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Summarised audited consolidated results for the year ended 30 June 2015
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 2015
Highlights
- Dividend up 15,0%
- Total return 59,0%
- Like-for-like NAV up 13,4%
- 95% of debt fixed for 5,2 years
- Strong performance from Rosebank Mall
Statement of comprehensive income
Audited Audited
12 months 12 months
30 June 2015 30 June 2014
R000 R000
Revenue 2 703 034 2 514 779
Investment property income 2 642 949 2 432 459
Straight-line rental income accrual 60 085 45 055
Listed property securities income 37 265
Property expenses (887 918) (837 822)
Net property income 1 815 116 1 676 957
Other operating expenses (64 611) (82 480)
Operating income 1 750 505 1 594 477
Net interest (351 647) (394 721)
Received 157 344 65 645
Paid (508 991) (460 366)
Net operating income 1 398 858 1 199 756
Change in fair value 2 426 584 1 532 852
Investment property 2 467 113 1 655 897
Straight-line rental income accrual (60 085) (45 055)
Listed property securities (on disposal) (82 266)
Derivative instruments 19 556 4 276
(Loss)/profit on disposal (5 768) 190 760
Investment in subsidiary (30 011)
Investment property 24 243 4 460
Associate 17 431
Listed property securities 168 869
Amortisation of debenture premium 102 806
Gain on bargain purchase (African Land) 102 895
Impairment of goodwill (4 280) (7 779)
Income before debenture interest 3 815 394 3 121 290
Debenture interest (1 147 443)
Net income before equity-accounted investments 3 815 394 1 973 847
Share of loss from joint ventures (17 447)
Share of income from associate 652 462
Profit before taxation 3 798 599 1 974 309
Taxation (19 023) (17 719)
Profit for the year 3 779 576 1 956 590
Other comprehensive income
Exchange differences on translation of foreign operations 5 329 8 894
Total comprehensive income for the year 3 784 905 1 965 484
Total profit for the year attributable to:
Shareholders of the company 3 779 576 1 948 487
Non-controlling interests 8 103
Profit for the year 3 779 576 1 956 590
Total comprehensive income attributable to:
Shareholders of the company 3 784 905 1 956 248
Non-controlling interests 9 236
Total comprehensive income for the year 3 784 905 1 965 484
Reconciliation to distributable earnings
Audited Audited
12 months 12 months
30 June 2015 30 June 2014
R000 R000
Abridged reconciliation - headline earnings and
distributable earnings
Net income after taxation 3 779 576 1 948 487
Debenture interest 1 147 443
Earnings 3 779 576 3 095 930
Headline earnings adjustments (2 457 065) (1 870 232)
Change in fair value of investment property (2 467 113) (1 650 419)
(Loss)/profit on disposal: Investment in subsidiary 30 011
Investment property (24 243) (4 460)
Associate company (Mantrablox) (17 431)
Amortisation of debenture premium (102 806)
Gain on bargain purchase (African Land) (102 895)
Impairment of goodwill 4 280 7 779
Headline earnings 1 322 511 1 225 698
Distributable earnings adjustments (2 892) (77 098)
Change in fair value: Derivative instruments (19 556) (4 276)
Listed property securities 82 266
Profit on disposal of listed property securities (168 869)
Investments in sub-Saharan Africa (excluding SA) (35) (3 441)
Investments in SA subsidiaries (2 945)
Capital items 620 1 325
Taxation 12 387
Deferred taxation 6 637 15 897
Distributable earnings 1 319 619 1 148 600
Total shares in issue 243 256 092 243 256 092
Weighted average shares in issue 243 256 092 243 195 790
Total shares in issue for distribution per share
(excluding treasury shares) 242 990 433 243 102 433
Basic and diluted earnings per share (cents) 1 553,7 1 273,0
Basic and diluted headline earnings per share (cents) 543,7 504,0
