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Condensed consolidated reviewed results for the year ended 30 June 2015 and distribution declaration
Hospitality Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/014211/06)
Share code for A-linked units: HPA ISIN for A-linked units: ZAE000076790
Share code for B-linked units: HPB ISIN for B-linked units: ZAE000076808
Income tax reference number: 9770/799/1/47
("Hospitality" or "the Fund" or "the company")
Condensed consolidated reviewed results for the year ended 30 June
2015 and distribution declaration
Comments
1. Introduction
Hospitality is the only Real Estate Investment Trust ("REIT") listed on the JSE that offers
investors exposure to the hospitality sector through the ownership of a portfolio of hotel
properties. Hospitality has an equal number of A- and B-linked units in issue:
A-linked units have a preferential claim to earnings with capped growth at the lower of
CPI or 5% per annum;
B-linked units receive the balance of the distribution and carry a higher inherent risk as
they are not only geared to the trading conditions but further leveraged by the
preferential claims of the A-linked units.
2. Trading environment
Trading conditions in the hotel industry over the past year remained challenging due to
subdued domestic economic growth, reduced foreign tourism volumes as a result of the
perceived risk of travelling to South Africa during the outbreak of Ebola elsewhere in
Africa and the implementation of the new South African visa requirements, a decline in
government travel and conferencing and electricity supply constraints.
Against this backdrop, the Fund reported a decline in distribution per combined linked unit
of 7.7% to 161,36 cents compared to the prior year, comprising the A-linked unit
distribution of 148.21 cents (up 4.9%) and the B-linked unit distribution of 13,15 cents
(down 60.7%).
The STR Global South Africa Hotel Review reflects the slowdown experienced by the
hotel industry in the year under review, with a reported year-on-year increase in
occupancy of 0.8% to 62.8% and average daily rates ("ADR") rising 5.9% to R1 051. The
revenue per available room ("RevPAR") grew 6.8% for the year ended 30 June 2015,
compared to RevPAR growth of 11.1% in the prior year.
The Fund's occupancy for that portion of its portfolio which is subject to variable rental
income and excluding conference hotels (hotels where the revenue generated fro
conferencing exceeds rooms revenue) was slightly behind the industry average at 62.0%
(2014: 61.4%). Its overall ADR grew by 6.5% to R1 237 and RevPar increased by 7.3% to R766.
Further breakdown of the Fund's portfolio in terms of its core and non-core properties
reveals the following:
OCCUPANCY ADR RevPar
FY2015 FY2014 Variance FY2015 FY2014 Variance FY2015 FY2014 Variance
Core 65.6% 65.4% 0.3% 1 355 1 274 6.4% 889 833 6.7%
Non-core 50.0% 49.4% 1.2% 722 718 0.6% 361 355 1.7%
Total 62.0% 61.4% 1.0% 1 237 1 162 6.5% 766 714 7.3%
Source Markets
The demographic market source of income to the Fund's properties was as follows:
MARKET SOURCE
FOREIGN
FOREIGN AIRCREW DOMESTIC TOTAL
28% 8% 64% 100%
3. Results
The Fund reported rental income growth of 1.8% to R434,1 million (2014: R426,3 million).
Like-for-like rental income (adjusted for the conversion of Birchwood from a fixed to a
fixed and variable ("F&V") lease, the disposal of the Courtyard interests and the
acquisition of additional sectional title units at Radisson Blu Waterfront) increased by
7.7%.
In addition to the slowdown that affected the whole hospitality sector, factors specific to
the Fund, which impacted its performance, were as follows:
- The prior year rental income was boosted in December 2013 by R10 million as
foreign dignitaries travelled to South Africa to pay tribute to the late President
Nelson Mandela.
- The impact of the conversion of the lease at Birchwood on expiry from a fixed to a
F&V lease was more acute than had originally been anticipated, being R27,4
million lower than prior year and R17,7 million down on forecast. This was due
mainly to a downturn in conferencing demand in both the public sector and
corporate client base.
- Having disposed of its Courtyard interests in April 2015, the rental income from
these properties was included only for ten months.
