Wrap Text
Summarised unaudited consolidated interim results for the six months ended 31 December 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 unaudited consolidated interim results for the six months ended 31 December 2014
- Dividend up 13,7%
- Total return (six months) 25,9%
- Investments in sub-Saharan Africa (excluding South Africa) R2 billion
- Rosebank Mall redevelopment completed
Statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2014 2013 2014
R’000 R’000 R’000
Revenue 1 312 270 1 171 491 2 514 779
Investment property income 1 280 476 1 114 638 2 432 459
Straight-line rental income accrual 31 794 19 588 45 055
Listed property securities income 37 265 37 265
Property expenses (409 864) (369 386) (837 822)
Net property income 902 406 802 105 1 676 957
Other operating expenses (36 771) (28 733) (82 480)
Operating income 865 635 773 372 1 594 477
Net interest (182 109) (185 160) (394 721)
Received 81 570 27 471 65 645
Paid (263 679) (212 631) (460 366)
Net operating income 683 526 588 212 1 199 756
Change in fair value 661 190 526 270 1 532 852
Investment property 722 121 658 494 1 655 897
Straight-line rental income accrual (31 794) (19 588) (45 055)
Listed property securities (on disposal) (82 881) (82 266)
Derivative instruments (29 137) (29 755) 4 276
(Loss)/profit on disposal (28 795) 191 628 190 760
Subsidiary (African Land) (28 767)
Investment property (28) 4 607 4 460
Associates 17 431 17 431
Listed property securities 169 590 168 869
Amortisation of debenture premium 47 350 102 806
Gain on bargain purchase (African Land) 64 802 102 895
Impairment of goodwill (7 779)
Income before debenture interest 1 315 921 1 418 262 3 121 290
Debenture interest (561 922) (1 147 443)
Net income before share of income from
joint ventures and associates 1 315 921 856 340 1 973 847
Share of income from joint ventures 2 182
Share of income from associates 562 462
Profit before taxation 1 318 665 856 340 1 974 309
Taxation (7 650) (493) (17 719)
Profit for the period/year 1 311 015 855 847 1 956 590
Other comprehensive income
Exchange differences on translation of
foreign operations 3 137 10 484 8 894
Total comprehensive income for the period/year 1 314 152 866 331 1 965 484
Total profit for the period attributable to:
Shareholders of the company 1 311 015 855 285 1 948 487
Non-controlling interests 562 8 103
Profit for the period/year 1 311 015 855 847 1 956 590
Total comprehensive income attributable to:
Shareholders of the company 1 314 152 865 769 1 956 248
Non-controlling interests 562 9 236
Total comprehensive income for the period/year 1 314 152 866 331 1 965 484
Abridged reconciliation - headline earnings
and distributable earnings
Net income after taxation 1 311 015 855 847 1 948 487
Debenture interest 561 922 1 147 443
Earnings 1 311 015 1 417 769 3 095 930
Headline earnings adjustments (693 326) (792 684) (1 870 232)
Change in fair value of investment property (722 121) (658 494) (1 650 419)
Loss/(profit) on disposal: Investment in subsidiary 28 767
Investment property 28 (4 607) (4 460)
Associate company (Mantrablox) (17 431) (17 431)
Amortisation of debenture premium (47 350) (102 806)
Gain on bargain purchase (African Land) (64 802) (102 895)
Impairment of goodwill 7 779
Headline earnings 617 689 625 085 1 225 698
Distributable earnings adjustments 20 944 (63 199) (77 098)
Change in fair value: Derivative instruments 29 137 29 755 (4 276)
Listed property securities 82 881 82 266
Profit on disposal of listed property securities (169 590) (168 869)
Net income: Hyprop Investments (Mauritius) (28 408) (8 353) (20 929)
Manda Hill (8 068) (4 324) (17 590)
Income received: Hyprop Investments (Mauritius) 20 975 2 486 4 770
African Land 3 762 30 308
Capital items 87 184 1 325
Taxation 7 221
Deferred taxation (listed property securities and other) 15 897
Distributable earnings 638 633 561 886 1 148 600
Total shares in issue 243 256 092 243 256 092 243 256 092
Weighted average shares in issue 243 256 092 243 136 472 243 195 790
Basic and diluted earnings per share (cents) 538,9 583,1 1 273,0
Basic and diluted headline earnings per share (cents) 253,9 257,1 504,0
Distribution details
Total distribution per share for the year (cents) 262,7 231,0 472,0
Six months ended 30 June (cents) 241,0
