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Unaudited interim results for the six months ended 30 June 2012
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1987/005284/06)
Share Code: HYP
ISIN: ZAE000003430
(“Hyprop” or “the company”)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
Half year distribution up 9,4% to 198 cents per combined unit
Total assets R20,6 billion, up 2,1%
Gearing 24,7%
R920 million re-development of Rosebank Mall approved
Investment into Africa through Atterbury Africa
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2012 2011 2011
R’000 Restated R’000
R’000
Revenue 1 066 395 563 851 1 583 157
Investment property income 1 002 045 497 891 1 350 937
Straight-line rental income
accrual (14 049) 8 400 100 214
Listed property securities
income 78 399 57 560 132 006
Property expenses (363 650) (185 725) (511 681)
Net property income 702 745 378 126 1 071 476
Other operating expenses (24 423) (19 314) (43 855)
Operating income 678 322 358 812 1 027 621
Net interest (210 986) (63 760) (208 325)
Received 10 844 2 731 31 416
Paid (221 830) (66 491) (239 741)
Net operating income 467 336 295 052 819 296
Change in fair value 422 786 273 520 (212 008)
Investment property 437 275 284 537 236 654
Straight-line rental income
accrual 14 049 (8 400) (100 214)
Listed property securities 56 882 8 345 258 716
Goodwill (547 654)
Derivative instruments (85 420) (10 962) (59 510)
Profit/(loss) on disposal 308 (9 835)
Investment property (6 129)
Listed property securities 308 (3 706)
Amortisation of debenture premium 238 002 61 690 231 354
Non-core income 449 4 555
Income before debenture interest 1 128 432 630 711 833 362
Debenture interest (481 364) (300 665) (741 703)
Net income before share of income
from associate 647 068 330 046 91 659
Share of income from associate 8 314 9 949
Profit before taxation 647 068 338 360 101 608
Taxation (561 787) (41 003) (185 639)
Total comprehensive income/(loss) 85 281 297 357 (84 031)
Abridged reconciliation - headline
earnings and distributable earnings
Net income/(loss) after taxation 85 281 297 357 (84 031)
Debenture interest 481 364 300 665 741 703
Earnings 566 645 598 022 657 672
Headline earnings adjustments (593 960) (306 392) 122 613
Change in fair value of
investment property (net of
deferred taxation) (355 650) (244 702) (203 522)
Impairment of goodwill 547 654
(Profit)/loss on disposal of
listed property securities (308) 3 706
Amortisation of debenture
premium (238 002) (61 690) (231 354)
Loss on disposal of investment
property 6 129
Headline earnings (27 315) 291 630 780 285
Distributable earnings adjustments 508 700 9 171 (37 054)
Change in fair value of listed
property securities (net of
deferred taxation) (46 264) (7 177) (222 496)
Change in the fair value of
derivative instruments 85 420 10 962 59 510
Taxation 87 986
Deferred taxation 469 544 28 302
Attfund transaction costs 5 504 9 644
Share of income from associate (118)
Distributable earnings 481 385 300 801 743 231
Total combined units in issue 243 113 169 166 113 169 243 113 169
Weighted average combined units in
issue 243 113 169 166 113 169 192 061 114
Earnings per combined unit 233,1 360,0 342,4
Headline earnings per combined unit (11,2) 175,6 406,3
Distributable earnings per combined
unit 198,0 181,1 383,6
Distribution details
Total distribution for the year 198,00 181,00 383,00
Six months ended 31 December 202,00
Four months ended 31
December 137,00
Special distribution - two
months ended 31 August 65,00
Six months ended 30 June 198,00 181,00 181,00
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2012 2011 2011
Restated
R’000 R’000 R’000
Assets
Non-current assets 19 996 275 11 617 170 19 746 691
Investment property 17 750 318 9 797 910 17 357 277
Building appurtenances and
tenant installations 44 548 20 087 35 873
Investment in associate 117 702 210 407 117 658
Goodwill 12 493 12 493
Derivative instruments 3 371
Loan receivable 47 496 47 782 47 217
Listed property securities 2 023 718 1 537 613 2 176 173
Current assets 345 600 175 504 327 641
Derivative instruments 1 197
Receivables 210 277 130 066 119 247
Cash and cash equivalents 135 323 44 241 208 394
Non-current assets held for sale 290 337 123 822
Investment property 180 808 123 822
Listed property securities 109 529
Total assets 20 632 212 11 792 674 20 198 154
Equity and liabilities
Share capital and reserves 6 155 388 6 451 495 6 070 107
Liabilities
Non-current liabilities 12 489 184 4 888 307 12 116 277
