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Summarised consolidated audited results for year ended 30 June 2023 and guidance for the year ending 30 June 2023
HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP ISIN: ZAE000190724
Bond issuer code: HYPI
(Approved as a REIT by the JSE)
("Hyprop" or "the Company" or "the Group")
www.hyprop.co.za
SUMMARISED CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2023
AND GUIDANCE FOR THE YEAR ENDING 30 JUNE 2024
Growth in distributable income
24% increase in distributable income to R1.451 billion
18% increase in distributable income per share to 405.2 cents
Portfolios continue to deliver high quality operational performances
Continued improvement in trading metrics across our South African ("SA") and Eastern European ("EE") portfolios provide positive
endorsement of our repositioning and active asset management initiatives.
- Tenant turnover increased by 12.8% and 15.9% in SA and EE, respectively
- Retail vacancies maintained at very low levels of 1.2% in SA and 0.3% in EE
- Trading densities grew by 11.8% in SA and 16.9% in EE
- SA portfolio's foot count up 5.2%, while EE experienced an impressive 14.3% increase
ESG initiatives on track
- MSCI upgraded Hyprop's ESG rating to 'AA' from 'A', recognising our improved corporate governance practices and green
building initiatives
- The second phase of the Gauteng solar PV project was completed at Woodlands Boulevard and Rosebank Mall
- We saved 39 078 kl of water following the installation of Propelair toilets
- Implementation of our zero-waste strategy reduced average organic waste diverted from landfills from 65 tons/month
to 60.25 tons/month
- The Hyprop Foundation together with our centres contributed a total of R5.4 million towards its various initiatives
Strong balance sheet and liquidity
- R500 million new capital raised through the FY2022 DRIP
- 36 million (R730 million) reduction in Euro borrowings in line with debt amortisation/reduction strategy
- Strong liquidity position with R1.2 billion of cash and R2.3 billion of available bank facilities, before the 2023 dividend
payment
- LTV ratio decreased to 36.3% in June 2023
- Refinanced over R5 billion of borrowings in FY2023, and R2 billion post year end at lower margins than previously achieved
Audited Audited
June 2023 June 2022
Net operating income (R'000) 1 229 170 1 121 371
Headline earnings per share (cents) 393.9 442.1
Basic earnings per share (cents) 431.9 406.7
Distributable income per share (cents) 405.2 342.50
Dividend per share (cents) 299.29970 293.64090
Net asset value per share (Rands) 63.39 60.88
Dividend policy
Our dividend policy is based on our key objectives of maintaining and repositioning our portfolios, maintaining a healthy
balance sheet, and reducing the LTV ratio, while meeting shareholder expectations and the minimum distribution requirements for
REITs. As a result of changes in the composition of the Group's distributable income since FY2022 and feedback received from
shareholders, the dividend policy previously communicated has been refined as follows:
- payment of an interim dividend equivalent to 90% of the distributable income from the South African portfolio, commencing for
the interim period ending 31 December 2023; and
- payment of a final dividend on finalisation of the Group's annual audited results, such that the total distribution for the
financial year is equivalent to 75% of the Group's distributable income from the SA and EE portfolios.
The balance of the distributable income will be retained to manage borrowings and fund capital expenditure in the normal course.
A dividend of 299.3 cents per share (R1.07 billion in aggregate) will be paid to shareholders for the year ended 30 June 2023.
Subject to obtaining the necessary regulatory approvals, shareholders will be entitled to elect to reinvest the net cash
Dividend in return for additional Hyprop shares through a dividend reinvestment alternative ("FY2023 DRIP"), limited to a
maximum aggregate reinvestment amount of R500 million.
Amounts raised from the FY2023 DRIP will be used to fund capital expenditure beyond the Group's normal requirements, primarily
to ensure energy security for the SA portfolio, and new opportunities being pursued by the Group, with the Company meeting the
minimum distribution requirements applicable to REITs.
A detailed announcement relating to the dividend and the FY2023 DRIP, including salient dates, any discount to the market price
at which shareholders will be entitled to subscribe for additional Hyprop shares and the tax treatment of the dividend and
the FY2023 DRIP, will be released separately once the relevant regulatory approvals have been obtained. The board of directors
of Hyprop may, in its discretion, withdraw or amend the FY2023 DRIP should market conditions warrant such action. Any such
withdrawal will be communicated to shareholders prior to the release of the FY2023 DRIP finalisation announcement on SENS.
