| Tue 25 Feb 2003, 18:01 | | HYPROP Investments Limited - Audited Results for t |
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HYPROP Investments Limited
"Hyprop" or "the company"
Audited results for the twelve months ended 31 December 2002
(Registration number 1987/005284/06)
Share code HYP ISIN code ZAE 000003430
Operating income up 47%
Distribution per combined unit up 3%
Group income statement
31 Dec 31 Dec
2002 2001
Note R000 R000
Turnover 160 653 111 755
Operating income 105 598 72 058
Net finance (charges)/income (16 418) 751
Interest received 498 4 529
Interest paid (16 916) (3 778)
Net operating income 89 180 72 809
Change in fair value of investment
property 43 911 (1 323)
Income before debenture interest
and tax 133 091 71 486
Debenture interest (83 967) (72 021)
Debenture interest paid 1 (83 967) (72 726)
Interest capitalised - 705
Income/(loss) before taxation 49 124 (535)
Taxation (6 607) (18)
Secondary tax on companies (21) (18)
Deferred taxation (6 586) -
Net income/(loss) after taxation 42 517 (553)
Minority interest (17 054) -
Loss from associates (268) (51)
Net profit/(loss) for the year 25 195 (604)
Earnings per combined unit (cents)
- as previously reported - 127,51*
Earnings per combined unit (cents) 168,67 125,21*
Headline earnings per combined
unit (cents) 129,76 127,51*
(*Based on weighted average
combined units)
Reconciliation - headline earnings
Net profit for the year 25 195 (604)
Debenture interest paid 83 967 72 726
Net profit after taxation before
debenture interest 109 162 72 122
Headline earnings adjustment (25 184) 1 323
Change in fair value of investment
property (net of deferred taxation) (37 325) 1 323
Attributable to outside shareholders 12 141 -
Headline earnings 83 978 73 445
Total combined units in issue 64 719 478 64 719 478
Weighted average combined units 64 719 478 57 599 237
Total Interest Dividends
distribution on on
per combined deben- ordinary
unit tures shares
Note (cents (cents (cents
1 Distribution details per unit) per unit) per unit)
Total distribution for the
year ended 31 December 2002 130,000 129,740 0,260
Distribution number 30 for the
six months ended 31 December 2002 66,290 66,157 0,133
Distribution number 29 for the
six months ended 30 June 2002 63,710 63,583 0,127
Total distribution for the year
ended 31 December 2001 126,360 126,107 0,253
Distribution number 28 for the
eight months ended
31 December 2001 84,660 84,490 0,170
Distribution number 27 for the
four months ended 30 April 2001 41,700 41,617 0,083
Abridged group cash flow statement
31 Dec 31 Dec
2002 2001
R000 R000
Cash (absorbed by)/generated
from operating activities (13 801) 38 143
Cash generated from operations 103 199 82 801
Interest income 498 4 529
Finance charges (16 916) (3 778)
Distribution to unitholders (96 024) (45 396)
Cash distributed to minorities (4 529) -
Taxation (29) (13)
Cash flow from investing activities (58 899) (424 885)
Cash flow from financing activities 69 958 334 954
Net decrease in cash and
cash equivalents (2 742) (51 788)
Cash and cash equivalents at
beginning of the year 4 732 60 56 520
On acquisition of business 1 256 -
Cash and cash equivalents at
end of the year 3 246 4 732
Group balance sheet
31 Dec 31 Dec
2002 2001
R000 R000
Assets
Non-current assets 1 116 027 871 388
Tangible fixed assets 1 115 481 870 631
Financial assets 546 757
Current assets 7 352 6 807
Trade and other receivables 4 106 2 075
Cash and cash equivalents 3 246 4 732
Total assets 1 123 379 878 195
Equity and liabilities
Equity 420 165 235 719
Share capital and reserves 260 746 235 719
Minority interest 159 419 -
Non-current liabilities 647 832 571 289
Debentures 319 067 319 067
Debenture premium 144 981 144 981
Deferred taxation 6 586 -
Long-term liabilities 177 198 107 241
Current liabilities 55 382 71 187
Trade and other payables 12 468 16 376
Taxation 11 19