Six months ended 31 December (cents) 262,7 231,0 231,0
Statement of financial position
Unaudited Unaudited Audited
31 December 31 December 30 June
2014 2013 2014
R’000 R’000 R’000
Assets
Non-current assets 25 399 492 25 218 389 24 931 191
Investment property 23 270 523 24 539 960 23 998 182
Building appurtenances and tenant installations 70 610 85 849 82 692
Investments in sub-Saharan Africa (excluding South Africa) 2 031 121 579 102 812 459
Shareholder loans 1 929 253 579 102 812 459
Investment in joint ventures 101 868
Investment in associates 736 137 600
Goodwill 4 280 12 059 4 280
Derivative instruments 22 222 1 282 32 978
Current assets 250 339 431 283 228 525
Receivables 86 279 159 653 103 686
Loan receivable 47 146 157 561 47 486
Cash and cash equivalents 116 914 114 069 77 353
Non-current assets held-for-sale 1 737 182 51 982 1 705 236
Investment property 1 737 182 1 705 236
Listed property securities 51 982
Total assets 27 387 013 25 701 654 26 864 952
Equity and liabilities 19 823 075 11 803 062 12 905 543
Share capital and reserves 19 823 075 11 679 616 12 772 306
Non-controlling interest (African Land) 123 446 133 237
Liabilities
Non-current liabilities 5 354 511 11 339 596 10 992 517
Debentures and debenture premium 5 785 643 5 719 119
Interest-bearing liabilities 5 248 358 5 479 952 5 185 822
Derivative instruments 60 406 44 110 41 829
Deferred taxation 45 747 29 891 45 747
Current liabilities 2 209 427 2 558 996 2 966 892
Payables 396 483 482 259 367 984
Interest-bearing liabilities 1 812 944 1 514 815 2 013 031
Combined unitholders for distribution 561 922 585 877
Total liabilities 7 563 938 13 898 592 13 959 409
Total equity and liabilities 27 387 013 25 701 654 26 864 952
Net asset value per share (R) 81,49 71,80 76,02
Abridged statement of changes in equity
Unaudited Unaudited Audited
31 December 31 December 30 June
2014 2013 2014
R’000 R’000 R’000
Balance at beginning of period/year 12 905 543 10 814 409 10 814 409
Total profit for the period/year 1 311 015 855 285 1 948 487
Capital restructure 5 719 119
Non-controlling interest (African Land) 123 446 137 776
Buy-back of African Land shares from
non-controlling interest (118 025)
Dividends (1 063) (562) (4 539)
Share-based payment reserve 3 349 1 649
Foreign currency translation reserve 3 137 10 484 7 761
Balance at end of period/year 19 823 075 11 803 062 12 905 543
Abridged statement of cash flows
Unaudited Unaudited Audited
31 December 31 December 30 June
2014 2013 2014
R’000 R’000 R’000
Cash flows from operating activities 56 390 161 995 218 169
Cash generated from operations 884 644 885 974 1 725 345
Interest received 43 014 27 471 65 645
Interest paid (285 391) (233 061) (482 496)
Taxation paid (558) (7 607)
Distribution to combined unitholders (517 831) (1 079 397)
Dividends paid (585 877) (3 321)
Cash flows from investing activities (1 424 950) (1 167 223) (1 392 333)
Cash flows from financing activities 1 408 530 1 021 767 1 179 506
Net increase in cash and cash equivalents 39 970 16 539 5 342
Cash acquired with subsidiary 22 709
Translation effects on cash and
cash equivalents of foreign entities 145
Cash reallocated to assets held-for-sale (409) (2 955)
Cash and cash equivalents at beginning of period/year 77 353 74 821 74 821
Cash and cash equivalents at end of period/year 116 914 114 069 77 353
COMMENTARY
INTRODUCTION
Hyprop is Africa’s leading specialist shopping centre Real Estate Investment Trust (REIT). It is also one of South
Africa’s oldest listed property companies (1988) and operates an internally managed portfolio of shopping centres in major
metropolitan areas across South Africa.
Hyprop’s growing presence in sub-Saharan Africa (excluding South Africa) is held through AttAfrica, a joint venture
between Hyprop, Attacq Limited (Attacq) and the Atterbury Group, and through Manda Hill Mauritius, a joint venture between
Hyprop and AttAfrica.
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. The portfolio also includes interests in Accra Mall and Westhills
Mall (both in Accra, Ghana), and Manda Hill Centre in Lusaka, Zambia.
FINANCIAL RESULTS
Hyprop has declared a dividend of 262,7 cents per share for the six months ended 31 December 2014 (“the period”), an
increase of 13,7% on the corresponding period in 2013.
