FINANCIAL DIRECTOR’S REPORT |
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|
| 2015 IN PERSPECTIVE |
 |
Hyprop declared a
dividend of 280,3 cents
per share for the six
months ended 30 June
2015, an increase of 16,3%
on the corresponding
period in 2014. The total
distribution for the year
of 543 cents per share
is 15,0% higher than the
prior period.
| Laurence Cohen,financial director |
|
Distributable earnings statement
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|
12 months ended
30 June 2015 |
|
12 months ended
30 June 2014 |
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| |
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|
|
|
|
|
|
|
|
| Business segment |
|
Revenue
R000 |
|
Distributable
earnings
R000 |
|
Revenue
R000 |
|
Distributable
earnings
R000 |
|
| Canal Walk (80%) |
|
579 188 |
|
412 308 |
|
545 252 |
|
379 254 |
|
| Clearwater Mall |
|
358 011 |
|
245 039 |
|
336 499 |
|
224 585 |
|
| Rosebank Mall |
|
234 353 |
|
149 665 |
|
121 808 |
|
63 302 |
|
| Woodlands Boulevard |
|
231 701 |
|
152 821 |
|
214 842 |
|
142 336 |
|
| Somerset Mall |
|
231 100 |
|
159 387 |
|
166 624 |
|
116 017 |
|
| The Glen (75,15%) |
|
218 999 |
|
153 796 |
|
214 218 |
|
143 198 |
|
| Hyde Park Corner |
|
199 074 |
|
130 900 |
|
179 905 |
|
120 000 |
|
| CapeGate |
|
167 562 |
|
96 472 |
|
157 166 |
|
91 674 |
|
| Shopping centres |
|
2 219 988 |
|
1 500 388 |
|
1 936 314 |
|
1 280 366 |
|
| Atterbury Value Mart |
|
120 286 |
|
89 544 |
|
112 551 |
|
83 714 |
|
| Willowbridge1 |
|
90 746 |
|
49 793 |
|
85 797 |
|
46 232 |
|
| Somerset Value Mart |
|
23 7841 |
|
15 3081 |
|
22 692 |
|
14 466 |
|
| Value centres |
|
234 816 |
|
154 645 |
|
221 040 |
|
144 412 |
|
| Stoneridge2 (90%) |
|
56 275 |
|
29 110 |
|
67 864 |
|
31 042 |
|
| CapeGate Lifestyle2 |
|
32 937 |
|
22 178 |
|
46 380 |
|
31 721 |
|
| Properties sold |
|
89 212 |
|
51 288 |
|
114 244 |
|
62 763 |
|
| Total retail |
|
2 544 016 |
|
1 706 321 |
|
2 271 598 |
|
1 487 541 |
|
| Standalone offices3 |
|
73 126 |
|
45 866 |
|
67 900 |
|
42 159 |
|
| Investment property |
|
2 617 142 |
|
1 752 187 |
|
2 339 498 |
|
1 529 700 |
|
| Investments in sub-Saharan Africa (excluding SA) |
|
|
|
42 368 |
|
77 953 |
|
35 078 |
|
| Listed property securities4 |
|
|
|
|
|
37 265 |
|
37 265 |
|
| Word4Word Marketing |
|
25 807 |
|
4 243 |
|
15 008 |
|
3 180 |
|
| Fund management expenses |
|
|
|
(62 001) |
|
|
|
(55 139) |
|
| Net interest |
|
|
|
(417 178) |
|
|
|
(401 484) |
|
| Straight-line rental income accrual |
|
60 085 |
|
|
|
45 055 |
|
|
|
| Total |
|
2 703 034 |
|
1 319 619 |
|
2 514 779 |
|
1 148 600 |
|
1 Held for sale 2 Sold during the 2015 financial year 3 Includes Glenwood, Glenfield and Lakefield – held for sale 4 Sycom units – sold
Hyprop has again presented a solid set of results, maintaining distribution and capital growth well above the sector average.
Hyprop declared a dividend of 280,3 cents per share for the six months ended 30 June 2015, an increase of 16,3% on the corresponding period in 2014.