Outlook and prospects
The improved trading metrics of our portfolios demonstrate the strength and relevance of our centres in their markets. This, in
conjunction with the Group's strong balance sheet, liquidity and support from investors and financiers, has created a solid
base from which the Group will continue to execute its key strategic objectives of generating sustainable returns for
shareholders, maintaining a strong balance sheet and reducing debt, and allocating capital prudently to diversify risk.
We are pursuing the following six strategic initiatives:
1. Driving the implementation of sustainable solutions to reduce the impact of loadshedding and its consequent effects in SA
2. Repositioning the SA and the EE portfolios to retain and grow market share
3. Reviewing the portfolios annually to evaluate the case for recycling of assets, increase our exposure to favourable
geographies and consider new growth opportunities
4. Protecting value in the SSA portfolio pending an exit
5. Ensuring our balance sheet is robust
6. Developing non-tangible assets aligned to our tangible assets and/or the property sector.
Despite the difficult global economic environment, and unique challenges in each of the regions in which we operate, we are
cautiously optimistic that the peak of inflation and interest rates will soon be reached. The Group's financial performance will
however be negatively impacted in the short term by higher interest costs as borrowings are refinanced, and interest rate hedges
mature and are replaced at the prevailing high interest rates. Navigating South Africa's energy supply challenges has come at
great cost to the Group and our tenants, with no imminent solution in sight.
In the light of the above, Hyprop expects a reduction in distributable income per share for the year ending 30 June 2024 of
approximately 10% to 15% mainly due to higher interest costs and based on the following key assumptions:
- Forecast investment property income is based on contractual rental escalations and market-related renewals;
- Appropriate allowances for vacancies and rent reversions have been incorporated into the forecast;
- Maturing borrowings are refinanced at prevailing interest rates and margins;
- No further deterioration in the SA economy or loadshedding;
- No major economic, socio-political or other regional/global disruptions occur;
- No major corporate and tenant failures occur;
- No corporate transactions occur, other than the disposal of Ikeja City Mall by 30 June 2024;
- Exchange rates (which have not been hedged) are in line with those at 30 June 2023; and
- The FY2023 DRIP is supported by shareholders and R500 million of new capital is raised.
Shareholders should note that the guidance above is subject to change, certain assumptions may not materialise, plans may
change, and unanticipated events and circumstances may affect the Group strategy or the actions it takes.
The guidance has not been reviewed or reported on by the Company's auditors. KPMG Inc. has audited the Company and Group
financial statements. Their unqualified audit report is available from the registered office of the Company or on the Company’s
website.
20 September 2023
This short-form announcement is the responsibility of the directors and is only a summary of the information contained in
Hyprop's consolidated audited annual financial statements for the year ended 30 June 2023 ("the full announcement") and does not
include full or complete details.
The full announcement has been released on SENS and is available on the JSE website at
https://senspdf.jse.co.za/documents/2023/jse/isse/HYPE/FY2023.pdf and on the Company website at
https://www.hyprop.co.za/results/annuals-2023/pdf/financial-statements.pdf.
Copies of the full announcement may also be requested by emailing Boitumelo Nkambule at boitumelo@hyprop.co.za
or at the Company's registered office. Any investment decision should be based on the full announcement published on the
Company's website.
Hyprop's summarised consolidated audited results for the year ended 30 June 2023, which includes directors' commentary, have
Been published on the Company's website at https://www.hyprop.co.za/results/annuals-2023/pdf/booklet.pdf
Corporate information
Directors S Noussis (Chairman)*^, MC Wilken (CEO), BC Till (CFO)#, AW Nauta (CIO)#, AA Dallamore*^, L Dotwana*^, KM Ellerine*,
RJD. Inskip*^, Z Jasper*†,
TV Mokgatlha*^, BS Mzobe*^ #Executive | *Non-executive | ^Independent
Registered office Second Floor, Cradock Heights, 21 Cradock Avenue, Rosebank, 2196 Transfer secretaries Computershare Investor
Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 Company secretary Fundiswa Nkosi Sponsor
Java Capital, 6th Floor, 1 Park Lane, Wierda Valley, Sandton, 2196 Investor relations Boitumelo Nkambule
e. boitumelo@hyprop.co.za
Date: 20-09-2023 05:43:00
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