Wrap Text
Summarised consolidated results for the year ended 30 June 2016
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”)
Property investment excellence.
Summarised consolidated results for the year ended 30 June 2016
Highlights
- Final dividend up 14,9%
- Acquired three shopping malls (Nigeria, Serbia and Montenegro)
- R700 million equity raised (post year-end)
- Disposed of non-core properties for R365 million (post year-end)
Summarised consolidated Statement of comprehensive income
Audited Audited
12 months 12 months
30 June 2016 30 June 2015
R000 R000
Revenue 3 078 221 2 703 034
Investment property income 2 976 420 2 642 949
Straight-line rental income accrual 101 801 60 085
Property expenses (993 861) (887 918)
Net property income 2 084 360 1 815 116
Other operating expenses (76 593) (64 611)
Operating income 2 007 767 1 750 505
Net interest (366 176) (351 647)
Received 323 759 157 344
Paid (689 935) (508 991)
Net operating income 1 641 591 1 398 858
Change in fair value 1 217 049 2 426 584
Investment property 1 382 134 2 467 113
Straight-line rental income accrual (101 801) (60 085)
Investment in joint venture (10 102)
Derivative instruments (53 182) 19 556
Loss on disposal (5 768)
Investment in subsidiary (30 011)
Investment property 24 243
Impairment of goodwill (4 280)
Net income before equity-accounted investments 2 858 640 3 815 394
Share of loss from joint ventures (41 007) (17 447)
Share of income from associate 457 652
Profit before taxation 2 818 090 3 798 599
Taxation (50 930) (19 023)
Profit for the year 2 767 160 3 779 576
Other comprehensive income
Exchange differences on translation of foreign operations (1 491) 5 329
Total comprehensive income for the year 2 765 669 3 784 905
Total profit for the year attributable to:
Shareholders of the company 2 750 847 3 779 576
Non-controlling interests 16 313
Profit for the year 2 767 160 3 779 576
Total comprehensive income attributable to:
Shareholders of the company 2 752 041 3 784 905
Non-controlling interests 13 628
Total comprehensive income for the year 2 765 669 3 784 905
Audited Audited
12 months 12 months
30 June 2016 30 June 2015
R000 R000
Summarised reconciliation - headline earnings and
distributable earnings
Profit for the year 2 767 160 3 779 576
Earnings 2 767 160 3 779 576
Headline earnings adjustments (1 372 032) (2 457 065)
Change in fair value of investment property (1 382 134) (2 467 113)
Change in fair value of investment in joint venture 10 102
Loss on disposal: Investment in subsidiary 30 011
Investment property (24 243)
Impairment of goodwill 4 280
Headline earnings 1 395 128 1 322 511
Distributable earnings adjustments 142 535 (2 892)
Change in fair value: Derivative instruments 53 182 (19 556)
Investments in sub-Saharan Africa (excluding SA) (35 131) (35)
Investments in South African subsidiaries 1 205 (2 945)
Investments in South-Eastern Europe 24 572
Capital items 15 632 620
Taxation 7 371 12 387
Deferred taxation 43 558 6 637
Antecedent dividend 32 146
Distributable earnings 1 537 663 1 319 619
Total shares in issue 243 256 092 243 256 092
Weighted average shares in issue 242 921 081 243 256 092
Total shares in issue for dividend per share
(excludes treasury shares) 248 030 619 242 990 433
Basic earnings per share (cents) 1 139,1 1 553,7
Headline earnings per share (cents) 574,3 543,7
Diluted earnings per share (cents) 1 131,1 1 553,7
Diluted headline earnings per share (cents) 567,3 543,7
Summarised consolidated statement of financial position
Audited Audited
30 June 2016 30 June 2015
R000 R000
Assets
Non-current assets 32 227 218 27 395 984
Investment property 28 702 563 24 925 604
South African portfolio 26 380 137 24 925 604
Ikeja City Mall (Lagos, Nigeria) 2 322 426
Building appurtenances and tenant installations 126 100 77 300
