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HYP
HYP
HYP - Hyprop - Reviewed results for the six months ended 30 June 2007 and
distribution declaration
Hyprop Investments Limited
(Registration No. 1987/005284/06)
Share Code: HYP
ISIN Code: ZAE00003430
("Hyprop" or "the company")
REVIEWED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Distribution per combined unit 130 cents
18.2% increase in distribution per combined unit
Pre-tax NAV R44.58 up 36%
Total assets R8,5 billion
Market capitalisation R6,3 billion
GROUP INCOME STATEMENT
Reviewed 30 Reviewed 30 Audited 31
June 2007 June 2006 December
2006
R000 R000 R000
Revenue 326 387 365 654 738 381
Investment property income 322 042 310 677 630 285
Straight-line rental income 3 507 13 620 26 235
accrual
Listed property securities 838 41 357 81 861
income
Property expenses (93 931) (97 316) (199 119)
Net property income 232 456 268 338 539 262
Other operating expenses (19 168) (15 587) (29 120)
Operating income 213 288 252 751 510 142
Net interest 4 207 (53 986) (106 499)
Received 52 279 797 2 143
Paid (48 072) (54 783) (108 642)
Net operating income 217 495 198 765 403 643
Change in fair value 800 992 500 530 1 548 261
Investment property 799 957 476 754 1 458 212
Straight-line rental income (3 507) (13 620) (26 235)
accrual
Listed property securities 4 542 37 396 116 284
(Loss)/profit on disposal (657) 1 944 2 675
Investment property 731
Listed property securities (657) 1 944 1 944
Amortisation of debenture 20 066 4 790 35 248
premium
Income before debenture 1 037 896 706 029 1 989 827
interest
Debenture interest (187 680) (158 806) (324 831)
Net income before share of 820 216 547 223 1 664 996
income from associate
Share of income from associate 5 331 37 452
Net income before taxation 855 547 547 223 1 702 448
Taxation (214 591) (139 747) (429 344)
Net income after taxation 640 956 407 476 1 273 104
Attributable to -
Hyprop combined unitholders 521 884 327 317 1 055 321
Minorities 119 072 80 159 217 783
640 956 407 476 1 273 104
Reconciliation - headline
earnings and distributable
earnings
Net income after taxation - 521 884 327 317 1 055 321
attributable to Hyprop combined
unitholders
Headline earnings adjustments (300 533) (123 325) (547 981)
Change in fair value of
investment property (net of
deferred taxation and minority (490 534) (290 219) (885 135)
interests)
Straight-line rental income
accrual (net of deferred
taxation and minority 1 644 8 088 13 054
interests)
Profit on disposal of
investment property (731)
Loss on disposal of listed
property securities 657
Debenture interest 187 680 158 806 324 831
Headline earnings 221 351 203 992 507 340
Distributable earnings (33 762) (44 851) (183 241)
adjustments
Change in fair value of listed
property securities (net of
deferred taxation) (3 883) (31 973) (99 423)
Deferred taxation adjustments (8 149)
Amortisation of debenture (20 066) (4 790) (35 248)
premium
Straight-line rental income
accrual (net of deferred
taxation and minority (1 664) (8 088) (13 054)
interests)
Share of income from associate (35 516)
Distributable earnings 187 589 159 141 324 099
Total combined units in issue 144 369 188 144 369 188 144 369 188
Weighted average combined units
in issue - for earnings and
headline earnings 144 369 188 143 768 609 144 074 873
Earnings per combined unit 491,5 338,1 957,9
Headline earnings per combined 153,3 141,9 352,1
unit
Distributable earnings per
combined unit 129,9 110,2 224,5
Distribution Interest on
debentures
(cents per
unit)
Distribution 39 - six months
ended 30 June 2007 130,00
Total distribution - twelve
months ended 31 December 2006 225,00
Distribution 38 - six months
ended 31 December 2006 115,00
Distribution 37 - six months
ended 30 June 2006 110,00
GROUP BALANCE SHEET
Reviewed Reviewed Audited 31
30 June 2007 30 June 2006 December
