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HYPROP INVESTMENTS LIMITED - Summarised consolidated results for the year ended 30 June 2017

Release Date: 01/09/2017 08:30
Code(s): HYP     PDF:  
Wrap Text
Summarised consolidated results for the year ended 30 June 2017

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 consolidated results for the year ended 30 June 2017


Highlights
- Total dividend up 12,1%
- Agreement to acquire The Mall in Sofia, Bulgaria (post year-end)
- Disposal of non-core properties for R867 million


Summarised consolidated statement of comprehensive income
                                                                                Audited           Audited 
                                                                              12 months         12 months 
                                                                           30 June 2017      30 June 2016 
                                                                                   R000              R000 
Revenue                                                                       3 167 649         3 078 221 
Investment property income                                                    3 128 062         2 976 420 
Straight-line rental income accrual                                              39 587           101 801 
Property expenses                                                            (1 073 877)         (993 861)
Net property income                                                           2 093 772         2 084 360 
Other operating expenses                                                        (78 232)          (76 593)
Operating income                                                              2 015 540         2 007 767 
Net interest                                                                   (336 502)         (366 176)
Received                                                                        294 177           323 759 
Paid                                                                           (630 679)         (689 935)
Net operating income                                                          1 679 038         1 641 591 
Other income                                                                     36 931                   
Change in fair value                                                            983 372         1 217 049 
Investment property                                                           1 181 786         1 382 134 
Straight-line rental income accrual                                             (39 587)         (101 801)
Financial guarantee                                                            (163 855)                  
Investment in joint venture                                                      10 102           (10 102)
Derivative instruments                                                           (5 074)          (53 182)
Loss on disposal                                                                   (526)                  
Investment in subsidiary                                                         (2 557)                  
Investment property                                                               2 031                   
Impairment of loan (AttAfrica)                                                  (25 377)                  
Impairment of goodwill                                                          (18 134)                  
Net income before equity-accounted investments                                2 655 304         2 858 640 
Share of loss from joint ventures                                               (50 380)          (41 007)
Share of income from associate                                                                        457 
Dividends                                                                       146 350                   
Profit before taxation                                                        2 751 274         2 818 090 
Taxation                                                                         (4 340)          (50 930)
Profit for the year                                                           2 746 934         2 767 160 
Other comprehensive income                                                                                
Exchange differences on translation of foreign operations                       (27 623)           (1 491)
Total comprehensive income for the year                                       2 719 311         2 765 669 
Total profit for the year attributable to:                                                                
Shareholders of the company                                                   2 767 652         2 750 847 
Non-controlling interests                                                       (20 718)           16 313 
Profit for the year                                                           2 746 934         2 767 160 
Total comprehensive income attributable to:                                                               
Shareholders of the company                                                   2 755 272         2 752 041 
Non-controlling interests                                                       (35 961)           13 628 
Total comprehensive income for the year                                       2 719 311         2 765 669 

                                                                                Audited           Audited 
                                                                              12 months         12 months 
                                                                           30 June 2017      30 June 2016 
                                                                                   R000              R000 
Condensed reconciliation - headline earnings                                                              
Profit for the year                                                           2 767 652         2 767 160 
Earnings                                                                      2 767 652         2 767 160 
Headline earnings adjustments                                                (1 173 229)       (1 372 032)
Change in fair value of:   Investment property                               (1 181 786)       (1 382 134)
                           Investment in joint venture                          (10 102)           10 102 
Loss/(profit) on disposal: Investment in subsidiary                               2 556
                           Investment property                                   (2 031)
Impairment of goodwill                                                           18 134
Headline earnings                                                             1 594 423         1 395 128 
Total shares in issue                                                       248 441 278       243 256 092 
Weighted average shares in issue                                            247 441 400       242 921 081 
Diluted weighted average shares in issue                                    247 720 531       243 367 758 
Total shares in issue for dividend per share                          
(excludes treasury shares)                                                  247 899 032       248 030 619 
Basic earnings per share (cents)                                                1 118,5           1 139,1 
Headline earnings per share (cents)                                               644,4             574,3 
Diluted earnings per share (cents)                                              1 110,8           1 131,1 
Diluted headline earnings per share (cents)                                       637,1             567,3 