DISTRIBUTABLE EARNINGS STATEMENT
6 months ended 6 months ended
31 December 2014 31 December 2013
Business segment Distributable Distributable
Revenue earnings Revenue earnings
R’000 R’000 R’000 R’000
Canal Walk (80%) 278 973 201 027 257 115 186 424
Super regional 278 973 201 027 257 115 186 424
Clearwater Mall 173 588 123 078 161 384 111 130
Woodlands Boulevard 112 939 77 980 104 677 71 628
Somerset Mall 109 795 78 684 52 677 39 124
Rosebank Mall 107 732 68 945 58 053 28 122
The Glen (75,15%) 107 401 74 917 102 543 69 260
CapeGate 80 129 45 982 74 751 43 707
Large regional 691 584 469 586 554 085 362 971
Hyde Park 92 446 63 997 91 355 61 853
Regional 92 446 63 997 91 355 61 853
Atterbury Value Mart 57 742 43 791 53 644 40 455
Willowbridge1 44 744 25 537 41 610 24 108
Stoneridge1 (90%) 35 946 18 304 32 871 15 146
CapeGate Lifestyle1 23 053 16 038 23 126 16 107
Somerset Value Mart 11 818 7 770 10 920 7 226
Value centres 173 303 111 440 162 171 103 042
Shopping centres 1 236 306 846 050 1 064 726 714 290
Stand-alone offices2 35 480 21 750 34 067 21 680
Investment property 1 271 786 867 800 1 098 793 735 970
Investments in sub-Saharan Africa
(excluding South Africa) 20 975 9 262 6 248
Listed property securities3 37 267 37 267
Word4Word Marketing 8 690 1 563 6 581 1 229
Fund management expenses (30 802) (25 119)
Net interest (220 903) (193 709)
Straight-line rental income accrual 31 794 19 588
Total 1 312 270 638 633 1 171 491 561 886
1 Held-for-sale
2 Includes Glenwood, Glenfield and Lakefield - held-for-sale
3 Sycom units - sold
Revenue and distributable earnings from investment property (excluding Somerset Mall, acquired 1 October 2013)
increased by 11,1% and 13,2%, respectively.
Rosebank Mall was transferred from development property to investment property, effective 1 July 2014 and the
capitalisation of interest on the redevelopment ceased on the same date. The majority of incremental income from the
redevelopment was earned from 1 October 2014.
The property cost-to-income ratio, affected by timing differences, was lower at 32,0% (June 2014: 34,4%). The total
cost-to-income ratio at a fund level reduced to 34,9% from 37,3%, in part due to the deconsolidation of fund management
costs relating to African Land, following its restructure.
Net interest increased by 14,0%, mainly due to capital expenditure on Rosebank Mall and the acquisition of Manda Hill.
Total arrears at 31 December 2014 were R21,4 million (30 June 2014: R19,2 million, including Rosebank Mall). This
constitutes 0,5% (30 June 2014: 0,5%) of rental income. The corresponding allowance for doubtful debts was R11,3 million
(30 June 2014: R8,8 million).
Vacancies
Vacancies across the retail portfolio increased marginally to 1,4% (30 June 2014: 1,2%). The retail vacancy percentage
now includes Rosebank Mall.
Vacancies in the office portfolio (9% of the total portfolio by rentable area), reduced to 6,6% (30 June 2014: 13,8%),
mainly due to new lettings at Lakefield Office Park and Canal Walk offices.
% of total rentable area
31 December 30 June
Vacancy by sector 2014 2014
Retail 1,4 1,2*
Office 6,6 13,8
Total 1,8 2,4
* 30 June 2014 excludes Rosebank Mall
PROPERTY PORTFOLIO
Value per
Value attributable to Hyprop rentable area
Business segment Rentable 31 December 30 June 31 December
area 2014 2014 2014
(m2) R’000 R’000 (R/m2)
Canal Walk (80%) 156 903 6 208 000 6 064 000 49 457
Super regional 156 903 6 208 000 6 064 000 49 457
Clearwater 86 061 3 641 000 3 473 000 42 307
The Glen (75,15%) 79 671 2 126 909 2 059 269 35 521
Woodlands Boulevard 71 620 2 239 000 2 196 000 31 262
Rosebank Mall 80 878 2 181 000 1 849 000 26 967
CapeGate1 93 494 1 779 000 1 738 000 19 028
Somerset Mall 66 339 2 263 000 2 252 000 34 113
Large regional 478 063 14 229 909 13 567 269 31 236
Hyde Park 38 386 1 855 000 1 769 000 48 325
Regional 38 386 1 855 000 1 769 000 48 325
Atterbury Value Mart 47 783 1 088 000 1 105 000 22 769
Willowbridge2 42 499 615 000 594 000 14 471
Stoneridge2 (90%) 48 584 434 700 432 000 9 941
Somerset Value Mart 12 546 187 000 185 000 14 905
Value centres 151 412 2 324 700 2 316 000 15 673
Shopping centres 824 764 24 617 609 23 716 269 32 641
Stand-alone offices3 34 257 489 000 457 000 13 340
Investment property 859 021 25 106 609 24 173 269 31 871
Investments in sub-Saharan Africa
(excluding South Africa) 2 031 121 2 220 721
Total property assets 859 021 27 137 730 26 393 990
1 Includes Lifestyle Centre - held-for-sale
2 Held-for-sale
3 Includes Glenwood, Glenfield and Lakefield - held-for-sale
Investment property was independently valued at 31 December 2014 at R25,1 billion (30 June 2014: R24,2 billion), an
increase of 3,9%. The increase in value was primarily due to income growth.
