HYPROP INVESTMENTS LIMITED AND ITS SUBSIDIARIES

REGISTRATION NUMBER: 1987/005284/06

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS - AUDITED

FOR THE YEAR ENDED 30 JUNE 2022

The preparation of these Consolidated and separate financial statements has been supervised by: Brett Till CA(SA), CFO of the Group.

1

Contents

Page

STATUTORY REPORTS

Responsibility statement on internal financial controls

3

Declaration by the company secretary

3

Report of the audit and risk committee

4

Directors' report

9

Independent auditor's report to the shareholders of

15

Hyprop Investments Ltd

FACES

Statements of profit or loss and other comprehensive income

22

Statements of financial position

23

Statements of changes in equity

24

Statements of cash flows

26

  1. ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS

A1

Significant accounting policies

27

A2

Key judgements and estimations

28

A3

Changes in accounting policies and disclosures

32

A4

Standards issued but not yet effective

33

A5

Going concern

34

  1. PERFORMANCE ANALYSES

B1

Distributable income and dividend per share

35

B2

Earnings per share

36

B3

Net asset values

37

  1. SEGMENTAL ANALYSIS

C1

Overview and definitions

38

C2

Segmental analyses - Profit or loss

39

C3

Segmental analyses - Financial position

41

  1. PROFIT AND LOSS

D1

Revenue and minimum lease payments

43

D2

Other operating income

43

D3

Expenses

44

D4

Operating expense commitments

46

D5

Interest

46

D6

Dividend income

46

D7

Taxation

47

  1. PROPERTY INVESTMENTS AND RELATED BALANCES

E1

Investment property

49

E2

Property, plant and equipment

56

E3

Capital commitments

57

E4

Investments in subsidiaries

58

E5

Investments in joint arrangements and associates

63

E6

Financial asset - Hystead

67

E7

Assets and liabilities held-for-sale

70

E8

Changes in shareholding

73

  1. OTHER ASSETS

F1

Loans receivable

77

F2

Trade and other receivables

80

F3

Cash and cash equivalents

80

F4

Intangible assets

81

Page

  1. EQUITY AND RESERVES

G1

Share capital and treasury shares

82

G2

Other Reserves

83

  1. FUNDING AND RELATED ITEMS

H1

Borrowings

84

H2

Derivatives

88

H3

Financial guarantees

90

H4

Covenants and capital management

93

  1. OTHER LIABILITIES

I1

Deferred taxation

94

I2

Trade and other payables

96

I3

Provisions

97

I4

Taxation payable

98

  1. CASH FLOW INFORMATION

J1

Cash generated from operations

99

J2

Other cash flow notes

100

K

RELATED PARTIES

K1

Related party transactions and balances

101

  1. REMUNERATION

L1

Directors' remuneration

103

L2

Long-term incentives

105

L3

Retirement benefits

107

  1. FINANCIAL INSTRUMENTS

M1

Classification of financial instruments

108

M2

Fair value measurement methodologies

109

M3

Measurement of financial instruments

110

  1. FINANCIAL RISK MANAGEMENT

N1

Risk management overview

114

N2

Liquidity risk and sensitivity

115

N3

Interest rate risk and sensitivity

120

N4

Currency risk and sensitivity

123

N5

Credit risk and sensitivity

129

  1. OTHER INFORMATION

O1

Events after the reporting date

134

O2

JSE Property disclosures

135

P

REIT DISCLOSURES

P1

SA Reit Ratios

137

  1. ADDITIONAL INFORMATION

Q1

Earnings reconciliations

143

Q2

Five-year review

144

Q3

Impact of Category 1 acquisition

145

Q4

Group Structure

146

  1. SHAREHOLDERS' INFORMATION

R1

Shareholders' analysis

147

R2

Shareholders' Diary

148

R3

Distribution details

148

R4

Administration

148

R5

Glossary

149

Basis of preparation

These consolidated and separate financial statements have been prepared in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies Act of South Africa and the JSE Listings Requirements.

Approval of the annual financial statements

The Audited Consolidated and Separate Annual Financial Statements, set out on pages 22 to 136, were approved by the board of directors on 29 September 2022.

2

Responsibility statement on internal financial controls

for the year ended 30 June 2022

The directors, whose names are stated below, hereby confirm that:

  • the annual financial statements set out on pages 22 to 136, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS;
  • to the best of our knowledge and belief, no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;
  • internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to effectively prepare the financial statements of the issuer;
  • the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function as executive directors with primary responsibility for implementation and execution of controls;
  • where we are not satisfied, we have disclosed to the audit committee and the auditors any deficiencies in design and operational effectiveness of the internal financial controls, and have taken steps to remedy the deficiencies; and
  • we are not aware of any fraud involving directors.

MC Wilken

BC Till

CEO

CFO

Johannesburg

29 September 2022

Declaration by the company secretary

I declare that, to the best of my knowledge, the Company has lodged with the Companies and Intellectual Property Commission, for the financial year ended 30 June 2022, all such returns as are required of a public company in terms of section 88 of the Companies Act of South Africa, as amended, and that all such returns are true, correct and up to date.

F Nkosi

Company secretary

Johannesburg

29 September 2022

3

Report of the audit and risk committee

for the year ended 30 June 2022

INTRODUCTION

The audit and risk committee (the ARC) is pleased to submit its report for the year ended 30 June 2022, as required by section 94(7)(f) of the Companies Act of South Africa.

