Venture 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.



INTERIM BALANCE SHEET
(in thousands of Canadian dollars)

JUNE 30 DECEMBER 31
2005 2004
----------- ------------
(unaudited)
ASSETS
Land under development $ - $ 990
Mortgages receivable (note 3) 4,863 9,482
Other assets 117 203
Cash and cash equivalents 3,421 1,904
-------- ---------
$ 8,401 $ 12,579
-------- ---------

LIABILITIES
Accounts payable and accrued liabilities
(note 4) $ 234 $ 804
Income taxes payable 794 16
Future income taxes 332 482
-------- ---------
$ 1,360 $ 1,302
-------- ---------

SHAREHOLDERS' EQUITY
Capital stock (note 6) $ 26,677 $ 32,022
Contributed surplus 6,868 6,868
Deficit (26,504) (27,613)
-------- ---------
$ 7,041 $ 11,277
-------- ---------

-------- ---------
$ 8,401 $ 12,579
-------- ---------



INTERIM STATEMENT OF OPERATIONS AND DEFICIT
(in thousands of Canadian dollars, except per share amount)

THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2005 2004 2005 2004
--------- -------- ---------- --------
(unaud- (unaud- (unaud- (unaud-
ited) ited) ited) ited)

Land sales (note 2) $ - $ 3,043 $ 2,700 $ 3,043
Cost of sales/(recoveries) (110) 847 979 847
--------- -------- ---------- --------
Gross profit 110 2,196 1,721 2,196
Interest and other income 118 131 270 229
General and administrative
costs (113) (216) (254) (418)
--------- -------- ---------- --------
Income before income taxes 115 2,111 1,737 2,007
Income taxes
provided/(recovered) (note 5)
- current 465 (1) 813 -
- future (423) 764 (185) 729
--------- -------- ---------- --------
$ 73 $ 1,348 $ 1,109 $ 1,278
--------- -------- ---------- --------

Deficit - beginning of
period $ (26,577) $ (38,097) $ (27,613) $ (38,027)
Deficit - end of period $ (26,504) $ (36,749) $ (26,504) $ (36,749)

Net earnings per share $ 0.00 0.04 0.03 0.04



INTERIM STATEMENT OF CASH FLOWS
(in thousands of Canadian dollars)


THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2005 2004 2005 2004
--------- -------- ---------- --------
(unaud- (unaud- (unaud- (unaud-
ited) ited) ited) ited)

CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
Cash receipts
Receipts on sales of land $ - $ 635 $ 2,700 $ 640
Collection of mortgages
receivable 4,658 - 4,658 -
Interest and other income
received 149 - 251 8
Deposits received on land
sales - 3 - 9

Cash payments
Real estate commissions - - (155) -
Deposit refunded - (1,052) - (1,052)
Expenditures on land
development (322) (734) (308) (969)
Income taxes paid - - - (1)
Payments of general,
administrative and other (86) (207) (284) (691)
--------- -------- ---------- --------
4,399 (1,355) 6,862 (2,056)
--------- -------- ---------- --------

INVESTING ACTIVITIES
Restricted cash - 1,051 - 1,043
--------- -------- ---------- --------
- 1,051 - 1,043
--------- -------- ---------- --------

FINANCING ACTIVITIES
Redemption of capital stock (5,345) - (5,345) -
--------- -------- ---------- --------
(5,345) - (5,345) -
--------- -------- ---------- --------

--------- -------- ---------- --------
INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS (946) (304) 1,517 (1,013)
--------- -------- ---------- --------

CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD $ 4,367 $ 311 $ 1,904 $ 1,020
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 3,421 $ 7 $ 3,421 $ 7


NOTES TO INTERIM FINANCIAL STATEMENTS

(In thousands of dollars, unaudited)

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, 2004 and should be read in conjunction with those financial statements.

2. Land sales

During the period ended June 30, 2005 there was one land sale for $2,700. This completes the sale of the Company's real estate properties.

3. Mortgages receivable

At June 30, 2005, mortgages receivable of $4,863 (December 31, 2004 - $9,482) included $513 which is due in December 2005 and $4,350 which is due in 2007. A total of $4,658 was received during the Second Quarter of 2005 in early repayments of amounts that were due in December 2005.

4. Accounts payable and accrued liabilities

At June 30, 2005, an amount of $195 (December 31, 2004 - $745) is included for costs expected to be incurred on land that has been sold.

5. 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.



Six months ended
-----------------------
June 30, June 30,
2005 2004
---------- ---------
Earnings/(loss) before income taxes $1,737 $2,007
---------- ---------
Expected income taxes/(recovery) 628 726

Other - 3
---------- ---------
Total $ 628 $ 729
---------- ---------


6. 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). Currently each unit consists of 75 Class A special shares and one Class B common share. The Company's earnings per share have been calculated using the number of Class B common shares outstanding of 35,631,932.

In June 2005, the Company redeemed 534,478,980 Class A Special shares for an amount of $5,345.

7. Commitments

At June 30, 2005, the Company had provided letters of credit amounting to $708 (December 31, 2004 - $3,987) of which $500 related to a potential claim arising from the Company's unsuccessful application for rezoning the Britannia site. Subsequent to the quarter end, settlement was reached with the party claiming costs and a letter of credit for $500 were cancelled in July 2005.

A security for $1,500 is to be provided to Jannock Limited (now Vicwest Corporation) to cover any potential environmental liabilities for the Britannia and Milton quarry sites that may arise during the three years after sale of the properties. The Company is not aware of any liabilities for environmental issues at these sites and expects to use a letter of credit to meet this requirement.

8. Potential Recoveries and Subsequent Event

In August 2005, the Company received a refund of property taxes amounting to $413,000 which will be recognized in Third Quarter income. In addition, the Company has identified approximately $1,100,000 of potential recoveries of development charges that will be resolved over the next two or three years and will be recognized as income when resolved. The ultimate amounts realized and the timing of recoveries are uncertain and could differ from current estimates.

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