2006
R000 R000 R000
Assets
Non-current assets 7 631 245 6 533 232 7 766 336
Investment property 7 353 714 5 453 221 6 467 537
Building appurtenances and 19 934 23 026 21 160
tenant installations
Investment in associate 140 913 142 620
Listed property securities 116 684 1 056 985 1 135 019
Current assets 829 093 57 903 86 166
Receivables 38 721 46 557 58 110
Cash and cash equivalents 790 372 11 346 28 056
Non-current assets classified as
held-for-sale
Investment property 40 402 210 354 38 060
Total assets 8 500 740 6 801 489 7 890 562
Equity and liabilities
Equity capital and reserves 4 118 683 2 663 373 3 504 948
Share capital and reserves 3 266 776 2 016 887 2 744 892
Minority interests 851 907 646 486 760 056
Non-current liabilities 4 092 059 3 889 039 4 119 534
Debentures and debenture premium 1 751 692 1 802 215 1 771 757
Long-term loans 916 005 1 171 941 1 135 748
Financial guarantee for 6 677 7 548
associate
Deferred taxation 1 417 685 914 883 1 204 481
Current liabilities 289 998 249 077 266 080
Payables 100 930 90 274 100 055
Taxation 1 388
Combined unitholders for 187 680 158 803 166 025
distribution
Total equity and liabilities 8 500 740 6 801 489 7 890 562
Net asset value per combined 34,76 26,45 31,29
unit (R)
Net asset value per combined
unit excluding deferred taxation 44,58 32,79 39,63
liability (R)
GROUP STATEMENT OF CHANGES IN EQUITY
Group Share Non- Retained Minority Total
capital distribut income interests
able
reserve
R000 R000 R000 R000 R000
Balance at 1 January 1 431 1 680 210 7 917 593 312 2 282 870
2006
Issue of ordinary 12 12
share capital
Net income for the 407 476
period* 327 317 80 159
Net transfer to non- 324 321 (324 321)
distributable reserve
Distribution to (27 948) (27 948)
minorities
Minority share of 963 963
additions to
investment property
Balance at 30 June 1 443 2 004 531 10 913 646 486 2 663 373
2006
Balance at 1 January 1 444 2 734 454 8 994 760 056 3 504 948
2007
Net income for the 521 884 119 072 640 956
period*
Net transfer to non- 522 041 (522 041)
distributable reserve
Distribution to (31 732) (31 732)
minorities
Minority share of 4 511 4 511
additions to
investment property
Balance at 30 June 1 444 3 256 495 8 837 851 907 4 118 683
2007
*Minority net income includes minority share of fair value adjustment to
investment properties
ABRIDGED GROUP CASH FLOW STATEMENT
Reviewed Reviewed Audited 31
30 June 2007 30 June 2006 December
2006
R000 R000 R000
Cash flows from operating 43 555 22 557 40 697
activities
Cash generated from operations 232 594 248 803 498 783
Interest received 52 279 797 2 143
Interest paid (48 072) (54 783) (108 642)
Distribution to Hyprop combined (166 025) (141 709) (300 512)
unitholders
Net cash paid to minorities (27 221) (30 515) (51 039)
Taxation (36) (36)
Cash flows from investing 938 503 (81 761) (46 997)
activities
Cash flows from financing (219 742) 46 030 9 836
activities
Net increase in cash and cash 762 316 (13 174) 3 536
equivalents
Cash and cash equivalents at the 28 056 24 520 24 520
beginning of the year
Cash and cash equivalents at the 790 372 11 346 28 056
end of the period
COMMENTS
FINANCIAL RESULTS
Hyprop`s distribution of 130 cents per combined unit for the six months ended
June 2007 exceeds that of the comparative period by 18.2%.
Hyprop`s shopping centres contributed 11.7% to the growth in distribution, with
the balance achieved mainly from interest earned as a result of the disposal of
Hyprop`s investment in SA Retail Properties Limited ("SA Retail").
An R800 million increase in the property revaluation surplus contributed to an
11% increase in net asset value per combined unit to R34.76. Excluding deferred
taxation, the net asset value per combined unit of R44.58 is marginally higher
than the closing combined unit price on the JSE of R43.85 at 30 June 2007.
