Wrap Text
Summarised audited consolidated results for the year ended 30 June 2014
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP ISIN: ZAE000190724
(Approved as a REIT by the JSE)
(“Hyprop” or “the company” or “the group”)
Summarised audited consolidated results for the year ended 30 June 2014
2014 Highlights
- Distribution 472cpu up 11,3%
- Total property assets up 17,5% to R26,4 billion
- Investment in sub-Saharan Africa (excluding South Africa) increases to R2,2 billion
- NAV up 11,1%
Statement of comprehensive income
Audited Unaudited Audited
12 months 12 months 6 months
30 June 2014 30 June 2013 30 June 2013
R’000 R’000 R’000
Revenue 2 514 779 2 223 991 1 099 489
Investment property income 2 432 459 2 036 083 1 008 671
Straight-line rental income accrual 45 055 39 136 15 879
Listed property securities income 37 265 148 772 74 939
Property expenses (837 822) (711 184) (347 277)
Net property income 1 676 957 1 512 807 752 212
Other operating expenses (82 480) (56 182) (26 720)
Operating income 1 594 477 1 456 625 725 492
Net interest (394 721) (385 563) (191 723)
Received 65 645 28 570 17 234
Paid (460 366) (414 133) (208 957)
Net operating income 1 199 756 1 071 062 533 769
Change in fair value 1 532 852 2 254 840 1 403 721
Investment property 1 655 897 1 898 754 1 198 105
Straight-line rental income accrual (45 055) (39 136) (15 879)
Listed property securities (on disposal) (82 266) 255 535 (2 842)
Derivative instruments 4 276 139 687 224 337
Profit on disposal 190 760 12 532 28 061
Investment property 4 460 (11 796) 90
Associate 17 431 - -
Listed property securities 168 869 (3 643) -
Sycom rights offer nil paid letters 27 971 27 971
Amortisation of debenture premium 102 806 299 042 49 119
Gain on bargain purchase (African Land) 102 895 - -
Impairment of goodwill (7 779) - -
Income before debenture interest 3 121 290 3 637 476 2 014 670
Debenture interest (1 147 443) (1 030 800) (517 831)
Net income before share of income from associate 1 973 847 2 606 676 1 496 839
Share of income from associate 462 4 406 4 262
Profit before taxation 1 974 309 2 611 082 1 501 101
Taxation (17 719) 2 047 626 2 239 008
Profit for the year/period 1 956 590 4 658 708 3 740 109
Other comprehensive income
Exchange differences on translation of foreign operations 8 894 313 319
Total comprehensive income for the year/period 1 965 484 4 659 021 3 740 428
Total profit for the year/period attributable to:
Unitholders of the company 1 948 487 4 658 708 3 740 109
Non-controlling interests 8 103
Profit for the year/period 1 956 590 4 658 708 3 740 109
Total comprehensive income attributable to:
Unitholders of the company 1 956 248 4 659 021 3 740 428
Non-controlling interests 9 236
Total comprehensive income for the year/period 1 965 484 4 659 021 3 740 428
Abridged reconciliation - headline earnings and distributable
earnings
Net income after taxation 1 948 487 4 658 708 3 740 109
Debenture interest 1 147 443 1 030 800 517 831
Earnings 3 095 930 5 689 508 4 257 940
Headline earnings adjustments (1 870 232) (3 621 990) (3 296 367)
Change in fair value of investment property (1 650 419) (1 285 691) (1 198 105)
(Profit)/loss on disposal: Investment property (4 460) 11 796 (90)
Associate company (Mantrablox) (17 431) - -
Sycom rights offer nil paid letters (27 971) (27 971)
Amortisation of debenture premium (102 806) (299 042) (49 119)
Gain on bargain purchase (African Land) (102 895) - -
Deferred taxation - investment property (2 021 082) (2 021 082)
Impairment of goodwill 7 779 - -
Headline earnings 1 225 698 2 067 518 961 573
Distributable earnings adjustments (77 098) (1 035 391) (444 320)
Change in fair value: Listed property securities 82 266 (210 132) 2 842
Change in fair value: Derivative instruments (4 276) (139 687) (224 337)
(Profit)/loss on disposal of listed property securities (168 869) 3 643 -
Net income: Hyprop Investments (Mauritius) (20 929) (3 789) (3 789)