- At the Mount Grace Country House & Spa, lower demand for mid-week
conferencing particularly from the public sector, negatively affected its
performance by R3,5 million on last year and R8 million on forecast.
These factors were somewhat ameliorated by continued strong demand at the Fund's
properties in the Western Cape, in both the business and leisure sectors. In addition, the
Fund benefited from the acquisition of additional units at Radisson Blu Waterfront that
increased its share of the rental pool in this property from 41% to 54%.
Fund expenses were flat on the previous year at R40,7 million. This was due in part to
lower staff incentive bonuses of R1,3 million (2014: R2,9 million), reflecting the Fund's
2015 performance as well as debt raising fees which decreased by R1,7 million. An
amount of R2,0 million was incurred on the forensic investigation and legal costs in
relation to the dismissal of the previous CEO, Mr Andrew Rogers.
Net finance costs increased 10.0% to R160,9 million (2014: R146,0 million), in line with
higher debt levels to fund acquisitions and capital projects, higher swap margins
contracted for and an increase in the repo rate of 25 basis points in July 2014.
The following table reflects the operating financial results for year ended 30 June 2015
compared to the previous financial year and the forecast released on 20 August 2014:
Actual Actual Forecast
2015 2014 Variance Variance 2015 Variance Variance
(R'000) (R'000) (R'000) (%) (R'000) (R'000) (%)
Contractual Rental 434 112 426 276 7 836 1.8% 463 508 (29 396) -6.3%
Fund Expenses (40 674) (40 524) (150) -0.4% (40 532) (142) -0.4%
Net Finance Costs (160 888) (146 326) (14 562) -10.0% (161 127) 239 0.1%
Taxation (116) (181) 65 35.9% - (116) -100.0%
Income from associates 203 3 238 (35) -14.7% - 203 100.0%
Debenture interest (232 815) (239 483) 6 668 2.8% (261 849) 29 034 11.1%
A-linked unit 213 845 194 652 19 193 -9.9% (213 693) (152) -0.1%
B-linked unit 18 970 44 831 (25 861) -57.7% (48 156) 29 186 60.6%
Distribution - A-linked
unit (cents) 148.21 141.35 6.86 4.9% 148.43 (0.22) -0.1%
- Interim 73.33 69.83 3.50 5.0% 73.33 - 0.0%
- Final 74.88 71.52 3.36 4.7% 75.10 (0.22) -0.3%
Distribution - B-linked
unit (cents) 13.15 33.45 (20.30) -60.7% 33.45 (20.30) -60.7%
- Interim 9.12 19.25 (10.13) -52.6% 16.40 (7.28) -44.4%
- Final 4.03 14.20 (10.17) -71.6% 17.05 (13.02) -76.4%
Combined distribution
(cents) 161.36 174.80 (13.44) -7.7% 181.88 (20.52) -11.3%
- Interim 82.45 89.08 (6.63) -7.4% 89.73 (7.28) -8.1%
- Final 78.91 85.72 (6.81) -7.9% 92.15 (13.24) -14.4%
Number of linked units 144 286 138 150 6 136 4.4% 143 970 316 0.2%
In three separate trading statements, published on 25 November 2014; 22 May 2015 and
29 July 2015 the Fund provided additional guidance given weaker trading across the
hospitality sector that had impacted earnings. The actual 2015 distributions are in line
with the latest trading update.
4. Funding
The group's debt facilities with financial institutions as at 30 June 2015 amounted to
R1,94 billion. Total funds drawn on these facilities were R1,86 billion resulting in a
loan to value (LTV) ratio (total interest–bearing liabilities/investment properties plus
properties held for sale) of 36,0% (2014: 36,7%). The interest cover ratio was 2,45 which
is within the covenant level of 2,00 required by the debt providers.
The weighted average cost of borrowings was 9,12% (2014: 9,14%) for the period under
review with 67% of the group's borrowings being subject to fixed interest rates.