Summarised consolidated statement of financial position
                                                                                Audited           Audited 
                                                                           30 June 2017      30 June 2016 
                                                                                   R000              R000 
Assets                                                                                                    
Non-current assets                                                           32 854 166        32 227 218 
Investment property                                                          29 681 596        28 702 563 
South African portfolio                                                      27 711 853        26 380 137 
Ikeja City Mall (Lagos, Nigeria)                                              1 969 743         2 322 426 
Building appurtenances and tenant installations                                 148 530           126 100 
Investments in sub-Saharan Africa (excluding SA)                              3 005 821         3 315 614 
Investment in associate                                                                               766 
Loans receivable                                                                 17 434            14 732 
Goodwill                                                                                           18 134 
Derivative instruments                                                              785            49 309 
Current assets                                                                1 366 021           378 150 
Receivables                                                                     230 741           179 193 
Derivative instruments                                                            9 530                   
Cash and cash equivalents                                                     1 125 750           198 957 
Non-current assets held-for-sale                                                426 681         1 243 591 
Total assets                                                                 34 646 868        33 848 959 
Equity                                                                       24 882 553        23 118 856 
Stated capital and reserves                                                  24 788 254        22 988 596 
Non-controlling interest                                                         94 299           130 260 
Liabilities                                                                                               
Non-current liabilities                                                       5 428 316         8 879 743 
Interest-bearing liabilities                                                  5 068 332         8 632 036 
Financial guarantee                                                             163 855                   
Derivative instruments                                                           56 530           101 198 
Deferred taxation                                                               139 599           146 509 
Current liabilities                                                           4 322 925         1 822 492 
Payables                                                                        489 681           528 440 
Interest-bearing liabilities                                                  3 832 306         1 294 052 
Derivative instruments                                                              938                   
Liabilities directly associated with non-current assets held-for-sale            13 074            27 868 
Total liabilities                                                             9 764 315        10 730 103 
Total equity and liabilities                                                 34 646 868        33 848 959 
Net asset value per share (R)                                                     99,78             94,50 


Summarised consolidated statement of changes in equity
                                                                                Audited           Audited 
                                                                           30 June 2017      30 June 2016 
                                                                                   R000              R000 
Balance at beginning of year                                                 23 118 856        21 658 721 
Total profit for the year attributable to Hyprop shareholders                 2 767 652         2 750 847 
Non-controlling interest                                                        (35 961)          130 260 
Issue of shares                                                                 695 656                   
Treasury shares                                                                   3 422           (27 789)
Dividends                                                                    (1 660 316)       (1 404 296)
Share-based payment reserve                                                       5 624             9 919 
Foreign currency translation reserve                                            (12 380)            1 194 
Balance at end of year                                                       24 882 553        23 118 856 
Distribution details                                                                                      
Total distribution for the year (cents)                                           695,1             619,9 
Six months ended 30 June (cents)                                                  347,8             322,1 
Six months ended 31 December (cents)                                              347,3             297,8 


Summarised consolidated statement of cash flows
                                                                                Audited           Audited 
                                                                           30 June 2017      30 June 2016 
                                                                                   R000              R000 
Cash flows from operating activities                                            319 908          (210 672) 
Cash generated from operations                                                2 159 602         1 709 767 
Interest received                                                               266 423           191 515 
Interest paid                                                                  (441 049)         (692 192) 
Taxation paid                                                                    (4 751)          (15 466) 
Dividends paid                                                               (1 660 317)       (1 404 296) 
Cash flows from investing activities                                            669 846        (1 716 759) 
Cash flows from financing activities                                            (44 833)        1 989 143 
Net increase in cash and cash equivalents                                       944 921            61 712 
Cash (disposed)/acquired with subsidiary                                         (4 006)           48 964 
Translation effects on cash and cash equivalents of foreign entities            (12 336)            5 002 
Cash reallocated to assets held-for-sale                                         (1 786)             (562) 
Cash and cash equivalents at beginning of year                                  198 957            83 841 
Cash and cash equivalents at end of year                                      1 125 750           198 957 


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.

