Hyprop Investments Limited (SA) HY 2014 results

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Hyprop Investments Limited (SA) HY 2014 results

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Hyprop Investments Limited (SA) HY 2014 results

  1. 1. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 Property investment excellence. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 2
  2. 2. ¡ istribution up 9,5% to 231 cents per unit D ¡ otal property assets up to R25 billion from T R22,5 billion ¡ cquired Manda Hill in Zambia (87% of African Land) A ¡ omerset Mall included from 1 October 2013 S ¡ osebank Mall redevelopment remains on track R Front cover image: Hyde Park Corner HYPROP INVESTMENTS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1987/005284/06) JSE share code: HYP ISIN: ZAE000003430 (Approved as a REIT by the JSE) (“Hyprop” or “the company”) www.hyprop.co.za
  3. 3. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 1 STATEMENT OF COMPREHENSIVE INCOME Revenue Investment property income Straight-line rental income accrual Listed property securities income Property expenses Net property income Other operating expenses Operating income Net interest Received Paid Net operating income Change in fair value Investment property Straight-line rental income accrual Listed property securities (on disposal) Derivative instruments Profit/(loss) on disposal Investment property Associate Listed property securities Sycom rights offer nil paid letters Amortisation of debenture premium Gain on bargain purchase Income before debenture interest Debenture interest Net income before share of income from associate Share of income from associate Profit before taxation Taxation Profit for the period Other comprehensive income Exchange differences on translation of foreign operations Total comprehensive income for the period Total profit for the period attributable to: Unitholders of the company Non-controlling interest Profit for the period Total comprehensive income attributable to: Unitholders of the company Non-controlling interest Total comprehensive income for the period Unaudited Unaudited Six months Six months 31 December 2013 31 December 2012 R’000 R’000 1 171 491 1 124 503 1 114 638 1 027 412 19 588 23 257 37 265 73 834 (369 386) (363 907) 802 105 760 596 (28 733) (29 462) 773 372 731 134 (185 160) (193 841) 27 471 11 336 (212 631) (205 177) Audited Six months 30 June 2013 R’000 1 099 489 1 008 671 15 879 74 939 (347 277) 752 212 (26 720) 725 492 (191 723) 17 234 (208 957) 588 212 526 270 658 494 (19 588) (82 881) (29 755) 191 628 4 607 17 431 169 590 537 293 851 119 700 649 (23 257) 258 377 (84 650) (15 529) (11 886) 47 350 64 802 1 418 262 (561 922) 856 340 249 923 27 971 49 119 856 340 (493) 855 847 1 622 806 (512 969) 1 109 837 144 1 109 981 (191 382) 918 599 2 014 670 (517 831) 1 496 839 4 262 1 501 101 2 239 008 3 740 109 10 484 866 331 (6) 918 593 319 3 740 428 855 285 562 855 847 918 599 3 740 109 918 599 3 740 109 865 769 562 866 331 918 593 3 740 428 918 593 3 740 428 (3 643) 533 769 1 403 721 1 198 105 (15 879) (2 842) 224 337 28 061 90
  4. 4. 2 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 STATEMENT OF COMPREHENSIVE INCOME (continued) Unaudited Six months 31 December 2013 R’000 Abridged reconciliation – headline earnings and distributable earnings Net income after taxation Debenture interest Earnings Headline earnings adjustments Change in fair value of investment property (Profit)/loss on disposal: Investment property Associate company Amortisation of debenture premium Gain on bargain purchase Deferred taxation – investment property Sycom rights offer nil paid letters Headline earnings Distributable earnings adjustments Change in fair value: Listed property securities Derivative instruments (Profit)/loss on disposal of listed property securities Net income: Hyprop Investments (Mauritius) African Land Dividends: Hyprop Investments (Mauritius) African Land Investment in associate – Mantrablox Transaction costs (2013: Sycom; 2012: Attfund Retail) Taxation Deferred taxation – listed property securities and other Distributable earnings Total combined units in issue Weighted average combined units in issue Basic and diluted earnings per combined unit Basic and diluted headline earnings per combined unit Distributable earnings