| Mon 2 Mar 2009, 7:15 | | HYP - Hyprop - Audited Results For The Year Ended 31 December 2008 |
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HYP
HYP
HYP - Hyprop - Audited Results For The Year Ended 31 December 2008
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")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
- 14.1% increase in total distribution to 308 cents per combined unit
- NAV excl. derred taxation R49.51 per combined unit
- Property assets R9.3 billion
- Market capitalisation R7 billion
- R662 million development programme for completion in 2009
GROUP INCOME STATEMENT
Audited 31 Pro-forma* Audited 31
Dec 2008 unaudited Dec 2007
31 Dec 2007
R000 R000 R000
Revenue 781 343 622 078 715 866
Investment property income 658 674 580 392 670 943
Straight-line rental income accrual 15 769 15 678 18 915
Listed property securities income 106 900 26 008 26 008
Property expenses (205 209) (177 585) (202 945)
Net property income 576 134 444 493 512 921
Other operating expenses (41 353) (39 651) (39 651)
Operating income 534 781 404 842 473 270
Net interest (17 080) 3 664 3 875
Received 39 408 85 362 85 573
Paid (56 488) (81 698) (81 698)
Net operating income 517 701 408 505 477 145
Non-core income 1 871 2 196 2 196
Change in fair value 157 091 1 393 060 1 624 286
Investment property 225 630 1 355 012 1 589 475
Straight line rental income accrual (15 769) (15 678) (18 915)
Listed property securities (52 770) 53 726 53 726
Surplus on disposal 8 392 25 624 25 624
Investment property 8 392 2 235 2 235
Listed property securities 23 389 23 389
Amortisation of debenture premium 85 492 43 088 43 088
Amortisation of financial guarantee 1 742
for associate 4 139 1 742
Income before debenture interest 774 686 1 874 216 2 174 081
Debenture interest (511 629) (405 018) (405 018)
Net income before share of income
from associate 263 057 1 469 198 1 769 063
Share of income from associate (11 799) 66 755 66 755
Net income before taxation 251 258 1 535 953 1 835 818
Taxation - deferred 100 615 (385 753) (451 946)
Net income after taxation 351 873 1 150 200 1 383 872
Attributable to -
Hyprop combined unitholders 351 873 1 150 200 1 150 200
Minorities 233 672
351 873 1 150 200 1 383 872
Reconciliation - headline earnings
and distributable earnings
Net income after taxation -
attributable to Hyprop combined
unitholders 351 873 1 150 200 1 150 200
Headline earnings adjustments 356 598 (566 670) (566 670)
Change in fair value of investment (157 993) (980 585) (980 585)
property (net of deferred taxation
and minority interests)
Straight line rental income accrual
(net of deferred taxation and
minority interests) 11 354 11 132 11 132
Surplus on disposal of investment (2 235) (2 235)
property (8 392)
Debenture interest 511 629 405 018 405 018
Headline (loss)/earnings (708 471) 583 530 583 530
Distributable earnings adjustments (196 220) (179 437) (179 437)
Change in fair value of listed
property securities (net of deferred
taxation) 45 382 (45 936) (45 936)
Surplus on disposal of listed
property securities (23 389) (23 389)
Deferred taxation (160 865) 3 535 3 535
Amortisation of debenture premium (85 492) (43 088) (43 088)
Amortisation of financial guarantee (1 742) (1 742)
for associate (4 139)
Straight-line rental income accrual
(net of deferred taxation and
minority interests) (11 354) (11 132) (11 132)
Share of income from associate 20 248 (57 685) (57 685)
Distributable earnings 512 251 404 093 404 093
Total combined units in issue 166 113 169 166 113 169 166 113 169
Weighted average combined units in 166 113 169 149 805 183 149 805 183