Facility Interest rate Repayment
NEDBANK - PROPERTY FACILITY
Loan 1 176 300 000 3 month JIBAR plus 2,67% Feb 2020
Loan 2 400 000 000 3 month JIBAR plus 2,8% Oct 2019
Loan 3 30 250 000 3 month JIBAR plus 2,85% Oct 2018
Loan 4 150 000 000 3 month JIBAR plus 2,38% Feb 2018
Loan 7 67 000 000 3 month JIBAR plus 2,38% July 2018
Loan 8 (Revolving loan) 150 000 000 3 month JIBAR plus 2,75% July 2018
973 550 000
CORPORATE BONDS
Secured - HPF 01 150 000 000 3 month JIBAR plus 1.82% April 2016
Unsecured - HPF 03 80 000 000 3 month JIBAR plus 2.7% April 2016
Secured - HPF 04.1 300 000 000 3 month JIBAR plus 2,0% Feb 2017
Secured - HPF 04.2 100 000 000 3 month JIBAR plus 2,0% Feb 2017
Secured - HPF 05 200 000 000 Fixed at 9.89% Feb 2017
Secured - HPF 06 60 000 000 3 month JIBAR plus 2,8% Feb 2020
Secured - HPF 07 80 000 000 3 month JIBAR plus 2,25% Aug 2017
970 000 000
TOTAL 1 943 550 000
The total fair value of the interest-bearing borrowings amounted to R1 981 418 000.
These level 2 financial instruments were fair valued using the discount cash flow model.
HEDGED DEBT Nominal rate Expiry
Collar swap - Floor
Nedbank swap 1 150 000 000 6.0%/Ceiling 9.09% Sep 2016
Nedbank swap 2 150 000 000 Vanilla swap - 6.4% Oct 2016
Nedbank swap 3 100 000 000 Vanilla swap - 7.05% Sep 2017
RMB swap 2 346 667 000 Vanilla swap - 7.96% July 2016
Collar swap - Floor
RMB swap 3 250 000 000 6.65%/Ceiling 9.20% Feb 2016
RMB swap 4 100 000 000 Vanilla swap - 7.05% Sep 2017
Secured -HPF 05 200 000 000 Fixed at 9.89% Feb 2017
1 296 667 000
% Hedged 67%
The total fair value of the derivative financial liabilities amounted to R2 093 000.
These level 2 financial instruments were fair valued using mark-to-market.
The carrying amounts of remaining financial instruments reasonably approximates their
fair values.
An additional 5-year secured note for R 60 million and a 2.5-year secured note for R80
million were issued in February 2015. The proceeds were utilised to repay the R40 million
unsecured note that matured in April 2015 and to fund the capital expenditure programme
for FY2016.
When issuing new debt the group endeavours to optimally spread the maturity to
minimise its exposure to large debt maturities in any single year.
5. Capital Structure
Hospitality was awarded REIT status by the JSE Limited ("JSE") on 1 July 2013. In order
to maintain its REIT status and ensure that it continues to benefit from the tax
efficiencies granted to REITs as set out in section 25BB of the Income Tax Act, the
Company is required to comply with Section 13 of the JSE Listings Requirements.
The JSE granted the Fund dispensation until 30 September 2015 to comply with the
gearing requirement of Section 13 of the Listings Requirements which requires total
consolidated IFRS liabilities of a REIT not to exceed 60% of its consolidated IFRS
assets. Hospitality proposed the restructuring of the Company's linked unit capital
structure to a simple "all share" structure by way of a scheme of arrangement in terms of
sections 114 and 115 of the Companies Act, 71 of 2008 at a Special General Meeting
held on 20 August 2015. Prior to the meeting, Hospitality were informed that several B-
unit share- and debenture holders wished to alter their vote and vote in favour of the
resolution. They requested an additional adjournment to cater for the administrative
processes they needed to follow. This was put to the meeting on 20 August 2015 and it
was agreed to adjourn the meeting until 10h00 on 21 August 2015. The result of the
meeting will be disclosed to shareholders as soon as is practically possible after the
conclusion of the meeting.
6. Property portfolio
The Fund's portfolio comprises interests in 22 hotel and resort properties in South Africa.
As at 30 June 2015 , the carrying amount of the portfolio was R5,2 billion.