Investments in sub-Saharan Africa (excluding SA) 3 315 614 2 339 121
Investment in associate 766 827
Loans receivable 14 732
Goodwill 18 134
Derivative instruments 49 309 53 132
Current assets 378 150 224 750
Receivables 179 193 87 152
Loans receivable 53 757
Cash and cash equivalents 198 957 83 841
Non-current assets held for sale 1 243 591 1 235 062
Total assets 33 848 959 28 855 796
Equity 23 118 856 21 658 721
Stated capital and reserves 22 988 596 21 658 721
Non-controlling interest 130 260
Liabilities
Non-current liabilities 8 879 743 6 012 830
Interest-bearing liabilities 8 632 036 5 919 909
Derivative instruments 101 198 40 123
Deferred taxation 146 509 52 798
Current liabilities 1 822 492 1 162 678
Payables 528 440 388 049
Interest-bearing liabilities 1 294 052 772 000
Derivative instruments 2 629
Liabilities directly associated with non-current
assets held for sale 27 868 21 567
Total liabilities 10 730 103 7 197 075
Total equity and liabilities 33 848 959 28 855 796
Net asset value per share (R) 94,50 89,04
Summarised consolidated statement of changes in equity
Audited Audited
30 June 2016 30 June 2015
R000 R000
Balance at beginning of year 21 658 721 12 905 543
Total profit for the year attributable to Hyprop shareholders 2 750 847 3 779 576
Capital restructure 5 719 119
Non-controlling interest 130 260
Buy-back of African Land shares from non-controlling interest (118 024)
Treasury shares (27 789)
Dividends (1 404 296) (639 529)
Share-based payment reserve 9 919 6 707
Foreign currency translation reserve 1 194 5 329
Balance at end of year 23 118 856 21 658 721
Distribution details
Total distribution for the year (cents) 619,9 543,0
Six months ended 30 June (cents) 322,1 280,3
Six months ended 31 December (cents) 297,8 262,7
Summarised consolidated statement of cash flows
Audited Audited
30 June 2016 30 June 2015
R000 R000
Cash flows (utilised by)/generated from operating activities (210 672) 97 774
Cash generated from operations 1 709 767 1 738 764
Interest received 191 515 105 084
Interest paid (692 192) (518 610)
Taxation paid (15 466) (2 553)
Debenture interest paid (585 877)
Dividends paid (1 404 296) (639 034)
Cash flows applied (to)/from investing activities (1 716 759) 667 056
Cash flows applied from/(to) financing activities 1 989 143 (752 412)
Net increase in cash and cash equivalents 61 712 12 418
Cash acquired with subsidiary 48 964
Translation effects on cash and cash equivalents of foreign
entities 5 002 (5 294)
Cash reallocated to assets held for sale (562) (636)
Cash and cash equivalents at beginning of year 83 841 77 353
Cash and cash equivalents at end of year 198 957 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
South-Eastern Europe.
Hyprop’s strategy is to own dominant, 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 Mall, West Hills and Achimota Retail
Centre (all in Accra, Ghana), Manda Hill Centre in Lusaka, Zambia and Ikeja City Mall in Lagos, Nigeria.
During the year Hyprop expanded into South-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 322,1 cents per share for the six months ended 30 June 2016, an increase of 14,9% on
the corresponding period in 2015. The total distribution for the year of 619,9 cents per share is an increase of 14,2%
on the prior year.
Distributable earnings for the year benefited from the inclusion of income from recently acquired Ikeja City Mall in
Nigeria (November 2015), Delta City Podgorica in Montenegro (February 2016) and Delta City Belgrade in Serbia
(April 2016), as well as the opening of Achimota Retail Centre, in Accra, Ghana (October 2015). Distributable earnings
were further increased by exchange rate gains due to Rand weakness and from the inclusion of income from the redeveloped
Rosebank Mall for the full period.