issue
Earnings per combined unit 519.8 1 038.2 1 038.2
Headline earnings per combined unit 426.5 389.5 389.5
Distributable earnings per combined
unit 308.4 269.7 269.7
Distribution details 308.00 270.00 270.00
Total distribution for the year
Six months ended 31 December 158.00 140.00 140.00
Six months ended 30 June 150.00 130.00 130.00
GROUP BALANCE SHEET
Audited Pro- Audited 31
31 Dec forma* Dec 2007
2008 unaudited
31 Dec
2007
R000 R000 R000
Assets
Non-current assets 9 362 622 8 467 215 9 637 870
Investment property 7 695 869 6 955 966 8 126 411
Building appurtenances and tenant
installations 21 091 24 124 24 334
Investment in associate 178 983 198 186 198 186
Loan receivable 45 232
Listed property securities 1 421 447 1 288 939 1 288 939
Current assets 126 026 642 397 655 961
Short-term investments 500 000 500 000
Receivables 59 936 59 035 67 639
Cash and cash equivalents 66 090 83 362 88 322
Non-current assets held-for-sale
Investment property 188 390 188 390
Total assets 9 488 648 9 298 002 10 482 221
Equity and liabilities
Equity capital and reserves 4 247 182 3 896 355 4 832 041
Share capital and reserves 4 247 182 3 896 355 3 895 309
Minority interests 936 732
Non-current liabilities 4 878 116 5 068 362 5 304 127
Debentures and debenture premium 2 656 401 2 741 893 2 741 893
Long-term loans 900 000 900 000 900 000
Financial guarantee for associate 1 668 5 806 5 806
Deferred taxation 1 320 047 1 420 663 1 656 428
Current liabilities 363 350 333 285 346 053
Payables 100 891 100 727 113 495
Combined unitholders for distribution 262 459 232 558 232 558
Total equity and liabilities 9 488 648 9 298 002 10 482 221
Net asset value per combined unit (R) 41 56 39.96 39.96
Net asset value per combined unit 48.51
excluding deferred taxation (R) 49.51 49.93
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Audited 31 Pro-forma* Audited 31
Dec 2008 unaudited Dec 2007
31 Dec 2007
R000 R000 R000
Balance at beginning of year 4 832 041 3 504 948 3 504 948
De-consolidation of minority (936 732) (759 010)
interests
Issue of shares 217 217
Net income for the year 351 873 1 150 200 1 383 872
Attributable to minorities (56 996)
Balance at end of year 4 247 182 3 896 355 4 832 041
ABRIDGED GROUP CASH FLOW STATEMENT
Audited 31 Pro-forma* Audited 31
Dec 2008 unaudited Dec 2007
31 Dec 2007
R000 R000 R000
Cash flows from operating
activities 35 396 104 821 87 414
Cash generated from operations 526 801 428 452 467 830
Interest received 39 408 85 362 85 573
Interest paid (56 488) (81 698) (81 698)
Distribution to Hyprop combined
unitholders (481 728) (338 484) (338 484)
Distribution to minorities (56 996)
Income from associate 7 403 11 189 11 189
Cash flows from investing (52 668) 190 046 208 600
activities
Cash flows from financing
activities (235 748) (235 748)
Net (decrease)/increase in cash and
cash equivalents (17 272) 59 119 60 266
Cash and cash equivalents at the
beginning of the year 83 362 28 056 28 056
Deconsolidation of minority
interest in cash and cash
equivalents (3 813)
Cash and cash equivalents at the 66 090 83 362 88 322
end of the year
* Pro-forma excludes minorities
FINANCIAL RESULTS
Hyprop, a property loan stock company which owns premium quality regional and
super regional shopping centres, continued to achieve sound growth in
distributions for the year ended 31 December 2008 ("the year").
Hyprop has declared a total distribution of 308 cents per combined unit for the
year, an increase of 14.1% on the previous year. The final distribution of 158
cents represents growth of 12.9% compared to the corresponding period in 2007.