per combined unit Distribution details Total distribution for the year Six months ended 31 December Six months ended 30 June Unaudited Six months 31 December 2012 R’000 Audited Six months 30 June 2013 R’000 855 847 561 922 1 417 769 (792 684) (658 494) (4 607) (17 431) (47 350) (64 802) 918 599 512 969 1 431 568 (325 623) (87 586) 11 886 3 740 109 517 831 4 257 940 (3 296 367) (1 198 105) (90) (249 923) (49 119) 625 085 (63 199) 82 881 29 755 1 105 945 (591 071) (212 974) 84 650 (169 590) (8 353) (4 324) 2 486 3 762 3 643 184 1 711 1 443 1 791 1 520 (469 544) (219 812) 561 886 243 256 092 243 136 472 583,1 514 874 243 113 169 243 113 169 588,8 517 253 243 113 169 243 113 169 1 751,4 257,1 231,0 454,9 211,8 395,5 212,8 231,0 231,0 211,0 211,0 213,0 (2 021 082) (27 971) 961 573 (444 320) 2 842 (224 337) (3 789) 1 434 (3 969) 213,0
  5. 5. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 3 STATEMENT OF FINANCIAL POSITION Unaudited 31 December 2013 R’000 Audited 30 June 2013 R’000 25 218 389 20 282 124 24 539 960 85 849 137 12 059 579 102 1 282 19 782 728 63 065 108 12 059 384 307 39 857 431 283 298 996 Receivables Loans receivable Cash and cash equivalents 159 653 157 561 114 069 224 175 Non-current assets held-for-sale 51 982 2 400 822 Listed property securities Investment in associate 51 982 2 279 253 121 569 Total assets 25 701 654 22 981 942 Equity and liabilities 11 803 062 10 814 409 11 679 616 123 446 10 814 409 11 339 596 10 341 977 5 785 643 5 479 952 44 110 29 891 5 822 497 4 436 486 52 984 30 010 2 558 996 1 825 556 482 259 1 514 815 561 922 359 725 948 000 517 831 Total liabilities 13 898 592 12 167 533 Total equity and liabilities 25 701 654 22 981 942 71,80 68,43 Assets Non-current assets Investment property Building appurtenances and tenant installations Investment in associate Goodwill Loans receivable Derivative instruments Current assets Share capital and reserves Non-controlling interest Liabilities Non-current liabilities Debentures and debenture premium Interest-bearing liabilities Derivative instruments Deferred taxation Current liabilities Payables Interest-bearing liabilities Combined unitholders for distribution Net asset value per combined unit (R) 74 821
  6. 6. 4 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 ABRIGED STATEMENT OF CHANGES IN EQUITY Unaudited 31 December 2013 R’000 Audited 30 June 2013 R’000 Balance at beginning of period Total comprehensive income for the period Non-controlling interest Dividend attributable to minorities – African Land Foreign currency translation reserve 10 814 409 855 285 123 446 (562) 10 484 7 073 981 3 740 109 Balance at end of period 11 803 062 10 814 409 Unaudited 31 December 2013 R’000 Audited 30 June 2013 R’000 319 ABRIGED STATEMENT OF CASH FLOWS Cash flows from operating activities 161 995 (49 773) 885 974 27 471 (233 061) (558) (517 831) 660 705 17 234 (215 147) 16 (512 969) 388 (1 167 223) 1 021 767 (241 730) 198 450 Net increase/(decrease) in cash and cash equivalents Cash acquired with subsidiary Cash and cash equivalents at beginning of period 16 539 22 709 74 821 (93 053) 167 874 Cash and cash equivalents at end of period 114 069 74 821 Cash generated from operations Interest received Interest paid Taxation paid Distribution to combined unitholders Income from associate Cash flows from investing activities Cash flows from financing activities
  7. 7. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 5 COMMENTARY INTRODUCTION Hyprop is South Africa’s largest JSE-listed specialist shopping centre Real Estate Investment Trust (“REIT”), and one of South Africa’s oldest listed property companies (1988). The company currently has R25 billion in assets under management. The property portfolio includes 12 prime shopping centres in South Africa, exposure to malls in the rest of Africa through Atterbury Africa, a joint venture with Attacq Limited (previously the Atterbury Group) and African Land Investments Limited (“African Land”). Atterbury Africa has a 47% interest in Accra Mall (19 000m2) in Accra, Ghana while African Land owns Manda Hill Shopping Centre (43 400m2) in Lusaka, Zambia. FINANCIAL RESULTS Hyprop has declared a distribution of 231 cents per combined unit for the six months ended 31 December 2013 (“the period”), an increase of 9,5% on the corresponding period in 2012.