South African portfolio
Revenue and distributable earnings
12 months ended 12 months ended
30 June 2016 30 June 2015
Business segment Distributable Distributable
Revenue earnings Revenue earnings
R000 R000 R000 R000
Canal Walk (80%) 628 169 442 978 579 188 412 308
Clearwater Mall 376 612 260 069 358 011 245 039
Somerset Mall 257 565 177 062 231 100 159 387
Rosebank Mall 283 060 183 350 234 353 149 665
Woodlands Boulevard 246 864 162 911 231 701 152 821
The Glen (75,15%) 230 817 163 036 218 999 153 796
Hyde Park Corner 211 335 137 855 199 074 130 900
CapeGate 178 943 106 051 167 562 96 472
Shopping centres 2 413 365 1 633 312 2 219 988 1 500 388
Atterbury Value Mart 129 153 96 124 120 286 89 544
Willowbridge(1) 99 574 56 008 90 746 49 793
Somerset Value Mart(1) 25 524 16 750 23 784 15 308
Value centres 254 251 168 882 234 816 154 645
Total retail 2 667 616 1 802 194 2 454 804 1 655 033
Standalone offices(2) 77 078 45 957 73 126 45 866
Stoneridge(3) (90%) 56 275 29 110
CapeGate Lifestyle(3) 32 937 22 178
Properties sold 89 212 51 288
Investment property 2 744 694 1 848 151 2 617 142 1 752 187
1 Held for sale
2 Includes Glenwood, Glenfield and Lakefield - held for sale
3 Sold during the 2015 financial year
Total revenue and distributable earnings from South African investment property (excluding properties sold) increased
by 8,6% and 8,7%, respectively. Like-for-like revenue and distributable earnings from investment property (excluding
Rosebank Mall) both increased by 7,3%.
Cost-to-income ratios
30 June 30 June
2016 2015
Net basis (%) Investment property (SA) 15,0 15,7
Total group 19,2 18,7
Gross basis (%) Investment property (SA) 33,2 33,6
Total group 36,0 36,0
Ongoing and effective cost control in the South African portfolio contributed to a marginal improvement in the
investment property cost-to-income ratio, on the net and gross basis.
Tenant arrears
Total arrears as a percentage of rental income were 0,5% (30 June 2015: 0,6%).
Vacancies
% of total rentable area
Vacancy profile by sector 30 June 30 June
2016 2015
Retail 0,8 1,3
Office 4,5 8,3
Total 1,1 2,0
Retail vacancies reduced to 0,8% (30 June 2015: 1,3%), primarily due to new lettings at Somerset Mall, Willowbridge
and Somerset Value Mart. Vacancies in the office portfolio also reduced, largely due to new lettings at Lakefield
Office Park and Hyde Park offices.
Valuations Value attributable to Hyprop Value per
rentable area
Business segment Rentable 30 June 30 June 30 June
area 2016 2015 2016
(m2) R000 R000 (R/m2)
Shopping centres 649 479 25 282 472 23 790 630 42 870
Value centres 90 600 1 755 000 1 734 000 19 371
Total retail 740 079 27 037 472 25 524 630 39 993
Standalone offices 23 811 328 075 315 775 13 778
Properties sold (post year-end) 22 866 365 000 365 000 15 963
Investment property 786 756 27 730 547 26 205 405 38 501
Investment property was valued at 30 June 2016 at R27,7 billion (30 June 2015: R26,2 billion), an increase of 5,8%.
The increase in value was primarily due to income growth.
Developments
Projects currently under construction and due for completion in the next financial year include the installation of
H&M at Somerset Mall (R15,8 million) and Checkers at Atterbury Value Mart (R31 million).
During the year a total amount of R178 million was spent on capital projects, new equipment and tenant installations.
Extensions to the shopping centres with an estimated project cost of R167 million are in planning.
Disposals
Agreements have been reached for the disposal of Somerset Value Mart and Glenfield Office Park for R185 million and
R180 million respectively. Transfer of Somerset Value Mart is imminent, while transfer of Glenfield Office Park is
subject to approval from competition authorities. The proceeds from both disposals will be applied to reduce debt.
Efforts to dispose of Willowbridge Centre and the remaining standalone office buildings are continuing.