Distribution details
Total distribution for the year (cents) 543,0 472,0
Six months ended 30 June (cents) 280,3 241,0
Six months ended 31 December (cents) 262,7 231,0
Statement of financial position
Audited Audited
30 June 2015 30 June 2014
R000 R000
Assets
Non-current assets 27 395 984 24 931 191
Investment property 24 925 604 23 998 182
Building appurtenances and tenant installations 77 300 82 692
Investments in sub-Saharan Africa (excluding SA) 2 339 121 812 459
Investment in associate 827 600
Goodwill 4 280
Derivative instruments 53 132 32 978
Current assets 224 750 228 525
Receivables 87 152 103 686
Loans receivable 53 757 47 486
Cash and cash equivalents 83 841 77 353
Non-current assets held for sale 1 235 062 1 758 991
Total assets 28 855 796 26 918 707
Equity 21 658 721 12 905 543
Stated capital and reserves 21 658 721 12 772 306
Non-controlling interest (African Land) 133 237
Liabilities
Non-current liabilities 6 012 830 10 992 517
Interest-bearing liabilities 5 919 909 5 185 822
Derivative instruments 40 123 41 829
Deferred taxation 52 798 45 747
Debentures and debenture premium 5 719 119
Current liabilities 1 162 678 2 966 892
Payables 388 049 367 984
Interest-bearing liabilities 772 000 2 013 031
Derivative instruments 2 629
Combined unitholders for distribution 585 877
Liabilities directly associated with non-current
assets held for sale 21 567 53 755
Total liabilities 7 197 075 14 013 164
Total equity and liabilities 28 855 796 26 918 707
Net asset value per share (R) 89,04 76,02
Abridged statement of changes in equity
Audited Audited
30 June 2015 30 June 2014
R000 R000
Balance at beginning of year 12 905 543 10 814 409
Total profit for the year 3 779 576 1 948 487
Capital restructure 5 719 119
Non-controlling interest (African Land) 137 776
Buy-back of African Land shares from non-controlling interest (118 024)
Dividends (639 529) (4 539)
Share-based payment reserve 6 707 1 649
Foreign currency translation reserve 5 329 7 761
Balance at end of year 21 658 721 12 905 543
Abridged statement of cash flows
Audited Audited
30 June 2015 30 June 2014
R000 R000
Cash flows from operating activities 97 774 218 169
Cash generated from operations 1 738 764 1 725 345
Interest received 105 084 65 645
Interest paid (518 610) (482 496)
Taxation paid (2 553) (7 607)
Debenture interest paid (585 877) (1 079 397)
Dividends paid (639 034) (3 321)
Cash flows from investing activities 667 056 (1 392 333)
Cash flows from financing activities (752 412) 1 179 506
Net increase in cash and cash equivalents 12 418 5 342
Translation effects on cash and cash equivalents of
foreign entities (5 294) 145
Cash reallocated to assets held for sale (636) (2 955)
Cash and cash equivalents at beginning of year 77 353 74 821
Cash and cash equivalents at end of year 83 841 77 353
COMMENTARY
INTRODUCTION
Hyprop, Africa’s leading specialist shopping centre Real Estate Investment Trust (REIT), operates an internally
managed portfolio of shopping centres in major metropolitan areas across South Africa. Hyprop also has a growing presence in
sub-Saharan Africa (excluding SA), through a joint venture with Attacq Limited (Attacq) and the Atterbury Group.
The core portfolio consists of premier shopping centres in South Africa, including super regional centre 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 West Hills Mall (both in Accra, Ghana), and Manda Hill Centre
in Lusaka, Zambia.
FINANCIAL RESULTS
Hyprop has declared a dividend of 280,3 cents per share for the six months ended 30 June 2015, an increase of 16,3% on
the corresponding period in 2014. The total distribution for the year of 543 cents per share is an increase of 15,0% on
the prior year.