SEGMENTAL ANALYSIS
31 Dec 2008 31 Dec 2007
Revenue Distributable Revenue Distributable
earnings earnings
Business (R000) (R000) (R000) (000)
segment
Canal Walk 295 137 206 913 255 753 179 294
The Glen 92 631 65 487 80 483 59 176
Hyde Park 109 029 71 206 96 994 66 731
The Mall of
Rosebank 86 885 61 206 79 697 52 782
Southcoast Mall 18 792 12 567 15 891 10 953
Stoneridge 12 395 6 135
Shopping 614 869 423 514 528 818 368 936
centres
Offices 43 805 29 950 51 574 33 870
Investment 658 674 453 464 580 392 402 806
property
Listed property 106 900 106 900 26 008 26 008
securities
Straight line 15 769 15 769 15 678 15 678
rental income
accrual
781 343 576 134 622 078 444 492
Fund management
expenses (41 353) (39 651)
Net interest
(paid)/received (17 080) 3 664
Net operating 517 701 408 505
income
Non core income 1 871 2 196
Share of income 8 449
from associate 9 070
Straight line (15 769) (15 678)
rental income
accrual
Total 781 343 512 251 622 078 404 093
Hyprop`s shopping centres contributed 79% of total income for the year
(2007:84%).
Revenue from shopping centres, excluding Stoneridge which opened on 24
September, increased by 13.9%. Net income increased by 13.1% on a like-for-like
basis. Net income from offices was lower as a result of the disposal of two non-
core office buildings during the year.
The overall average rental growth from investment property was 14%, benefitting
from consistently high occupancy at Hyprop`s shopping centres with ongoing
demand for space despite of a challenging trading environment.
Total vacancies at year-end were 3.3% (2007: 0.75%). The increase is
attributable to vacancies at Stoneridge and Canal Walk offices.
Hyprop`s expense to income ratio improved to 20% from 22% in 2007.
The increase in net income from listed property securities is attributable to
the inclusion of Hyprop`s 36.7% interest in Sycom Property Fund ("Sycom") for
the full year.
INVESTMENT PORTFOLIO
Value Value
attributable attributable
to Hyprop to Hyprop
Rentable Dec 2008 Dec 2007 Value per
area rentable
area
Business segment m2 (R000) (R000) (R/m2)
Canal Walk 135 402 3 368 000 3 320 000 31 093
The Glen 55 729 1 083 747 1 029 555 25 875
Hyde Park 36 894 1 217 000 1 140 000 32 986
The Mall of Rosebank 33 774 880 000 820 000 26 056
Southcoast Mall 29 361 165 000 151 850 11 239
Stoneridge 50 241 463 500 10 251
Shopping centres 341 401 7 177 247 6 461 405 25 173
Offices 25 078 281 600 436 390 11 229
Investment property 366 479 7 458 847 6 897 795 24 219
Development property 257 095* 269 814 #
Listed property 1 421 447 1 288 939
securities
Investment in 178 983 198 186
associate
366 479 9 316 372 8 654 7 34
* construction costs incurred to end December 2008 on additional retail at The
Glen, Canal Walk and Southern Sun Hyde Park
# construction costs incurred to end December 2007 on Stoneridge
Investment Property
Investment property was independently valued by Old Mutual Properties
(Proprietary) Limited using the discounted cash flow method. Development
property has been valued at cost.
The revaluation surplus in respect of investment property increased by R226
million. The board is satisfied that the valuation appropriately reflects the
increase in income from investment property and the scarcity value of Hyprop`s
assets.
Developments
Additional Additional Hotel
Retail Retail
Canal Walk The Glen Hyde Park Total
R000 R000 R000 R000
Capital cost (Hyprop 206 101 277 811 178 732 662 644
share)
Spent to 31 Dec 2008 (115 082) (100 154) (41 858) (257 094)
To be spent 91 019 177 657 136 874 405 550
Size 15 541m2 19 400m2 132 rooms
Budgeted initial yield (%) 8.9 10.9 11.4
Anticipation completion May 09 Nov 09 Aug 09
date
Listed property securities
Hyprop`s interest in Sycom was valued at 31 December 2008 at R1.4 billion based
on the closing price at that date of R18.87 per unit.