  8. 8. 6 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 COMMENTARY (continued) SEGMENTAL OVERVIEW Six months ended 31 December 2013 Six months ended 31 December 2012 Revenue R’000 Distributable earnings R’000 Canal Walk Super regional Clearwater Mall The Glen Woodlands Boulevard CapeGate Somerset Mall Large regional Hyde Park Regional Atterbury Value Mart Willowbridge Stoneridge Somerset Value Mart Value centres Shopping centres Stand-alone offices Development property1 Held for sale2 257 115 257 115 161 384 102 543 104 677 97 877 52 677 519 158 91 355 91 355 53 644 41 610 32 871 10 920 139 045 1 006 673 34 067 58 053 Investment property Listed property securities3 Fund management expenses Net interest Atterbury Africa African Land Word4Word Marketing Straight-line rental income accrual 1 098 793 37 267 Business segment Total 9 262 6 581 19 588 1 171 491 Revenue R’000 Distributable earnings R’000 186 424 186 424 111 130 69 260 71 628 59 814 39 124 350 956 61 853 61 853 40 455 24 108 15 146 7 226 86 935 686 168 21 680 28 122 234 884 234 884 154 746 98 374 93 795 93 377 168 012 168 012 100 314 63 718 63 960 59 368 440 292 87 961 87 961 49 998 38 817 32 637 10 448 131 900 895 037 32 341 73 007 11 082 287 360 55 694 55 694 37 978 23 556 15 151 7 311 83 996 595 062 21 692 43 687 1 169 735 970 37 267 (25 119) (193 709) 2 486 3 762 1 229 1 011 467 73 834 661 610 73 834 (29 127) (192 465) 15 945 23 257 1 022 561 886 1 124 503 514 874 Rosebank Mall and Mall offices – transferred to development property from September 2012 Southcoast Mall and Southern Sun Hyde Park 3 Sycom units 1 2
  9. 9. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 7 Excluding the recently acquired Somerset Mall, distributable earnings from the regional and superregional malls increased by 9,6%, benefiting in part from extensions at Canal Walk and The Glen. The value centres showed muted growth of 3,5% while distributable earnings from offices was maintained. The property cost-to-income ratio, affected by timing delays in respect of operating cost expenditure, improved to 33,1% (30 June 2013: 34,4%), while the total cost-to-income ratio at a fund level remained unchanged at 34,6%. Distributable earnings from development property (Rosebank Mall) decreased by R15,6 million compared with the previous corresponding period, which was in line with budget. Distributable earnings from listed property securities decreased due to the exchange of 81,5 million Sycom units for Somerset Mall, effective 1 October 2013. Total arrears (excluding Rosebank Mall and including Somerset Mall) at 31 December 2013 were R17,4 million (30 June 2013: R17,1 million) and the corresponding allowance for doubtful debts was R5,0 million (30 June 2013: R6,7 million). Vacancies Demand from retailers at Hyprop’s regional shopping malls remains strong with vacancies of less than 1%. Retail vacancies across the portfolio improved from 2,1% to 1,2%, driven in part by new lettings at the value centres (CapeGate Lifestyle, Willowbridge and Stoneridge), albeit at lower rentals. Office vacancies increased slightly from 8,1% to 8,2%. Overall, the portfolio was 98,2% let at 31 December 2013 (June 2013: 97,3%). % of total GLA Vacancy profile by sector* 31 December 2013 30 June 2013 Retail Office 1,2 8,2 2,1 8,1 Total 1,8 2,7 *Excludes Rosebank Mall
  10. 10. 8 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 COMMENTARY (continued) PROPERTY PORTFOLIO Value attributable to Hyprop Value per rentable area Rentable area (m2) 31 December 2013 R’000 30 June 2013 R’000 31 December 2013 (R/m2) Canal Walk Super regional Clearwater The Glen Woodlands Boulevard CapeGate Somerset Mall Large regional Hyde Park Regional Atterbury Value Mart Willowbridge Stoneridge Somerset Value Mart Value centres Shopping centres Stand-alone offices Development property1 153 531 153 531 86 028 76 849 71 617 97 346 67 133 398 973 37 003 37 003 47 745 44 663 48 584 12 386 153 378 742 885 34 118 5 911 200 5 911 200 3 316 000 1 957 809 1 979 000 1 643 000 2 243 000 11 138 809 1 634 000 1 634 000 987 000 630 000 409 500 185 000 2 211 500 20 895 509 471 400 1 697 000 5 627 200 5 627 200 3 203 000 1 854 094 1 886 000 1 602 000 48 127 48 127 38 546 33 898 27 633 16 878 33 411 29 541 44 159 44 159 20 672 14 106 9 365 14 936 14 715 31 049 13 817 Investment property Listed property securities2 Atterbury Africa African Land3 777 003 23 063 909 51 982 579 102 1 339 561 19 842 494 2 279 253 336 994 25 034 554 22 458 741 Business Segment Property Assets 8 545 094 1 556 000 1 556 000 987 000 585 000 421 200 185 000 2 178 200 17 906 494 442 000 1 494 000 Rosebank Mall and Mall Offices - transferred to development property from September 2012 Sycom units 3 Hyprop’s 87% share in African Land ¹ 2
