Wrap Text
Summarised unaudited consolidated interim results for the six months ended 31 December 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 unaudited consolidated interim results for the six months ended 31 December 2015
HIGHLIGHTS
- Dividend up 13,4%
- Opening of Achimota Mall, Ghana
- Acquisition of Ikeja City Mall, Nigeria
- Acquisition of Delta City Malls, Serbia and Montenegro (post-period-end)
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2015 2014 2015
R000 R000 R000
Revenue 1 479 642 1 312 270 2 703 034
Investment property income 1 412 254 1 280 476 2 642 949
Straight-line rental income accrual 67 388 31 794 60 085
Property expenses (464 865) (409 864) (887 918)
Net property income 1 014 777 902 406 1 815 116
Other operating expenses (36 644) (36 771) (64 611)
Operating income 978 133 865 635 1 750 505
Net interest (158 441) (182 109) (351 647)
Received 124 963 81 570 157 344
Paid (283 404) (263 679) (508 991)
Net operating income 819 692 683 526 1 398 858
Change in fair value 1 096 427 661 190 2 426 584
Investment property 994 335 722 121 2 467 113
Straight-line rental income accrual (67 388) (31 794) (60 085)
Derivative instruments 169 480 (29 137) 19 556
(Loss)/profit on disposal (28 795) (5 768)
Investment in subsidiary (28 767) (30 011)
Investment property (28) 24 243
Impairment of goodwill (4 280)
Net income before equity-accounted investments 1 916 119 1 315 921 3 815 394
Share of income/(loss) from joint ventures 30 705 2 182 (17 447)
Share of income from associates 195 562 652
Profit before taxation 1 947 019 1 318 665 3 798 599
Taxation (857) (7 650) (19 023)
Profit for the period/year 1 946 162 1 311 015 3 779 576
Other comprehensive income
Exchange differences on translation of foreign operations 63 137 3 137 5 329
Total comprehensive income for the period/year 2 009 299 1 314 152 3 784 905
Total profit for the period/year attributable to:
Shareholders of the company 1 946 870 1 311 015 3 779 576
Non-controlling interests (708)
Profit for the period/year 1 946 162 1 311 015 3 779 576
Total comprehensive income attributable to:
Shareholders of the company 1 992 234 1 314 152 3 784 905
Non-controlling interests 17 065
Total comprehensive income for the period/year 2 009 299 1 314 152 3 784 905
Abridged reconciliation - headline earnings and
distributable earnings
Net income after taxation 1 946 870 1 311 015 3 779 576
Earnings 1 946 870 1 311 015 3 779 576
Headline earnings adjustments (994 335) (693 326) (2 457 065)
Change in fair value of investment property (994 335) (722 121) (2 467 113)
Loss/(profit) on disposal: Investment in subsidiary 28 767 30 011
Investment property 28 (24 243)
Impairment of goodwill 4 280
Headline earnings 952 535 617 689 1 322 511
Distributable earnings adjustments (229 253) 20 944 (2 892)
Change in fair value: Derivative instruments (169 480) 29 137 (19 556)
Investments in sub-Saharan Africa (excluding SA) (65 041) (15 501) (35)
Investments in South African subsidiaries 1 597 (2 945)
Capital items 2 814 87 620
Taxation 857 7 221 12 387
Deferred taxation 6 637
Distributable earnings 723 282 638 633 1 319 619
Total shares in issue 243 256 092 243 256 092 243 256 092
Weighted average shares in issue 243 256 092 243 256 092 243 256 092
Total shares in issue for dividend per share
(excludes treasury shares) 242 845 433 243 102 433 242 990 433
Basic and diluted earnings per share (cents) 800,3 538,9 1 553,7
Basic and diluted headline earnings per share (cents) 392,2 253,9 543,7
Distribution details
Total distribution per share for the period/year (cents) 297,8 262,7 543,0
Six months ended 30 June (cents) 280,3
Six months ended 31 December (cents) 297,8 262,7 262,7
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R000 R000 R000
Assets
Non-current assets 32 022 259 25 399 492 27 395 984
Investment property 28 372 447 23 270 523 24 925 604
South African portfolio 25 965 405 23 270 523 24 925 604
Ikeja City Mall (Lagos, Nigeria) 2 407 042
