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Hyprop Investments Limited HY 2012 results

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Hyprop Investments Limited HY 2012 results

Hyprop Investments Limited HY 2012 results

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  • 1. UNAUDITED INTERIM RESULTS for the six months ended 30 June 2012 Half year distribution up 9,4% to 198 cents per combined unit Total assets R20,6 billion, up 2,1% Gearing 24,7% Hyprop Investments Limited (Incorporated in the Republic of South Africa) (Registration No. 1987/005284/06) Share Code: HYP ISIN Code: ZAE000003430 (“Hyprop” or “the company”) www.hyprop.co.za DIRECTORS: MS Aitken*† (Chairman); PG Prinsloo (CEO); LR Cohen (FD); EG Dube*†; KM Ellerine*; L Engelbrecht*†; MJ Lewin*; JA Mabuza*†; L Norval*; S Shaw-Taylor*; GR Tipper*†; LLS van der Watt*; M Wainer*; LI Weil*† (* Non-executive † Independent) REGISTERED OFFICE: 2nd Floor, Cradock Heights, 21 Cradock Avenue, Rosebank (PO Box 41257, Craighall, 2024) TRANSFER SECRETARIES Computershare Investor Services (Proprietary) Limited, Ground Floor 70, Marshall Street, Johannesburg (PO Box 61051, Marshalltown, 2107) COMPANY SECRETARY Probity Business Services (Proprietary) Limited SPONSOR Java Capital INVESTOR RELATIONS Envisage Investor Corporate Relations R920 million re-development of Rosebank Mall approved Investment into Africa through Atterbury Africa STATEMENT OF COMPREHENSIVE INCOME Unaudited 30 June 2012 R’000 Unaudited 30 June 2011 Restated R’000 Audited 31 Dec 2011 R’000 Revenue 1 066 395 563 851 1 583 157 Investment property income 1 002 045 497 891 1 350 937 Straight-line rental income accrual (14 049) 8 400 100 214 Listed property securities income 78 399 57 560 132 006 Property expenses (363 650) (185 725) (511 681) Net property income 702 745 378 126 1 071 476 Other operating expenses (24 423) (19 314) (43 855) Operating income 678 322 358 812 1 027 621 Net interest (210 986) (63 760) (208 325) Received 10 844 2 731 31 416 Paid (221 830) (66 491) (239 741) Net operating income 467 336 295 052 819 296 Change in fair value 422 786 273 520 (212 008) Investment property 437 275 284 537 236 654 Straight-line rental income accrual 14 049 (8 400) (100 214) Listed property securities 56 882 8 345 258 716 Goodwill (547 654) Derivative instruments (85 420) (10 962) (59 510) Profit/(loss) on disposal 308 (9 835) Investment property (6 129) Listed property securities 308 (3 706) Amortisation of debenture premium 238 002 61 690 231 354 Non-core income 449 4 555 Income before debenture interest 1 128 432 630 711 833 362 Debenture interest (481 364) (300 665) (741 703) Net income before share of income from associate 647 068 330 046 91 659 Share of income from associate 8 314 9 949 Profit before taxation 647 068 338 360 101 608 Taxation (561 787) (41 003) (185 639) Total comprehensive income/(loss) 85 281 297 357 (84 031) Abridged reconciliation - headline earnings and distributable earnings Net income/(loss) after taxation 85 281 297 357 (84 031) Debenture interest 481 364 300 665 741 703 Earnings 566 645 598 022 657 672 Headline earnings adjustments (593 960) (306 392) 122 613 Change in fair value of investment property (net of deferred taxation) (355 650) (244 702) (203 522) Impairment of goodwill 547 654 (Profit)/loss on disposal of listed property securities (308) 3 706 Amortisation of debenture premium (238 002) (61 690) (231 354) Loss on disposal of investment property 6 129 Headline earnings (27 315) 291 630 780 285 Distributable earnings adjustments 508 700 9 171 (37 054) Change in fair value of listed property securities (net of deferred taxation) (46 264) (7 177) (222 496) Change in the fair value of derivative instruments 85 420 10 962 59 510 Taxation 87 986 Deferred taxation 469 544 28 302 Attfund transaction costs 5 504 9 644 Share of income from associate (118) Distributable earnings 481 385 300 801 743 231 Total combined units in issue 243 113 169 166 113 169 243 113 169 Weighted average combined units in issue 243 113 169 166 113 169 192 061 114 Earnings per combined unit 233,1 360,0 342,4 Headline earnings per combined unit (11,2) 175,6 406,3 Distributable earnings per combined unit 198,0 181,1 383,6 Distribution details Total distribution for the year 198,00 181,00 383,00 Six months ended 31 December 202,00 Four months ended 31 December 137,00 Special distribution - two months ended 31 August 65,00 Six months ended 30 June 198,00 181,00 181,00 Investment Property Old Mutual Investment Group: Property Investments (Pty) Limited updated the valuations prepared by them at the previous year-end to determine an independent valuation of the