The net asset value (NAV) per linked unit as at 30 June 2015 amounted to R11,74, an
increase of 3,0% from 2014.The combined market value at the end of the year traded at a
32% discount to the NAV. The weighted average lease expiry period is 12,1 years.
Gross rental income Property Valuation
R 000 % R 000 %
Core portfolio 395 899 91% 4 807 000 94%
Non-core portfolio 38 213 9% 329 228 6%
434 112 100% 5 136 228 100%
7. Acquisitions and disposals
The Fund's investment strategy is to invest in well-located, large hotels in major
metropolitan centres with strong brands and diverse source markets and to dispose of
certain properties which do not meet these criteria.
The non-core properties that the Fund has identified for disposal were more severely
affected by the slowdown in the hospitality sector. Accordingly, the Fund has expedited
the disposal of these properties, valued at R355,6 million through a combination of direct
sales and auctions. This will unlock additional capital resources for core property
acquisitions and/or repayment of debt. The Fund disposed of its interest in the Courtyard
portfolio to City Lodge on 1 May 2015 for R80,0 million which was in line with its carrying
amount.
In addition, sale agreements were concluded for Protea Hotel The Richards and Protea
Hotel Hluhluwe & Safaris at R46 million and R14.5 million respectively, with transfer of
both hotels expected towards the end of August 2015. These properties are part of the
non-core portfolio.
The renegotiation of the new fixed and variable lease at Birchwood from 1 July 2014
required the investment by the Fund of a further R60 million in a 35% undivided share in
215 rooms, which was funded through the issue of linked units to the sellers.
The Fund invested R76,4 million to acquire 25 additional units at the Radisson Blu
Waterfront, which was funded by a combination of debt and equity.
On 8 August 2014, 4 additional rooms were acquired in Radisson Blu Gautrain Hotel for
a consideration of R15.4 million, which was funded through the issue of equity.
8. Developments and capital projects
The Fund continued to upgrade several of its properties during the period:
- R13.2 million was invested to reposition the Mount Grace Country House and Spa
with the construction of a mountain cycling club and children's entertainment
facilities.
- Refurbishment of 167 rooms at Birchwood for R20.7 million to support the hotel's
initiatives to attract additional corporate clients, including the relaunch of a
section of the hotel as "The Silverbirch Hotel".
- Four new rooms were added at the Radisson Blu Gautrain and the public areas were
upgraded, with a total investment of R15.3 million.
- The Radisson Blu Waterfront conference facilities and public areas were refurbished,
costing R9,0 million.
- An outdoor swimming pool, with an investment of R7.3 million, was completed at
Westin Cape Town to enhance the appeal of the hotel to the leisure market.
The quality of the Fund's core properties continues to provide a solid platform for future
income growth. The Fund is cognisant of future refurbishment projects that will require
additional capital investment and is investigating options to deal with this on a
sustainable basis going forward.
The Minister of Western Cape Local Government, Environmental Affairs and
Development Planning granted Hospitality approval to develop Phase 2 of Arabella
Country Estate subject to compliance with certain conditions and administrative
processes. Furthermore, the Competent Authority for the Administration of the Land Use
Planning Ordinance, 1985, approved the rezoning and subdivision of the Property, which
includes 352 Residential erven, a Private Nature Reserve and a 9-hole executive mashie
golf course with associated infrastructure. Management and the Board continue to
explore the various options available to the Company, in order for it to realise a
profit from Arabella Phase 2.
9. Liquidity
During the financial year, 34% of the A-linked units and 79% of the B-linked units were
traded on the JSE Limited.
10. Board of directors
Mr Kamil Abdul Karrim resigned as an independent non-executive director with effect
from 31 December 2014. The Board thanks Mr Karrim for his considerable contribution to
the Fund from its inception.
Mrs Anitha Soni resigned as independent non- executive director on 30 March 2015 due
to ill health and sadly passed away on 16 May 2015. The Board extends its condolences
to her family.
Mr Andrew Rogers, the previous CEO, was dismissed on 22 June 2015, following the
outcome of a forensic investigation and a subsequent disciplinary hearing and resigned
as a director from the Board of Hospitality Property Fund Limited.