Investments in sub-Saharan Africa (excluding SA)
Hyprop share of
distributable earnings(2)
Valuation Valuation Value per
30 June 30 June rentable 30 June 30 June
Rentable 2016(1) 2015(1) area Vacancy 2016 2015
area (m2) (USD000) (USD000) (USD/m2) (%) (R000) (R000)
Total portfolio 127 660 562 400 339 870 4 405 4,0 83 654 42 368
1 Valuation reflects 100% of the asset 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 97,4% to R83,7 million,
in part due to income from West Hills Mall (Accra, Ghana - effective November 2014), Achimota Retail Centre (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 rate gains of
R15,9 million.
Investments in sub-Saharan Africa (excluding SA) to date total R4,3 billion (excluding in-country debt in Nigeria) and
are financed with US Dollar bank funding.
Investments in South-Eastern Europe
Hyprop share of
distributable earnings(2)
Hyprop’s effective Valuation 30 June Value per rentable 30 June
shareholding Rentable 2016(1) area Vacancy 2016
(%) area (m2) (EUR000) (EUR/m2) (%) (R000)
Total portfolio 60,0 53 605 206 100 3 845 - 31 944
1 Valuation reflects 100% of the asset value
2 Hyprop share of distributable earnings is reflected after interest on corporate debt
The purchase of Delta City Podgorica (Montenegro) was effective in February 2016, while the purchase of Delta City
Belgrade (Serbia) was effective in April 2016. Implementation of the acquisition is progressing well and income is in line
with expectations.
The purchase consideration for Delta City Podgorica has been paid in full, while EUR49,3 million of the total purchase
consideration relating to Delta City Belgrade has been delayed, pending the fulfilment of certain conditions.
Notwithstanding the delay in payment, all net property income from Delta City Belgrade has accrued to the purchasers
from the effective date in April 2016. It is anticipated that the outstanding amount will be paid in September 2016.
The Delta City acquisitions were funded with Euro-denominated bridge funding, supported by a guarantee from Hyprop.
The bridge funding will be refinanced within twelve months following the initial draw-down of the bridge loan. The
long-term funding for the transaction will be at a higher cost than the bridge funding. It is anticipated that the
long-term funding of the transaction will be in place from February 2017.
The delay in payment of the final tranche of the purchase consideration for Delta City Belgrade, as well as the lower
cost of funding for the bridge loan, are both once-off benefits to Hyprop in the 2016 financial year and the first half
of the 2017 financial year.
Net asset value
The net asset value (NAV) per share at 30 June 2016 increased by 6,1% to R94,50 (30 June 2015: R89,04). The increase
was primarily due to an increase in the independent valuation of the investment property portfolio.
At 30 June 2016, the closing share price of R129,89 represented a premium of 37,4% to the NAV per share.
Borrowings
30 June 30 June
2016 2015
Rm Rm
Bank debt 9 344 4 520
South Africa 2 992 2 327
USD (Rand equivalent)(1) 4 842 2 193
EUR (Rand equivalent)(2) 1 510
Debt capital market funding (South Africa only) 1 640 2 172
Corporate bonds 1 200 1 800
Commercial paper 440 372
Cash and cash equivalents (239) (138)
Net borrowings 10 745 6 554
Loan to value (%) 30,8 22,9
Debt at fixed rates (%)
South African debt (%) 89,6 96,7
USD debt (%) 72,4 89,9
Maturity of fixes (years)
South African debt (years) 4,9 5,6
USD debt (years) 3,7 4,1
Cost of funding (%)
South African debt (%) 8,9 8,4
USD debt (%) 4,6 4,4
EUR debt (%) 1,7 -
Debt capital market (DCM) % of total debt 15 19
1 The USD debt includes 75% of the in-country debt relating to Ikeja City Mall
(Lagos, Nigeria)
2 The Euro debt, which relates to Hyprop’s effective 60% interest in the
South-Eastern European shopping malls, is not consolidated on the Hyprop
statement of financial position.
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.
The loan-to-value (LTV) ratio at 30 June 2016 increased to 30,8% (30 June 2015: 22,9%), largely due to the inclusion
of the funding of Hyprop’s effective 60% share of the Delta City Malls (Serbia and Montenegro) as well as the funding
of Hyprop’s 75% share of Ikeja City Mall (Lagos, Nigeria).
The debt to acquire the Delta City Malls comprises short-term bridge funding and the interest rate has therefore not
been fixed.