Net income: African Land (17 590) - -
Dividends received: Hyprop Investments (Mauritius) 4 770 1 434 1 434
Dividends received: African Land 30 308
Capital restructuring costs (2013: Sycom transaction cost) 1 325 3 502 1 791
Taxation 2 963 1 520
Deferred taxation (listed property securities and other) 15 897 (689 356) (219 812)
Investment in associate (Mantrablox) (3 969) (3 969)
Distributable earnings 1 148 600 1 032 127 517 253
Total combined units in issue 243 256 092 243 113 169 243 113 169
Weighted average combined units in issue - for earnings and
headline earnings 243 195 790 243 113 169 243 113 169
Basic and diluted earnings per combined unit (cents) 1 273,0 2 340,3 1 751,4
Basic and diluted headline earnings per combined unit (cents) 504,0 850,4 395,5
Distribution details
Total distribution for the year (cents) 472,0 424,0 213,0
Six months ended 30 June (cents) 241,0 213,0 213,0
Six months ended 31 December (cents) 231,0 211,0 -
Statement of financial position
Audited Audited
30 June 2014 30 June 2013
R’000 R’000
ASSETS
Non-current assets 24 931 191 20 282 124
Investment property 23 998 182 19 782 728
Building appurtenances and tenant installations 82 692 63 065
Investment in associate 600 108
Goodwill 4 280 12 059
Loan receivable 812 459 384 307
Derivative instruments 32 978 39 857
Current assets 228 525 298 996
Receivables 103 686 224 175
Loan receivable 47 486 -
Cash and cash equivalents 77 353 74 821
Non-current assets held-for-sale 1 705 236 2 400 822
Investment property 1 705 236 -
Listed property securities - 2 279 253
Investment in associate - 121 569
Total assets 26 864 952 22 981 942
EQUITY AND LIABILITIES 12 905 543 10 814 409
Share capital and reserves 12 772 306 10 814 409
Non-controlling interest (African Land) 133 237 -
Liabilities
Non-current liabilities 10 992 517 10 341 977
Debentures and debenture premium 5 719 119 5 822 497
Interest-bearing liabilities 5 185 822 4 436 486
Derivative instruments 41 829 52 984
Deferred taxation 45 747 30 010
Current liabilities 2 966 892 1 825 556
Payables 367 984 359 725
Interest-bearing liabilities 2 013 031 948 000
Combined unitholders for distribution 585 877 517 831
Total liabilities 13 959 409 12 167 533
Total equity and liabilities 26 864 952 22 981 942
Net asset value per combined unit (R) 76.02 68.43
Abridged statement of changes in equity
Audited Audited
30 June 2014 30 June 2013
R’000 R’000
Balance at beginning of the year (2013: period) 10 814 409 7 073 981
Total profit for the year (2013: period) 1 948 487 3 740 109
Non-controlling interest (African Land) 137 776 -
Dividend attributable to minorities (African Land) (4 539) -
Share-based payment reserve 1 649 -
Foreign currency translation reserve 7 761 319
Balance at end of the year (2013: period) 12 905 543 10 814 409
Abridged statement of cash flows
Audited Audited
30 June 2014 30 June 2013
R’000 R’000
Cash flows from operating activities 218 169 (49 773)
Cash generated from operations 1 725 345 660 705
Interest received 65 645 17 234
Interest paid (482 496) (215 147)
Taxation paid (7 607) 16
Distribution to combined unitholders (1 079 397) (512 969)
Dividends paid (3 321) -
Income from associate - 388
Cash flows from investing activities (1 392 333) (241 730)
Cash flows from financing activities 1 179 506 198 450
Net increase/(decrease) in cash and cash equivalents 5 342 (93 053)
Translation effects on cash and cash equivalents of foreign entities 145 -
Cash reallocated to assets held-for-sale (2 955) -
Cash and cash equivalents at beginning of year (2013: period) 74 821 167 874
Cash and cash equivalents at end of the year (2013: period) 77 353 74 821
Commentary
Introduction
Hyprop is one of Africa’s leading listed property companies, specialising in high-quality shopping centres. It is also
one of South Africa’s oldest listed property companies (1988) and operates as an internally managed Real Estate
Investment Trust (REIT), based in Rosebank, Johannesburg.