The shopping centre portfolio in South Africa includes super-regional centre Canal Walk, large regional centres
Clearwater, The Glen, Woodlands, CapeGate, Somerset Mall and Rosebank Mall, and regional centre Hyde Park Corner.

The sub-Saharan African portfolio (excluding SA) includes interests in Accra Mall, West Hills Mall and Achimota Retail
Centre (all in Accra, Ghana), Kumasi City Mall in Kumasi, Ghana, Manda Hill Centre in Lusaka, Zambia and Ikeja City
Mall in Lagos, Nigeria.

Hyprop's investments in South-Eastern Europe, held via UK-based Hystead Limited, include 60% interests in Delta City
Belgrade, Serbia, Delta City Podgorica, Montenegro and Skopje City Mall in Skopje, Macedonia. In July 2017, Hyprop 
agreed to acquire a 60% interest in The Mall in Sofia, Bulgaria.

Financial results
Hyprop has declared a dividend of 347,8 cents per share for the six months ended 30 June 2017, an increase of 8,0% on
the corresponding period in 2016. The total distribution for the year of 695,1 cents per share is an increase of 12,1%
on the prior year, in line with forecast.
 
Due to constraints on the conversion of Naira to US Dollar, distributable earnings from Ikeja City Mall in Lagos,
Nigeria, amounting to R26,0 million, were excluded from dividends for the year. 

Distributable earnings for the year benefited from the inclusion of income amounting to R101,8 million from the
investments in South-Eastern Europe (30 June 2016: R24,6 million).

South African portfolio

Revenue and distributable earnings
                                                               12 months ended                    12 months ended
                                                                 30 June 2017                       30 June 2016
Business segment                                                        Distributable                        Distributable     
                                                          Revenue            earnings          Revenue            earnings    
                                                             R000                R000             R000                R000    
Shopping centres                                        2 580 200           1 723 648        2 413 365           1 633 312    
Value centres(1)                                          174 314             128 615          161 017             114 046    
Total retail                                            2 754 514           1 852 263        2 574 382           1 747 358    
Standalone offices(2)                                      46 908              28 332           41 701              25 828    
Investment property (excluding properties sold)         2 801 422           1 880 595        2 616 083           1 773 186    
Properties sold(3)                                         74 179              36 332          128 611              74 965    
Total investment property                               2 875 601           1 916 927        2 744 694           1 848 151    
1 Includes Willowbridge North (held-for-sale)
2 Includes Lakefield Office Park (held-for-sale)
3 Properties sold during the 2017 year include Somerset Value Mart, Willowbridge South, Glenfield and Glenwood office parks.

Revenue and distributable earnings from investment property (excluding properties sold) increased by 7,1% and 6,1%,
respectively. 

Clearwater, Hyde Park Corner, CapeGate and Somerset Mall performed well during the year, with weighted average growth
in distributable earnings of 8,6%. The Glen's income was negatively affected by construction work and limited rent
reductions.

Trading density growth continued to slow in the second half of the year. Excluding The Glen, trading density growth
for the year was 2,0% (30 June 2016: 6,7%). Trading density growth for the year including The Glen was 1,4% 
(30 June 2016: 5,0%).

Notwithstanding the slowing in trading density growth, Hyprop's shopping centres continue to receive strong demand for
space from both national and international tenants.

Cost-to-income ratios
                       30 June       30 June
                          2017          2016
Net basis (%)             15,7          15,0
Gross basis (%)           33,3          33,2

The cost-to-income ratios increased marginally, due in part to higher municipal costs at Canal Walk and loss of income
due to extensions and refurbishments at The Glen, Rosebank Mall and Canal Walk.