BORROWINGS
Net borrowings at 31 December 2008 of R834 million equated to a gearing ratio of
8.9%.
The average interest rate on long-term loans of R900 million was 9.54%
(2007:9.54%). The interest rate was reduced to an average fixed rate of 9.37%
with effect from January 2009.
Subsequent to year-end, Hyprop raised R500 million to fund the completion of its
development programme, R450 million of which was drawn down in February 2009 at
a fixed rate of 9.40%.
NET ASSET VALUE
The net asset value per combined unit ("NAV") at year-end was R41.56,
representing a 4% increase on the NAV of R39.96 at the previous year-end.
Excluding deferred taxation, the NAV at year-end was R49.51 (2007:R48.51). This
is a 17.9% premium to the market price at year end of R42.00.
MANAGEMENT CONTRACT
Hyprop`s asset and property management agreements with Madison Property Fund
Managers expire on 31 December 2009, other than the property management
agreement in respect of The Glen which expires on 31 May 2009.
The board is considering various options with regard to the management of the
portfolio and an announcement will be made in due course.
DIRECTORATE
CEO Pieter Prinsloo resigned from the board with effect from 28 February 2009.
The board thanks Pieter for his seven years` service and his contribution to
Hyprop`s success. The board is in the process of identifying a suitable
replacement and an announcement in this regard will be made in due course.
PROSPECTS
Trading conditions are expected to remain difficult in the year ahead. However,
Hyprop is well positioned with quality real estate assets and a strong balance
sheet, which should minimise any adverse impact on distributable income brought
about by the current weak economic environment.
Projections indicate that, barring a significant deterioration in market
conditions, Hyprop`s distribution for the financial year ending 31 December 2009
will be between 328 cents and 332 cents per combined unit. This forecast has not
been reviewed or reported on by Hyprop`s auditors.
PAYMENT OF DEBENTURE INTEREST
Distribution 42 of 158 cents per combined unit for the six months ended 31
December 2008 will be paid to combined unitholders as follows:
March 2009
Last day to trade cum distribution Friday 20
Combined units trade ex distribuiton Monday 23
Record date Friday 27
Payment date Monday 30
Unitholders may not dematerialise or rematerialise their combined units between
Monday, 23 March 2009 and Friday, 27 March 2009.
BASIS OF PREPARATION
These annual financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), International Accounting
Standard IAS 34 `Interim Financial Reporting`, JSE Listing Requirements and the
requirements of the Companies Act.
The accounting policies are consistent with those applied in the most recent
audited financial statements for the prior financial year ended 31 December
2007.
Previously Hyprop`s interests in Canal Walk and The Glen were consolidated in
accordance with IAS 27: `Consolidated and separate financial statements` on the
basis that the co-ownership agreements afforded Hyprop control of the financial
and operating policies of these shopping centres. In terms of these co-
ownership agreements, material capital expenditure requires mutual consent of
the co-owners. In view of the recent significant increases in development costs,
most of the capital expenditure now being undertaken is material and accordingly
these centres are no longer considered to be controlled solely by Hyprop.
Hyprop`s interests in Canal Walk and The Glen have therefore been
proportionately consolidated and reflect Hyprop`s share of assets, liabilities,
income and expenditure.
In order to facilitate comparison, pro-forma figures for the comparable year, on
the basis of proportionate consolidation, have also been presented.
AUDIT OPINION
Grant Thornton has audited the financial information set out in these results
and their audit report is available for inspection at the company`s registered
office.
On behalf of the board.
MS Aitken PG Prinsloo
Chairman CEO
27 February 2008
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)
REGISTERED OFFICE; 3rd Floor, Hyde Park Shopping Centre, Jan Smuts Avenue,
Sandton, 2196 (PO Box 41257 Craighall 2024)
TRANSFER SECRETARIES: Computershare Investor Services (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
INVESTOR RELATIONS: Envisage Investor & Corporate Relations
Date: 02/03/2009 07:15:01 Produced by the JSE SENS Department.
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