ACQUISITIONS
In line with its strategy to invest in listed property securities with a retail
focus, Hyprop acquired 4 686 100 linked units in Resilient Property Income Fund
Limited for cash at an average cost of R24.40 per linked unit.
DEVELOPMENTS
Stoneridge Shopping Centre
The construction of a 50 000m2 lifestyle centre in Greenstone Park,
Modderfontein, at an estimated cost of R544 million and an anticipated initial
yield of 9%, is progressing according to plan and is scheduled for completion in
October 2008.
Canal Walk Shopping Centre (80% undivided share)
The development of a 3 500m2 Mr Price Home at a cost of R32.4 million (Hyprop
share - R25.6 million) and an expected initial yield of 13%, is scheduled for
completion in November 2007.
The conversion of three unused cinema theatres into a 1 600m2 Sportmans
Warehouse at a net cost of R5.7 million (Hyprop share - R4.6 million) and an
expected initial yield of 18%, is also scheduled for completion in November
2007.
Various other extensions are in planning stage, including 16 000m2 additional
retail, a 1 400m2 expansion to Woolworths and an enlargement of the food court.
The Glen Shopping Centre (75.15% undivided share)
A 2 200m2 extension to Edgars and additional parking was completed in March 2007
at a cost of R15.6 million (Hyprop share - R11.7 million). The initial yield is
13%.
The development of additional banking area, at a cost of R8.7 million (Hyprop
share - R6.5 million), has commenced in August 2007 at an estimated initial
yield of 17%.
The local authority has granted 19 000m2 additional rights in respect of which
planning for development has commenced.
Southcoast Mall (50% undivided share)
A 1 000m2 extension for Boardmans, at a cost of R6 million (Hyprop share - R3
million) with an expected initial yield of 9.5%, is scheduled for completion in
October 2007.
DISPOSALS
Subsequent to 30 June 2007, the disposal of a portion of Morningview Office Park
for R40.4 million was completed. Sale of the remainder of the Morningview Office
Park is under negotiation.
BORROWINGS
Following the receipt of the proceeds from the disposal of its investment in SA
Retail, Hyprop`s borrowings net of cash reduced from R1.1 billion at 31 December
2006 to R126 million at 30 June 2007.
Hyprop has unutilised borrowing capacity of R3.4 billion for future investment.
VALUATIONS
Rentable Value Value Value per
area attributable rentable
to Hyprop area
June 2007 Dec 2006
(m2) (R000) (R000) (R000) (R/m2)
Canal Walk 132 316 3 800 000 3 250 000 3 040 000 28 719
The Glen 54 100 1 180 000 1 117 000 886 770 21 811
Hyde Park 37 102 1 000 000 920 000 1 000 000 26 953
The Mall of 33 774 765 000 700 000 765 000 22 651
Rosebank
Southcoast 27 642 280 700 274 000 140 350 10 155
Mall
Shopping 284 934 7 025 700 6 261 000 5 832 120 24 657
centres
Offices 38 885 402 502 343 360 402 502 10 351
Investment 323 819 7 428 202 6 604 360 6 234 622 22 939
property
Development 124 947 57 832 124 947
property -
Stoneridge
Listed 116 684 1 135 019 116 684
property
securities
Investment in 140 913 142 620 140 913
associate
323 819 7 810 746 7 939 831 6 617 166
Old Mutual Property Group (Proprietary) Limited updated their independent
valuation at 31 December 2006 to revalue each investment property at 30 June
2007. Investment property increased in value by R800 million or 13% to R7.4
billion. Development property has been valued at cost.