Tenant arrears
Total arrears as a percentage of rental income were 0,4% (30 June 2016: 0,5%). Bad debts written off during the year
were R8,9 million (30 June 2016: R13,3 million).

Vacancies
                                % of total rentable area
                                 30 June       30 June 
Vacancy profile by sector           2017          2016 
Retail                               1,9           0,8 
Office                               7,9           4,5 
Total                                2,4           1,1 

The retail vacancy of 1,9% includes the former Stuttafords stores at Clearwater and Rosebank Mall which were vacated
at the end of May 2017 (6 299m2), Cinemas at Woodlands Boulevard (2 397m2) and the former HiFi Corporation store at
CapeGate (1 358m2).
 
The Stuttafords store at Canal Walk has been re-let to H&M (scheduled to begin trading in November 2017). After
year-end, the retail vacancy reduced to 1,7%.

The increase in office vacancies relates primarily to The Mall Offices in Rosebank, where Sasol vacated 8 942m2 during
the year. Good progress has been made letting this space (albeit at lower rentals), and only 1 821m2 of space remains
vacant. Other office vacancies include small areas at Hyde Park Corner and Canal Walk.

Valuations                                                                               Value per 
                                             Value attributable to Hyprop            rentable area 
Business segment                       Rentable         30 June         30 June            30 June 
                                           area            2017            2016               2017 
                                            (m2)           R000            R000              (R/m2)
Shopping centres                        644 196      26 490 589      25 282 472             45 181 
Value centres(1)                         66 394       1 473 000       1 321 000             22 186 
Total retail                            710 590      27 963 589      26 603 472             43 033 
Total standalone offices(2)              20 328         310 798         289 075             15 289 
Total (excluding properties sold)       730 918      28 274 387      26 892 547                    
Properties sold(3)                                                      838 000                    
Investment property                     730 918      28 274 387      27 730 547             42 261 
1 Includes Willowbridge North (held-for-sale)
2 Includes Lakefield Office Park(held-for-sale)
3 Properties sold during the 2017 year include Somerset Value Mart, Willowbridge South, 
  Glenfield and Glenwood office parks

Excluding properties sold, investment property was valued at R28,3 billion at 30 June 2017 (30 June 2016: R26,9 billion),
an increase of 5,1%. The weighted average capitalisation rate of the portfolio is 6,6%. All discount and capitalisation 
rates remained largely the same as the previous year.

Capital expenditure
Extensions and refurbishments at Rosebank Mall, The Glen and Canal Walk are on schedule and within budget:

Shopping centre       Project                                                          Amount (Hyprop share)      Completion date    
Rosebank Mall         Additional 4 300m2 rentable area                                 R127,0 million             April 2018         
The Glen              Food court enclosure and additional 1 200m2 rentable area        R90,9 million              April 2018         
Canal Walk            Additional retail in La Piazza area                              R41,6 million              November 2017      

The extension of Rosebank Mall will accommodate H&M and other key tenants, while the refurbishments at Canal Walk and
The Glen will strengthen the retail offering in specific areas of the respective centres. The estimated average forward
yield for the three projects is approximately 7%.
 
Hyprop is focused on improving the quality and sustainability of its shopping centres and during the year R177,9 million 
(30 June 2016: R178,0 million) was spent on refurbishments, tenant installations, new equipment and technology. The third 
phase of the solar photovoltaic plant at Clearwater Mall will be completed in September 2017, following which approximately 
15% of the centre's electricity requirements will be provided by solar power.

Disposals
During the year, the following disposals were completed, at an average yield of approximately 9%:

                         Sale price            Rentable area (m2)     Transfer date     
Somerset Value Mart      R185 million                     12 546      September 2016    
Glenfield Office Park    R180 million                     10 320      December 2016     
Willowbridge South       R460 million                     25 268      March 2017        
Glenwood Office Park     R42 million                       3 471      May 2017          
Total                    R867 million                     51 605

The sale of Willowbridge North for R225 million is unconditional and transfer is anticipated in September 2017. 