Hyprop is listed on the JSE’s retail REIT sector and directly owns 12 prime shopping centres in major metropolitan
areas across South Africa.
The group’s growing presence in sub-Saharan Africa (excluding South Africa) is held through Atterbury Africa, a joint
venture between Hyprop, Attacq Limited (Attacq) and the Atterbury Group.
Strategy
Hyprop’s strategy is to invest in high-quality shopping centres in sub-Saharan Africa.
The core portfolio consists of premier shopping centres in South Africa, including super regional Canal Walk, large
regional centres, Clearwater Mall, The Glen Shopping Centre, Woodlands Boulevard, CapeGate Shopping Centre, Somerset and
Rosebank Malls and regional centre, Hyde Park Corner.
Held-for-sale
In line with its strategy, Hyprop is in the process of disposing of its stand-alone office portfolio as well as
non-core retail assets, Stoneridge Centre, Willowbridge and CapeGate Lifestyle. As a result, these assets have been
classified as held-for-sale.
Capital structure
Hyprop became a REIT on 1 July 2013. As part of the REIT conversion process, Hyprop’s combined unit structure was
converted to an all share structure. The necessary resolutions were passed by unitholders and the new all share structure
became effective on 18 August 2014. Future distributions will be classified as dividends.
Financial results
Hyprop declared a distribution of 472 cents per unit for the year to 30 June 2014 (the year), an increase of 11,3% on
the corresponding period in 2013.
Distributions for the six months to 30 June 2014 were up 13,1% to 241 cents per unit (six months to 30 June 2013:
213 cents per unit). This was due to strong like-for-like growth from the super and large regional shopping centres,
savings on interest costs and the acquisition of African Land Investments Limited (African Land) in December 2013.
Segmental overview
Audited 12 months ended Unaudited 12 months ended
30 June 2014 30 June 2013
Distributable Distributable
Revenue earnings Revenue earnings
Business Segment R’000 R’000 R’000 R’000
Canal Walk (80%) 545 252 379 254 479 801 346 410
Super regional 545 252 379 254 479 801 346 410
Clearwater Mall 336 499 224 585 309 037 203 135
The Glen (75,15%) 214 218 143 198 197 412 127 320
Woodlands Boulevard 214 842 142 336 188 306 129 340
CapeGate1 203 546 123 395 188 072 118 666
Somerset Mall 166 624 116 017 - -
Large regional 1 135 729 749 531 882 827 578 461
Hyde Park 179 905 120 000 171 465 109 380
Regional 179 905 120 000 171 465 109 380
Atterbury Value Mart 112 551 83 714 101 024 76 341
Willowbridge2 85 797 46 232 78 845 46 200
Stoneridge2 (90%) 67 864 31 042 64 733 30 321
Somerset Value Mart 22 692 14 466 21 270 14 347
Value centres 288 904 175 454 265 872 167 209
Shopping centres 2 149 790 1 424 239 1 799 965 1 201 460
Stand-alone offices3 67 900 42 159 74 495 42 407
Development property4 121 808 63 302 140 105 77 944
Investment property 2 339 498 1 529 700 2 014 565 1 321 811
Listed property securities5 37 265 37 265 148 773 148 773
African Land 77 953 30 308 - -
Dividends received from Hyprop Mauritius6 - 4 770 - 1 434
Word4Word Marketing 15 008 3 180 21 517 2 142
Fund management expenses - (55 139) - (54 331)
Net interest (401 484) (387 702)
Straight-line rental income accrual 45 055 - 39 136 -
Total 2 514 779 1 148 600 2 223 991 1 032 127
1 Includes Lifestyle Centre - held-for-sale
2 Held-for-sale
3 Includes Glenwood, Glenfield and Lakefield - held-for-sale
4 Rosebank Mall and Mall Offices - transferred to development property from September 2012
5 Sycom units - sold in December 2013 and January 2014
6 Hyprop Investments (Mauritius) revenue constitutes interest received of R45,5 million (2013: R8,2 million)
Distributable earnings from regional, large regional and super regional malls (excluding Somerset Mall, acquired
1 October 2013) increased by 9,5%, with average growth of 11,0% from The Glen, Clearwater and Woodlands.
Rosebank Mall continued to be impacted by the redevelopment and distributable earnings decreased by R16,1 million.