Hyprop portfolio at 30 June 2012. Investment property increased in value by R437 million to R17,9 billion, a 2,7% increase. Developments The board has approved the re-development of the Rosebank Mall at a total cost of approximately R920 million and at an approximate yield of 7%. Construction on the Gardens site has begun and the total redevelopment project will take approximately two years to complete. During the period the Edgars and Jet stores at Clearwater were extended at a total cost of R12,9 million and at an incremental yield of 13,1%. Planning for further extensions at various shopping centres, including Canal Walk and The Glen and the refurbishment Willowbridge, are progressing well. Listed Property Securities Listed property securities at 30 June included the following: Fund type Number of units % held Value R‘000 Sycom PUT 84 225 688 33,9% 2 024 Acucap PLS 2 593 011 1,5% 110 Total value 2 134 Disposals Hyprop disposed of its investment in Vunani during the period for R101 million. The investment in Acucap was sold subsequent to period-end for R108 million. Hyprop’s 50% interest in Southcoast Mall was sold to Redefine Properties Limited (“Redefine”) during the period for R110.5 million. Transfer to Redefine was registered in July 2012. Agreement was reached in June 2012 for the sale of the Trade Centre property located within the CapeGate precinct for R70 million. Transfer is anticipated in September 2012. Other investments Hyprop has entered into an agreement with the Atterbury Group as a co-investor in a Mauritian based property investment company, Atterbury Africa Limited (“Atterbury Africa”). Hyprop’s initial shareholding in Atterbury Africa is 37,5% with a commitment to invest R750 million in the fund over the next 5 years. Atterbury Africa’s primary strategy is to develop and own quality shopping centres in Africa with a US dollar based income stream. Atterbury Africa recently purchased a 42,5% interest in the successful Accra Mall in Ghana and is planning to develop further shopping centres in that country and other selected African countries. Hyprop’s investment in Atterbury Africa is subject to exchange control approval. BORROWINGS Net borrowings at 30 June 2012 of R5,0 billion equate to a gearing ratio of 24,7%, down from 26,2% at 31 December 2011. The decrease in gearing is due to an increase in property valuations as well as the application of proceeds on disposals. At period-end, interest rates were hedged in respect of 72% of borrowings, at a weighted average rate of 8,4% (2011: 8,2%) and with a weighted average maturity of 4 years. In July 2012, Hyprop made its debut in the local bond market with an issuance of R400 million in 3-year bonds and R300 million in 3-month commercial paper. The initial bond issuance was priced at an all-in margin of 134 bps, while the commercial paper priced at 23 bps above 3-month Jibar, resulting in an aggregate all-in rate of 9%. Hyprop was assigned national long term and short term investment-grade credit ratings by Moody’s of A3.za and P-2.za respectively. Hyprop has unutilised bank facilities available to fund the Rosebank Mall re-development and the investment in Atterbury Africa. NET ASSET VALUE The net asset value per combined unit (“NAV”) at 30 June 2012 was R50,50, representing a 1,2% decrease on the NAV of R51,12 at 31 December 2011, primarily as a result of the increase in the capital gains taxation rate from 14% to 18,67% in February 2012. Excluding deferred taxation, the NAV at 30 June 2012 was R59,06, a discount of 4,9% to Hyprop’s closing combined unit price of R62,11 on 30 June 2012. DIRECTORATE As previously announced, Gavin Tipper and Jabu Mabuza were appointed to the board as independent non-executive directors on 8 March 2012 and 21 June 2012, respectively. The new appointments have increased the total number of independent non-executive directors to six, or 50% of the total complement of non-executive directors on the board. PROSPECTS Key focus in the year ahead will be on the re-development of Rosebank Mall, smaller expansion projects at other existing shopping centres, as well as its investment into Africa, through Atterbury Africa. Hyprop will also continue to dispose of non-core assets. Taking into account the once-off benefit in the second half of 2011 relating to the repurchase of 15 million Attfund Retail consideration units, Hyprop anticipates distribution growth for the full year ending December 2012 of between 5% and 7%. This forecast has not been reviewed or reported on by the company’s auditors. PAYMENT OF DEBENTURE INTEREST Distribution 50 of 198 cents per combined unit for the six months ended 30 June 2012 will