As a consequence of the above disposals (Willowbridge North included), the rentable area in the South African
portfolio will reduce by 69 152m2, a reduction of 8,8%.

Lakefield Office Park is the last remaining non-core property to be sold. Willowbridge North and Lakefield Office Park
are included under assets held-for-sale in the statement of financial position at 30 June 2017.

The disposal of non-core assets has improved the overall quality of the portfolio, with a reduced exposure to the
higher risk office sector.

Investments outside South Africa
The functional and reporting currencies for the investments in sub-Saharan Africa (excluding SA) and South-Eastern
Europe are the US Dollar and Euro, respectively.

The relevant exchange rates used to convert to Rand at the respective dates were as follows:

                         30 June 2017                      30 June 2016
                                    Year-end                           Year-end     
                Average rate       spot rate       Average rate       spot rate     
                          (R)             (R)                (R)             (R)   
US Dollar              13,63           13,04              14,87           14,77    
Euro                   14,53           14,90              16,40           16,40    

The average rates are a weighted average of the actual exchange rates on the dates that the foreign currency dividends
were received in South Africa. The year-end spot rate is the rate used to translate balance sheet items at year-end.

Hyprop fixes the exchange rates on US Dollar and Euro income for six months in advance of receipt of the dividends.

Investments in sub-Saharan Africa (excluding South Africa)
The macro-economic environment in the countries in which Hyprop and AttAfrica are invested in has improved in the last
six months. The local currencies are more stable in Ghana and Zambia and US Dollar liquidity in Nigeria has improved,
although at a weaker Naira exchange rate.

Operationally, there has been an improvement in rental collections, however there has not been any significant growth
in rental levels.

                          Hyprop share of distributable earnings
                           30 June 2017      30 June 2016    
                                   R000              R000    
Distribution received           168 241           213 388    
Interest and expenses          (111 269)         (129 734)    
Net                              56 972(1)         83 654    
1 Excludes Ikeja distribution of R26,0 million

Distributable earnings from the investments in sub-Saharan Africa (excluding SA) reduced to R57,0 million (30 June
2016: R83,7 million), largely due to the exclusion of distributable earnings from Ikeja City Mall in Lagos, Nigeria,
replacement of tenants at lower rentals at Manda Hill Centre in Lusaka, Zambia and Rand appreciation against the US 
Dollar.

In light of the improved US Dollar liquidity in Nigeria, we expect to resume distributing income from Ikeja City Mall
during the 2018 financial year. During the current year, R65,0 million (Hyprop share: R48,7 million) was applied to the
reduction of senior in-country US Dollar debt in Nigeria.

Vacancies
                                                 Hyprop's
                                                effective       Rentable       30 June 2017       30 June 2016 
                                             shareholding           area            vacancy            vacancy 
                      City/country                     (%)           (m2)                (%)                (%)
Ikeja City Mall       Lagos, Nigeria                 75,0         22 223                  -                2,3 
Manda Hill Centre     Lusaka, Zambia                 68,8         40 561                5,4                4,7 
Accra Mall            Accra, Ghana                   17,6         21 349                  -                  - 
West Hills Mall       Accra, Ghana                   16,8         27 560                5,3                5,0 
Achimota Mall         Accra, Ghana                   28,1         15 006                6,1               21,7 
Kumasi City Mall      Kumasi, Ghana                  28,1         17 948               26,5                n/a 
Total portfolio                                                  144 647                6,5                4,0 

Demand for space at Accra Mall (Accra, Ghana) and Ikeja City Mall (Lagos, Nigeria) remains strong. Trading at Achimota
Mall (Accra, Ghana), which opened in November 2015, has stabilised over the last 12 months and vacancies have reduced.
Kumasi City Mall, in Kumasi, Ghana began trading in April 2017. 