This was in line with budget.
Property expenses were well-contained with the cost-to-income ratio marginally lower at 34,4% (June 2013: 34,9%). The
total cost-to-income ratio at a fund level increased to 37,3% from 35,1%. This was due to a reduction in income from
listed investments, following the disposal of the investment in Sycom Property Fund, and the once-off consolidation of
fund management costs relating to African Land.
Net interest paid increased by 3,6% year-on-year. The increase was marginal due to proceeds from disposals, amounting
to R205 million, reducing short-term funding requirements.
Total arrears (excluding Rosebank Mall) at 30 June 2014 were R14,3 million (30 June 2013: R17,1 million). This
constitutes 0,4% (30 June 2013: 0,5%) of rental income and includes Somerset Mall. The corresponding allowance for doubtful
debts was R7,1 million (30 June 2013: R6,7 million).
Vacancies
Vacancies across the retail portfolio, which constitutes 95% of the total portfolio by gross lettable area (GLA)
decreased to 1,2% (30 June 2013: 2,1%). Vacancies in the office portfolio (5% of the total portfolio), increased to 13,8%
(30 June 2013: 8,1%). Subsequent to year-end, vacancies in the office portfolio declined to 9,5%.
% of total GLA
Vacancy profile by sector 30 June 2014 30 June 2013
Retail* 1,2 2,1
Office 13,8 8,1
Total 2,4 2,7
*Excludes Rosebank Mall
Property portfolio
Value per
Value attributable to Hyprop rentable area
Rentable area 30 June 2014 30 June 2013 30 June 2014
Business Segment (m2) R’000 R’000 (R/m2)
Canal Walk (80%) 157 031 6 064 000 5 627 200 48 271
Super regional 157 031 6 064 000 5 627 200 48 271
Clearwater 86 028 3 473 000 3 203 000 40 371
The Glen (75,15%) 76 849 2 059 269 1 854 094 35 654
Woodlands Boulevard 71 617 2 196 000 1 886 000 30 663
CapeGate1 98 567 1 738 000 1 602 000 17 633
Somerset Mall 66 831 2 252 000 33 697
Large regional 399 892 11 718 269 8 545 094 31 006
Hyde Park 38 345 1 769 000 1 556 000 46 134
Regional 38 345 1 769 000 1 556 000 46 134
Atterbury Value Mart 47 786 1 105 000 987 000 23 124
Willowbridge2 43 001 594 000 585 000 13 814
Stoneridge2 (90%) 48 584 432 000 421 200 9 880
Somerset Value Mart 12 386 185 000 185 000 14 936
Value centres 151 757 2 316 000 2 178 200 15 578
Shopping centres 747 025 21 867 269 17 906 494 32 277
Stand-alone offices3 34 114 457 000 442 000 13 396
Development property4 - 1 849 000 1 494 000 -
African Land5 - 1 408 262 - -
Investment property 781 139 25 581 531 19 842 494 -
Listed property securities6 - - 2 279 253 -
Investment in Atterbury Africa - 812 459 336 994 -
781 139 26 393 990 22 458 741 -
1 Includes Lifestyle Centre - held-for-sale
2 Held-for-sale
3 Includes Glenwood, Glenfield and Lakefield - held-for-sale
4 Rosebank Mall and Mall Offices - transferred to development property from September 2012
5 87,01%, (Hyprop’s share) of Manda Hill Shopping Centre
6 Sycom units - sold in December 2013 and January 2014
Investment property
Investment property was independently valued at year end and increased to R25,6 billion (30 June 2013: R19,8 billion).
