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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
Financial director’s
report
continued
During the year, a maturing South African bank loan of R1,2 billion was refinanced with DCM funding (three, four and five-year corporate bonds). All DCM
funding is unsecured. Provided that DCM funding in South Africa can be secured at margins equivalent to or lower than bank funding, we will continue to
increase the ratio of DCM funding to total funding.
The Rand equivalent of US Dollar-denominated bank debt reduced during the year, largely due to Rand appreciation against the US Dollar. US Dollar debt
includes debt in Hyprop Mauritius, as well as 75% of in-country debt for Ikeja City Mall (Lagos, Nigeria).
Euro-denominated debt increased, due to the final payment of EUR49,3 million in September 2016 for Delta City Belgrade, and a payment of EUR92 million
in October 2016 for Skopje City Mall. The interest rates on the Euro debt have not yet been fixed, pending changes to the Euro debt structure.
The increase in cash is largely due to inflows from the issue of new shares in August 2016 (R700 million) and proceeds from the sale of non-core assets in the
South African portfolio (R867 million).
Hyprop’s bank facilities (Rand, US Dollar and Euro) include loan covenants which comprise maximum loan-to-value ratios and minimum interest cover ratios.
All loan covenants are currently well within the maximum and minimum levels specified in the facility agreements.
Distributable earnings statement and reconciliation to dividend declared
Distributable earnings
12 months
30 June
2017
R000
30 June
2016
R000
South African property portfolio
1 916 927
1 848 151
Continuing operations
1 880 595
1 773 186
Properties sold
36 332
74 965
Investments in sub-Saharan Africa (excluding SA)
56 972
83 654
Investments in South-Eastern Europe
101 823
24 572
Fund management expenses
(67 347)
(63 922)
Net interest
(321 336)
(394 310)
Other income
36 533
7 372
Antecedent dividend
16 704
Distributable earnings
1 723 572
1 522 221
Total shares in issue at year-end
248 441 278
243 256 092
Treasury shares
(542 246)
(410 659)
Shares issued, August 2016
5 185 186
Shares in issue for distributable earnings
247 899 032
248 030 619
Dividend per share (cents)
695,1
619,9
Dividend per share growth (%)
12,1
14,2
Net interest costs of R321,3 million (2016: R394,3 million) reduced due to non-core asset sales of R867 million and a cash inflow of R700 million from issuing
new shares. The proceeds were applied in part to reducing debt (R518,0 million) and to capital expenditure in the South African portfolio (R177,9 million).
The remaining cash was placed on deposit. The cash on deposit will in part be utilised to fund ongoing capital expenditure in the South African portfolio.
As mentioned above, other income of R36,5 million comprises credit enhancement fees received for the funding guarantee provided by Hyprop for
the South-Eastern European investment. The implementation of asset-backed finance in the Hystead subsidiaries will result in a reduction of these fees.
A possible separate listing of Hystead will result in a termination of these fees.
Treasury shares are held for an equity-settled staff incentive scheme.
Appreciation
I thank my 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
1 September 2017