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HYP
HYP
Hyprop - Reviewed results for the six months ended 30 June 2006
Hyprop Investments Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1987/005284/06)
Share Code: HYP
ISIN Code: ZAE00003430
("Hyprop")
REVIEWED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
Distribution per combined unit 110 cents up 21%
Increase in value of investment property R477 million
Total assets R6,8 billion
COMMENTS
FINANCIAL RESULTS
Hyprop"s distribution to combined unitholders for the period under review of
110 cents exceeded that of the comparative period by 21%.
60% of distribution growth resulted from significant rental increases on lease
renewals, contractual rental escalations and increases in turnover rental and
the balance from reduced interest costs and savings in expenses.
Hyprop"s shopping centres contributed 87% of investment property income, with
45% of investment property income derived from Canal Walk.
The growth in value of the investment property portfolio increased net asset
value per combined unit by 10% to R26,45. The net asset value, assuming no
deferred taxation, is R32,79 per combined unit - 13% above the closing
combined unit price on 30 June 2006 of R29,00.
The increase in combined unitholder funds from R3,4 billion to R3,8 billion
arose from the issue of 1 231 916 combined units and a property valuation
surplus of R477 million.
ACQUISITIONS
SA Retail Properties Limited ("SA Retail")
Hyprop acquired an additional 5 782 921 linked units in SA Retail, of which 2
456 937 linked units were acquired for cash at an average cost of R10,94 per
linked unit. Payment for the balance was settled by the issue of Hyprop
combined units at an average price of R36,06.
Stoneridge Shopping Centre
In March 2006, 18ha of land situated in Greenstone Park, Modderfontein were
transferred to Hyprop at a cost of R51 million. The property has 70 000 m2 of
retail rights.
Construction of the first phase of 52 000 m2 will commence after the required
percentage of leasing has been concluded and feasibility targets met. Hyprop
will own 90% and Abland (Proprietary) Limited, which will develop the property
on Hyprop"s behalf, 10%. The anticipated cost of the new centre is R470
million.
DISPOSALS
Listed property securities
Hyprop disposed of 1 356 059 linked units in Freestone Property Holdings
Limited, realising a distributable profit of R1,9 million.
BORROWINGS
In January 2006 Hyprop refinanced R900 million of borrowings via the capital
debt market, thereby reducing the interest rate by 50 basis points. At 30
June 2006, the average interest on total borrowings of R1,17 billion was 9,5%
(2005: 10,8%). Interest rates have been fixed in respect of 77% of borrowings
for periods ranging from four to nine years.
Hyprop"s financial position is sound with a 20% debt-to-open market value
ratio. Potential borrowing capacity for future business expansion amounts to
R2,1 billion.
VALUATION
The investment property portfolio, which was independently valued by Old
Mutual Properties (Proprietary) Limited at 30 June 2006, increased in value by
R477 million (9%) to R5,6 billion.
SEGMENTAL ANALYSIS
Net
property
Value Revenue income
Rentable Total attributable (including (including
area value to Hyprop minorities) minorities)
Business segment (m2) (R000) (R000) (R000) (R000)
Canal Walk 131 320 2 800 000 2 240 000 141 412 96 203
The Glen 51 800 887 700 667 107 46 574 35 042
Hyde Park 37 121 782 000 782 000 41 665 28 652
The Mall of 33 774 577 000 577 000 34 722 23 444
Rosebank
Southcoast Mall 27 642 117 000 58 500 6 730 4 704
Stoneridge 52 694 52 694
Shopping Centres 281 657 5 216 394 4 377 301 271 103 188 045
Offices 69 120 468 155 468 155 39 574 27 198
Investment 350 777 5 684 549 4 845 456 310 677 215 243
properties
Listed property 1 056 985 1 056 985 41 357 41 357
securities
Straight-line 13 620 13 620
rental income
accrual
Fund management (17 469)
expenses
6 741 534 5 902 441 365 654 252 751
Canal Walk"s net income increased by 12%, due to increased turnover rental and
reduction in expenses. Benefiting from the successful expansion in 2005, The
Glen"s net income grew by 22%. Hyde Park, The Mall of Rosebank and the offices
achieved steady net income growth of 8%,13% and 9%, respectively.
VACANCIES
30 June 2006 31 December 2005
Business segment (m2) (%) (m2) (%)
Canal Walk* 3 766 3,1 3 751 3,1
The Glen 240 0,5 253 0,5
Hyde Park
The Mall of Rosebank 299 0,9 399 1,2
Southcoast Mall 1 622 5,9 2 461 8,9
Shopping Centres 5 927 2,3 6 864 2,6
Offices 2 054 2,3 2 486 2,8
Total 7 981 2,3 9 350 2,7
(%) is a ratio of area available for letting to the rentable area
* Canal Walk"s vacancy is currently 2125 m2 (1,7%)
BROAD-BASED BLACK ECONOMIC EMPOWERMENT
In a transformation initiative, Hyprop together with Vunani Properties
(Proprietary) Limited ("Vunani") has established an unlisted property loan
stock company Vunani Property Investment Fund (Proprietary) Limited ("VPIF").
