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HYP
HYP
HYP - Hyprop Investments Limited - Unaudited results for the six
months ended 30 June 2010
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1987/005284/06)
Share Code: HYP ISIN: ZAE000003430
("Hyprop" or "the company")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2010
8,1% increase in interim distribution per combined unit
Total return 13%
NAV excl. deferred taxation R55,06 per combined unit up 4%
Total assets R11 billion up 2%
Market capitalisation R8,3 billion up 9%
Gearing 13%
Statement of comprehensive income
Unaudited Reviewed Audited
30 June 30 June 31 Dec
2010 2009 2009
R`000 R`000 R`000
Revenue 527 770 434 136 923 655
Investment property income 464 009 362 983 790 568
Straight-line rental income 3 106 11 425 13 318
accrual
Listed property securities 60 655 59 728 119 769
income
Property expenses (165 578) (114 346) (259 380)
Net property income 362 192 319 790 664 275
Other operating expenses (17 766) (22 826) (47 840)
Operating income 344 426 296 964 616 435
Net interest (59 697) (24 659) (70 829)
Received 3 682 18 592 26 931
Paid (63 379) (43 251) (97 760)
Net operating income 284 729 272 305 545 606
Non-core income 449 449 905
Change in fair value 311 207 (63 375) 583 733
Investment property 187 257 149 032 580 121
Straight-line rental income (3 106) (11 425) (13 318)
accrual
Listed property securities 120 525 (178 528) 32 391
Derivative instruments 6 531 (22 454) (15 461)
Amortisation of debenture premium 54 547 48 249 97 696
Amortisation of financial 357 357 715
guarantee for associate
Income before debenture interest 651 289 257 985 1 228 655
Debenture interest (289 037) (267 442) (544 851)
Net income before share of income 362 252 (9 457) 683 804
from associate
Share of income from associate 7 701 5 385 20 305
Investment property income 7 715 5 630 11 566
Straight-line rental income (14) (245) 386
accrual
Change in fair value of 8 353
investment property
Profit before taxation 369 953 (4 072) 704 109
Taxation (67 668) (16 735) (152 084)
Total comprehensive income for 302 285 (20 807) 552 025
the period
Abridged reconciliation -
headline earnings and
distributable earnings
Net income after taxation 302 285 (20 807) 552 025
Debenture interest 289 037 267 442 544 851
Earnings 591 322 246 635 1 096 876
Headline earnings adjustments (191 008) (155 552) (531 749)
Change in fair value of (136 461) (107 303) (434 053)
investment property (net of
deferred taxation)
Amortisation of debenture premium (54 547) (48 249) (97 696)
Headline earnings 400 314 91 083 565 127
Distributable earnings (110 526) 175 876 (20 368)
adjustments
Change in fair value of listed (103 652) 153 534 (27 856)
property securities (net of
deferred taxation)
Change in the fair value of (6 531) 22 454 15 461
derivative instruments
Deferred taxation 1 481
Amortisation of financial (357) (357) (715)
guarantee for associate
Share of income from associate 14 245 (8 739)
(change in fair value and
straight-line rental income
accrual
Distributable earnings 289 788 266 959 544 759
Total combined units in issue 166 113 166 113 166 113
169 169 169
Weighted average combined units 166 113 166 113 166 113
in issue 169 169 169
Earnings per combined unit 356,0 148,5 660,3
Headline earnings per combined 241,0 54,8 340,2
unit
Distributable earnings per 174,5 160,7 327,9
combined unit
Distribution details
Total distribution for the year 174,00 161,00 328,00
Six months - ended 31 December 167,00
- ended 30 June 174,00 161,00 161,00
Statement of financial position
Unaudited Reviewed Audited
30 June 30 June 31 Dec 2009
2010 R`000 2009 R`000
R`000
Assets
Non-current assets 10 914 955 9 681 125 10 550 405
Investment property 9 099 758 8 213 396 8 858 711
Building appurtenances and 19 785 19 119 20 993
tenant installations
Investment in associate 171 021 159 671 169 499
Loan receivable 47 901 46 021 47 364
Derivative instruments 2 127
Listed property securities 1 574 363 1 242 918 1 453 838
Current assets 113 682 296 984 258 153
Receivables 78 972 58 750 80 591
Cash and cash equivalents 34 710 238 234 177 562
Total assets 11 028 637 9 978 109 10 808 558
Equity and liabilities
Share capital and reserves 5 101 492 4 226 374 4 799 207
Liabilities
Non-current liabilities 5 495 990 5 368 699 5 594 236
Debentures and debenture 2 504 158 2 608 153 2 558 705
premium
Long-term loans 1 451 437 1 400 000 1 550 000
Derivative instruments 22 454 12 447
Financial guarantee for 596 1 310 953
associate
Deferred taxation 1 539 799 1 336 782 1 472 131
Current liabilities 431 155 383 036 415 115
Payables 131 061 115 594 134 691
Derivative instruments 11 057 3 015
Combined unitholders for 289 037 267 442 277 409