The increase in value was driven primarily by income growth and the acquisition of Somerset Mall and Manda Hill
Shopping Centre (African Land).
Developments
Rosebank Mall
Rosebank Mall’s redevelopment has progressed significantly towards final completion in September 2014, which will be
marked by the opening of a flagship Woolworths store.
Post year end, store openings included River Island, Edgars, Dischem and Clicks. The centre is fully let and the
total capital cost remains within the budget of R932 million at an estimated yield of 7%.
Other developments
In line with Hyprop’s strategy of maintaining a quality shopping centre portfolio, several tenant relocations,
improvements and refurbishments totaling R58,8 million were undertaken.
Energy saving initiatives
A number of projects aimed at improving energy efficiency were completed during the year. To date, these initiatives
have saved 4,9 million kWh resulting in cost savings of R5,9 million. During the next financial year, Hyprop will
introduce smart metering to further improve monitoring. In addition, a 500kWp solar photovoltaic plant will be installed at
Clearwater Mall at a cost of R8 million, which will be operating by November 2014.
During the year, equipment amounting to R27,9 million was replaced. This will contribute to lower maintenance costs
and improved environmental efficiencies.
Investments in Sub-Saharan Africa (excluding South Africa)
Atterbury Africa
Hyprop received a dividend of R4,8 million from its investment in Atterbury Africa Limited (Atterbury Africa), through
its wholly owned subsidiary Hyprop Investments (Mauritius). Accra Mall in Ghana is currently Atterbury Africa’s only
income-producing property. Hyprop’s investment in Atterbury Africa increased to R812 million (30 June 2013:
R337 million), due to capital contributions for the West Hills development and land acquisitions in Ghana.
Atterbury Africa’s portfolio:
Atterbury Attributable Hyprop’s
Africa value effective
Property GLA (m2) Ownership USD ’000 shareholding Comments
Existing centre
Accra Mall
(Accra, Ghana) 19 000 47% 38 780 17,6% Existing centre, future
expansion planned
Developments
West Hills Mall
(Accra, Ghana) 27 500 45% 29 850 16,8% Opening October 2014
Achimota Mall
(Accra, Ghana) 13 000 75% 5 567 28,1% Construction commenced,
opening October 2015
Kumasi City Mall
(Kumasi, Ghana) 27 000 75% 7 380 28,1% Concluded acquisition of land
rights, design finalised and
pre-letting commenced
Waterfalls Project
(Lusaka, Zambia) 27 500 25% 1 215 9,4% Land holding with development
rights for retail and hotel
African Land
Hyprop received a dividend of R30,3 million from African Land for the year.
Post year end, Hyprop announced the restructure of its investment in African Land (effective 1 July 2014), whereby
Hyprop, through Hyprop Investments (Mauritius), will hold 50% in Manda Hill (Lusaka, Zambia), African Land’s only asset.
Atterbury Africa will hold the balance. Following the restructure, Hyprop’s effective interest in Manda Hill will be
68,75%, down from 87%.
Net asset value
The net asset value per combined unit (NAV) at 30 June 2014 increased by 11,1% to R76.02 (30 June 2013: R68.43). The
increase was primarily due to an increase in the independent valuation of the investment property portfolio.
At 30 June 2014, the closing combined unit price of R79.51 represented a premium of 4,6% to the NAV per combined unit.
Borrowings
30 June 2014 30 June 2013
Rm Rm
SA bank facilities 3 509 3 404
Debt capital market (DCM):
Corporate bonds 1 600 1 150
Commercial paper 697 498
USD debt 1 393 333
Cash and cash equivalents (125) (240)
Net borrowings 7 074 5 145
Gearing 28,4% 22,9%
Net borrowings increased to R7,1 billion at 30 June 2014 (30 June 2013: R5,1 billion) mainly as a result of capital
expenditure on the Rosebank Mall redevelopment, the acquisition of African Land and developments in Atterbury Africa.
Investments in sub-Saharan Africa (excluding South Africa) are financed with US Dollar funding.
At year end, interest rates were hedged in respect of 71,4% (30 June 2013: 87%) of borrowings, at a weighted average
rate of 7,5% (30 June 2013: 8,1%).