This enterprise and skills development initiative is in line with the Property
Transformation Charter and Department of Trade and Industry"s BBBEE Codes of
Good Practice.
Hyprop has disposed of five office buildings for R174,5 million to VPIF at an
initial yield of 10,5%, effective on transfer which is expected during
September 2006. VPIF has acquired other properties, including properties from
Vunani, resulting in an aggregate initial asset value for VPIF of R377
million.
It is the intention that Hyprop"s initial interest in VPIF of 56,1% will
dilute to less than 50% through future acquisitions by VPIF.
PROSPECTS
Hyprop anticipates superior growth in distributions for the year ending 31
December 2006. However, the rate of distribution growth for the full year is
not expected to be as high as that achieved for the six months ended 30 June
2006.
PAYMENT OF DEBENTURE INTEREST
Debenture interest payment number 37 of 110 cents per debenture for the period
1 January to 30 June 2006 will be paid to combined unitholders as follows:
Last day to trade cum distribution Friday, 8 September 2006
Combined units trade ex distribution Monday, 11 September 2006
Record date Friday, 15 September 2006
Payment date Monday, 18 September 2006
Unitholders may not dematerialise or rematerialise their combined units
between Monday, 11 September 2006 and Friday, 15 September 2006, both days
inclusive.
BASIS OF PREPARATION AND REVIEW OPINION
This interim report has been prepared in accordance with International
Financial Reporting Standards and International Accounting Standard IAS 34 -
Interim Financial Reporting.
The accounting policies applied are consistent with those applied in the most
recent audited financial statements.
Certain prior year adjustments were effected in the annual financial
statements at 31 December 2005. The comparative figures for the six months
ended 30 June 2005 have been restated accordingly.
The company"s auditors, Grant Thornton, have reviewed the financial
information set out in this interim report. Their review report is available
for inspection at the company"s registered office.
On behalf of the board
PF Kirchmann PG Prinsloo
Chairman CEO
21 August 2006
GROUP INCOME STATEMENT
Reviewed Reviewed Audited
30 June 30 June 31 December
2006 2005 2005
R000 R000 R000
Revenue 365 654 289 343 635 041
Investment property income 310 677 275 668 571 503
Straight-line rental income 13 620 7 487 22 889
accrual
Listed property securities income 41 357 6 188 40 649
Property and other operating (112 903) (104 576) (213 504)
expenses
Net property income 252 751 184 767 421 537
Net interest (53 986) (48 310) (105 805)
Received 797 1 789 2 104
Paid (54 783) (50 099) (107 909)
Net operating income 198 765 136 457 315 732
Change in fair value 500 530 255 734 1 374 384
Investment property 476 754 249 838 1 364 974
Straight-line rental income (13 620) (7 487) (22 889)
accrual
Listed property securities 37 396 13 383 32 299
Profit on disposal 1 944 618 4 306
Investment property 274 212
Listed property securities 1 944 344 4 094
Amortisation of debenture premium 4 790 1 703 5 066
Income before debenture interest 706 029 394 512 1 699 488
and taxation
Debenture interest (158 806) (105 920) (247 342)
Net income before taxation 547 223 288 592 1 452 146
Taxation - deferred (139 747) (63 805) (378 217)
Net income after taxation 407 476 224 787 1 073 929
Attributable to -
Hyprop combined unitholders 327 317 178 074 892 496
Minorities 80 159 46 713 181 433
407 476 224 787 1 073 929
Reconciliation - headline
earnings and
distributable earnings
Net income after taxation -
attributable to
Hyprop combined unitholders 327 317 178 074 892 497
Headline earnings adjustments (282 131) (162 274) (847 096)
Change in fair value of
investment property
(net of deferred taxation and (290 219) (166 226) (860 296)
minority interests)
Straight-line rental income
accrual (net of deferred
taxation and minority interests) 8 088 4 226 13 412
Profit on disposal of investment (274) (212)
property
Debenture interest 158 806 105 920 247 342
Headline earnings 203 992 121 720 292 743
Distributable earnings (44 851) (15 813) (46 094)
adjustments
Change in fair value of listed
property securities
(net of deferred taxation) (31 973) (11 442) (27 616)
Amortisation of debenture premium (4 790) (1 703) (5 066)
Straight-line rental income
accrual (net of deferred
taxation and minority interests) (8 088) (4 226) (13 412)
Other fair value adjustments 1 558
Distributable earnings 159 141 105 907 246 649
Total combined units in issue 144 369 188 116 630 923 143 137 272
Weighted average combined units
in issue -
for earnings and headline 143 768 609 116 630 923 124 287 108
earnings
Weighted average combined units
in issue -
for distributable earnings 144 369 188 116 630 923 129 884 098
Earnings, headline earnings and
distributable