distribution
Total liabilities 5 927 145 5 751 735 6 009 351
Total equity and liabilities 11 028 637 9 978 109 10 808 558
Net asset value per combined unit 45,79 41,14 44,29
(R)
Net asset value per combined unit 55,06 49,19 53,16
- excluding deferred taxation
liability (R)
Abridged statement of changes in equity
Unaudited Reviewed Audited
30 June 30 June 31 Dec
2010 2009 2009
R`000 R`000 R`000
Balance at beginning of the 4 799 207 4 247 182 4 247 182
period
Total comprehensive income for 302 285 (20 807) 552 025
the period
Balance at end of the period 5 101 492 4 226 375 4 799 207
Abridged statement of cash flows
Unaudited Reviewed Audited
30 June 30 June 31 Dec
2010 2009 2009
R`000 R`000 R`000
Cash flows from operating 11 612 42 440 53 089
activities
Cash generated from operations 342 539 304 860 624 030
Interest received 3 682 18 592 26 931
Interest paid (63 379) (43 251) (97 760)
Distribution to combined (277 409) (262 459) (529 901)
unitholders
Income from associate 6 179 24 698 29 789
Cash flows from investing (55 901) (370 296) (591 617)
activities
Cash flows from financing (98 563) 500 000 650 000
activities
Net increase/(decrease) in cash (142 852) 172 144 111 472
and cash equivalents
Cash and cash equivalents at the 177 562 66 090 66 090
beginning of the period
Cash and cash equivalents at the 34 710 238 234 177 562
end of the period
Financial results
Notwithstanding a difficult retail trading environment, Hyprop
continued to achieve growth in distributions to unitholders for the
six months ended 30 June 2010 ("the period").
Hyprop has declared an interim distribution of 174 cents per
combined unit, an increase of 8,1% on the distribution for the
comparable period in 2009.
30 June 2010 30 June 2009
Business segment Revenue Distributable Revenue Distributable
R`000 R`000 R`000 R`000
Canal Walk 185 786 134 795 155 032 110 126
The Glen 75 123 50 401 51 180 34 557
Hyde Park 65 518 41 800 58 706 37 591
The Mall of Rosebank 48 475 31 098 45 220 33 939
Stoneridge 23 557 10 430 23 400 12 289
Southcoast Mall 10 993 7 136 10 063 6 658
Shopping centres 409 452 275 660 343 601 235 160
Offices 21 243 13 661 13 941 9 873
Hotels 33 314 9 176 5 441 3 604
Investment property 464 009 298 497 362 983 248 637
Listed property 60 655 60 655 59 728 59 728
securities
Straight-line rental 3 106 3 106 11 425 11 425
income accrual
527 770 362 258 434 136 319 790
Fund management (17 831) (22 826)
expenses
Net interest (59 697) (24 659)
(paid)/received
Net operating income 284 730 272 305
Non-core income 449 449
Share of income from 7 715 5 630
associate
Straight-line rental (3 106) (11 425)
income accrual
Total 527 770 289 788 434 136 266 959
Revenue and distributable earnings from shopping centres increased
by 19% and 17%, respectively. On a like-for-like basis (excluding
additional retail at The Glen and Canal Walk), revenue from
shopping centres increased by 12%, while distributable earnings
increased 9%. Shopping centre income was negatively affected by
increased municipal rates and electricity during the period, which
was not fully recoverable from tenants.
Provisions for doubtful debts were increased by 40% (R5,3 million)
during the period, bringing total provisions for doubtful debts to
61% of total arrears.
Revenue and distributable earnings from offices increased due to
the inclusion of Cradock Heights and Rosebank Gardens in the
current period.
Income from hotels includes The Grace and Southern Sun Hyde Park.
Other operating expenses reduced by 22% (R5,1 million) primarily
due to the replacement of asset management fees with lower
consulting fees, both payable to Redefine Properties Limited
("Redefine").
Property Portfolio
Value attributable
to Hyprop
Value per
Rentable June 2010 Dec 2009 Rentable
area R`000 R`000 area
(m2) June 2010
(R/m2)
Canal Walk 150 394 4 260 800 4 040 000 35 414
The Glen 74 583 1 439 234 1 439 234 25 676
Hyde Park 36 894 1 250 000 1 250 000 33 881
The Mall of Rosebank 37 009 911 000 905 000 24 616
Stoneridge 50 241 417 600 425 700 9 235
Southcoast Mall 29 361 146 250 140 500 9 962
Shopping centres 378 482 8 424 884 8 200 434 26 840
Offices 22 221 308 200 300 500 13 870
400 703 8 733 084 8 500 934 26 121
Hotels 291 000 288 000
Investment property 400 703 9 024 084 8 788 934 26 847
Development property 91 682# 87 743#
Listed property 1 574 363 1 453 838
securities
Investment in 171 021 169 499
associate
400 703 10 861 150 10 500 014
#Rosebank Gardens
Investment Property
Old Mutual Investment Group: Property Investments (Pty) Limited
updated the valuations prepared by them at year-end to determine an
independent valuation of the Hyprop portfolio at 30 June 2010.
