Jannock Properties Limited
TSX VENTURE : JPL.UN

Jannock Properties Limited

November 20, 2006 12:34 ET

Jannock Properties Limited Reports September 30, 2006 Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 20, 2006) - Jannock Properties Limited (TSX VENTURE:JPL.UN) today reported net earnings of $319,000 ($0.01 per share) for the Third Quarter of 2006 compared with earnings of $271,000 ($0.01 per share) for the same period in 2005.

Real Estate

There were no repayments of mortgages receivable during the Third Quarter of 2006 however all interest payments have been received when due.

The outstanding balance for the two remaining mortgages is $3,670,000 with repayments due in 2007, or earlier if the purchasers make partial discharges in order to commence construction activities.

Cash Flows from Operations

Cash provided by operating activities in the Third Quarter of this year amounted to $283,000 compared to $329,000 for the same period last year. The major differences are due to:

- Cash receipts for the Third Quarter this year were $527,000 and included $484,000 as compensation from a municipality for the over-dedication of parkland at one of the sites that the Company had previously developed. The balance of receipts was primarily interest received on outstanding mortgage receivables and on cash surpluses. This compares with $449,000 for the Third Quarter of last year, which included a property tax refund of $413,000 and interest earnings of $36,000.

- Cash payments for the Third Quarter this year were $244,000 and included income tax payments on 2006 earnings of $174,000 and administrative costs of $70,000. In the same period last year cash payments were $120,000 and included $56,000 for expenditures on land development and $78,000 for administrative expenses.

In early October, the Corporation received $241,000 as a partial repayment of some levy credits relating to a property that it had previously sold. A further $459,000 of levy credits is potentially recoverable at some time in the future.

Jancor Companies, Inc.

Operating results in the Third Quarter were significantly lower than in 2005 and offset most of the gains that had been experienced earlier in the year. This has been attributed to a sharp slump in the US housing markets and the impact of lower consumer confidence. The outlook for the rest of the year is for continuing soft market conditions.

Senior debt levels at Jancor increased during the Third Quarter of 2006 mainly due to the acquisition of a siding manufacturing plant in Mississippi. This plant will produce private-label siding and is expected to be profitable in 2007.

In early October 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 the next US$5,572,000 once total payments of principal and interest on Jancor's subordinated bank debt reached US$16,717,000. This is in addition to the right 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. At this time the Corporation has not determined how much of these payments, if any, will be taxable.

Corporate Items

In the Third Quarter of this year administrative costs were $66,000 compared with $83,000 for the Third Quarter of last year. Year-to-date these costs are 23% less than for the same period in 2005.

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 Canadian Venture Exchange (trading symbol: JPL.UN). Currently each Unit consists of one Class B common share and 70 Class A special shares.

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)
SEPTEMBER 30 DECEMBER 31
2006 2005
---- ----
(unaudited)
ASSETS
Mortgages receivable (note 3) 3,670 4,183
Other assets 113 68
Cash and cash equivalents 2,624 4,562
-------------------------
$ 6,407 $ 8,813
-------------------------

LIABILITIES
Accounts payable and accrued liabilities (note 4) $ 160 $ 186
Income taxes payable 29 947
Future income taxes 358 354
-------------------------
$ 547 $ 1,487
-------------------------

SHAREHOLDERS' EQUITY
Capital stock (note 6) $ 24,896 $ 26,677
Contributed surplus 6,868 6,868
Deficit (25,904) (26,219)
-------------------------
$ 5,860 $ 7,326
-------------------------

-------------------------
$ 6,407 $ 8,813
-------------------------



INTERIM STATEMENT OF OPERATIONS AND DEFICIT
(in thousands of Canadian dollars, except per share amount)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
2006 2005 2006 2005
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)

Land sales (note 2) $ - $ - $ - $ 2,700
Cost of sales - - - 979
----------------------------------------------
Gross profit - - - 1,721
Interest and other income 565 507 754 777
General and administrative
costs (66) (83) (261) (337)
----------------------------------------------
Income before income taxes 499 424 493 2,161
Income taxes provided/
(recovered) (note 5)
- current 179 97 174 910
- future 1 56 4 (129)
----------------------------------------------
Net income for the period $ 319 $ 271 $ 315 $ 1,380
----------------------------------------------

