| Tue 24 Feb 2004, 11:36 | | AUDITED RESULTS FOR THE TWELVE MONTHS ENDED 31 |
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HYPROP INVESTMENTS LIMITED - AUDITED RESULTS FOR THE TWELVE MONTHS ENDED 31
DECEMBER 2003 FINANCIAL HIGHLIGHTS
HYPROP INVESTMENTS LIMITED
"Hyprop" or "the company"
(Registration number 1987/005284/06)
Share code HYP ISIN code ZAE 000003430
AUDITED RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2003
FINANCIAL HIGHLIGHTS
* Distribution per combined unit up 7,7%
* Headline earnings per combined unit up 9,7%
* Operating income up 85%
* Acquired Canal Walk and The Rosebank Mall
GROUP INCOME STATEMENT
31 Dec 31 Dec
2003 2002
Note R000 R000
Turnover 316 691 160 654
Operating income 195 251 105 598
Net finance charges (43 522) (16 418)
Interest received 1 767 498
Interest paid (45 289) (16 916)
Net operating income 151 729 89 180
Profit on disposal of investment properties 6 814 -
Change in fair value of financial assets 2 069 -
Change in fair value of investment properties 116 684 43 911
Income before debenture interest and taxation 277 296 133 091
Debenture interest paid 1 (124 364) (83 967)
Income before taxation 152 932 49 124
Taxation (21 160) (6 607)
Secondary tax on companies (31) (21)
Deferred taxation (21 129) (6 586)
Net income after taxation 131 772 42 517
Minority interest (64 149) (17 054)
Loss from associates (223) (268)
Net profit for the year 67 400 25 195
EARNINGS AND HEADLINE EARNINGS
Earnings per combined unit (cents) 215,4 168,7
Headline earnings per combined unit (cents) 142,4 129,8
Earnings per share (cents) 75,7 38,9
Headline earnings per share (cents) 2,7 -
Reconciliation - Headline earnings
Net profit for the year 67 400 25 195
Headline earnings adjustments (64 980) (25 184)
Change in fair value of investment properties
(net of deferred taxation) (96 217) (37 325)
Attributable to outside shareholders 37 687 12 141
Profit on disposal of investment properties
(net of CGT) (6 450) -
Headline earnings - shares 2 420 11
Debenture interest paid 124 364 83 967
Headline earnings - combined units 126 784 83 978
Total combined units in issue 89 009 179 64 719 478
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 2003 140,000
139,720 0,280
Distribution number 32 for the
six months ended 31 December 2003 74,900 74,750 0,150
Distribution number 31 for the
six months ended 30 June 2003 65,100 64,970 0,130
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
ABRIDGED CASH FLOW STATEMENT
31 Dec 31 Dec
2003 2002
R000 R000
Cash flows from operating activities (2 586) (13 801)
Cash generated from operations 167 041 103 199
Interest income 1 767 498
Finance charges (45 288) (16 916)
Distribution to unitholders (100 848) (96 024)
Cash distributed to minorities (25 247) (4 529)
Taxation (11) (29)
Cash flows from investing activities (1 271 328) (58 899)
Cash flows from financing activities 1 279 691 69 958
Net increase/(decrease) in cash and cash
equivalents 5 777 (2 742)
Cash and cash equivalents at beginning
of the year 3 246 4 732
On acquisition of business - 1 256
Cash and cash equivalents at end of the year 9 023 3 246
GROUP BALANCE SHEET
31 Dec 31 Dec
2003 2002
R000 R000
Assets
Non-current assets
Tangible assets 2 715 680 1 115 481
Current assets 105 298 7 898
Trade and other receivables 70 336 4 106
Financial assets 25 939 546
Cash and cash equivalents 9 023 3 246
Total assets 2 820 978 1 123 379
Equity and liabilities
Equity 760 518 420 165
Share capital and reserves 328 140 260 746
Minority interest 432 378 159 419
Non-current liabilities 1 948 412 647 832
Debentures 438 815 319 067
Debenture premium 273 891 144 981
Deferred taxation 27 716 6 586
Long-term liabilities 1 207 990 177 198
Current liabilities 112 048 55 382
Trade and other payables 45 348 12 468
Taxation 32 11
Unitholders for distribution 66 668 42 903
Total equity and liabilities 2 820 978 1 123 379
Net asset value per combined unit (R) 11,69 11,20
GROUP STATEMENT OF CHANGES IN EQUITY
Non-
distribu- Reva- Re-
Share table luation tained
capital reserve reserve income Total
R000 R000 R000 R000 R000
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
Balance at 1 January 2003 648 9 050 245 601 5 447 260 746
Issue of ordinary share capital 243 243
Net profit for the year 67 400 67 400
Transfer to revaluation reserve
(net of deferred taxation) 57 283 (57 283) -
Net transfer from non-distributable
reserve (282) 8 490 (8 208) -
Dividends (249) (249)
Balance at 31 December 2003 891 8 768 311 374 7 107 328 140
BASIS OF PREPARATION
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
used in the preparation of the financial statements are consistent with those
used in the prior year ended 31 December 2002 ("the prior year").