Following African Land’s restructure, the ratio of fixed-rate debt will increase to approximately 80% of total debt.
Prospects
Hyprop expects dividend growth of between 10% and 12% for the full year to 30 June 2015.
The guidance is based on the following key assumptions:
- forecast investment property income is based on contractual rental escalations and market related renewals;
- appropriate allowances for vacancies have been incorporated into the forecast; and
- no major corporate and tenant failures will occur.
The forecast has not been reviewed or reported on by the company’s auditors.
Change to company secretary
Following the acquisition of the business of Probity Business Services Proprietary Limited by Computershare Investor
Services Proprietary Limited (Computershare), CIS Company Secretaries Proprietary Limited, a subsidiary of Computershare,
was appointed as company secretary of Hyprop with effect from 2 June 2014.
Payment of dividend
All rental income earned by the company, less property expenses and interest on debt, is distributed to shareholders
semi-annually.
A dividend of 241 cents per share for the six months ended 30 June 2014 will be paid to shareholders as follows:
September 2014
Last day to trade cum dividend Thursday, 18
Shares trade ex dividend Friday, 19
Record date Friday, 26
Payment date Monday, 29
Shareholders may not dematerialise or rematerialise their shares between Friday, 19 September 2014 and
Friday, 26 September 2014, both days inclusive. In respect of dematerialised shareholders, the dividend will be
transferred to the CSDP accounts/broker accounts on Monday, 29 September 2014. Certificated shareholders' dividend
payments will be posted on or about Monday, 29 September 2014. An announcement relating to the tax treatment of the
dividend will be released separately.
Basis of preparation
These summarised audited consolidated results for the year ended 30 June 2014 have been prepared in accordance with
International Financial Reporting Standards (“IFRS”), International Accounting Standard IAS34 ‘Interim Financial
Reporting’, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Standards Council, the JSE Listings Requirements and the South African Companies Act,
2008.
The accounting policies applied in the preparation of these results are consistent with those applied in the audited
financial statements for the prior financial period.
The gain on bargain purchase amounting to R102,9 million relates to Hyprop’s acquisition of African Land and was
calculated in terms of IFRS 3 ‘Business Combinations’. The gain represents the amount by which the fair value of net assets
acquired exceeds the consideration paid and has no impact on distributable earnings. The initial accounting for the
business combination at 31 December 2013 was based on provisional amounts which resulted in a reported gain on bargain
purchase of R64,8 million. The gain on bargain purchase at 30 June 2014 was adjusted retrospectively in accordance with
IFRS3.45.
Grant Thornton has audited the group annual financial statements. Their unqualified audit report is available from
the registered office of the company.
These summarised audited consolidated results for the year ended 30 June 2014 have been extracted from the audited
group annual financial statements. The auditor’s report does not necessarily cover all of the information included in this
announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditors work, they should obtain a copy of the auditor’s report together with the accompanying financial information from the
registered office of the company.
Preparation of the financial information was supervised by Laurence Cohen CA(SA) in his capacity as Financial Director.
On behalf of the board
GR Tipper PG Prinsloo
Chairman CEO
29 August 2014
Company information
Directors:
GR Tipper*† (chairman); PG Prinsloo (CEO); LR Cohen (FD); EG Dube*†; KM Ellerine*; L Engelbrecht*†; MJ Lewin*†;
TV Mokgatlha*†; L Norval*; S Shaw-Taylor*; LLS van der Watt*† (*Non-executive †Independent)
Registered office:
2nd floor, Cradock Heights, 21 Cradock Avenue, Rosebank
(PO Box 52509, Saxonwold, 2132)
Transfer secretaries
Computershare Investor Services Proprietary Limited,
Ground Floor, 70 Marshall street, Johannesburg
(PO Box 61051, Marshalltown, 2107)
Company secretary
CIS Company Secretaries Proprietary Limited
Sponsor
Java Capital
Investor relations
Nikki Catrakilis-Wagner
011 447 0090
www.hyprop.co.za
Date: 29/08/2014 08:02:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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