Debentures and debenture
premium 6 121 539 2 386 205 6 359 541
Long-term loans 4 146 304 1 570 000 4 191 622
Derivative instruments 139 227 23 415 44 463
Deferred taxation 2 082 114 908 687 1 520 651
Current liabilities 1 987 640 452 872 2 011 770
Payables 367 397 152 207 308 482
Short-term loans 1 125 292 1 347 292
Derivative instruments 13 587 22 931
Combined unitholders for
distribution 481 364 300 665 333 065
Total liabilities 14 476 824 5 341 179 14 128 047
Total equity and liabilities 20 632 212 11 792 674 20 198 154
Net asset value per combined unit(R) 50,50 53,20 51,12
Net asset value per combined unit -
excluding deferred taxation
liability (R)
59,06 58,67 57,37
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2012 2011 2011
Restated
R’000 R’000 R’000
Balance at beginning of period 6 070 107 6 154 138 6 154 138
Total comprehensive income/(loss)
for the period 85 281 297 357 (84 031)
Balance at end of period 6 155 388 6 451 495 6 070 107
ABRIDGED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2012 2011 2011
R’000 R’000 R’000
Cash flows from operating
activities 121 820 (68 863) (47 667)
Cash generated from operations 666 195 290 921 879 948
Interest received 10 844 2 731 31 416
Interest paid (221 830) (66 491) (239 741)
Taxation paid (324) (17 983)
Distribution to combined
unitholders (333 065) (303 987) (712 625)
Income from associate 7 963 11 318
Cash flows from investing
activities 72 427 (34 643) (4 420 885)
Cash flows from financing
activities (267 318) 80 000 4 609 200
Net (decrease)/increase in cash and
cash equivalents (73 071) (23 506) 140 648
Cash and cash equivalents at
beginning of period 208 394 67 747 67 746
Cash and cash equivalents at end of
period 135 323 44 241 208 394
COMMENTARY
INTRODUCTION
Hyprop is South Africa’s largest listed shopping centre fund, with 11
directly owned shopping centres. All rental income earned by the company less
property expenses and interest on debt is distributed to unitholders semi-
annually. Hyprop’s primary objective is to provide sustainable income growth
and capital appreciation to investors over the long term.
FINANCIAL RESULTS
Hyprop has declared an interim distribution of 198 cents, an increase of 9,4%
on the distribution for the comparable period in 2011.
Distribution growth benefited from a good performance and a positive trading
environment at Hyprop’s larger shopping centres, savings in interest costs
and improved performance from Sycom Property Fund Limited (“Sycom”) and
Southern Sun Hyde Park Hotel.
SEGMENTAL OVERVIEW
30 June 2012 30 June 2011
Distributable Distributable
Revenue earnings Revenue earnings
Business segment R’000 R’000 R’000 R’000
Canal Walk 225 845 161 850 202 905 146 493
Super regional 225 845 161 850 202 905 146 493
The Glen 92 566 59 847 85 830 54 855
CapeGate Precinct 89 348 57 408
Clearwater Mall 139 256 98 881
Woodlands Boulevard 88 302 60 623
Large regional 409 472 276 759 85 830 54 855
Hyde Park 78 168 48 400 73 409 46 019
Rosebank Mall 53 191 29 072 51 106 35 864
Southcoast Mall 10 466 5 762 10 395 5 731
Regional 141 825 83 234 134 910 87 614
Stoneridge 29 930 12 330 28 974 13 414
Atterbury Value
Mart 47 753 37 937
Somerset Value Mart 10 135 6 795
Willowbridge
Shopping Centre 37 850 21 752
Value Centres 125 668 78 814 28 974 13 414
Shopping Centres 902 810 600 657 452 619 302 376
Stand-alone offices 55 826 36 351 21 365 13 414
Hotels 24 659 563 23 907 (3 518)
Investment property 983 295 637 571 497 891 312 272
Listed property
securities 78 399 78 399 57 560 57 560
Fund management expenses (24 423) (13 467)
Net interest paid (210 986) (63 760)
Share of income from
associate 8 196
Word4Word Marketing 18 750 824
Straight-line rental
income accrual (14 049) 8 400
Total 1 066 395 481 385 563 851 300 801
Income from the properties acquired from Attfund Retail was included from 1
September 2011, the effective date of the acquisition. The comparative period
ended June 2011 therefore does not include any income from Attfund Retail.
On a like-for-like basis, net income from Canal Walk and The Glen showed
strong growth, increasing by 10,5% and 9,1% respectively, while Rosebank Mall
underperformed partly due to planned vacancies ahead of its re-development.
Income from hotels in the period under review includes Southern Sun Hyde Park
only, following the sale of The Grace in the second half of 2011. Income from
Southern Sun Hyde Park improved due to higher occupancies.