DISTRIBUTABLE EARNINGS STATEMENT
Audited 12 months ended Audited 12 months ended
30 June 2015 30 June 2014
Business segment Distributable Distributable
Revenue earnings Revenue earnings
R000 R000 R000 R000
Canal Walk (80%) 579 188 412 308 545 252 379 254
Clearwater Mall 358 011 245 039 336 499 224 585
Rosebank Mall 234 353 149 665 121 808 63 302
Woodlands Boulevard 231 701 152 821 214 842 142 336
Somerset Mall 231 100 159 387 166 624 116 017
The Glen (75,15%) 218 999 153 796 214 218 143 198
Hyde Park Corner 199 074 130 900 179 905 120 000
CapeGate 167 562 96 472 157 166 91 674
Shopping centres 2 219 988 1 500 388 1 936 314 1 280 366
Atterbury Value Mart 120 286 89 544 112 551 83 714
Willowbridge1 90 746 49 793 85 797 46 232
Somerset Value Mart1 23 784 15 308 22 692 14 466
Value centres 234 816 154 645 221 040 144 412
Stoneridge2 (90%) 56 275 29 110 67 864 31 042
CapeGate Lifestyle2 32 937 22 178 46 380 31 721
Properties sold 89 212 51 288 114 244 62 763
Total retail 2 544 016 1 706 321 2 271 598 1 487 541
Standalone offices3 73 126 45 866 67 900 42 159
Investment property 2 617 142 1 752 187 2 339 498 1 529 700
Investments in sub-Saharan Africa (excluding SA) 42 368 77 953 35 078
Listed property securities4 37 265 37 265
Word4Word Marketing 25 807 4 243 15 008 3 180
Fund management expenses (62 001) (55 139)
Net interest (417 178) (401 484)
Straight-line rental income accrual 60 085 45 055
Total 2 703 034 1 319 619 2 514 779 1 148 600
1 Held for sale
2 Sold during the 2015 financial year
3 Includes Glenwood, Glenfield and Lakefield - held for sale
4 Sycom units - sold
Total revenue and distributable earnings from investment property increased by 11,9% and 14,5% respectively,
benefiting from increased income from Rosebank Mall, the inclusion of income from Somerset Mall (acquired 1 October 2013) for the
full year and tight control of operating expenses. Like-for-like revenue and distributable earnings from investment
property increased by 6,5% and 8,1% respectively.
Rosebank Mall was transferred from development property to investment property on 1 July 2014. The majority of
incremental income from the redevelopment was earned from 1 October 2014.
Distributable earnings from the investments in sub-Saharan Africa (excluding SA) increased by 20,8% to R42,4 million,
in part due to income from Manda Hill (Lusaka, Zambia - effective December 2013) and from West Hills Mall (Accra, Ghana
- effective November 2014). Income from the investments in sub-Saharan Africa (excluding SA) benefited from exchange
gains of R2,3 million.
The property cost-to-income ratio reduced to 33,6% (June 2014: 34,4%). The total cost-to-income ratio at a fund level
reduced to 36,0% (June 2014: 37,3%).
The 3,9% increase in net interest costs for the year was limited by applying the proceeds of non-core asset sales
(Stoneridge and CapeGate Value and Lifestyle centres) to the repayment of debt.
Total arrears at 30 June 2015 were R19,4 million (30 June 2014: R19,2 million). This constitutes 0,6% (30 June 2014:
0,5%) of rental income. The corresponding allowance for doubtful debts was R10,7 million (30 June 2014: R8,8 million).
Vacancies
Vacancies in the retail portfolio (including Rosebank Mall) increased marginally to 1,3% (30 June 2014: 1,2%).
Vacancies in the office portfolio (9,7% of the total portfolio by rentable area) reduced to 8,3% (30 June 2014: 13,8%), mainly
due to new lettings at the Lakefield Office Park and Canal Walk offices.