Mr Ridwaan Asmal, Hospitality's Financial Director, who also fulfilled the role of Acting
CEO, resigned from the Company effective 12 August 2015. The Board extends its
gratitude to Mr Asmal for his commitment to the Fund since 2006 and the significant role
he played during his tenure.
Mr Riaan Erasmus who served as Group Financial Manager of the Fund since 2010 has
been appointed as Acting CFO.
Mr Gerald Nelson, who was the CEO of the Company until his retirement in June 2013
and is currently a non-executive director, made himself available as the Acting CEO until
the appointment of a new CEO.
11. Prospects
The performance of the Fund in the year ahead will largely be driven by the hospitality
trading environment. Management expects occupancies to grow in line with domestic
GDP growth with room rates increasing slightly ahead of the prevailing CPI rate.
Furthermore, inflationary pressures on salaries and wages as well as utility costs could
impact hotel expenses in 2016. The core properties in Sandton and the Western Cape
have been more resilient in the recent slowdown and should continue to support the
Fund's earnings in the year ahead.
Hospitality's underlying performance for the 2016 financial year will be impacted by a
renewal of the lease at Champagne Sports Resort. Due to escalations in the fixed rental
since 2006 the rental at expiry is significantly higher than market which will result in a
reversion of approximately R6.2 million per annum.
Furthermore there will be a requirement to refurbish the hotel in order to maintain
market share. No further fixed rental income reversions will occur following the restructure
of the Champagne lease.
12. Subsequent events
The Protea Hotel The Richards was sold on 19 August 2015 for a total consideration of
R46 million. The directors are not aware of any matter or circumstances arising since the
end of the financial year to the date of this report, not otherwise dealt with in this report
that would significantly affect the operations, the results and the financial position of the
group.
13. Distribution Payment
Unitholders will receive distribution payment number 19 for the six-month period ended
30 June 2015 of 74,88 cents per A-linked unit and 4,03 cents per B-linked unit.
In accordance with Hospitality's status as a REIT, linked unitholders are advised that the
distribution meets the requirements of a "qualifying distribution" for the purposes of
section 25BB of the Income Tax Act, No. 58 of 1962 ("Income Tax Act").
The number of units in issue at the date of the declaration is 144 285 503.
Local tax residents
Qualifying distributions received by local tax residents must be included in the gross
income of such linked unitholders (as a non-exempt dividend in terms of section
10(1)(k)(aa) of the Income Tax Act), with the effect that the qualifying distribution is
taxable as income in the hands of the linked unitholder. These qualifying distributions
are, however, exempt from dividend withholding tax in the hands of South African tax
resident linked unitholders, provided that the South African resident linked unitholders
provided the following forms to their Central Securities Depository Participant ("CSDP")
or broker, as the case may be, in respect of uncertificated linked units, or the company,
in respect of certificated linked units:
a) a declaration that the distribution is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the company, as the case may be,
should the circumstances affecting the exemption change or the beneficial owner cease to be
the beneficial owner, both in the form prescribed by the Commissioner for the South African
Revenue Service. Linked unitholders are advised to contact their CSDP, broker or the
company, as the case may be, to arrange for the abovementioned documents to be submitted
prior to payment of the distribution, if such documents have not already been submitted.
Non- resident
Qualifying distributions received by non-resident linked unitholders will not be taxable as
income and instead will be treated as ordinary dividends but which are exempt in terms of the
usual dividend exemptions per section 10(1)(k) of the Income Tax Act. It should be noted that
until 31 December 2013 qualifying distributions received by non-residents were not subject to
dividend withholding tax. From 1 January 2014, any qualifying distribution received by a non-
resident from a REIT will be subject to dividend withholding tax at 15%, unless the rate is
reduced in terms of any applicable agreement for the avoidance of double taxation ("DTA")
between South Africa and the country of residence of the linked unitholder. Assuming
dividend withholding tax is withheld at a rate of 15%, the net amount due to non-resident
unitholders will be 63,648 cents per A-linked unitholder and 3,4255 cents per B-linked unit. A
reduced dividend withholding tax rate in terms of the applicable DTA, may only be relied on if
the non-resident linked unitholder has provided the following forms to their CSDP or broker,
as the case may be, in respect of uncertificated linked units, or the company, in respect of
certificated linked units:
a) a declaration that the dividend is subject to a reduced rate as a result of the application
of a DTA; and
b) a written undertaking to inform their CSDP, broker or the company, as the case may be,
should the circumstances affecting the reduced rate change or the beneficial owner
cease to be the beneficial owner, both in the form prescribed by the Commissioner for
the South African Revenue Service. Non-resident linked unitholders are advised to
contact their CSDP, broker or the company, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the distribution if such
documents have not already been submitted, if applicable. Unitholders are requested to
seek professional advice on the appropriate action to take.