earnings per combined unit Cents Cents Cents
Earnings per combined unit 338,1 243,5 917,1
Headline earnings per combined 141,9 104,4 235,5
unit
Distributable earnings per 110,2 90,8 189,9
combined unit
Total Dividends
Distribu- Interest on on ordinary
tion per
combined debentures shares
unit
Distribution details (cents per (cents per (cents per
unit) unit) unit)
Distribution 37 for the six
months ended
30 June 2006 110,00 110,00
Total distribution for the year 190,00 189,62 0,38
31 December 2005
Distribution 36 for the six
months ended
31 December 2005 99,00 98,80 0,20
Distribution 35 for the six 91,00 90,82 0,18
months ended 30 June 2005
GROUP BALANCE SHEET
Reviewed Reviewed Audited
30 June 30 June 31 December
2006 2005 2005
R000 R000 R000
Assets
Non-current assets 6 533 232 4 086 580 6 055 938
Investment property 5 276 766 3 810 827 4 978 831
Investment property under 52 694 34 957
development
Straight-line rental income 123 761 94 739 110 141
accrual
Building appurtenances and tenant 23 026 20 158 24 651
installations
Listed property securities 1 056 985 125 899 942 315
Current assets 57 903 60 724 89 363
Listed property securities 34 626 8 759
Receivables 46 557 10 613 56 084
Cash and cash equivalents 11 346 15 485 24 520
Non-current assets classified as
held for sale
Investment property 210 354 34 800
Total assets 6 801 489 4 147 304 6 180 101
Equity and liabilities
Equity capital and reserves 2 663 373 1 455 409 2 282 870
Share capital and reserves 2 016 887 975 155 1 689 558
Minority interests 646 486 480 254 593 312
Non-current liabilities 3 889 039 2 526 684 3 663 638
Debentures and debenture premium 1 802 215 1 078 112 1 762 591
Long-term loans 1 171 941 987 811 1 125 911
Deferred taxation 914 883 460 761 775 136
Current liabilities 249 077 165 211 233 593
Payables 90 274 59 028 91 851
Taxation 49 36
Combined unitholders for 158 803 106 134 141 706
distribution
Total equity and liabilities 6 801 489 4 147 304 6 180 101
Net asset value per combined unit 26,45 17,60 24,12
(R)
Net asset value per combined unit
- assuming
no deferred taxation liability (R) 32,79 21,56 29,53
ABRIDGED GROUP CASH FLOW STATEMENT
Reviewed Reviewed Audited
30 June 30 June 31 December
2006 2005 2005
R000 R000 R000
Cash flows from operating 22 557 71 632 95 703
activities
Cash generated from operations 248 803 231 467 444 657
Interest received 797 1 789 2 104
Interest paid (54 783) (50 099) (107 909)
Distribution to Hyprop combined (141 709) (86 307) (192 441)
unitholders
Cash paid to minorities (30 515) (25 196) (50 637)
Taxation (36) (22) (71)
Cash flows from investing (81 761) (127 451) (280 587)
activities
Cash flows from financing 46 030 58 785 196 885
activities
Net (decrease)/increase in cash (13 174) 2 966 12 001
and cash equivalents
Cash and cash equivalents at the 24 520 12 519 12 519
beginning of the period
Cash and cash equivalents at the 11 346 15 485 24 520
end of the period
GROUP STATEMENT OF CHANGES IN EQUITY
Non-
distri-
Share butable Retained Minority
capital reserve income interest Total
s
R000 R000 R000 R000 R000
Balance at 1 January
2005
- as previously 1 166 996 089 4 341 479 012 1 480 608
reported
- prior year 7 545 7 545
adjustment-
amortisation of
debenture premium
- reclassification 2 973 2 973
of distribution to
minorities
- change in rate of (211 846) (27 924) (239 770)
deferred taxation
Balance at 1 January 1 166 791 788 4 341 454 061 1 251 356
2005 - restated
Net profit for the 178 075 46 713 224 788
period*
Net transfer to non- 175 462 (175 462) -
distributable
reserve
Dividends (215) (215)
Distribution to (25 196) (25 196)
minorities
Minority share of 4 676 4 676
additions to
investment property
Balance at 30 June 1 166 967 250 6 739 480 254 1 455 409
2005
Balance at 1 January 1 431 1 680 210 7 917 593 312 2 282 870
2006
Issue of ordinary 12 12
share capital
Net profit for the 327 317 80 159 407 476
period*
Net transfer to non- 324 321 (324 321) -
distributable
reserve
Distribution to (27 948) (27 948)
minorities
Minority share of 963 963
additions to
investment property
Balance at 30 June 1 443 2 004 531 10 913 646 486 2 663 373
2006
*Minority net profit includes minority share of fair value adjustment to
investment properties
Registered office
3rd Floor Hyde Park Shopping Centre Jan Smuts Avenue
Sandton 2196 (PO Box 41257 Craighall 2024)
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor 70 Marshall Street Johannesburg 2001
(PO Box 61051 Marshalltown 2107)
Sponsor
Java Capital (Proprietary) Limited
Directors
PF Kirchmann*+ (Chairman) PG Prinsloo (CEO) MS Aitken*+ WE Cesman* EG
Dube* JR McAlpine*+ LI Weil* S Shaw-Taylor* PJ Thurling*+
M Wainer* SV Webb*
* Non-executive + Independent
Company secretary
Probity Business Services (Proprietary) Limited
www.hyprop.co.za
Date: 21/08/2006 09:01:02 AM Produced by the JSE SENS Department
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