be paid to combined unitholders as follows: SEPTEMBER 2012 Last day to trade cum distribution Friday, 14 Combined units trade ex distribution Monday, 17 Record date Friday, 21 Payment date Tuesday, 25 Unitholders may not dematerialise or rematerialise their combined units between Monday, 17 September and Friday, 21 September, both days inclusive. CHANGE IN ACCOUNTING POLICY As mentioned in the previous year-end annual results announcement, Hyprop noted its early adoption of the amendment to IAS 12. Deferred taxation is now recognised on the revaluation of the building component of investment properties at the capital gains taxation rate on the presumption that the investment will be recovered through disposal and will therefore attract capital gains taxation. Hyprop applied the amendment retrospectively as required by IAS 8, resulting in a re-statement of the deferred taxation balance at 30 June 2011. BASIS OF PREPARATION This interim report has been prepared in accordance with International Financial Reporting Standards, the AC500 Standards, International Accounting Standard IAS 34 ‘Interim Financial Reporting’ and the Companies Act. The accounting policies applied are consistent with those applied in the most recent audited annual financial statements. Hyprop has no dilutionary instruments in issue. These financial results have not been reviewed or audited by the company’s auditors. Preparation of the financial information was supervised by Laurence Cohen CA(SA) in his capacity as Financial Director. On behalf of the board. MS Aitken PG Prinsloo Chairman CEO 22 August 2012 STATEMENT OF FINANCIAL POSITION Unaudited 30 June 2012 R’000 Unaudited 30 June 2011 Restated R’000 Audited 31 Dec 2011 R’000 Assets Non-current assets 19 996 275 11 617 170 19 746 691 Investment property 17 750 318 9 797 910 17 357 277 Building appurtenances and tenant installations 44 548 20 087 35 873 Investment in associate 117 702 210 407 117 658 Goodwill 12 493 12 493 Derivative instruments 3 371 Loan receivable 47 496 47 782 47 217 Listed property securities 2 023 718 1 537 613 2 176 173 Current assets 345 600 175 504 327 641 Derivative instruments 1 197 Receivables 210 277 130 066 119 247 Cash and cash equivalents 135 323 44 241 208 394 Non-current assets held-for-sale 290 337 123 822 Investment property 180 808 123 822 Listed property securities 109 529 Total assets 20 632 212 11 792 674 20 198 154 Equity and liabilities Share capital and reserves 6 155 388 6 451 495 6 070 107 Liabilities Non-current liabilities 12 489 184 4 888 307 12 116 277 Debentures and debenture premium 6 121 539 2 386 205 6 359 541 Long-term loans 4 146 304 1 570 000 4 191 622 Derivative instruments 139 227 23 415 44 463 Deferred taxation 2 082 114 908 687 1 520 651 Current liabilities 1 987 640 452 872 2 011 770 Payables 367 397 152 207 308 482 Short-term loans 1 125 292 1 347 292 Derivative instruments 13 587 22 931 Combined unitholders for distribution 481 364 300 665 333 065 Total liabilities 14 476 824 5 341 179 14 128 047 Total equity and liabilities 20 632 212 11 792 674 20 198 154 Net asset value per combined unit ( R ) 50,50 53,20 51,12 Net asset value per combined unit - excluding deferred taxation liability ( R ) 59,06 58,67 57,37 ABRIDGED STATEMENT OF CASH FLOWS Unaudited 30 June 2012 R’000 Unaudited 30 June 2011 R’000 Audited 31 Dec 2011 R’000 Cash flows from operating activities 121 820 (68 863) (47 667) Cash generated from operations 666 195 290 921 879 948 Interest received 10 844 2 731 31 416 Interest paid (221 830) (66 491) (239 741) Taxation paid (324) (17 983) Distribution to combined unitholders (333 065) (303 987) (712 625) Income from associate 7 963 11 318 Cash flows from investing activities 72 427 (34 643) (4 420 885) Cash flows from financing activities (267 318) 80 000 4 609 200 Net (decrease)/increase in cash and cash equivalents (73 071) (23 506) 140 648 Cash and cash equivalents at beginning of period 208 394 67 747 67 746 Cash and cash equivalents at end of period 135 323 44 241 208 394 COMMENTARY INTRODUCTION Hyprop is South Africa’s largest listed shopping centre fund, with 11 directly owned shopping centres. All rental income earned by the company less property expenses and interest on debt is distributed to unitholders semi-annually. Hyprop’s primary objective is to provide sustainable income growth and capital appreciation to investors over the long term. FINANCIAL RESULTS Hyprop has declared an interim distribution of 198 cents, an increase of 9,4% on the distribution for the comparable period in 2011. Distribution growth benefited from a good performance and a positive trading environment at Hyprop’s larger