Share of income from associate in the comparative period relates to income
received from Vunani Property Investment Fund Limited (“Vunani”). This income
was included in listed property securities income in the period under review,
following Vunani’s listing on the JSE Limited in August 2011.
Taxation comprises deferred taxation in respect of the fair value adjustment
to investment property and listed property securities, as well as a charge
for the increase in the capital gains taxation rate, resulting in a headline
loss for the period.
Total arrears in the portfolio at 30 June 2012, comprising normal arrears,
legal cases and outstanding tenant deposits were R25,7 million (31 December
2011: R41,3 million) and the total provision for doubtful debts was R9,4
million (31 December 2011: R17,4 million).
Vacancies
Total vacancies in the portfolio at 30 June 2012 were 3,8% (31 December 2011:
4,1%):
Vacancy profile by sector % of total GLA % of total GLA
30 June 2012 31 Dec 2011
Retail 2,8 3,6
Office 13,7 10,0
PROPERTY PORTFOLIO
Value attributable Value per
to Hyprop m2
Rentable 30 June 31 Dec 30 June
area 2012 2011 2012
Business segment (m2) R’000 R’000 (R/m2)
Canal Walk 157 447 4 960 000 4 880 000 39 378
Super regional 157 447 4 960 000 4 880 000 39 378
The Glen 74 624 1 624 906 1 623 365 29 294
CapeGate Precinct 106 061 1 472 000 1 435 000 13 879
Clearwater Mall 85 174 2 641 000 2 500 000 31 007
Woodlands Boulevard 70 159 1 680 000 1 604 000 23 946
Large regional 336 018 7 435 906 7 162 365 23 746
Hyde Park 36 894 1 372 000 1 337 000 37 188
Rosebank Mall 35 950 922 000 923 000 25 647
Southcoast Mall 29 361 110 543 122 000 7 530
Regional 102 205 2 404 543 2 382 000 70 364
Stoneridge 51 293 414 900 409 500 8 988
Atterbury Value Mart 47 694 943 000 885 000 19 772
Somerset Value Mart 12 546 162 000 154 000 12 912
Willowbridge 44 027 629 000 607 000 14 287
Value centres 155 560 2 148 900 2 055 500 14 110
Shopping centres 751 230 16 949 349 16 479 865 25 144
Stand-alone offices 51 243 775 500 769 000 15 134
Hotels 130 000 145 000
Investment property 802 473 17 854 849 17 393 865 24 667
Development property 116 000 116 000
Listed property securities 2 133 247 2 176 172
802 473 20 104 096 19 686 037 24 667
Investment Property
Old Mutual Investment Group: Property Investments (Pty) Limited updated the
valuations prepared by them at the previous year-end to determine an
independent valuation of the Hyprop portfolio at 30 June 2012.
Investment property increased in value by R437 million to R17,9 billion, a
2,7% increase.
Developments
The board has approved the re-development of the Rosebank Mall at a total
cost of approximately R920 million and at an approximate yield of 7%.
Construction on the Gardens site has begun and the total redevelopment
project will take approximately two years to complete.
During the period the Edgars and Jet stores at Clearwater were extended at a
total cost of R12,9 million and at an incremental yield of 13,1%.
Planning for further extensions at various shopping centres, including Canal
Walk and The Glen and the refurbishment Willowbridge, are progressing well.
Listed Property Securities
Listed property securities at 30 June included the following:
Fund type Number of % Value
units held R’000
Sycom PUT 84 225 688 33,9 2 024
Acucap PLS 2 593 011 1,5 110
Total value 2 134
Disposals
Hyprop disposed of its investment in Vunani during the period for R101
million. The investment in Acucap was sold subsequent to period-end for R108
million.
Hyprop’s 50% interest in Southcoast Mall was sold to Redefine Properties
Limited (“Redefine”) during the period for R110,5 million. Transfer to
Redefine was registered in July 2012.
Agreement was reached in June 2012 for the sale of the Trade Centre property
located within the CapeGate precinct for R70 million. Transfer is anticipated
in September 2012.
Other investments
Hyprop has entered into an agreement with the Atterbury Group as a co-
investor in a Mauritian based property investment company, Atterbury Africa
Limited (“Atterbury Africa”). Hyprop’s initial shareholding in Atterbury
Africa is 37,5% with a commitment to invest R750 million in the fund over the
next 5 years. Atterbury Africa’s primary strategy is to develop and own
quality shopping centres in Africa with a US dollar based income stream.
Atterbury Africa recently purchased a 42,5% interest in the successful Accra
Mall in Ghana and is planning to develop further shopping centres in that
country and other selected African countries. Hyprop’s investment in
Atterbury Africa is subject to exchange control approval.