SEGMENTAL ANALYSIS
Six months Six months to Six months to Six months
to 30 June 30 June 2007 30 June 2007 to 30 June
2007 2006
Gross Net income Net income Net income
revenue (including (Hyprop (Hyprop
(including minorities) share) share)
minorities)
(R000) (R000) (R000) (000)
Canal Walk 151 131 108 563 87 945 76 962
The Glen 52 216 38 727 29 472 26 334
Hyde Park 45 841 31 006 31 006 28 652
The Mall of 37 199 24 961 24 961 23 444
Rosebank
Southcoast 7 711 5 317 5 317 4 704
Mall
Shopping 294 098 208 574 178 701 160 096
centres
Offices 27 944 19 537 19 537 27 198
Investment 322 042 228 111 198 238 187 294
property
Listed 838 838 838 41 357
property
securities
Investment in 5 331 5 331
associate
322 880 234 280 204 407 228 651
Straight-line 3 507 3 507 2 344 11 392
rental income
accrual
Fund (19 168) (19 168) (17 469)
management
expenses
326 387 218 619 187 583 222 574
Increases in contractual rental and parking income as well as improved expense
control contributed to an 11.7% growth in shopping centre net income. Net income
for offices reduced as a result of the disposal of five office buildings to
Hyprop`s BEE initiative, Vunani Property Investment Fund (Proprietary) Limited,
in October 2006. The expense to revenue ratio is 21%.
VACANCIES
30 June 2007 31 December 2006
m2 % of m2 % of
rentable rentable
area area
Canal Walk 837 0,7 1 305 1,0
The Mall of Rosebank 297 0,9
Southcoast Mall 848 3,0 1 560 5,6
Shopping centres 1 685 0,6 3 162 1,1
Offices 36 0,1 277 0,6
1 721 0,5 3 439 1,1
The Glen, Hyde Park and The Mall of Rosebank were fully let at 30 June 2007.
DIRECTORATE
As indicated in the previous Annual Report, Peter Kirchmann has retired as
chairman and director. Peter Thurling has resigned as alternate director.
Michael Aitken, who has extensive property experience and has been a director of
Hyprop for seven years, has been appointed independent chairman.
These changes to the board were effective 20 August 2007.
PROSPECTS
The board anticipates that Hyprop`s distribution per combined unit for the year
ending 31 December 2007 will increase by between 14% and 17% as compared with
the distribution for the year ended 31 December 2006. This is marginally higher
than the 12% to 15% forecast on 1 March 2007.
This forecast has not been reviewed or reported on by Hyprop`s auditors.
DISTRIBUTION
Distribution number 39 of 130 cents per combined unit for the six months to 30
June 2007 will be paid to combined unitholders as follows:
2007
Last day to trade cum distribution Friday, 7 Sept
Combined units trade ex distribution Monday, 10 Sept
Record date Friday, 14 Sept
Payment date Monday, 17 Sept
Unitholders may not dematerialise or rematerialise their combined units between
Monday, 10 September 2007 and Friday, 14 September 2007, both days inclusive.
BASIS OF PREPARATION AND REVIEW OPINION
This interim report has been prepared in accordance with International Financial
Reporting Standards and International Accounting Standard IAS 34 - Interim
Financial Reporting.
The accounting policies applied are consistent with those applied in the most
recent audited financial statements.
The company`s auditors, Grant Thornton, have reviewed the financial information
set out in this interim report. Their review report is available for inspection
at the company`s registered office.
On behalf of the board.
PG Prinsloo
CEO
21 August 2007
REGISTERED OFFICE
3rd Floor, Hyde Park Shopping Centre, Jan Smuts Avenue, Sandton, 2196
(PO Box 41257 Craighall 2024)
TRANSFER SECRETARIES
Computershare Investor Services 2004 (Proprietary) Limited,
Ground Floor 70 Marshall Street, Johannesburg (PO Box 61051, Marshalltown 2107)
ASSET MANAGER
Madison Property Fund Managers Limited
COMPANY SECRETARY
Probity Business Services (Proprietary) Limited
SPONSOR
Java Capital (Proprietary) Limited
DIRECTORS
MS Aitken*# (Chairman); PG Prinsloo (CEO); LR Cohen (FD); WE Cesman* (alt JA
Finn); EG Dube*; JR McAlpine*#; LI Weil*; S Shaw-Taylor*; MY Sibisi*#; M Wainer*
(alt MN Flax)
(* Non-executive # Independent)
Date: 21/08/2007 09:00:01 Produced by the JSE SENS Department.
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