Hyprop share of shareholder loans/investment property
At 30 June 2017 the Hyprop share of the US Dollar value of the AttAfrica portfolio, Manda Hill and Ikeja City Mall was 
USD281,8 million (30 June 2016: USD285,1 million) at a weighted average capitalisation rate of 8,4% (30 June 2016: 8,2%).

                                                    Hyprop share
                                           30 June 2017      30 June 2016
                                                   R000              R000
AttAfrica and Manda Hill                      3 005 821         3 315 614
Ikeja City Mall, Lagos, Nigeria (75%)         1 476 553         1 740 658
Investments in sub-Saharan Africa             4 482 374         5 056 272

The Rand equivalent value of the investments in sub-Saharan Africa (excluding SA) at 30 June 2017 was R4,5 billion
(30 June 2016: R5,1 billion). The net reduction over the year was largely due to Rand appreciation against the US Dollar,
a reduction in the valuation of Ikeja City Mall and impairment of the AttAfrica shareholder loan in Hyprop Mauritius.

Hyprop is currently not looking to increase its investments in sub-Saharan Africa (excluding South Africa).

Investments in South-Eastern Europe
Hyprop's investments in South-Eastern Europe are held through a UK company, Hystead Limited (Hystead), in which Hyprop
has a 60% interest. The purchase of Skopje City Mall in Skopje, Macedonia, for a total consideration of EUR92 million,
was effective in October 2016. 

                          Hyprop share of distributable earnings
                           30 June 2017      30 June 2016    
                                   R000              R000    
Distribution received           147 059            37 000    
Interest and expenses           (45 236)          (12 428)    
Net                             101 823            24 572    

Trading conditions at the South-Eastern European shopping centres, including foot count and turnover growth, remain
positive. Demand for space remains strong and plans to extend the centres are progressing.

Vacancies
At 30 June 2017 (and at 30 June 2016), there were no vacancies in the South-Eastern European shopping centres.

Hyprop share of investment property
At 30 June 2017 the Hyprop share of the Euro value of the Hystead portfolio was EUR179,9 million (30 June 2016:
EUR123,7 million) at a weighted average capitalisation rate of 8,7% (30 June 2016: 8,4%).

                                                               Hyprop share
                                                       30 June 2017      30 June 2016 
                                                               R000              R000 
Delta City Belgrade, Belgrade, Serbia (60%)               1 162 200         1 283 136 
Delta City Podgorica, Podgorica, Montenegro (60%)           685 698           744 888 
Skopje City Mall, Skopje, Macedonia (60%)                   833 208               n/a 
Investments in South-Eastern Europe                       2 681 106         2 028 024 

The total Rand equivalent value of Hyprop's share of investment property in South-Eastern Europe increased due to the
acquisition of Skopje City Mall in Skopje, Macedonia. The Rand equivalent value of the Delta City centres reduced due
to the appreciation of the Rand against the Euro.

The investments in South-Eastern Europe are accounted for as an investment in a financial asset with the gain on initial 
recognition of the financial asset being deferred. Accordingly, the investments do not appear on the consolidated
statement of financial position.

Funding
In March 2017, EUR206,0 million was refinanced for three years at a rate of 2,5% (previously 1,7%). The remaining Euro
funding amounting to EUR93,0 million is currently at a rate of 1,7%. Euro debt of approximately EUR134,1 million will
be refinanced during the course of the 2018 financial year with in-country asset backed finance.

The Euro debt is supported by a guarantee from Hyprop, as well as back-to-back security provided by the other shareholder 
of Hystead. The Hyprop funding support results in the recognition of a financial guarantee on the Hyprop statement of 
financial position. Hyprop receives credit enhancement fees for its funding support. In addition, the underlying properties 
in the South-Eastern European portfolio are currently unencumbered.

Acquisition
In July 2017, it was announced that Hystead had reached agreement to acquire The Mall shopping centre in Sofia, Bulgaria, 
for EUR155 million. Approval for the transaction from the Bulgarian competition authority is still pending. It is anticipated 
that the transaction will be effective from October 2017.