Building appurtenances and tenant installations 102 833 70 610 77 300
Investments in sub-Saharan Africa (excluding SA) 3 326 636 2 031 121 2 339 121
Shareholder loans 3 183 053 1 929 253 2 258 125
Investment in joint venture 143 583 101 868 80 996
Investment in associate 505 736 827
Goodwill 18 134 4 280
Derivative instruments 201 704 22 222 53 132
Current assets 374 796 250 339 224 750
Receivables 147 489 86 279 87 152
Loan receivable 51 120 47 146 53 757
Cash and cash equivalents 176 187 116 914 83 841
Non-current assets held for sale 1 271 301 1 789 777 1 235 062
Total assets 33 668 356 27 439 608 28 855 796
Equity and liabilities 23 105 429 19 823 075 21 658 721
Stated capital and reserves 22 946 351 19 823 075 21 658 721
Non-controlling interest 159 078
Liabilities
Non-current liabilities 8 774 245 5 354 511 6 012 830
Interest-bearing liabilities 8 641 487 5 248 358 5 919 909
South African debt 3 309 520 3 362 466 3 726 838
USD debt 5 331 967 1 885 892 2 193 071
Derivative instruments 26 040 60 406 40 123
Deferred taxation 106 718 45 747 52 798
Current liabilities 1 760 499 2 209 427 1 162 678
Payables 489 340 396 483 388 049
Interest-bearing liabilities (South African debt) 1 267 824 1 812 944 772 000
Derivative instruments 3 335 2 629
Liabilities directly associated with
non-current assets held for sale 28 183 52 595 21 567
Total liabilities 10 562 927 7 616 533 7 197 075
Total equity and liabilities 33 668 356 27 439 608 28 855 796
Net asset value per share (R) 94,33 81,49 89,04
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R000 R000 R000
Balance at beginning of period/year 21 658 721 12 905 543 12 905 543
Total profit for the period/year 1 946 870 1 311 015 3 779 576
Capital restructure 5 719 119 5 719 119
Non-controlling interest 159 078
Buy-back of African Land shares from
non-controlling interest (118 024) (118 024)
Treasury shares (27 898)
Dividends (681 847) (1 063) (639 529)
Share-based payment reserve 5 141 3 349 6 707
Foreign currency translation reserve 45 364 3 136 5 329
Balance at end of period/year 23 105 429 19 823 075 21 658 721
ABRIDGED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
31 December 31 December 30 June
2015 2014 2015
R000 R000 R000
Cash flows from operating activities 80 549 56 390 97 774
Cash generated from operations 945 363 884 644 1 738 764
Interest received 89 945 43 014 105 084
Interest paid (263 416) (285 391) (518 610)
Taxation paid (9 496) (2 553)
Debenture interest paid (585 877) (585 877)
Dividends paid (681 847) (639 034)
Cash flows from investing activities (1 330 044) (1 424 950) 667 056
Cash flows from financing activities 1 287 866 1 408 530 (752 412)
Net increase in cash and cash equivalents 38 371 39 970 12 418
Cash acquired with subsidiary 48 964
Translation effects on cash and cash equivalents
of foreign entities 6 144 (5 294)
Cash reallocated to assets held for sale (1 133) (409) (636)
Cash and cash equivalents at beginning of period/year 83 841 77 353 77 353
Cash and cash equivalents at end of period/year 176 187 116 914 83 841
COMMENTARY
INTRODUCTION
Hyprop, Africa’s leading specialist shopping centre Real Estate Investment Trust (REIT), operates a portfolio of
shopping centres in major metropolitan areas across South Africa (SA), sub-Saharan Africa (excluding SA), and more recently,
central and eastern Europe. Hyprop’s strategy is to own high-quality shopping centres in emerging markets, where such
assets can be acquired or developed at attractive yields.
The shopping centre portfolio in South Africa includes 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 sub-Saharan African portfolio (excluding SA) includes interests in Accra, West Hills and Achimota Malls (all in
Accra, Ghana), Manda Hill Centre in Lusaka, Zambia and Ikeja City Mall in Lagos, Nigeria.
In February 2016, Hyprop expanded into central and eastern Europe, with the acquisition of a 60% interest in Delta
City Belgrade, Serbia and Delta City Podgorica, Montenegro.