% of total rentable area
Vacancy by sector 30 June 2015 30 June 2014
Retail 1,3 1,2*
Office 8,3 13,8
Total 2,0 2,4
*30 June 2014 excludes Rosebank Mall
PROPERTY PORTFOLIO
Value per
Value attributable to Hyprop rentable area
Rentable area 30 June 2015 30 June 2014 30 June 2015
Business segment m2 R000 R000 R/m2
Canal Walk (80%) 156 689 6 732 800 6 064 000 53 711
Clearwater Mall 86 081 3 944 000 3 473 000 45 817
Rosebank Mall 80 712 2 495 000 1 849 000 30 912
Somerset Mall 66 354 2 450 000 2 252 000 36 923
The Glen (75,15%) 79 665 2 329 830 2 059 269 38 913
Woodlands Boulevard 71 659 2 296 000 2 196 000 32 041
Hyde Park Corner 38 117 2 009 000 1 769 000 52 706
CapeGate1 63 700 1 534 000 1 738 000 24 082
Shopping centres 642 977 23 790 630 21 400 269 40 816
Atterbury Value Mart 47 785 1 112 000 1 105 000 23 271
Willowbridge4 42 378 622 000 594 000 14 677
Somerset Value Mart4 12 546 193 000 185 000 15 383
Stoneridge2 (90%) 432 000
Value centres 102 709 1 927 000 2 316 000 18 762
Total retail 745 686 25 717 630 23 716 269 37 779
Standalone offices3 34 386 508 775 457 000 14 796
Investment property 780 072 26 226 405 24 173 269 36 766
Investment in sub-Saharan Africa
(excluding SA) 2 339 121 2 220 721
780 072 28 565 526 26 393 990
1 Excludes CapeGate Value and Lifestyle centres - sold during 2015 financial year
2 Sold during the 2015 financial year
3 Includes Glenwood, Glenfield and Lakefield - held for sale
4 Held for sale
Investment property was independently valued at 30 June 2015 at R26,2 billion (30 June 2014: R24,2 billion), an
increase of 12,1% (excluding the effect of the disposal of Stoneridge and CapeGate Lifestyle). The increase in value was
primarily due to income growth, as well as a 34,9% increase in the valuation of Rosebank Mall, subsequent to the completion
of its redevelopment.
The investment in sub-Saharan Africa (excluding SA) is reflected at cost plus equity-accounted profits.
Developments
The extension of the Woolworths store at Canal Walk was completed on time and within budget, while the completion of
an extension to Woolworths at Somerset Mall is anticipated in October 2015. Refurbishment and extensions are underway at
Clearwater Mall to accommodate the introduction of a number of international fashion brands, including H&M, River Island and
Top Shop, at a total cost of R36,6 million.
The second phase of the solar photovoltaic plant at Clearwater Mall was completed in August 2015. The total size of
the plant (phase 1 and 2) is 1 500kW at peak, with generating capacity of 2,5GWh per annum. The installation of new
generators at Hyde Park Corner was completed, providing the centre with full back-up power. Following minor further capital
expenditure, all shopping centres in the portfolio will have sufficient back-up power.
Small refurbishments, extensions and energy-saving initiatives are in progress or planned at a number of Hyprop’s
shopping centres as part of an ongoing effort to improve the quality of the centres, enhance the tenant mix and reduce
operating costs.
DISPOSALS
As previously announced, CapeGate Lifestyle, CapeGate Value Centre and Stoneridge were sold for a total amount of R833
million.
Efforts to sell Willowbridge Centre, Somerset Value Mart and the standalone office portfolio are continuing.
INVESTMENTS IN SUB-SAHARAN AFRICA (EXCLUDING SA)
Income producing properties
12 months 12 months
Hyprop’s June 2015 June 2014
Rentable effective 30 June 2015 Distributable Distributable
area shareholding Investment earnings1 earnings1
m2 % R000 R000 R000
AttAfrica (Mauritius)
Accra Mall (Accra, Ghana) 19 000 17,6 229 659 7 726 6 525
West Hills Mall (Accra, Ghana) 27 500 16,8 461 926 6 695
Manda Hill (Lusaka, Zambia)2 44 000 68,8 984 710 30 657 30 308
Expenses 46 403 (2 710) (1 755)
90 500 1 722 698 42 368 35 078
Loans advanced to AttAfrica
for developments (not yet income producing) 528 652
Capitalised interest 81 033
Other 6 738
Total investment 2 339 121
1 After interest on funding costs in Hyprop Investments Mauritius
2 Effective interest in Manda Hill reduced from 87,0% to 68,8% on 1 July 2014
Development properties
Centre name Hyprop’s Hyprop’s
Rentable effective effective
area shareholding cost
m2 % USD000 Comments
Achimota Mall Under construction -
(Accra, Ghana) 14 624 28,1 15 178 opening October 2015
Kumasi City Mall Under construction -
(Kumasi, Ghana) 18 360 28,1 40 026 opening April 2017
Waterfalls Project
(Lusaka, Zambia) 9,4 1 031 Land holding
Approved funds for investment in sub-Saharan Africa (excluding SA) are R5 billion (includes amounts invested to date).
