| Wed 13 Apr 2011, 15:29 | | HYP - Hyprop Investments Limited - Hyprop`s proposed acquisition of 100% of the |
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HYP
HYP
HYP - Hyprop Investments Limited - Hyprop`s proposed acquisition of 100% of the
shares in Attfund retail: financial effects, Attfund retail forecast and
withdrawal of cautionary announcement
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")
HYPROP`S PROPOSED ACQUISITION OF 100% OF THE SHARES IN ATTFUND RETAIL: FINANCIAL
EFFECTS, ATTFUND RETAIL FORECAST AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Combined unitholders are referred to the previous announcements related to and
detailing the proposed offer (the "offer") to be made by Hyprop to acquire 100%
of the shares in Femtoworx Limited (in the process of being renamed Attfund
Retail Limited) ("Attfund Retail"), for the purpose of acquiring Attfund
Retail`s portfolio of property assets and listed securities.
This announcement sets out the forecast financial information in respect of
Attfund Retail and financial effects as required in terms of the JSE Listing
Requirements.
ATTFUND RETAIL FORECAST
Attfund Retail`s profit forecasts have been prepared for the 12 month periods
ending 31 December 2011 and 31 December 2012. The forecasts have been prepared
on the assumption that the effective date of the offer was 1 January 2011.
The aggregate effective offer consideration of R8.986 billion (before taking
into account the Attfund Retail debt) represents a forward yield of 7.37% based
on the forecast pre-interest distributable income for the 12 months ending 31
December 2011.
The profit forecasts have been:
- prepared in accordance with Hyprop`s accounting policies and in compliance
with IFRS;
- reviewed by the independent reporting accountants whose report will be
included in the circular to be posted to Hyprop combined unitholders in
relation to the offer; and
- prepared on the assets of Attfund Retail which post implementation of the
offer will be transferred to Hyprop.
12 months 12 months
ending ending 31
31 December December
2011 2012
R`000 R`000
Revenue 1 035 180 1 083 392
Investment property income 968 690 1 047 778
Straight-line rental income accrual 41 001 8 677
Listed properties securities income 22 289 23 481
Word 4 Word income 3 200 3 456
Property expenses (306 267) (341 997)
Net property income 728 913 741 395
Other operating expenses (25 374) (27 057)
Operating income 703 539 714 338
Net interest (145 063) (139 870)
Interest received 28 380 33 573
Interest from loan to associate 15 096 15 096
Interest on earnings 13 284 18 477
Interest paid on long-term loans (173 443) (173 443)
Net operating income 558 476 574 468
Change in fair value 640 012 726 479
Investment property 664 100 717 228
Listed property securities 16 913 17 928
Straight-line rental income accrual (41 001) (8 677)
Income before debenture interest and
taxation 1 198 488 1 300 947
Debenture interest (517 475) (565 791)
Net income before taxation 681 013 735 156
Taxation - Deferred (186 260) (200 996)
Total comprehensive income for the period 494 753 534 160
Reconciliation to distributable earnings
Revenue 994 179 1 074 715
Property expenses (306 267) (341 997)
Other operating expenses (25 374) (27 057)
Net interest (145 063) (139 870)
Distributable earnings 517 475 565 791
- Since the Attfund Retail assets will be transferred to Hyprop post the
implementation of the offer, the income earned on these assets will be
distributed to Hyprop combined unitholders in the form of debenture
interest. Given that debenture interest is deductible for tax purposes
there will be no tax incurred on the income of the Attfund Retail assets.
- Uncontracted rental income comprises 19% of the total forecast investment
property income in the year ending 31 December 2011 and 30% in the year
ending 31 December 2012. Uncontracted rental income is income which has
been forecast but for which there are no signed lease agreements in place;
and for the purposes of the forecasts, relates primarily to leases which
come up for renewal during the forecast period (as opposed to vacancies).
- The detailed assumptions underlying the forecast will be included in the
circular to be posted to Hyprop combined unitholders in relation to the
offer.
FINANCIAL EFFECTS
As previously announced, the Attfund Retail vendors are required to place 30
million of the Hyprop combined units (the "placement units") being issued as
part of the consideration for the offer on the basis that, if any of the
placement units are not placed at a price of at least R54 per unit, Hyprop will
(at its election) either make up the difference or repurchase the placement
units in question at a price of R54 per unit. If Hyprop is required to
repurchase any of the placement units, the increased gearing will have a
dilutionary effect on Hyprop`s distributions in the short term but increase
growth in distributions going forward.