FINANCIAL RESULTS
Hyprop has declared a dividend of 297,8 cents per share for the six months ended 31 December 2015 (the period), an
increase of 13,4% on the corresponding period in 2014. Distributable earnings for the period benefited from the inclusion
of the redeveloped Rosebank Mall for the full period, additional income from Ikeja City Mall (acquired November 2015) and
Achimota Mall (opened October 2015), and from exchange rate gains due to Rand weakness against the US Dollar.
SOUTH AFRICAN PORTFOLIO
Revenue and distributable earnings
6 months ended 6 months ended
31 December 2015 31 December 2014
Business segment Distributable Distributable
Revenue earnings Revenue earnings
R000 R000 R000 R000
Canal Walk (80%) 310 678 218 274 278 973 201 027
Clearwater Mall 186 627 128 269 173 588 123 078
Rosebank Mall 138 506 91 020 107 732 68 945
Somerset Mall 125 601 86 785 109 795 78 684
Woodlands Boulevard 123 362 81 870 112 939 77 980
The Glen (75,15%) 115 790 82 364 107 401 74 917
Hyde Park Corner 103 716 66 774 92 446 63 997
CapeGate 87 680 51 307 80 129 45 982
Shopping centres 1 191 960 806 663 1 063 003 734 610
Atterbury Value Mart 65 241 48 893 57 742 43 791
Willowbridge1 48 913 27 669 44 744 25 537
Somerset Value Mart1 11 945 7 716 11 818 7 770
Value centres 126 099 84 278 114 304 77 098
Stoneridge2 (90%) 35 946 18 304
CapeGate Lifestyle2 23 053 16 038
Properties sold 58 999 34 342
Total retail 1 318 059 890 941 1 236 306 846 050
Standalone offices3 39 291 23 713 35 480 21 750
Investment property 1 357 350 914 654 1 271 786 867 800
1 Held for sale
2 Sold during the 2015 financial year
3 Includes Glenwood, Glenfield and Lakefield - held for sale
Total revenue and distributable earnings from South African investment property (excluding properties sold)
increased by 11,9% and 9,7%, respectively, benefiting from the inclusion of income from Rosebank Mall
(subsequent to the completion of its redevelopment) for the full period. Like-for-like revenue and distributable
earnings from investment property (excluding Rosebank Mall) increased by 10,3% and 7,7%, respectively.
Cost-to-income ratios
Cost-to-income ratio
31 December 30 June
2015 2015
Net basis (%) Investment property (SA) 15,5 15,7
Total group 18,8 18,7
Gross basis (%) Investment property (SA) 32,9 33,6
Total group 35,5 36,0
In line with industry best practice, cost-to-income ratios are now also reported on a net basis, which requires
municipal cost recoveries to be set-off municipal expenses and included in property expenses. Any over or
underrecovery is also included in property expenses. The improvement in the investment property ratios reflect
continued cost control in the South African portfolio.
Tenant arrears
Total arrears as a percentage of rental income remained steady at 0,6%.
Vacancies
% of total rentable area
Vacancy by sector 31 December 30 June
2015 2015
Retail 0,9 1,3
Office 7,2 8,3
Total 1,5 2,0
Retail vacancies reduced to 0,9% (30 June 2015: 1,3%), primarily due to new lettings at Somerset Mall and
Willowbridge. Vacancies in the office portfolio improved marginally.
Valuations Value per
Value attributable to Hyprop rentable area
Business segment Rentable 31 December 30 June 31 December
area 2015 2015 2015
(m2) R000 R000 (R/m2)
Canal Walk (80%) 158 452 7 040 000 6 732 800 55 537
Clearwater 86 065 4 096 300 3 944 000 47 596
Rosebank Mall 80 716 2 617 080 2 495 000 32 423
Somerset Mall 68 491 2 663 000 2 450 000 38 881
The Glen (75,15%) 79 705 2 431 290 2 329 830 40 587
Woodlands Boulevard 71 644 2 350 000 2 296 000 32 801
Hyde Park Corner 38 126 2 038 000 2 009 000 53 454
CapeGate 63 768 1 593 000 1 534 000 24 981
Shopping centres 646 967 24 828 670 23 790 630 42 340
Atterbury Value Mart 47 785 1 164 000 1 112 000 24 359
Willowbridge1 42 747 640 000 622 000 14 972
Somerset Value Mart 1 12 546 192 000 193 000 15 304
Value centres 103 078 1 996 000 1 927 000 19 364
Total retail 750 045 26 824 670 25 717 630 39 182
Standalone offices2 34 448 493 775 508 775 14 334
Investment property 784 493 27 318 445 26 226 405 38 091
1 Held for sale
2 Includes Glenwood, Glenfield and Lakefield - held for sale
Investment property was independently valued at 31 December 2015 at R27,3 billion (30 June 2015: R26,2 billion),
an increase of 4,2%. The increase in value was primarily due to income growth.