The total distribution for the year of 543 cents per share is 15,0% higher than the prior year.
Total revenue and distributable earnings from investment property increased by 11,9% and 14,5%, respectively, benefiting from increased income from
Rosebank Mall, the inclusion of income from Somerset Mall (acquired 1 October 2013) for the full year and tight control of operating expenses. Like-for-like
revenue and distributable earnings from investment property increased by 6,5% and 8,1%, respectively.
Rosebank Mall was transferred from development property to investment property on 1 July 2014. The majority of incremental income from the
redevelopment was earned from 1 October 2014.
The property cost-to-income ratio reduced to 33,6% (2014: 34,4%). The total cost-to-income ratio at fund level reduced to 36,0% (2014: 37,3%).
The 3,9% increase in net interest costs for the year was limited by applying the proceeds of non-core asset sales (Stoneridge, and CapeGate Value and
Lifestyle Centres) to repaying debt.
Total arrears at 30 June 2015 were R19,4 million (2014: R19,2 million). This constitutes 0,6% (2014: 0,5%) of rental income. The corresponding allowance for
doubtful debts was R10,7 million (2014: R8,8 million).
Property portfolio
| |
|
Value attributable to Hyprop |
|
Value per
rentable area
30 June 2015
R/m2 |
|
| Business segment |
|
Rentable area
m2 |
|
30 June 2015
R000 |
|
30 June 2014
R000 |
|
| Canal Walk (80%) |
|
156 689 |
|
6 732 800 |
|
6 064 000 |
|
53 711 |
|
| Clearwater Mall |
|
86 081 |
|
3 944 000 |
|
3 473 000 |
|
45 817 |
|
| Rosebank Mall |
|
80 712 |
|
2 495 000 |
|
1 849 000 |
|
30 912 |
|
| Somerset Mall |
|
66 354 |
|
2 450 000 |
|
2 252 000 |
|
36 923 |
|
| The Glen (75,15%) |
|
79 665 |
|
2 329 830 |
|
2 059 269 |
|
38 913 |
|
| Woodlands Boulevard |
|
71 659 |
|
2 296 000 |
|
2 196 000 |
|
32 041 |
|
| Hyde Park Corner |
|
38 117 |
|
2 009 000 |
|
1 769 000 |
|
52 706 |
|
| CapeGate |
|
63 700 |
|
1 534 0001 |
|
1 738 000 |
|
24 082 |
|
| Shopping centres |
|
642 977 |
|
23 790 630 |
|
21 400 269 |
|
40 816 |
|
| Atterbury Value Mart |
|
47 785 |
|
1 112 000 |
|
1 105 000 |
|
23 271 |
|
| Willowbridge4 |
|
42 378 |
|
622 000 |
|
594 000 |
|
14 677 |
|
| Somerset Value Mart |
|
12 546 |
|
193 0004 |
|
185 000 |
|
15 383 |
|
| Stoneridge2 (90%) |
|
|
|
|
|
432 000 |
|
|
|
| Value centres |
|
102 709 |
|
1 927 000 |
|
2 316 000 |
|
18 762 |
|
| Total retail |
|
745 686 |
|
25 717 630 |
|
23 716 269 |
|
37 779 |
|
| Standalone offices3 |
|
34 386 |
|
508 775 |
|
457 000 |
|
14 796 |
|
| Investment property |
|
780 072 |
|
26 226 405 |
|
24 173 269 |
|
36 766 |
|
| Investment in sub-Saharan Africa(excluding SA) |
|
|
|
2 339 121 |
|
2 220 721 |
|
|
|
| |
|
780 072 |
|
28 565 526 |
|
26 393 990 |
|
|
|
1 Excludes CapeGate Value and Lifestyle centres – sold during the 2015 financial year
2 Sold during the 2015 financial year
3 Includes Glenwood, Glenfield and Lakefield – held for sale
4 Held for sale
Investment property was independently valued at 30 June 2015 at R26,2 billion (2014: R24,2 billion), an increase of 12,1% (excluding the effect of disposing
of Stoneridge and CapeGate Lifestyle). The higher value was primarily due to income growth, as well as a 34,9% increase in the valuation of Rosebank
Mall after its redevelopment.