Total investments in sub-Saharan Africa (excluding South Africa) reduced marginally, due to a dilution in Hyprop’s effective
interest in Manda Hill Centre in Lusaka, Zambia, to 68,8% (30 June 2014: 87,0%), following the restructure of African Land.
DEVELOPMENTS
Rosebank Mall
The redevelopment of Rosebank Mall reached final completion at the end of September 2014, with the successful opening
of Woolworths. The centre recorded good trading results during the holiday period.
Other developments
Smaller refurbishment projects at Hyde Park, Canal Walk, Willowbridge and CapeGate, totalling R54,8 million, were
completed during the period.
Construction has commenced on the extensions of the Woolworths’ stores at Canal Walk and Somerset Mall, including
additional parking, at a combined cost of R112 million and an average forward yield of 8,3%.
Energy saving initiatives
The 500kWp solar pv plant at Clearwater Mall started operating in November 2014. The initial results are positive and
further projects are being planned. Hyprop also commenced the installation of smart metering at its shopping centres. These
initiatives contributed to Hyprop’s inclusion on the JSE SRI Index for the first time.
In response to the frequent electricity outages, Hyprop will be installing additional generators at those shopping
centres that currently do not have full electricity back-up, to ensure uninterrupted trading for shoppers. The costs
associated with the installation of additional back-up power is not anticipated to be material.
DISPOSALS
As previously announced, Hyprop began a process in 2014 to dispose of non-core assets, including its stand-alone
office portfolio and retail assets Stoneridge, Willowbridge, CapeGate Lifestyle and CapeGate Value Centre.
To date, the following properties have been sold:
Sale price
Rm
CapeGate Value Centre 30
CapeGate Lifestyle Centre 323
Stoneridge 480
Total 833
CapeGate Value Centre was transferred in December 2014, while transfer of the CapeGate Lifestyle Centre is anticipated
in March 2015. The sale of Stoneridge Centre is still subject to approval by the competition authorities. The proceeds
on sale will be applied to reduce debt.
Efforts to sell Willowbridge Centre and the stand-alone office portfolio are continuing.
INVESTMENTS IN SUB-SAHARAN AFRICA (EXCLUDING SOUTH AFRICA)
Following the restructure of African Land, effective 1 July 2014, all investments in sub-Saharan Africa (excluding
South Africa) are held through Hyprop Investments Mauritius, a wholly owned subsidiary of Hyprop.
Income-producing properties
6 months
31 December
Hyprop’s 31 December 2014
Rentable effective 2014 Distributable
area shareholding Investment earnings1
(m2) (%) (R’000) (R’000)
Accra Mall (Accra, Ghana) 19 000 17,6 217 021 3 587
West Hills Mall (Accra, Ghana) 27 500 16,8 483 444 1 578
Manda Hill (Lusaka, Zambia) 44 000 68,8 953 671 16 075
Expenses 38 230 (265)
90 500 1 692 366 20 975
Loans advanced to AttAfrica for developments
(not yet income producing) 257 230
Capitalised interest 76 481
Other 5 044
Total investment 2 031 121
1 After interest on funding costs in Hyprop Investments Mauritius
West Hills Mall in Accra, Ghana, successfully opened in November 2014, within budget.