AUDIT OPINION
Grant Thornton has audited the financial information set out in this report and
their unqualified audit report is available for inspection at the company"s
registered office.
COMMENTS
INTRODUCTION
During the year to 31 December 2003 ("the year") Hyprop made significant
progress in achieving the strategic goal of acquiring superior real estate
investments by expanding its regional retail portfolio whilst simultaneously
disposing of non-core commercial real estate. Hyprop acquired Canal Walk
Shopping Centre ("Canal Walk") in the Western Cape, The Rosebank Mall and JHI
House ("The Mall") and The Grace Hotel and Offices ("The Grace") in Gauteng.
With 80% of Hyprop"s assets comprising prime shopping centres, the company is
well positioned to take advantage of the retail property market"s growth
prospects in the future.
FINANCIAL RESULTS
Headline earnings of 142,40 cents per combined unit for the year increased by
9,7% over the previous year, exceeding market expectations. As a result of the
expansion of Hyprop"s property portfolio, turnover and operating income for the
year increased by 97% and 85%, respectively.
Combined unitholder funds increased by 44% to R1,04 billion from the issue of 24
289 701 combined units as part settlement for The Mall acquisition, and after a
revaluation surplus of R72 million.
Net asset value per combined unit increased by 4,4% to R11,69 per combined unit.
DISTRIBUTION
The board has approved a final distribution of 74,90 cents per combined unit.
The total distribution for the year of 140,00 (2002: 130,00) cents per combined
unit equates to 7,7% growth over the prior year.
ACQUISITIONS
On 31 December 2003 Hyprop acquired an 80% undivided share in Canal Walk for
R928 million funded out of new term loan facilities extended by Standard Bank
Properties. The acquisition is expected to achieve a yield of at least 11% in
2004.
Canal Walk, the premier Western Cape super regional centre, will significantly
enhance the quality, size and diversification of Hyprop"s portfolio of premium
retail and office investments.
Hyprop"s acquisitions of The Mall and The Grace have been previously reported in
detail.
DISPOSALS
Hyprop disposed of eight of the its smaller commercial properties to Prima
Property Trust ("Prima") with effect from 1 November 2003 for an aggregate
consideration of R66,5 million. The consideration was settled in part by a cash
payment of R43,2 million in January 2004 and the balance by the receipt of 25
861 111 Prima units at a price of 90 cents per unit. The disposal follows
Hyprop"s stated strategy of selling smaller commercial properties that do not
align with Hyprop"s overall investment strategy.
Seven of the eight properties were transferred to Prima on 30 January 2004.
Transfer of the remaining property is expected soon. The cash payment will be
utilised towards reducing Hyprop"s loan facilities.
DEVELOPMENTS
Hyde Park Shopping Centre ("Hyde Park")
During the year a Stuttafords store was completed in the premises previously
utilised by the IMAX theatre.
The 1 700 m2 extension to Woolworths and the construction of an adjacent two
level parking garage at a cost of R30 million, is currently in progress, with
the launch of the expanded Woolworths store scheduled for June 2004.
The Glen Shopping Centre ("The Glen")
The Glen currently has 10 000 m2 of unutilised retail rights. The construction
of the first phase of approximately 5 000 m2 of additional retail is under
consideration. Hyprop"s contribution of R41 million to the overall cost of R81
million is expected to yield an initial 12% return.
BORROWINGS
At 31 December 2003 Hyprop"s net borrowings amounted to R1,16 billion, equating
to a 51% debt-to-open market value ratio. Interest rates have been fixed to the
extent of 79% of net borrowings for periods ranging from one to three years.
PROPERTY PORTFOLIO
The segmental spread of the property portfolio, as independently valued at 31
December 2003, is as follows:
Value
attri-
Business Rentable Total butable
Segment area value to Hyprop
(m2) (R000) (R000)
Retail:
Canal Walk 131 320 1 188 500 950 800
Hyde Park 37 121 405 415 405 415
The Mall 33 086 271 340 271 340
The Glen 45 000 403 349 202 078
Sub-total 246 527 2 268 604 1 829 633
Commercial 92 573 432 900 432 900
Total 339 100 2 701 504 2 262 533
The valuation surplus of R72 million for the year is attributable to the strong
performance of the retail portfolio, in contrast to other property segments that
continued to operate under pressure.