Developments
Several smaller projects comprising extensions and tenant refurbishments totalling R141 million were completed during
the period. Most notable were the Woolworths extension at Somerset Mall (R58,5 million) and the extension for H&M at
Clearwater Mall (R37 million). H&M will start trading in April 2016.
In line with our strategy to continuously improve the quality of the retail offering in the portfolio, projects with an
estimated cost of R87 million are in planning.
INVESTMENTS IN SUB-SAHARAN AFRICA (EXCLUDING SA)
Hyprop share of
Hyprop’s Valuation Value per distributable earnings(2)
effective 31 December rentable 31 December 31 December
shareholding Rentable 2015(1) area Vacancy 2015 2014
City/ Country (%) area (m2) (USD000) (USD000) (%) (R000) (R000)
Ikeja City Mall Lagos, Nigeria 75,0 22 349 155 000 6 935 - 6 037
Manda Hill Lusaka, Zambia 68,8 40 561 153 100 3 775 3,1 13 123 16 075
Accra Mall Accra, Ghana 17,6 21 230 101 400 4 776 5,2 5 252 3 587
West Hills Mall Accra, Ghana 16,8 27 558 89 200 3 237 4,2 10 562 1 578
Achimota Mall Accra, Ghana 28,1 14 662 53 000 3 615 27,5 2 913
Total 126 360 551 700 4 366 6,0 37 887 21 240
Expenses (2 610) (265)
Net distributable earnings - sub-Saharan Africa (excluding SA) 35 277 20 975
1 Valuation reflects 100% of the value
2 Hyprop share of distributable earnings is reflected after interest on in-country debt and after interest on corporate debt
Distributable earnings from the investments in sub-Saharan Africa (excluding SA) increased by 68,2% to R35,3 million,
in part due to income from West Hills Mall (Accra, Ghana - effective November 2014), Achimota Mall (Accra, Ghana -
effective November 2015) and Ikeja City Mall (Lagos, Nigeria - effective November 2015). Distributable earnings from the
investments in sub-Saharan Africa (excluding SA) benefited from exchange gains of R8,1 million.
Achimota Mall, in which Hyprop has an effective 28,1% interest, was successfully opened in November 2015. Subsequent
to period-end, more shops at Achimota Mall started trading, reducing the vacancy to 14%.
Hyprop acquired a 75% interest in Ikeja City Mall (Ikeja), effective November 2015. Ikeja is trading well, is fully
let, has high average monthly footfall and the long-term prospects for the centre are positive.
Investments in sub-Saharan Africa (excluding SA) to date total R4,1 billion and are financed with US Dollar bank
funding. Approved funds for investment in sub-Saharan Africa (excluding SA) are R5 billion (including the amount
invested to date).
Low oil and commodity prices negatively affected the Nigerian, Ghanaian and Zambian economies, weakened the local
currencies against the US Dollar and reduced US Dollar availability. Management is working closely with the retailers and
banks in order to mitigate the negative impact on cash flow. Trading in the portfolio has not been materially affected,
due to the defensive qualities of the shopping malls located in large cities, where economic growth is higher than in
rural areas and secondary towns.
INVESTMENTS IN CENTRAL AND EASTERN EUROPE
In February 2016, Hyprop announced the acquisition of a 60% interest in Delta City Belgrade (Belgrade, Serbia) and
Delta City Podgorica (Podgorica, Montenegro) via a joint venture company based in the United Kingdom, Hystead Limited.
Homestead Group Holdings Limited (Homestead), a company associated with Louis Norval (a non-executive director of Hyprop),
has acquired the remaining 40% in both malls.
