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HYP - Hyprop Investments Limited - Hyprop`s proposed acquisition of 100% of the shares in Attfund retail: financial effects, Attfund retail forecast and withdrawal of cautionary announcement Hyprop Investments Limited (Incorporated in the Republic of South Africa) (Registration No. 1987/005284/06) Share Code: HYP ISIN Code: ZAE000003430 ("Hyprop" or "the company") HYPROP`S PROPOSED ACQUISITION OF 100% OF THE SHARES IN ATTFUND RETAIL: FINANCIAL EFFECTS, ATTFUND RETAIL FORECAST AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT INTRODUCTION Combined unitholders are referred to the previous announcements related to and detailing the proposed offer (the "offer") to be made by Hyprop to acquire 100% of the shares in Femtoworx Limited (in the process of being renamed Attfund Retail Limited) ("Attfund Retail"), for the purpose of acquiring Attfund Retail`s portfolio of property assets and listed securities. This announcement sets out the forecast financial information in respect of Attfund Retail and financial effects as required in terms of the JSE Listing Requirements. ATTFUND RETAIL FORECAST Attfund Retail`s profit forecasts have been prepared for the 12 month periods ending 31 December 2011 and 31 December 2012. The forecasts have been prepared on the assumption that the effective date of the offer was 1 January 2011. The aggregate effective offer consideration of R8.986 billion (before taking into account the Attfund Retail debt) represents a forward yield of 7.37% based on the forecast pre-interest distributable income for the 12 months ending 31 December 2011. The profit forecasts have been: - prepared in accordance with Hyprop`s accounting policies and in compliance with IFRS; - reviewed by the independent reporting accountants whose report will be included in the circular to be posted to Hyprop combined unitholders in relation to the offer; and - prepared on the assets of Attfund Retail which post implementation of the offer will be transferred to Hyprop. 12 months 12 months
ending ending 31 31 December December 2011 2012 R`000 R`000
Revenue 1 035 180 1 083 392 Investment property income 968 690 1 047 778 Straight-line rental income accrual 41 001 8 677 Listed properties securities income 22 289 23 481 Word 4 Word income 3 200 3 456 Property expenses (306 267) (341 997) Net property income 728 913 741 395 Other operating expenses (25 374) (27 057) Operating income 703 539 714 338 Net interest (145 063) (139 870) Interest received 28 380 33 573 Interest from loan to associate 15 096 15 096 Interest on earnings 13 284 18 477 Interest paid on long-term loans (173 443) (173 443) Net operating income 558 476 574 468 Change in fair value 640 012 726 479 Investment property 664 100 717 228 Listed property securities 16 913 17 928 Straight-line rental income accrual (41 001) (8 677) Income before debenture interest and taxation 1 198 488 1 300 947 Debenture interest (517 475) (565 791) Net income before taxation 681 013 735 156 Taxation - Deferred (186 260) (200 996) Total comprehensive income for the period 494 753 534 160 Reconciliation to distributable earnings Revenue 994 179 1 074 715 Property expenses (306 267) (341 997) Other operating expenses (25 374) (27 057) Net interest (145 063) (139 870) Distributable earnings 517 475 565 791 - Since the Attfund Retail assets will be transferred to Hyprop post the implementation of the offer, the income earned on these assets will be distributed to Hyprop combined unitholders in the form of debenture interest. Given that debenture interest is deductible for tax purposes there will be no tax incurred on the income of the Attfund Retail assets. - Uncontracted rental income comprises 19% of the total forecast investment property income in the year ending 31 December 2011 and 30% in the year ending 31 December 2012. Uncontracted rental income is income which has been forecast but for which there are no signed lease agreements in place; and for the purposes of the forecasts, relates primarily to leases which come up for renewal during the forecast period (as opposed to vacancies). - The detailed assumptions underlying the forecast will be included in the circular to be posted to Hyprop combined unitholders in relation to the offer. FINANCIAL EFFECTS As previously announced, the Attfund Retail vendors are required to place 30 million of the Hyprop combined units (the "placement units") being issued as part of the consideration for the offer on the basis that, if any of the placement units are not placed at a price of at least R54 per unit, Hyprop will (at its election) either make up the difference or repurchase