Subsequent to year-end, a maturing South African bank facility amounting to R1,2 billion was refinanced with DCM
funding (three, four and five-year corporate bonds). This has increased the ratio of DCM funding to total debt to
approximately 25%. All of Hyprop’s DCM funding is unsecured.
Distributable earnings statement and reconciliation to dividend declared
Distributable earnings
12 months
30 June 30 June
2016 2015
R000 R000
South African property portfolio 1 848 151 1 752 187
Investments in sub-Saharan Africa (excluding SA) 83 654 42 368
Investments in South-Eastern Europe 31 944
Word4Word Marketing 1 000 4 243
Fund management expenses (64 922) (62 001)
Net interest (394 310) (417 178)
Antecedent dividend 32 146
Total distributable earnings 1 537 663 1 319 619
Total shares in issue at year-end 243 256 092 243 256 092
Treasury shares in issue (410 659) (265 659)
Shares issued, August 2016 5 185 186
Shares in issue for distributable earnings 248 030 619 242 990 433
Dividend per share (cents) 619,9 543,0
Dividend per share growth (%) 14,2 15,0
Net interest costs for the period of R394,3 million (30 June 2015: R417,2 million) reduced due to non-core asset sales
in the second half of the 2015 financial year, amounting to R833 million (Stoneridge and CapeGate Value and Lifestyle
centres), the proceeds of which were applied to the repayment of debt.
Subsequent to year-end, 5,2 million new shares were issued at R135 per share. The issue of new shares after year-end,
but prior to the record date for the final distribution resulted in an antecedent dividend amounting to R32,1 million.
In accordance with industry best practice, the antecedent dividend has been added back in the calculation of
distributable earnings for the year.
The proceeds of the equity issue will be applied to the reduction of Rand-denominated debt and to ongoing capital
expenditure in the South African portfolio.
Prospects
Hyprop expects dividend growth of approximately 10% for the full year to 30 June 2017. 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; and
- Earnings from offshore investments will not be materially impacted by exchange rate volatility.
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 322,10 cents per share for the six months ended 30 June 2016 will be paid to shareholders as follows:
2016
Last day to trade cum dividend Tuesday, 27 September
Shares trade ex dividend Wednesday, 28 September
Record date Friday, 30 September
Payment date Monday, 3 October
Shareholders may not dematerialise or rematerialise their shares between Wednesday, 28 September 2016 and Friday,
30 September 2016, both days inclusive. Payment of the dividend will be made to shareholders on Monday, 3 October 2016.
In respect of dematerialised shareholders, the dividend will be transferred to the CSDP accounts/broker accounts on Monday,
3 October 2016. Certificated shareholders’ dividend payments will be deposited on or about Monday, 3 October 2016.
An announcement relating to the tax treatment of the dividend will be released separately.
Basis of preparation
The summary consolidated financial statements for the year ended 30 June 2016 were prepared in accordance with the
requirements of the JSE Limited Listings Requirements for preliminary reports and the requirements of the Companies
Act of South Africa. The JSE Listings Requirements require preliminary reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34
Interim Financial Reporting.
All amendments to standards that are applicable to Hyprop for its financial year beginning 1 July 2015 have been
considered. Based on management’s assessment, the amendments do not have a material impact on the group’s annual
financial statements.
All accounting policies applied in the preparation of the group annual financial statements for the year ended 30 June 2016
are consistent with those applied by Hyprop in its consolidated group annual financial statements for the prior financial
year.
These summarised consolidated financial statements for the year ended 30 June 2016 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 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 report
on 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 engagement, they should obtain a copy of the auditor’s report, together
with the accompanying financial information from the registered office of the company.
KPMG Inc. has audited the group annual financial statements. Their unqualified audit report is available 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
2 September 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*
*Non-executive †Independent
Independent non-executive director Louis van der Watt resigned from the board on 4 May 2016.
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-Jane Watson
(Telephone: +27 11 447 0090)
Email: investorrelations@hyprop.co.za or viki@hyprop.co.za
www.hyprop.co.za
Date: 02/09/2016 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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