The unaudited pro forma financial effects of the offer and the possible
repurchase by Hyprop of the placement units (the "specific repurchase") on
Hyprop`s historical distribution per unit, earnings per unit and headline
earnings per unit for the year ended 31 December 2010 and net asset value and
net tangible asset value per unit at 31 December 2010 are set out below.
The unaudited pro forma financial effects have been prepared for illustrative
purposes only, to provide information on how the offer and specific repurchase
may have impacted on the historical results and financial position of Hyprop.
The pro forma financial effects are the responsibility of the directors of
Hyprop.
Because of their nature, the pro forma financial effects may not fairly present
Hyprop`s financial position after the offer and/or the specific repurchase. In
particular the pro forma financial effects on the earnings per unit, headline
earnings per unit and distributions per unit do not fairly present the impact of
the offer on Hyprop`s distributions per unit, given that:
- the disclosure of earnings per unit and headline earnings per unit are
regulatory requirements but do not correlate to distributions per unit;
- the offer consideration was determined based on Attfund Retail`s forecast
earnings while the financial effects were calculated on the basis of
Attfund Retail`s historic earnings for the 12 month period ended 30 June
2010 as compared to Hyprop`s earnings for the 12 month period ended 31
December 2010; and
- the historic earnings of Attfund Retail for the 12 month period do not
include any earnings from the extensions at Clearwater Mall and Woodlands
Boulevard, which earnings were taken into account in determining the offer
consideration.
In the circumstances, Hyprop is of the view that the Attfund Retail forecasts
set out above provide unitholders with more meaningful information for the
purpose of determining how the offer may impact Hyprop`s distributions per unit
going forward.
Historical Pro forma Change Pro forma Change
before the after the after
offer offer specific
repurchase
Distribution 357.0 257.6 -27.8% 227.5 -11.7%
per unit
(cents)
Earnings per 720.0 609.9 -15.3% 626.1 2.7%
unit (cents)
Headline 425.6 276.3 -35.1% 248.6 -10.0%
earnings per
unit (cents)
Net asset 57.01 61.43 7.7% 62.40 1.6%
value per
unit -
excluding
deferred tax
(R)
Net tangible 57.01 54.95 -3.6% 55.07
asset value 0.2%
per unit -
excluding
deferred tax
(R)
Net asset 47.26 49.86 5.5% 49.32 -1.1%
value per
unit (R)
Net tangible 47.26 43.38 -8.2% 41.99 -3.2%
asset value
per unit (R)
Units in 166 113 169 258 113 169 92 000 000 228 113 169
issue -30 000 000
Notes and assumptions:
1 The amounts set out in the "Historical before the offer" column have been
extracted from Hyprop`s audited results for the year ended 31 December
2010.
2 Distribution per unit ("DPU"), earnings per unit ("EPU") and headline
earnings per unit ("HEPU"), as set out in the "Pro forma after the offer"
and "Pro forma after specific repurchase" columns, reflect the effects of
the offer and specific repurchase on distribution per unit, earnings per
unit and headline earnings per unit for the year ended 31 December 2010
based on the assumption that the offer and specific repurchase were
implemented at the beginning of the period in question; and
3 Net asset value and net tangible asset value per unit, as set out in the
q"Pro forma after the offer" and "Pro forma after specific repurchase"
columns, reflect the effect of the offer and specific repurchase on the net
asset value and net tangible asset value per unit at 31 December 2010
assuming the offer and specific repurchase were implemented on 31 December
2010.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Caution is no longer required to be exercised by Hyprop combined unitholders
when dealing in their combined units. As previously announced the offer remains
conditional upon, inter alia, Hyprop unitholder approval and the implementation
of the Attfund Retail restructure.
Johannesburg
13 April 2011
Corporate advisor and legal advisor to Hyprop
Java Capital (Proprietary) Limited
Sponsor to Hyprop
Java Capital Trustees and Sponsors (Proprietary) Limited
Legal advisor to Attfund Retail
Edward Nathan Sonnenbergs Inc.
Independent reporting accountants
Grant Thornton SA
Date: 13/04/2011 15:29:12 Produced by the JSE SENS Department.
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