The reduction in interest rates, rand strength and decrease in import costs in
the second half of the year led to improved consumer spend that benefited the
retail sector.
The shopping centres demonstrated robust trading conditions supported by growth
in turnover. Hyde Park and The Glen achieved net income growth of 9% and 20%,
respectively, during the year. The comparative figures are not available for
Canal Walk and The Mall, which were acquired in 2003.
The demand for offices remains weak with no significant growth in market rentals
and a continued slow take-up of vacant space. Further weakening of valuation
yields, together with shortening of lease renewal periods, negatively impacted
on the value of the commercial portfolio.
LETTING ACTIVITIES
Letting activities for the year by rentable area were as follows:
Business Activities for the twelve months
segment ended 31 December 2003
Renewals New lettings Tenants
vacated
(m2) (%) (m2) (%) (m2) (%)
Retail:
Hyde Park 1 016 0,6 3 409 1,8 2 684 1,5
The Glen 7 799 4,2 32 - 895 0,5
The Mall 3 743 2,0 1 114 0,6 1 330 0,7
Sub-total 12 558 6,8 4 555 2,4 4 909 2,7
Commercial 15 442 8,3 9 885 5,3 5 157 2,8
Total 28 000 15,1 14 440 7,7 10 066 5,5
Included under "new lettings and tenants vacated" are the lettings to Clicks and
Stuttafords and the vacating of the Imax at Hyde Park, as well as the letting to
the Mugg `n Bean restaurant at The Mall.
Vacancies by rentable area at 31 December 2003 were as follows:
Business 31 Dec 2003 31 Dec 2002
segment (m2) (%) (m2) (%)
Retail:
Hyde Park 359 0,1 61 0,1
The Glen 480 0,2 169 0,1
The Mall 620 0,2 n/a n/a
Canal Walk 7 472 2,6 n/a n/a
Commercial 11 312 3,9 12 246 8,6
Total 20 243 7,0 12 476 8,8
Proactive management in the commercial portfolio resulted in a high retention of
tenants as well as the steady letting of offices to new tenants.
After inclusion of available store space at Canal Walk, the retail portfolio
vacancies remain well within the industry norm, reflecting excellent portfolio
quality, prime locations and proactive tenant mix management. Hyprop intends to
canvass similar quality tenants and to further enhance the tenant mix.
RIGHTS ISSUE
The board intends to implement a rights issue during the course of the year, the
details of which will be announced at the appropriate time.
PROSPECTS
The board is confident that Hyprop will continue to deliver further growth in
distributions for the year ending 31 December 2004.
Utilising its strong capital base and active asset management, Hyprop will
continue to explore strategic acquisitions that will enhance the quality of its
portfolio. Where appropriate, further select disposals in the commercial
portfolio will be undertaken.
PAYMENT OF DEBENTURE INTEREST AND DIVIDEND
Combined unitholders will receive debenture interest payment number 32 of 74,75
cents per debenture and dividend payment number 32 of 0,15 cents per share for
the period 1July 2003 to 31 December 2003. The distribution amounts to 74,90
cents per combined unit.
Last date to trade cum distribution Friday, 12 March 2004
Date combined units will
trade ex distribution Monday, 15 March 2004
Record date Friday, 19 March 2004
Payment date Tuesday, 23 March 2004
Combined unitholders may not dematerialise or rematerialise their combined units
between Monday 15 March 2004 and Friday 19 March 2004, both days inclusive.
On behalf of the Board
PF Kirchmann PG Prinsloo
Chairman Managing Director
24 February 2004
REGISTERED OFFICE
Hyde Park Shopping Centre Jan Smuts Avenue Sandton 2196 (PO Box 41257 Craighall
2024)
TRANSFER SECRETARIES
Computershare Limited 9th Floor 70 Marshall Street Johannesburg (PO Box 1053
Johannesburg 2000)
SPONSOR
Java Capital (Pty) Ltd
DIRECTORS
PF Kirchmann* (Chairman) PG Prinsloo (Managing Director) MS Aitken*
J Bentel* WE Cesman* S Shaw-Taylor* PJ Thurling* M Wainer* SV Webb*
LI Weil* PL Whewell* *Non-executive directors
COMPANY SECRETARY
LR Cohen CA(SA)
Date: 24/02/2004 11:28:16 AM Produced by the JSE SENS Department