  11. 11. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 9 Investment property Investment property was independently valued by Old Mutual Investment Group South Africa using the discounted cash flow method. Excluding the effect of the acquisition of Somerset Mall, investment property increased in value by 4,9%, resulting in a fair value adjustment of R658 million. The increase in value was driven by income growth, supported by strong demand for quality shopping centres. Developments The Rosebank Mall redevelopment remains on track for final completion in September 2014. Thirty new stores (out of a total of 147) opened for trading during 2013. Lease commitments increased to 98% of rentable area (June 2013: 95%). Total capital cost remains at R932 million with an estimated yield of 7%. The extension of Edgars and the enlargement of Foschini at The Glen, as well as the extension of Edgars at Canal Walk, were completed on time and within budget. Energy saving initiatives In 2012 Hyprop introduced its Green Design and Environmental Strategy. Reducing electricity consumption forms an integral part of this strategy. To this end Hyprop commenced with a R11,5 million energy reduction project across the portfolio, which is expected to yield annual savings of R9,7 million. DISPOSALS Sycom units Following the exchange of 81,5 million Sycom units for Somerset Mall, Hyprop disposed of 575 000 Sycom units for R14 million in December 2013. Subsequent to period end, the remaining 2,2 million units were sold for R51,9 million. Mantrablox Proprietary Limited In December 2013, Attacq exercised its option to acquire Hyprop’s 20% interest in Mantrablox Proprietary Limited, which owns Garden Route Mall. The shares and loan account in Mantrablox were sold for R139 million, realising a profit of R17,4 million. Proceeds of these disposals were applied to reduce borrowings. INVESTMENTS IN SUB-SAHARAN AFRICA (EXCLUDING SOUTH AFRICA) In line with Hyprop’s strategy to become a dominant African shopping centre REIT, the company intends to invest up to R3 billion in sub-Saharan Africa (excluding South Africa) over the next five years. Of the R3 billion, R1 billion is currently allocated to Atterbury Africa (up from the R750 million originally committed) for developing and owning shopping centres in select African countries. The balance of R2 billion has been allocated to African Land, with the objective of acquiring existing, high quality, income-producing shopping centres. As agreed with Attacq, the investment in African Land will be restructured in due course, after which Hyprop will own 50% of African Land and Atterbury Africa the remaining 50%.
  12. 12. 10 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 COMMENTARY (continued) Atterbury Africa Hyprop received a dividend of R2,5 million for the period from its 37,5% share in Atterbury Africa. The dividend comprises income from Accra Mall, currently the only income-producing property in the portfolio. Hyprop’s investment in Atterbury Africa increased to R579 million (30 June 2013: R337 million), due to capital contributions for the West Hills development and the acquisition of additional land in Ghana. Overview of the Atterbury Africa property portfolio: Rentable area (m2) Ownership (%) Attributable value USD ’000 19 000 47 38 328 Existing centre, currently fully let 27 500 45 42 087 Construction work on new mall progressing well and scheduled for opening in October 2014 Achimota Land (Accra, Ghana) 14 500* 75 4 630 Acquisition of land rights concluded. Design finalised and pre-letting commenced Kumasi Land (Kumasi, Ghana) 27 800* 75 4 851 Acquisition of land rights concluded Waterfalls Project (Lusaka, Zambia) 27 500* 25 1 374 Land holding with development rights for retail and a hotel Property Income-producing property Accra Mall (Accra, Ghana) Developments West Hills Mall (Accra, Ghana) Comments *Proposed African Land Hyprop acquired an 87% shareholding in African Land for R768 million, at an 8,1% yield, effective 5 December 2013. The acquisition provides exposure to Manda Hill shopping centre, in Lusaka, Zambia, which was valued at USD149 million at period-end. African Land contributed R3,8 million to Hyprop’s distributable income for the period. NET ASSET VALUE The net asset value per combined unit (“NAV”) at 31 December 2013 increased by 4,9% to R71,80 (30 June 2013: R68,43). The increase was primarily due to an increase in the independent valuation of the investment property portfolio. At 31 December 2013, the closing combined unit price of R76,50 represented a premium of 6,5% to the NAV per combined unit.