Last day to trade cum distribution Friday, 11 September 2015
Linked units will trade ex-distribution Monday, 14 September 2015
Record date Friday, 18 September 2015
Payment date Monday, 21 September 2015
Unitholders may not dematerialise or rematerialise their linked units between Monday,14
September and Friday, 18 September 2015 both days inclusive.
By order of the Board
D G Bowden G A Nelson
(Chairman) (Acting CEO)
21 August 2015
Directors: D G Bowden (Chairman)*+, GA Nelson (Acting CEO)*, L de Beer *+, SA Halliday *+,
Z N Kubukeli*+, Z Ntwasa *+, WC Ross *+, (*Non-Executive, +Independent)
Registered Office: The Zone 2, Loft Offices East Wing, 2nd Floor, Cnr Oxford Road and
Tyrwhitt Avenue, Rosebank, 2196
Tel: +27 11 994 6300Fax: +27 11 994 6301 Email:info@hpf.co.zaWeb:www.hpf.co.za
Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
BASIS OF PREPARATION AND ACCOUNTING POLICIES
These results were prepared by acting CFO, Riaan Erasmus (CA)SA.
The condensed consolidated financial statements are prepared in accordance with the requirements of the
JSE Limited Listings Requirements for preliminary reports and the requirements of the Companies Act of
South Africa. The Listings Requirements require preliminary reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also,
as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS
and are consistent with those applied in the previous consolidated annual financial statements, except for
the following accounting policies adopted during the financial year:
- Offsetting Financial Assets and Financial Liabilities (amendments to IAS 32)
- Recoverable Amount Disclosed for Non-Financial Assets (Amendment to IAS 36)
- Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
- Annual Improvements to IFRS 2010 – 2012
- Annual Improvements to IFRS 2011 – 2013.
There was no material impact on the financial statements identified based on Management's assessment of
these standards. The directors take full responsibility for preparation of the preliminary report.
AUDITOR'S REPORT
These condensed consolidated financial statements for the year ended 30 June 2015 have been reviewed by
KPMG Inc, who expressed an unmodified review conclusion. The auditor's report contained the following
paragraph with respect to reportable irregularities:
In accordance with our responsibilities in terms of section 44(2) and 44(3) of the Auditing Professions Act, we
report that we have identified certain unlawful acts or omissions committed by persons responsible for the
management of Hospitality Property Fund Limited which constitute reportable irregularities in terms of the
Auditing Professions Act, and have reported such matters to the Independent Regulatory Board for Auditors.
The matters pertaining to the reportable irregularities have been described in the condensed financial
statements.