This will be Hystead's fourth South-Eastern European acquisition, taking the portfolio to a gross asset value of approximately 
EUR460 million. The Mall is the dominant shopping centre in Sofia and has a rentable area of 52 000m2, with a weighted average 
rent of EUR18,30/m2 per month. This acquisition is Hystead's first entry into the European Union and will enhance the quality, 
profile and critical mass of the portfolio. 

The acquisition will be funded in a similar manner to Hystead's first three acquisitions, with short-term bridge funding, 
supported by a guarantee from Hyprop. The Hyprop support will be for approximately EUR105 million, as the property will be 
acquired with existing senior in-country debt, having no recourse to Hyprop.

Hystead listing
Progress is being made with a possible listing of Hystead in the first half of calendar year 2018. The listing will
enable Hystead to become a standalone fund, will reduce its reliance on Hyprop and will position it for growth through
further acquisitions and developments.

Net asset value
The net asset value (NAV) per share at 30 June 2017 increased by 5,6% to R99,78 (30 June 2016: R94,50). The increase
was primarily due to an increase in the independent valuation of the South African investment property portfolio, as well
as the issue of new shares at a premium to NAV per share in July 2016, offset by the impact of the stronger Rand on the
sub-Saharan Africa portfolio.

At 30 June 2017, the closing share price of R116,76 represented a premium of 17,0% to the NAV per share.

Borrowings
                                                30 June       30 June 
                                                   2017          2016 
                                                     Rm            Rm 
South African debt                                4 114         4 632 
Bank debt                                         1 814         2 992 
Corporate bonds                                   2 300         1 200 
Commercial paper                                                  440 
USD debt (Rand equivalent)                        4 391         4 842 
EUR debt (Rand equivalent)                        2 674         1 510 
Cash and cash equivalents                        (1 126)         (239) 
Net borrowings                                   10 052        10 745 
Loan to value (%)                                  28,9          30,8 
Debt at fixed rates (%)(1)                                               
South African debt (%)                            100,9          89,6 
USD debt (%)                                       70,4          72,4 
Maturity of fixes (years)(1)                        3,4           4,4 
South African debt (years)                          3,9           4,9 
USD debt (years)                                    2,7           3,7 
Cost of funding (%)                                 5,7           6,0 
South African debt (%)                              8,9           8,9 
USD debt (%)                                        4,7           4,6 
EUR debt (%)                                        2,2           1,7 
Debt capital market (DCM) % of total debt            21            15 
1 Interest rate on Euro debt is not fixed

During the year, a maturing South African bank loan amounting to R1,2 billion was refinanced with DCM funding (three,
four and five-year corporate bonds). All DCM funding is unsecured.

The Rand equivalent of the US Dollar-denominated bank debt reduced during the year, largely due to Rand appreciation
against the US Dollar. The US Dollar debt includes debt in Hyprop Mauritius, as well as 75% of the in-country debt 
relating to Ikeja City Mall (Lagos, Nigeria).

The Euro debt, which funded Hyprop's 60% interest in the South-Eastern European shopping malls, is not consolidated on
the Hyprop statement of financial position. For the purpose of the above analysis, 60% of the debt and 60% of the
corresponding asset values have been included.

Euro-denominated debt increased, due to the final payment of EUR49,3 million in September 2016 in respect of Delta
City Belgrade, as well as a payment of EUR92 million in October 2016 for Skopje City Mall in Skopje, Macedonia. 

Due to the pending changes in the Euro debt structure, the interest rate on the Euro debt has not yet been fixed.

The increase in cash is largely due to inflows from the issue of new shares in July 2016 (R700 million) and proceeds
received from the sale of non-core assets in the South African portfolio (R867 million).