  13. 13. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 11 BORROWINGS 31 December 2013 Rm 30 June 2013 Rm SA bank facilities Debt capital market debt (DCM): Corporate bonds Commercial paper USD debt Cash and cash equivalents 3 726 3 404 1 600 498 1 170 (272) 1 150 498 333 (240) Net borrowings 6 722 5 145 Gearing 26,6% 22,9% Net borrowings increased to R6,7 billion at 31 December 2013 (30 June 2013: R5,1 billion) mainly as a result of the acquisition of African Land and capital expenditure on the Rosebank Mall redevelopment and developments in Atterbury Africa. At period-end, interest rates were hedged in respect of 70% (30 June 2013: 87%) of borrowings, at a weighted average rate of 7,5% (30 June 2013: 8,1%). Fixed rate debt decreased primarily due to the financing of African Land being unhedged, pending a re-structure of the investment. In November 2013, Hyprop successfully issued a R450 million six-year corporate bond to refinance a maturing bank facility. This brings total debt capital market (“DCM”) issuance to R2,098 billion, or 30% of total borrowings. PROSPECTS Hyprop, with its large, quality assets, strong contractual lease escalations and sound balance sheet is wellpositioned to withstand the impact of the challenging economic environment on consumer spend. The investment strategy into sub-Saharan Africa (excluding South Africa) has been enhanced with the acquisition of African Land. Hyprop will continue to invest in large, quality shopping centres, improve the tenant quality across the portfolio and dispose of non-core assets (subject to market conditions). Taking into account the anticipated benefit from African Land for the rest of the financial year, and strong net income growth from the existing portfolio, Hyprop expects distribution growth of between 8,5% and 10,5% for the full year to 30 June 2014. This is an upward revision from the guidance provided in June 2013 of between 6,5% and 8,5%. The growth in distributions is based on the following key assumptions: n  forecast investment property income is based on contractual rental escalations and market related renewals; n  appropriate allowances for vacancies have been incorporated into the forecast; and n  major corporate failures will occur. no The forecast has not been reviewed or reported on by the company’s auditors.
  14. 14. 12 UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 COMMENTARY (continued) PAYMENT OF DISTRIBUTION All rental income earned by the company, less property expenses and interest on debt, is distributed to unitholders semi-annually. Distribution 53 of 231 cents per combined unit for the six months ended 31 December 2013 will be paid to combined unitholders as follows: March 2014 Last day to trade cum distribution Combined units trade ex distribution Record date Payment of distribution Thursday, 20 Monday, 24 Friday, 28 Monday, 31 Unitholders may not dematerialise or rematerialise their combined units between Monday, 24 March 2014 and Friday, 28 March 2014, both days inclusive. An announcement relating to the tax treatment of the distribution will be released separately. BASIS OF PREPARATION These results have been prepared in accordance with International Financial Reporting Standards (“IFRS”), International Accounting Standard IAS34 ‘Interim Financial Reporting’, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Standards Council, the JSE Limited Listings Requirements and the South African Companies Act, 2008. The accounting policies applied in the preparation of these results are consistent with those applied in the audited financial statements for the prior financial period. 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 GR Tipper Chairman 19 February 2014 PG Prinsloo CEO
  15. 15. UNAUDITED INTERIM RESULTS for the six months ended 31 December 2013 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 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 Probity Business Services Proprietary Limited SPONSOR Java Capital INVESTOR RELATIONS Nikki Catrakilis-Wagner 011 447 0090 13
  16. 16. www.hyprop.co.za

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