BORROWINGS
Net borrowings at 30 June 2012 of R5,0 billion equate to a gearing ratio of
24,7%, down from 26,2% at 31 December 2011. The decrease in gearing is due to
an increase in property valuations as well as the application of proceeds on
disposals.
At period-end, interest rates were hedged in respect of 72% of borrowings, at
a weighted average rate of 8,4% (2011: 8,2%) and with a weighted average
maturity of 4 years.
In July 2012, Hyprop made its debut in the local bond market with an issuance
of R400 million in 3-year bonds and R300 million in 3-month commercial paper.
The initial bond issuance was priced at an all-in margin of 134 bps, while
the commercial paper priced at 23 bps above 3-month Jibar, resulting in an
aggregate all-in rate of 9%.
Hyprop was assigned national long term and short term investment-grade credit
ratings by Moody’s of A3.za and P-2.za respectively.
Hyprop has unutilised bank facilities available to fund the Rosebank Mall re-
development and the investment in Atterbury Africa.
NET ASSET VALUE
The net asset value per combined unit (“NAV”) at 30 June 2012 was R50,50,
representing a 1,2% decrease on the NAV of R51,12 at 31 December 2011,
primarily as a result of the increase in the capital gains taxation rate from
14% to 18,67% in February 2012.
Excluding deferred taxation, the NAV at 30 June 2012 was R59,06, a discount
of 4,9% to Hyprop’s closing combined unit price of R62,11 on 30 June 2012.
DIRECTORATE
As previously announced, Gavin Tipper and Jabu Mabuza were appointed to the
board as independent non-executive directors on 8 March 2012 and 21 June 2012
respectively. The new appointments have increased the total number of
independent non-executive directors to six, or 50% of the total complement of
non-executive directors on the board.
PROSPECTS
Key focus in the year ahead will be on the re-development of Rosebank Mall,
smaller expansion projects at other existing shopping centres, as well as its
investment into Africa, through Atterbury Africa. Hyprop will also continue
to dispose of non-core assets.
Taking into account the once-off benefit in the second half of 2011 relating
to the repurchase of 15 million Attfund Retail consideration units, Hyprop
anticipates distribution growth for the full year ending December 2012 of
between 5% and 7%. This forecast has not been reviewed or reported on by the
company’s auditors.
PAYMENT OF DEBENTURE INTEREST
Distribution 50 of 198 cents per combined unit for the six months ended 30
June 2012 will be paid to combined unitholders as follows:
SEPTEMBER 2012
Last day to trade cum distribution Friday, 14
Combined units trade ex distribution Monday, 17
Record date Friday, 21
Payment date Tuesday, 25
Unitholders may not dematerialise or rematerialise their combined units
between Monday 17 September and Friday 21 September, both days inclusive.
CHANGE IN ACCOUNTING POLICY
As mentioned in the previous year-end annual results announcement, Hyprop
noted its early adoption of the amendment to IAS 12. Deferred taxation is now
recognised on the revaluation of the building component of investment
properties at the capital gains taxation rate on the presumption that the
investment will be recovered through disposal and will therefore attract
capital gains taxation.
Hyprop applied the amendment retrospectively as required by IAS 8, resulting
in a re-statement of the deferred taxation balance at 30 June 2011.
BASIS OF PREPARATION
This interim report has been prepared in accordance with International
Financial Reporting Standards, the AC500 Standards, International Accounting
Standard IAS 34 ‘Interim Financial Reporting’ and the Companies Act.
The accounting policies applied are consistent with those applied in the most
recent audited annual financial statements. Hyprop has no dilutionary
instruments in issue.
These financial results have not been reviewed or audited by the company’s
auditors.
Preparation of the financial information was supervised by Laurence Cohen
CA(SA) in his capacity as Financial Director.
On behalf of the board.
MS Aitken PG Prinsloo
Chairman CEO
22 August 2012
DIRECTORS
MS Aitken*† (Chairman); PG Prinsloo (CEO); LR Cohen (FD); EG Dube*†;
KM Ellerine*; L Engelbrecht*†; MJ Lewin*; JA Mabuza*†; L Norval*;
S Shaw-Taylor*; GR Tipper*†; LLS van der Watt*; M Wainer*; LI Weil*†
(* Non-executive † Independent)
REGISTERED OFFICE
2nd Floor, Cradock Heights, 21 Cradock Avenue, Rosebank
(PO Box 41257 Craighall 2024)
TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited,
Ground Floor, 70 Marshall Street, Johannesburg
(PO Box 61051, Marshalltown 2107)
COMPANY SECRETARY
Probity Business Services (Proprietary) Limited
SPONSOR
Java Capital
INVESTOR RELATIONS
Envisage Investor & Corporate Relations
Date: 23/08/2012 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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