The acquisition of Delta City Podgorica was effective on 10 February 2016, while the acquisition of Delta City
Belgrade is anticipated to be effective during March 2016.
The acquisitions complement Hyprop’s strategy of acquiring or developing high-quality, income-producing shopping
centres in emerging markets.
Economic indicators for much of central and eastern Europe have been improving for some time. These regions provide an
opportunity to acquire quality assets at attractive yields and at a comparatively low cost of funding.
NET ASSET VALUE
The net asset value (NAV) per share at 31 December 2015 increased by 5,9% to R94,33 (30 June 2015: R89,04). The
increase was due in part to an increase in the independent valuation of the investment property portfolio.
At 31 December 2015, the closing share price of R103,35 represented a premium of 9,6% to the NAV per share.
NET INTEREST
Net interest costs for the period of R195,1 million reduced relative to the prior period (30 June 2015: R220,9
million) due to non-core asset sales (Stoneridge and CapeGate Value and Lifestyle centres), the proceeds of which were
applied to the repayment of debt.
BORROWINGS
31 December 30 June
2015 2015
Rm Rm
Bank debt: 7 858 4 520
South Africa 2 967 2 327
USD (Rand equivalent) 4 891 2 193
Debt capital market funding: 1 610 2 172
Corporate bonds 1 200 1 800
Commercial paper 410 372
Cash and cash equivalents (207) (138)
Net borrowings 9 261 6 554
Loan to value 28,5% 22,9%
Debt at fixed rates 85,7% 94,5%
South African debt 95,0% 96,7%
USD debt (Rand equivalent) 77,0% 89,9%
Maturity of fixes 4,6 years 5,2 years
South African debt 5,1 years 5,6 years
USD debt (Rand equivalent) 4,0 years 4,1 years
Cost of funding 6,6% 7,1%
South African debt 8,6% 8,4%
USD debt (Rand equivalent) 4,6% 4,4%
The Rand equivalent of US Dollar-denominated bank debt increased due to the acquisition of Ikeja City Mall, ongoing
development activity in AttAfrica and Rand depreciation against the US Dollar.
Debt capital market (DCM) funding at 31 December 2015 was 19% of total debt (30 June 2015: 32%). The reduction in the
ratio of DCM funding to total debt was largely due to additional US Dollar bank debt, following the acquisition of
Ikeja City Mall, as well as the expiry of a R400 million corporate bond during the period, which was refinanced with
bank debt.
DISTRIBUTABLE EARNINGS STATEMENT AND RECONCILIATION TO DIVIDEND DECLARED
Distributable earnings -
six months
31 December 31 December
2015 2014
R000 R000
South African property portfolio 914 655 867 800
Investments in sub-Saharan Africa (excluding SA) 35 277 20 975
Word4Word Marketing 1 000 1 563
Fund management expenses (32 559) (30 802)
Net interest (195 091) (220 903)
Total distributable earnings 723 282 638 633
Shares in issue for distributable earnings 242 845 433 243 102 433
Dividend per share (cents) 297,8 262,7
Dividend per share growth 13,4%
PROSPECTS
Notwithstanding difficult trading conditions in the South African and African environments, we expect dividend growth
of between 13% and 15% for the 2016 financial year. This is an upward revision to the guidance provided in August 2015
of approximately 10%. The increase is largely due to the inclusion of income from Ikeja City Mall and the two Delta City
Malls for the first time.
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 297,8 cents per share for the six months ended 31 December 2015 will be paid to shareholders as follows:
2016
Last day to trade cum dividend Wednesday, 23 March
Shares trade ex dividend Thursday, 24 March
Record date Friday, 1 April
Payment date Monday, 4 April
Shareholders may not dematerialise or rematerialise their shares between Thursday, 24 March 2016 and
Friday, 1 April 2016, both days inclusive. The dividend will be transferred to dematerialised shareholders CSDP accounts/broker
accounts and paid to certificated shareholders bank accounts on Monday, 4 April 2016.
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 2015 have been considered.
There were no amendments to standards effective in the period. 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 2015.
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
2 March 2016
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 of directors during the period.
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-Jane Watson
Telephone: +27 11 447 0090
Fax: +27 11 447 0092
Email:
investorrelations@hyprop.co.za
marketing@hyprop.co.za
www.hyprop.co.za
3 March 2016
Date: 03/03/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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