Investment opportunities in other sub-Saharan countries, including Nigeria and Kenya, are being considered.
NET ASSET VALUE
Net asset value (NAV) per share at 30 June 2015 increased by 17,1% to R89,04 (30 June 2014: R76,02). The increase was
due in part to an increase in the independent valuation of the investment property portfolio.
The non-accrual for the final dividend (in accordance with IFRS and industry best practice), added R2,80 to NAV per
share. On a like-for-like basis (excluding the effect of the non-accrual of the final dividend), growth in NAV per share
was 13,4%.
At 30 June 2015, the closing share price of R121,00 represented a premium of 35,9% to the NAV per share.
BORROWINGS
30 June 2015 30 June 2014
Rm Rm
Bank debt 4 520 4 902
South Africa 2 327 3 509
USD (Rand equivalent) 2 193 1 393
Debt capital market (DCM) 2 172 2 297
Corporate bonds 1 800 1 600
Commercial paper 372 697
Cash and cash equivalents (138) (125)
Net borrowings 6 554 7 074
Loan to value (%) 22,9 26,6
Investments in sub-Saharan Africa (excluding SA) are financed with US Dollar (USD) funding. Net borrowings reduced due
to the repayment of South African bank facilities from the proceeds of non-core asset sales.
At 30 June 2015, interest rates were fixed in respect of 94,5% (30 June 2014: 71,4%) of borrowings, at a weighted
average rate of 7,1% (30 June 2014: 7,5%), for an average 5,2 years (30 June 2014: 4,2 years). The ratio of debt with fixed
interest rates increased during the year, in part due to debt repayments (without breaking any interest rate swaps), as
well as due to fixing the USD debt incurred to acquire the interest in Manda Hill, Zambia.
Debt capital market funding at 30 June 2015 was 32% of total debt (30 June 2014: 32%).
PROSPECTS
Hyprop’s focus remains to invest in high-quality shopping centres. Due to limited acquisition opportunities in South
Africa, consideration will be given to investments in other emerging markets where existing assets can be acquired at
attractive yields or where development opportunities exist.
Hyprop expects dividend growth of approximately 10% for the full year to 30 June 2016. This 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.
- No major corporate and tenant failures will occur.
The forecast has not been reviewed or reported on by the company’s 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 280,3 cents per share for the six months ended 30 June 2015 will be paid to shareholders as follows:
September 2015
Last day to trade cum dividend Thursday, 17
Shares trade ex dividend Friday, 18
Record date Friday, 25
Payment date Monday, 28
Shareholders may not dematerialise or rematerialise their shares between Friday, 18 September 2015 and Friday, 25 September 2015,
both days inclusive. In respect of dematerialised shareholders, the dividend will be transferred to the CSDP accounts/broker accounts
on Monday, 28 September 2015. 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 2015 have been prepared in accordance with
International Financial Reporting Standards (IFRS), International Accounting Standard (IAS) 34 Interim Financial
Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements and the Companies Act of
South Africa.
All amendments to standards that are applicable to Hyprop for its financial year beginning on 1 July 2014 have been
considered. Based on management’s assessment, the amendments do not have a material impact on the group’s annual financial
statements. The amendments are as follows:
IFRS 2 Share-based Payments IAS 19 Employee Benefits
IFRS 3 Business Combinations IAS 24 Related-Party Disclosures
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 these amendments, all accounting policies applied in the preparation of the group annual financial
statements for the year ended 30 June 2015 are consistent with those applied by Hyprop in its consolidated group annual
financial statements for the prior financial year. The group annual financial statements have been prepared on a going-concern
basis.
Separate disclosure on the Statement of financial position of liabilities directly associated with non-current assets
held for sale has been made in accordance with IFRS 5 Non-Current Assets Held for Sale. Prior year non-current
liabilities held for sale were reclassified accordingly.
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 2015 have been extracted from the audited
group annual financial statements, but have not themselves been audited. The directors take full responsibility for the
preparation of the summarised audited consolidated results and for ensuring that the financial information has been
correctly extracted from the underlying 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 auditor’s 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
31 August 2015
Corporate 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
There were no changes to the board during the year.
Registered office
Second 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: +27 11 447 0090)
www.hyprop.co.za
Date: 01/09/2015 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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