the placement units in question at a price of R54 per unit. If Hyprop is required to repurchase any of the placement units, the increased gearing will have a dilutionary effect on Hyprop`s distributions in the short term but increase growth in distributions going forward. The unaudited pro forma financial effects of the offer and the possible repurchase by Hyprop of the placement units (the "specific repurchase") on Hyprop`s historical distribution per unit, earnings per unit and headline earnings per unit for the year ended 31 December 2010 and net asset value and net tangible asset value per unit at 31 December 2010 are set out below. The unaudited pro forma financial effects have been prepared for illustrative purposes only, to provide information on how the offer and specific repurchase may have impacted on the historical results and financial position of Hyprop. The pro forma financial effects are the responsibility of the directors of Hyprop. Because of their nature, the pro forma financial effects may not fairly present Hyprop`s financial position after the offer and/or the specific repurchase. In particular the pro forma financial effects on the earnings per unit, headline earnings per unit and distributions per unit do not fairly present the impact of the offer on Hyprop`s distributions per unit, given that: - the disclosure of earnings per unit and headline earnings per unit are regulatory requirements but do not correlate to distributions per unit; - the offer consideration was determined based on Attfund Retail`s forecast earnings while the financial effects were calculated on the basis of Attfund Retail`s historic earnings for the 12 month period ended 30 June 2010 as compared to Hyprop`s earnings for the 12 month period ended 31 December 2010; and - the historic earnings of Attfund Retail for the 12 month period do not include any earnings from the extensions at Clearwater Mall and Woodlands Boulevard, which earnings were taken into account in determining the offer consideration. In the circumstances, Hyprop is of the view that the Attfund Retail forecasts set out above provide unitholders with more meaningful information for the purpose of determining how the offer may impact Hyprop`s distributions per unit going forward. Historical Pro forma Change Pro forma Change before the after the after offer offer specific repurchase
Distribution 357.0 257.6 -27.8% 227.5 -11.7% per unit (cents) Earnings per 720.0 609.9 -15.3% 626.1 2.7% unit (cents) Headline 425.6 276.3 -35.1% 248.6 -10.0% earnings per unit (cents) Net asset 57.01 61.43 7.7% 62.40 1.6% value per unit - excluding deferred tax (R) Net tangible 57.01 54.95 -3.6% 55.07 asset value 0.2% per unit - excluding deferred tax (R) Net asset 47.26 49.86 5.5% 49.32 -1.1% value per unit (R) Net tangible 47.26 43.38 -8.2% 41.99 -3.2% asset value per unit (R) Units in 166 113 169 258 113 169 92 000 000 228 113 169 issue -30 000 000 Notes and assumptions: 1 The amounts set out in the "Historical before the offer" column have been extracted from Hyprop`s audited results for the year ended 31 December 2010. 2 Distribution per unit ("DPU"), earnings per unit ("EPU") and headline earnings per unit ("HEPU"), as set out in the "Pro forma after the offer" and "Pro forma after specific repurchase" columns, reflect the effects of the offer and specific repurchase on distribution per unit, earnings per unit and headline earnings per unit for the year ended 31 December 2010 based on the assumption that the offer and specific repurchase were implemented at the beginning of the period in question; and 3 Net asset value and net tangible asset value per unit, as set out in the q"Pro forma after the offer" and "Pro forma after specific repurchase" columns, reflect the effect of the offer and specific repurchase on the net asset value and net tangible asset value per unit at 31 December 2010 assuming the offer and specific repurchase were implemented on 31 December 2010. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Caution is no longer required to be exercised by Hyprop combined unitholders when dealing in their combined units. As previously announced the offer remains conditional upon, inter alia, Hyprop unitholder approval and the implementation of the Attfund Retail restructure. Johannesburg 13 April 2011 Corporate advisor and legal advisor to Hyprop Java Capital (Proprietary) Limited Sponsor to Hyprop Java Capital Trustees and Sponsors (Proprietary) Limited Legal advisor to Attfund Retail Edward Nathan Sonnenbergs Inc. Independent reporting accountants Grant Thornton SA Date: 13/04/2011 15:29:12 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