Investment property increased in value by R187 million to R9
billion, a 2,2% increase.
Vacancies at 30 June 2010 reduced to 3,9% from 4,5% at 31 December
2009. Excluding Stoneridge, which opened in September 2008, total
vacancies at the end of the period were 1,3% (2009: 1,9%).
Developments
The refurbishment of Hyde Park, at a budgeted cost of R37 million,
is currently underway with completion scheduled for December 2010.
Planning for the refurbishment of and extension to The Mall of
Rosebank, incorporating Rosebank Gardens, is well progressed.
Listed Property Securities
Income from Hyprop`s investment in Sycom Property Fund ("Sycom")
increased by 2%. This relatively low increase was due to a downward
revision of forecast Sycom income for the three months ended June
2010 as well as an under accrual of Sycom income in 2008 which
boosted 2009 income.
The investment in Sycom was valued at R1,6 billion at 30 June 2010
based on the closing price on that date of R20,90 per unit,
resulting in a write-up for the period of R121 million.
Net asset value
The net asset value per combined unit ("NAV") at 30 June 2010 was
R45,79, representing a 3% increase on the NAV of R44,29 at 31
December 2009.
Excluding deferred taxation, NAV at 30 June 2010 was R55,06, a
premium of 10,1% to Hyprop`s closing combined unit price of R49,99
on 30 June 2010.
Borrowings
Current net borrowings of R1,4 billion equate to a gearing ratio of
13%.
Long-term loans amounting to R1,35 billion have been fixed for
periods up to 2014 at an average rate of 9,57% (2009: 9,38%).
Asset management
In accordance with the board`s strategy, property asset management
was fully internalised from January 2010.
Three months notice of termination of the consultancy agreement
with Redefine was given in May 2010.
Any alternative arrangement relating to the provision of ongoing
asset management services will be subject to Hyprop unitholder
approval.
Redefine offer
On 12 August 2010 Redefine announced that its unitholders had
approved the acquisition of 19 686 558 Hyprop combined units from
Coronation Asset Management (Pty) Limited ("the Coronation units").
Acquisition of the Coronation units brings Redefine`s interest in
Hyprop to 45,2% and in terms of Securities Regulation Panel Rules,
triggered a mandatory offer to all Hyprop unitholders (excluding
Redefine) at R50 per unit ("the offer").
A circular was posted to Hyprop combined unitholders on 5 August in
which the board set out its views on the offer. The board has
recommended that Hyprop unitholders reject the offer.
The closing date of the offer is Friday, 27 August and the results
of the offer will be announced on SENS on Monday, 30 August.
Directorate
Wolf Cesman resigned from the board with effect from 31 May 2010.
The board thanks him for his contribution to Hyprop`s success.
Prospects
Savings in the second half of 2010 from the elimination of
consultancy fees to Redefine are likely to be offset by increases
and back charges in respect of municipal rates and electricity
costs, increased provisions for doubtful debts and lower than
budgeted occupancies at Southern Sun Hyde Park.
The board anticipates that, barring a change in market conditions,
Hyprop`s distribution for the six months ending 31 December 2010
will be between 181 cents and 185 cents per combined unit. The
forecast distribution for the full year therefore remains unchanged
at 355 cents to 359 cents per combined unit. This forecast has not
been reviewed or reported on by Hyprop`s auditors.
Payment of debenture interest
Distribution 45 of 174 cents per combined unit for the six months
ended 30 June 2010 will be paid to combined unitholders as follows:
September 2010
Last day to trade cum distribution Thursday, 16
Combined units trade ex distribution Friday, 17
Record date Thursday, 23
Payment date Monday, 27
Unitholders may not dematerialise or rematerialise their combined
units between Friday, 17 September 2010 and Thursday, 23 September
2010, both days inclusive.
Basis of preparation
This interim report has been prepared in accordance with
International Financial Reporting Standards, the AC 500 Standards,
International Accounting Standard IAS 34 `Interim Financial
Reporting` and the requirements of the Companies Act.
The accounting policies applied are consistent with those applied
in the most recent audited financial statements.
The results have not been audited or reviewed by the company`s
auditors.
On behalf of the board.
MS Aitken MF Rodel
Chairman CEO
23 August 2010
Directors
MS Aitken*# (Chairman); MF Rodel (CEO); LR Cohen (FD); EG Dube*; KM
Ellerine*; JR McAlpine*#; LI Weil*#; S Shaw-Taylor*; MY Sibisi*#; M
Wainer*
(* 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)
Company secretary
Probity Business Services (Proprietary) Limited
Sponsor
Java Capital
Investor relations
Envisage Investor & Corporate Relations
www.hyprop.co.za
Date: 24/08/2010 07:30:01 Produced by the JSE SENS Department.
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