Deficit - beginning of
period $ (26,223) $ (26,504) $ (26,219) $ (27,613)
Deficit - end of period $ (25,904) $ (26,233) $ (25,904) $ (26,233)

Net earnings per share $ 0.01 $ 0.01 $ 0.01 $ 0.04



INTERIM STATEMENT OF CASH FLOWS
(in thousands of Canadian dollars)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
2006 2005 2006 2005
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES
Cash receipts
Receipts on sales of land $ - $ - $ - $ 2,700
Collection of mortgages
receivable - - 513 4,658
Interest and other income
received 527 449 718 700
---------------------------------------------
527 449 1,231 8,058
---------------------------------------------

Cash payments
Real estate commissions - - - (155)
Expenditures on land
development (56) (5) (364)
Income taxes (paid)/refunded (174) 14 (1,092) 14
Payments of general and
administrative and other (70) (78) (291) (362)
---------------------------------------------
(244) (120) (1,388) (867)
---------------------------------------------

---------------------------------------------
Total operating activities 283 329 (157) 7,191
---------------------------------------------

FINANCING ACTIVITIES
Redemption of capital stock (1,781) (5,345)
---------------------------------------------
- - (1,781) (5,345)
---------------------------------------------

---------------------------------------------
INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS 283 329 (1,938) 1,846
---------------------------------------------

CASH AND CASH EQUIVALENTS
- BEGINNING OF PERIOD $ 2,341 $ 3,421 $ 4,562 $ 1,904
CASH AND CASH EQUIVALENTS
- END OF PERIOD $ 2,624 $ 3,750 $ 2,624 $ 3,750


NOTES TO INTERIM FINANCIAL STATEMENTS

(unaudited - in thousands of dollars)

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, 2005 and should be read in conjunction with those financial statements.

2. Land sales

There was no land sales during the nine months ended September 30, 2006. There was one land sale during the nine months to September 30, 2005 which completed the sale of the Company's real estate properties.

3. Mortgages receivable

At September 30, 2006, mortgages receivable of $3,670 (December 31, 2005 - $4,183) are all due in 2007 and carry interest at 6%.

4. Accounts payable and accrued liabilities

At September 30, 2006, an amount of $134 (December 31, 2005 - $138) 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.



Nine months ended
-----------------
September 30, 2006 September 30, 2005
--------------------------------------
Earnings/(loss) before income taxes $ 493 $2,161
--------------------------------------

--------------------------------------
Expected income taxes/(recovery) $ 178 $ 781
--------------------------------------


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). Accordingly, the Company's earnings per share have been calculated using the number of Class B common shares outstanding of 35,631,932.

7. Commitments

At September 30, 2006, the Company had provided letters of credit amounting to $73 (December 31, 2005 - $173).

Security for $1,200,000 and $300,000, respectively, is to be provided to Jannock Limited (now Vicwest Corporation) to cover any potential environmental liabilities that may arise for three years after the sale of the Britannia site (sold September 2004) and the Milton quarry (sold March 2005). These security amounts expire in September 2007 and March 2008 respectively. The Corporation is not aware of any liabilities for environmental issues at these sites.

8. Related Party Transactions

In March 2006, a former President of the Corporation repaid a mortgage receivable of $513,000 relating to a property which had been previously sold by the Corporation to an unrelated party. This property was acquired by the former President from the original purchaser in 2005.

For the nine months to September 30, 2006 the former President was paid $8,000 for consulting services provided to the Corporation ($15,000 for the same period in 2005). He also received a commission of $107,000 in 2005 (nil in 2006) in connection with the sale of properties.

The Corporation pays a share of rent and expenses to the former President as a sub-tenant in office space that it shares with him and a third party.

9. Potential Recoveries

The Corporation expects to recover approximately $700,000 of levy credits relating to a property that it had sold. In early October, the Corporation received $241,000 as a partial repayment of the levy credits. A further $459,000 is potentially recoverable although the ultimate amount realized and the timing of recovery are uncertain and could differ from current estimates.

10. Subsequent Events

In early October the Corporation received US$118,000 as its share of a payment of that was made by Jancor Companies, Inc. to its subordinated lender in September 2006. Also in Early October the Corporation received a payment of $241,000 relating to levy credits (see Note 9).

Contact Information