Unitholders for distribution 42 903 54 792
Total equity and liabilities 1 123 379 878 195
Net asset value per combined
unit (R) 11,20 10,81
Group statement of changes in equity
Non-
distribu- Reva-
Share table luation Retained
capital reserve reserve income Total
R000 R 000 R000 R000 R000
Balance at 1 January 2001
as previously reported 434 9 050 48 532 5 031 63 047
Change in accounting policy 173 208 173 208
Restated balance at
1 January 2001 434 9 050 221 740 5 031 236 255
Issue of ordinary share
capital 214 214
Net loss for the year (604) (604)
Transfer from revaluation
reserve (1 323) 1 323 -
Dividends (146) (146)
Balance at 31 December 2001 648 9 050 220 417 5 604 235 719
Balance at 1 January 2002 648 9 050 220 417 5 604 235 719
Net profit for the year 25 195 25 195
Transfer to revaluation
reserve (net of deferred
taxation) 25 184 (25 184) -
Dividends (168) (168)
Balance at 31 December 2002 648 9 050 245 601 5 447 260 746
Registered office
Hyde Park Corner Shopping Centre Jan Smuts Avenue Sandton 2196
PO Box 41257 Craighall 2024
Transfer secretaries
Computershare Investor Services Limited 9th Floor 70 Marshall Street
PO Box 1053 Johannesburg 2000
Directors
PF Kirchmann* (Chairman) PG Prinsloo (MD) MS Aitken* J Bentel*
WE Cesman* S Shaw-Taylor* M Wainer* MJ Watters* SV Webb* PL Whewell*
*Non-executive directors
Basis of preparation
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The group has adopted
accounting statement AC 135 (Investment Property) for the first time for the
year under review. The results for the previous financial year have been
restated on the same basis.
Audit opinion
Grant Thornton Kessel Feinstein has audited the financial information set out in
this report and the unqualified audit report is available for inspection at the
company`s registered office.
Comments
Introduction
The directors of Hyprop are pleased to report that the company, after
acquisition of the Kirchmann Hurry portfolio and a controlling share in The Glen
Shopping Centre, has achieved its objective of delivering sustained earnings
growth to combined unitholders.
Operating income for the year ended 31 December 2002 ("the year") increased by
47% over the year ended 31 December 2001 ("the previous year") due to expansion
of the portfolio, while headline earnings and distribution to combined
unitholders for the year rose by 2% and 3%, respectively, from the previous
year.
Distribution
The board has approved a final distribution of 66,29 cents per combined unit.
The total distribution for the year of 130,00 (2001: 126,36) cents per combined
unit equates to 3% growth over the previous year.
Acquisition of the Rosebank Mall and
JHI House
As detailed in the circular dated 10 February 2003 ("the circular"), Hyprop will
acquire the Rosebank Mall and JHI House ("the properties") from The Rosebank
Mall (Pty) Ltd with effect from 1 January 2003, for an aggregate purchase
consideration of R320 million.
The purchase price will be payable by the issue of combined units at R10,25 per
unit ("the consideration units"), provided that Centrecity Property Fund
("Cenprop") unitholders will be entitled to elect to receive cash or a
combination of cash and consideration units in respect of their proportionate
share of the distribution. The final proportion of consideration units to cash
will depend upon such election.
The acquisition agreement is subject to the fulfilment of various conditions by
no later than 30 April 2003.
Hyprop has to date secured unconditional irrevocable undertakings from 55% of
Hyprop combined unitholders, and written support from 51% of Cenprop
unitholders, to vote in favour of the resolutions ratifying the conclusion and
implementation of the acquisition.
As set out in the circular the general meetings of Hyprop combined unitholders
and Cenprop unitholders will be held on 5 March 2003 and the outcome announced
on 6 March 2003.