Distributable earnings statement and reconciliation to dividend declared

                                                                 Distributable earnings
                                                                       12 months
                                                              30 June            30 June 
                                                                 2017               2016 
                                                                 R000               R000 
South African property portfolio                            1 916 927          1 848 151 
Continuing operations                                       1 880 595          1 773 186 
Properties sold                                                36 332             74 965 
Investments in sub-Saharan Africa (excluding SA)               56 972             83 654 
Investments in South-Eastern Europe                           101 823             24 572 
Fund management expenses                                      (67 347)           (63 922)
Net interest                                                 (321 336)          (394 310)
Other income                                                   36 533              7 372 
Antecedent dividend                                                               16 704 
Distributable earnings                                      1 723 572          1 522 221 
Total shares in issue at year-end                         248 441 278        243 256 092 
Treasury shares                                              (542 246)          (410 659)
Shares issued, August 2016                                                     5 185 186 
Shares in issue for distributable earnings                247 899 032        248 030 619 
Dividend per share (cents)                                      695,1              619,9 
Dividend per share growth (%)                                    12,1               14,2 

Net interest costs of R321,3 million (30 June 2016: R394,3 million) reduced due to non-core asset sales of 
R867 million and a cash inflow of R700 million in July 2016 from the issue of new shares. The proceeds from 
non-core asset sales and the issue of new shares were applied in part to the reduction of debt (R518,0 million) 
and to capital expenditure in the South African portfolio (R177,9 million). The remaining cash was placed on deposit.

Other income, amounting to R36,5 million, comprises a credit enhancement fee received for the funding guarantee
provided by Hyprop in respect of the South-Eastern European investments. The implementation of asset backed finance 
in the Hystead subsidiaries and the possible listing of Hystead will result in the termination of these fees.

Treasury shares are held in respect of an equity settled staff incentive scheme.

Prospects
Hyprop expects dividend growth of between 7% and 9% for the year to 30 June 2018. 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
- Earnings from offshore investments will not be materially impacted by exchange rate volatility. Exchange rates 
  have been assumed at R13,00 and R15,00 to the US Dollar and Euro respectively
- Loss of income due to developments in the South African portfolio amounting to R9,3 million
- The Hystead listing taking place in the first half of calendar year 2018.

The forecast has not been reviewed or reported on by the company's auditors.

Payment of dividend
A dividend of 347,8 cents per share for the six months ended 30 June 2017 will be paid to shareholders as follows:

                                                        2017    
Last day to trade cum dividend         Tuesday, 26 September    
Shares trade ex dividend             Wednesday, 27 September    
Record date                             Friday, 29 September    
Payment date                               Monday, 2 October    

Shareholders may not dematerialise or rematerialise their shares between Wednesday, 27 September 2017 and Friday, 
29 September 2017, both days inclusive. Payment of the dividend will be made to shareholders on Monday, 2 October 2017. 
In respect of dematerialised shareholders, the dividend will be transferred to the CSDP accounts/broker accounts on Monday,
2 October 2017. Certificated shareholders’ dividend payments will be deposited on or about Monday, 2 October 2017.

An announcement relating to the tax treatment of the dividend will be released separately.

Basis of preparation
The summarised consolidated financial statements for the year ended 30 June 2017 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 as a minimum, contain the information required in terms of IAS 34 Interim
Financial Reporting.

All amendments to standards that are applicable to Hyprop for its financial year beginning 1 July 2016 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 2017 
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 2017 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 underlying 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

1 September 2017


Corporate information 

Directors
GR Tipper*# (Chairman)
PG Prinsloo (CEO)
LR Cohen (FD)
KM Ellerine*
L Engelbrecht*#
MJ Lewin*#
N Mandindi*#
TV Mokgatlha*#
L Norval*
S Shaw-Taylor*#
*Non-executive         #Independent 

Independent non-executive director, Nyami Mandindi, was appointed to the board on 8 May 2017.

Registered office
Second Floor 
Cradock Heights 
21 Cradock Avenue 
Rosebank
(PO Box 52509, Saxonwold, 2132)

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue 
Rosebank
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

www.hyprop.co.za

Date: 01/09/2017 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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