Development properties
Hyprop’s Hyprop’s
Rentable effective effective Anticipated
area shareholding cost yield
Centre name (m²) (%) (USD’000) (%) Comments
Achimota Mall (Accra, Ghana) 13 400 28,1 25 674 9,2 Under construction
- opening October 2015
Kumasi City Mall (Kumasi, Ghana) 29 000 28,1 56 301 9,3 Pre-letting underway,
two-year construction period
Waterfalls Project (Lusaka, Zambia) 9,4 1 031 Land holding
- no definite time frame
NET ASSET VALUE
The net asset value per share (NAV) at 31 December 2014 increased by 7,2% to R81,49 (30 June 2014: R76,02). The
increase was due in part to an increase in the independent valuation of the investment property portfolio.
The first-time non-accrual for the interim dividend, amounting to R639 million (in accordance with industry best
practice), also contributed to the increase in NAV per share. On a like-for-like basis (excluding the effect of the
non-accrual of the interim dividend), growth in NAV per share was 3,9%.
At 31 December 2014, the closing share price of R97,50 represented a premium of 19,6% to the NAV per share.
BORROWINGS
31 December 30 June
2014 2014
Rm Rm
South African bank facilities 2 684 3 509
Debt capital market debt (DCM):
Corporate bonds 1 800 1 600
Commercial paper 690 697
USD debt (Rand equivalent) 1 886 1 393
Cash and cash equivalents (164) (125)
Net borrowings 6 896 7 074
Loan-to-value 25,4% 26,6%
Investments in sub-Saharan Africa (excluding South Africa) are financed with US Dollar funding. Net borrowings reduced
marginally, due to the deconsolidation of ‘in-country’ debt relating to Manda Hill, Zambia.
At 31 December 2014 (following African Land’s restructure), interest rates were hedged in respect of 88,3%
(30 June 2014: 71,4%) of borrowings, at a weighted average rate of 7,3% (30 June 2014: 7,5%), for an average 5,1 years
(30 June 2014: 4,2 years).
Subsequent to period-end, the average maturity profile of fixed rate agreements and swaps increased to 5,6 years,
following the extension of existing swaps.
Debt capital market funding at 31 December 2014 was 35% of total debt (30 June 2014: 32%).
The loan-to-value ratio at 30 June 2014 (26,6%) was restated (from 28,4%) due to the previous exclusion of investment
property held-for-sale from total property assets in the June 2014 year-end results. The restatement relates to the
loan-to-value ratio only - the financial statements (at 31 December 2014 and 30 June 2014) were not impacted by the
restatement.
PROSPECTS
Hyprop expects dividend growth of between 12% and 15% for the full year to 30 June 2015. This is an upward revision
from the guidance provided in August 2014 of between 10% and 12%.
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 independent external auditors.
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 262,7 cents per share for the six months ended 31 December 2014 will be paid to shareholders as follows:
March 2015
Last day to trade cum dividend Friday, 20
Shares trade ex dividend Monday, 23
Record date Friday, 27
Payment date Monday, 30
Shareholders may not dematerialise or rematerialise their shares between Monday, 23 March 2015 and Friday, 27 March 2015,
both days inclusive. In respect of dematerialised shareholders, the dividend will be transferred to the CSDP
accounts/broker accounts on Monday, 30 March 2015. Certificated shareholders’ dividend payments will be posted on or about
Monday, 30 March 2015.
An announcement relating to the tax treatment of the dividend will be released separately.
BASIS OF PREPARATION
These results have been prepared in accordance with the International Financial Reporting Standard, IAS 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the requirements
of the Companies Act of South Africa.
All amendments to standards applicable for Hyprop’s financial period beginning on 1 July 2014 have been considered.
Based on management’s assessment, the following new amendments do not have a material impact on the group’s interim
financial statements:
IFRS 2 Share-based Payments IAS 19 Employee Benefits
IFRS 3 Business Combinations IAS 24 Related Party Disclosure
IFRS 8 Operating Segments IAS 27 Consolidated and Separate Financial Statements
IFRS 10 Consolidated Financial Statements IAS 36 Impairment of Assets
IFRS 12 Disclosure of Interest in Other Entities IAS 40 Investment Property
IFRS 13 Fair Value Measurement
Other than the amendments, all accounting policies applied in the preparation of these interim financial statements
are consistent with those applied by Hyprop in its consolidated financial statements for the year ended 30 June 2014.
These interim financial statements have not been reviewed or audited by Hyprop’s independent external auditors.
Preparation of the interim financial statements was supervised by Laurence Cohen CA(SA) in his capacity as Financial
Director.
On behalf of the board
GR Tipper PG Prinsloo
Chairman CEO 23 February 2015
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: Viki Watson (Telephone: 011 447 0090).
www.hyprop.co.za
Date: 23/02/2015 11:20:00 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.
Sharenet Sites 