Retail portfolio developments
The Glen Shopping Centre ("The Glen")
During the year Hyprop acquired a further 16,77% undivided share in The Glen for
a purchase consideration of R47,8 million equating to an initial forward yield
of 13%. The acquisition has resulted in Hyprop controlling 50,1% of The Glen.
By year-end the extension to The Glen had been completed, facilitating the
expansion of Pick `n Pay and other national tenants. Hyprop`s contribution of
R5,2 million to the total cost of R10,3 million will yield an initial 16%
return. The Glen currently has 10 000 m2 of unutilised retail rights and
management is finalising a master plan for further expansion.
Hyde Park Corner Shopping Centre ("Hyde Park")
Hyde Park benefited from a strong performance by retailers during the year and
achieved net income growth of 8%. A new Clicks store is being developed at a
total cost of R2,2 million and management is actively exploring further
expansion opportunities.
Post balance sheet event
Hyprop is disposing of Stand 155 Dunkeld West for a consideration of R4,33
million and is acquiring Stand 197 Dunkeld West for a purchase price of R3,63
million. The transfer to Hyprop of the almost fully occupied building in
exchange for a vacant building will reduce the company`s vacancy exposure in the
area.
Borrowings
At 31 December 2002 Hyprop`s borrowings amounted to R177,2 million, equating
into a 19% debt-to-open market value ratio, after accounting for the minority
interest in The Glen. Depending on the final proportion of consideration units
to cash in the purchase price payable for the Rosebank Mall and JHI House,
Hyprop may require maximum additional borrowings of R320 million which, together
with its current borrowings, will result in the debt-to-open market value ratio
not exceeding 42%. At year-end 57% of Hyprop`s borrowings had been hedged
against short-term interest rate fluctuations for periods ranging from 2 to 4
years.
Portfolio valuation
The sectoral spread of the portfolio, as independently valued at 31 December
2002, is as follows:
Value Change from the
Sector (Rm) (%) previous year (%)
Retail 551 58 15
Commercial 392 42 (8)
Total 943 100 5
Low vacancies, increased turnover rental and a robust performance from most of
the national retailers contributed to the growth of the retail portfolio.
In contrast the office sector remained over-saturated with a resultant slow take
up of vacant space. Loss of income due to vacancies, rent-free periods and
reduced rental impacted negatively on the value of the commercial portfolio.
Management anticipates that this will improve over the next two years with a
decline in new speculative commercial developments and sharp increases in
building costs.
Vacancies
Vacancies by rentable area at 31 December 2002 were as follows:
2002 2002 2001 2001
Sector (m2) (%) (m2) (%)
Retail 230 0,2 607 0,5
Commercial 12,246 8,6 13,846 10,3
Total 12,476 8,8 14,499 10,8
The vacancies equate by value to 6% of potential rental income compared with 8%
for the previous year. No significant vacancies were experienced in the retail
sector. 76% of the vacancies in the commercial sector are contained in the
Craighall/Dunkeld, Wierda Valley and Midrand office nodes.
Prospects
Distributions per unit for the 2003 year will be dependent upon the basis of the
settlement election for the Rosebank Mall and JHI House but in any event should
not be less than that for the year ended 31 December 2002.
Management will pursue investment opportunities in the retail sector that will
contribute to the strength and diversification of the portfolio. Properties in
the commercial portfolio that do not align with the company`s investment
strategy will be sold.
Payment of debenture interest and dividend
Combined unitholders will receive debenture interest payment number 30 of 66,157
cents per debenture and dividend payment number 30 of 0,133 cents per share for
the period 1 July 2002 to 31 December 2002. The distribution amounts to 66,290
cents per combined unit. The last day to trade cum distribution will be Thursday
13 March 2003. The combined units will trade ex distribution as from Friday 14
March 2003. The record date will be Thursday 20 March 2003 and the payment date
will be Monday 24 March 2003. Combined unitholders may not dematerialise or
rematerialise their combined units between Friday 14 March 2003 and Thursday 20
March 2003, both days inclusive.
On behalf of the Board
PF Kirchmann PG Prinsloo
Chairman Managing Director
24 February 2003
Date: 25/02/2003 05:54:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