The auditor's report does not necessarily report on all of the information contained in this
announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's
report together with the accompanying financial information from the issuer's registered office
REPORTABLE IRREGULARITY
On 22 June 2015, Mr AS Rogers, the previous CEO, was dismissed on 22 June 2015, following the outcome of
a forensic investigation and a subsequent disciplinary hearing and signed as director form the board of
Hospitality Property Fund Limited. . In terms of the Auditing Profession Act, 2005 the external auditor
had reason to believe that a reportable irregularity had taken place and issued a report in this regard
to Independent Regulatory Board for Auditors (IRBA). The Board formally responded to the external auditor
regarding actions taken to correct the irregularity reported. The external auditor is satisfied that the
reportable irregularity is no longer taking place.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Reviewed Audited
2015 2014
R '000 R '000
ASSETS
Non-current assets 4 819 827 4 536 393
Investment properties 4 806 775 4 514 950
Straight-line rent income accrual 225 1 050
Investment properties and related accrual 4 807 000 4 516 000
Furniture, fittings and equipment 573 942
Goodwill 12 000 19 200
Investment in associates 254 251
Current assets 626 033 577 725
Non-current assets held for sale 329 228 311 900
Properties held for trading 21 620 20 535
Trade and other receivables 71 035 58 087
Cash and cash equivalents 204 150 187 203
Total assets 5 445 860 5 114 118
EQUITY AND LIABILITIES
Equity 970 747 801 847
Share capital and share premium 515 931 481 316
Retained earnings (2 332) 13 289
Fair value reserve 457 148 307 242
Non-current liabilities 4 045 809 4 066 078
Debentures 2 415 842 2 325 186
Interest-bearing liabilities 1 627 874 1 732 627
Derivative liability 2 093 8 265
Current liabilities 429 304 246 193
Trade and other payables 85 352 87 917
Short term portion of Interest-bearing liabilities 230 000 40 000
Taxation 100 134
Debenture interest payable 113 852 118 142
Total equity and liabilities 5 445 860 5 114 118
Net asset value per linked unit (Rand)
A-linked unit 11.74 11.40
B-linked unit 11.74 11.40
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 June 2015
Reviewed Audited
2015 2014
R '000 R '000
Revenue 433 287 423 174
Rental income - contractual 434 112 426 276
- straight-line accrual (825) (3 102)
Expenditure (40 674) (40 524)
Operating expenses (40 674) (40 524)
Operating profit 392 613 382 650
Net finance cost (160 888) (146 041)
Finance income 9 696 4 371
Finance costs (170 584) (150 412)
Profit before debenture interest, goodwill, fair value adjustments and
taxation 231 725 236 609
(232 815) (239 483)
Debenture interest (232 815) (240 014)
Recoupment of debenture interest - 531
Loss before fair value adjustments, goodwill and taxation (1 090) (2 874)
Profit on sale of investment properties 390 -
Fair value adjustments 143 531 116 275
Investment properties, before straight-lining adjustment 143 734 153 772
Straight-line rental income accrual 825 3 102
Total fair value of investment properties 144 559 156 874
Goodwill impairment (7 200) (53 400)
Interest-rate swaps 6 172 12 801
Profit before taxation 142 831 113 401
Debenture discount amortisation (8 633) (7 480)
Equity accounted profit from associate after tax 203 238
Taxation (116) (181)
Total profit and comprehensive income for the year 134 285 105 978
Reconciliation between earnings, headline earnings and distributable earnings
Total profit and comprehensive income for the year 134 285 105 978
Adjustments : Debenture interest 232 815 240 014
Profit (linked units) 367 100 345 992
Adjustments :
Profit on sale of investment properties (390) -
Goodwill impairment 7 200 53 400
Fair value - investment properties revaluation (143 734) (153 772)
Fair value - straight line rental income (825) (3 102)
Headline earnings (linked units) 229 351 242 518
Fair value - interest rate swaps (6 172) (12 801)
Debenture discount amortisation 8 633 7 480
HPF Employee Incentive Trust effects 78 (285)
Taxation 100 -
Straight line rental income 825 3 102
Distributable earnings 232 815 240 014
Number of units/shares
A-linked unit 144 285 503 138 149 717
B-linked unit 142 315 793 136 180 007
- Units in issue 144 285 503 138 149 717
- HPF Employee Incentive Trust units (1 969 710) (1 969 710)
Weighted average number of units/shares
A-linked unit 142 380 569 137 369 080
B-linked unit 140 410 859 136 225 029
- Units in issue 142 380 569 137 369 080
- HPF Employee Incentive Trust units (1 969 710) (1 144 051)