shopping centres, savings in interest costs and improved performance from Sycom Property Fund Limited (“Sycom”) and Southern Sun Hyde Park Hotel. SEGMENTAL OVERVIEW 30 June 2012 30 June 2011 Business segment Revenue R’000 Distributable earnings R’000 Revenue R’000 Distributable earnings R’000 Canal Walk 225 845 161 850 202 905 146 493 Super regional 225 845 161 850 202 905 146 493 The Glen 92 566 59 847 85 830 54 855 CapeGate Precinct 89 348 57 408 Clearwater Mall 139 256 98 881 Woodlands Boulevard 88 302 60 623 Large regional 409 472 276 759 85 830 54 855 Hyde Park 78 168 48 400 73 409 46 019 Rosebank Mall 53 191 29 072 51 106 35 864 Southcoast Mall 10 466 5 762 10 395 5 731 Regional 141 825 83 234 134 910 87 614 Stoneridge 29 930 12 330 28 974 13 414 Atterbury Value Mart 47 753 37 937 Somerset Value Mart 10 135 6 795 Willowbridge Shopping Centre 37 850 21 752 Value centres 125 668 78 814 28 974 13 414 Shopping centres 902 810 600 657 452 619 302 376 Stand-alone offices 55 826 36 351 21 365 13 414 Hotels 24 659 563 23 907 (3 518) Investment property 983 295 637 571 497 891 312 272 Listed property securities 78 399 78 399 57 560 57 560 Fund mangement expenses (24 423) (13 467) Net interest paid (210 986) (63 760) Share of income from associate 8 196 Word4Word Marketing 18 750 824 Straight-line rental income accrual (14 049) 8 400 Total 1 066 395 481 385 563 851 300 801 Income from the properties acquired from Attfund Retail was included from 1 September 2011, the effective date of the acquisition. The comparative period ended June 2011 therefore does not include any income from Attfund Retail. On a like-for-like basis, net income from Canal Walk and The Glen showed strong growth, increasing by 10,5% and 9,1% respectively, while Rosebank Mall underperformed partly due to planned vacancies ahead of its re-development. Income from hotels in the period under review includes Southern Sun Hyde Park only, following the sale of The Grace in the second half of 2011. Income from Southern Sun Hyde Park improved due to higher occupancies. Share of income from associate in the comparative period relates to income received from Vunani Property Investment Fund Limited (“Vunani”). This income was included in listed property securities income in the period under review, following Vunani’s listing on the JSE Limited in August 2011. Taxation comprises deferred taxation in respect of the fair value adjustment to investment property and listed property securities, as well as a charge for the increase in the capital gains taxation rate, resulting in a headline loss for the period. Total arrears in the portfolio at 30 June 2012, comprising normal arrears, legal cases and outstanding tenant deposits were R25,7 million (31 December 2011: R41,3 million) and the total provision for doubtful debts was R9,4 million (31 December 2011: R17,4 million). Vacancies Total vacancies in the portfolio at 30 June 2012 were 3,8% (31 December 2011: 4,1%): Vacancy profile by sector % of total GLA 30 June 2012 31 Dec 2011 Retail 2,8 3,6 Office 13,7 10,0 PROPERTY PORTFOLIO Value attributable to Hyprop Value per m2 Business segment Rentable area (m2 ) 30 June 2012 R’000 31 Dec 2011 R’000 30 June 2012 (R/m2 ) Canal Walk 157 447 4 960 000 4 880 000 39 378 Super regional 157 447 4 960 000 4 880 000 39 378 The Glen 74 624 1 642 906 1 623 365 29 294 CapeGate Precinct 106 061 1 472 000 1 435 000 13 879 Clearwater Mall 85 174 2 641 000 2 500 000 31 007 Woodlands Boulevard 70 159 1 680 000 1 604 000 23 946 Large regional 336 018 7 435 906 7 162 365 23 746 Hyde Park 36 894 1 372 000 1 337 000 37 188 Rosebank Mall 35 950 922 000 923 000 25 647 Southcoast Mall 29 361 110 543 122 000 7 530 Regional 102 205 2 404 543 2 382 000 70 364 Stoneridge 51 293 414 900 409 500 8 988 Atterbury Value Mart 47 694 943 000 885 000 19 772 Somerset Value Mart 12 546 162 000 154 000 12 912 Willowbridge 44 027 629 000 607 000 14 287 Value centres 155 560 2 148 900 2 055 500 14 110 Shopping centres 751 230 16 949 349 16 479 865 25 144 Stand-alone offices 51 243 775 500 769 000 15 134 Hotels 130 000 145 000 Investment property 802 473 17 854 849 17 393 865 24 667 Development property 116 000 116 000 Listed property securities 2 133 247 2 176 172 802 473 20 104 096 19 686 037 24 667 THE LOOKING GLASS JN5030 ABRIDGED STATEMENT OF CHANGES IN EQUITY Unaudited 30 June 2012 R’000 Unaudited 30 June 2011 Restated R’000 Audited 31 Dec 2011 R’000 Balance at beginning of period 6 070 107 6 154 138 6 154 138 Total comprehensive income/(loss) for the period 85 281 297 357 (84 031) Balance at end of period 6 155 388 6 451 495 6 070 107

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