Investments in sub-Saharan Africa (excluding SA)
Distributable earnings from investments in sub-Saharan Africa
(excluding SA) increased by 20,8% to R42,4 million, in part due to
income from Manda Hill (Lusaka, Zambia – effective December 2013)
and West Hills Mall (Accra, Ghana – effective November 2014). Income
from our investments in sub-Saharan Africa (excluding SA) benefited
from exchange gains of R2,3 million.
Approved funds for investment in sub-Saharan Africa (excluding
SA) total R5 billion (includes amounts invested to date). Investment
opportunities in other sub-Saharan countries, including Nigeria and
Kenya, are being considered.
Net asset value
Net asset value (NAV) per share at 30 June 2015 increased by 17,1%
to R89,04 (2014: R76,02). This was due in part to an increase in the
independent valuation of the investment property portfolio.
Non-accrual for the final dividend (in accordance with IFRS and industry
best practice) added R2,80 to NAV per share. On a like-for-like basis
(excluding the effect of non-accrual of final dividend), growth in NAV
per share was 13,4%.
At 30 June 2015, the closing share price of R121,00 represented a
premium of 35,9% to NAV per share.
Borrowings
| |
30 June
2015
Rm |
|
30 June
2014
Rm |
|
| Bank debt |
4 250 |
|
4 902 |
|
| South Africa |
2 327 |
|
3 509 |
|
| USD (Rand equivalent) |
2 193 |
|
1 393 |
|
| Debt capital market (DCM) |
2 172 |
|
2 297 |
|
| Corporate bonds |
1 800 |
|
1 600 |
|
| Commercial paper |
372 |
|
697 |
|
| Cash and cash equivalents |
(138) |
|
(125) |
|
| Net borrowings |
6 554 |
|
7 074 |
|
| Loan to value (%) |
22,9 |
|
26,6 |
|
Net borrowings reduced after repaying South African bank facilities
from the proceeds of non-core asset sales.
At 30 June 2015, interest rates were fixed for 94,5% (2014: 71,4%) of
borrowings, at a weighted average rate of 7,1% (2014: 7,5%), for an
average 5,2 years
(2014: 4,2 years).
During the year, Hyprop extended a number of interest rate swaps at
only marginal additional cost, resulting in an average fixed rate maturity
profile of over five years.
The ratio of debt with fixed interest rates increased during the year, in
part due to debt repayments (without breaking any interest rate swaps),
and due to fixing the US Dollar (USD) debt incurred to restructure the
interest in Manda Hill, Zambia.
Investments in sub-Saharan Africa (excluding SA) are financed with USD
funding. An increase in the ratio of USD funding to total debt to 33,5%
(up from 19,7% at
30 June 2014) effectively reduces the overall cost of
funding.
Debt capital market funding at 30 June 2015 was 32% of total debt
(2014: 32%).
The loan-to-value ratio, at 22,9%, is below Hyprop’s ideal range of
30% to 40%. Higher loan-to-value levels depend largely on corporate
activity, particularly acquisitions. In the absence of significant
acquisitions, it is unlikely that the loan-to-value ratio will reach
these levels.
The maturity profile of Hyprop’s debt facilities, fixed rate agreements and interest rate swaps is reflected below:
Maturity profile
Fixed rates and swaps
Debt maturity profile
Bank facilities and debt capital market funding
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Cash management
All rental income earned by the company, less property expenses and
interest on debt, is distributed to shareholders semi-annually.
Cash collected between distribution payments is paid into floating rate
debt facilities to benefit from the interest saving.
New developments and capital expenditure are funded with debt
while acquisitions, depending on their size, may be funded in part by
equity. Proceeds from the sale of non-core assets will be applied to
capital expenditure, developments and the reduction of debt.
Appreciation
I thank the finance team for their dedication, commitment and hard
work during the year. I also extend my appreciation to my fellow board
members for their sound advice and valued guidance.
Laurence Cohen
Financial director