Distribution per linked unit (cents)
A-linked unit 148.21 141.35
- Interim 73.33 69.83
- Final 74.88 71.52
B-linked unit 13.15 33.45
- Interim 9.12 19.25
- Final 4.03 14.20
161.36 174.80
Earnings and diluted earnings per linked unit (cents)
A-linked unit 129.81 126.46
B-linked unit 129.81 126.46
259.62 252.92
Headline earnings and diluted headline earnings per linked unit (cents)
A-linked unit 81.10 88.64
B-linked unit 81.10 88.64
162.20 177.28
Earnings and diluted earnings per share (cents) 47.49 38.74
Headline earnings and diluted headline earnings per share (cents) (0.01) 0.01
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 201
Share Share Retained Fair value
capital premium earnings reserve Total
R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2013 27 476 172 73 884 140 669 690 752
Total profit and comprehensive income for the year - - 105 978 105 978
Transactions with owners, recorded directly in equity - 5 117 (166 573) 166 573 5 117
Issue of shares - 5 194 - - 5 194
Share issue expenses, net of tax - (77) - - (77)
Transfer to fair value reserve - investment properties - - (153 772) 153 772 -
Transfer to fair value reserve - interest rate swaps - - (12 801) 12 801 -
Balance at 30 June 2014 27 481 289 13 289 307 242 801 847
Total profit and comprehensive income for the year - - 134 285 134 285
Transactions with owners, recorded directly in equity 1 34 614 (149 906) 149 906 34 615
Issue of shares 1 34 614 - - 34 615
Transfer to fair value reserve - investment properties - - (143 734) 143 734
Transfer to fair value reserve - interest rate swaps - - (6 172) 6 172 -
Balance at 30 June 2015 28 515 903 (2 332) 457 148 970 747
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
Reviewed Audited
2015 2014
R'000 R'000
Cash flows from operating activities
Cash generated from operations 378 518 391 132
Finance income received 9 696 4 371
Finance costs paid (170 584) (150 412)
Taxation (150) (1 200)
Distribution to unitholders (237 105) (227 607)
Net cash (outflow)/inflow from operating activities (19 625) 16 284
Cash flows from investing activities
Acquisition and development of investment properties (244 204) (104 228)
Disposal of investment properties 80 000
Acquisition of properties held for trading (1 085) (827)
Acquisition of furniture and equipment (224) (484)
Dividends received from associates 200 150
Net cash outflow from investing activities (165 313) (105 389)
Cash flows from financing activities
Proceeds from the issue of linked units 116 638 18 985
Share issue expenses paid - (77)
Acquisition of treasury shares - (9 995)
Interest-bearing liabilities raised 85 247 200 000
Net cash inflow from financing activities 201 885 208 913
Net increase in cash and cash equivalents 16 947 119 808
Cash and cash equivalents at beginning of year 187 203 67 395
Cash and cash equivalents at end of year 204 150 187 203
CONDENSED CONSOLIDATED SEGMENTAL INFORMATION
for the year ended 30 June 2015
Information regarding the results of each reportable segment is included below. Performance is measured
based on operating profit before finance costs, as included in the internal management reports that are
reviewed by the group’s CEO. Segment profit is used to measure performance as management believes that
such information is the most relevant in evaluating the results of certain segments relative to other
entities that operate within these industries. Inter-segment pricing is determined on an arms' length basis.
Total of all
Non-core operating
R000's Core portfolio porfolio Head office segments
Statement of Comprehensive Income - 30
Jun 2015
Segment revenue 395 788 38 213 111 434 112
Expenditure - - (40 674) (40 674)
Segment results 395 788 38 213 (40 563) 393 438
Statement of Comprehensive Income - 30
Jun 2014
Segment revenue 405 322 20 941 13 426 276
Expenditure - - (40 524) (40 524)
Segment results 405 322 20 941 (40 511) 385 752
Statement of Financial Position - 30 Jun 2015
Non-current assets
Investment properties 4 807 000 - - 4 807 000
Current assets
Non current assets held for sale - 329 228 - 329 228
Trade and other receivables 20 287 5 981 44 767 71 035
Segment assets 4 827 287 335 209 44 767 5 207 263
Statement of Financial Position - 30 Jun 2014
Non-current assets
Investment properties 4 516 000 - - 4 516 000
Current assets
Non current assets held for sale - 311 900 - 311 900
Trade and other receivables 19 170 4 119 34 798 58 087
Segment assets 4 535 170 316 019 34 798 4 885 987
Date: 21/08/2015 04:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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