Events of the past two years, including the outbreak of Covid-19 in 2020, political riots in South Africa in July 2021, Russia's invasion of Ukraine in February 2022 and the floods in KwaZulu Natal in April 2022, have re-emphasised the need for businesses to implement sound risk management practices. Monitoring and managing risk, and monitoring the integrity of financial reporting systems, internal controls and financial disclosures are at the heart of the responsibilities of the ARC.

FOCUS AREAS IN 2022

Areas of special focus included:

  • Global events: Monitoring and considering the impact of Russia's invasion of Ukraine, rising energy costs, particularly in the Eastern European portfolio, and increases in inflation and interest rates on the Group's activities. The ARC continued monitoring the Group's response and risk management strategies to address the impact of the Covid-19 pandemic, noting that these risks have reduced over the financial year as the impact of Covid-19 dissipates;
  • Borrowings and foreign currency exposure: Assessing and monitoring implementation of the Group's funding strategy, including steps taken to reduce the Group's Euro denominated borrowings, and the impact of the acquisition of the 4 Eastern European properties from Hystead (the Hyprop Europe transaction) on borrowing covenants;
  • Corporate activity: Reviewing the accounting implications of the Hyprop Europe transaction and the changes in the accounting treatment of the Financial asset - Hystead; and
  • Information technology: Monitoring the information technology risks the Group faces and overseeing ongoing improvements in information technology risk management policies and processes.

STATUTORY DUTIES

The ARC is governed by a formal charter that codifies its independent role and responsibilities in providing oversight and recommendations to the Board for consideration and final approval. These responsibilities include those recommended by the King IV Report on Corporate GovernanceTM (King IV). The primary responsibilities of the ARC are to:

  • Oversee integrated reporting, including consideration of significant judgements and reporting decisions;
  • Ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities;
  • Review the expertise, resources and experience of the Company's finance function, and satisfy itself as to the suitability of the expertise and experience of the chief financial officer;
  • Oversee internal audit, and in particular, the appointment and/or rotation of the internal audit service provider;
  • Monitor compliance with the risk policy and procedures;
  • Recommend the appointment of the external auditor and oversee the external audit process; and
  • Make submissions to the Board on any relevant matter concerning the Company's accounting policies, financial controls, records, reporting and risk management.

FUNCTIONS

In addition to the above, the ARC covered matters relating to compliance, litigation, budgeting and forecasting, taxation and accounting policy choices, and supported the Board in the following areas:

  • Advising on the accounting implications of the Hyprop Europe transaction, including reviewing the forecasts and financial effects presented in the circular to shareholders dated 22 February 2022;
  • Reviewing adherence to Hyprop's systems of internal controls and, where necessary, monitoring improvements;

4

Report of the audit and risk committee

  • Monitoring established guidelines for the use of the external auditor for non-audit services, to maintain independence. The ARC recommended the use of KPMG as the Independent Reporting Accountant for the Hyprop Europe transaction;
  • Monitoring compliance with Real Estate Investment Trust (REIT) requirements, in accordance with the JSE Listings Requirements, and confirming that the risk management policy, which prohibits the Company from entering into derivative transactions not in the ordinary course of business, has been complied with in all material respects;
  • Monitoring implementation of policies and procedures to ensure compliance with the Protection of Personal Information Act (POPI) which came into force on 1 July 2021; and
  • Considering financial reporting in line with the results of the JSE proactive monitoring process and the Group's own internal objectives.

COMPOSITION AND MEETINGS

Details of the ARC members and their attendance at meetings during the year are set out in the Governance section of the integrated report. All members of the ARC are independent non-executive directors, in compliance with the Companies Act of South Africa and as recommended by King IV.

Mr Tipper stepped down as a member of the ARC at the annual general meeting held on 26 November 2021, in line with the recommendations of King IV. He continues to attend meetings of the ARC as an invited attendee.

The external and internal auditors and executive management are invited to attend ARC meetings.

SIGNIFICANT FINANCIAL STATEMENT REPORTING ISSUES

A significant part of the financial reporting process includes making estimates and exercising judgement. The ARC reviewed and evaluated the main judgements, estimates and assumptions made by management and the conclusions drawn from the available information and evidence.

The ARC ensured that these matters were covered by the work of the external auditor.

The key issues involving estimates and judgements during the year are set out below:

Key issue

Judgement in financial reporting

Audit and risk committee review

Conclusion

1

Valuation of

Investment property is the Group's most

Broll Valuation and Advisory Services was

The ARC endorsed

investment

significant asset and is measured at fair

appointed as an independent valuer in South

the independent

properties

value, with changes in fair value

Africa for the year ended 30 June 2022, in

valuations of the

recognised in profit or loss.

addition to Jones Lang LaSalle and Viking

investment

Valuation. CBRE and Mills Fitchet continued to

properties and the

The Group uses independent valuers to

serve as the independent valuers of the Eastern

relevant disclosures

value investment properties.

European and sub-Saharan Africa portfolios

in the financial

respectively.

statements.

The valuation involves making significant

judgements, especially regarding the

The ARC considered the independence and

current market conditions, reversionary

qualifications of the appointed independent

capitalisation rates and rental levels. The

valuers, as well as the rotation of properties

key assumptions and estimations used to

between the three valuers in South Africa.

perform the independent investment

property valuations are determined by

The ARC reviewed the external valuations,

the independent valuers.

including the discount rates and reversionary

capitalisation rates applied by the independent

valuers, and the manner in which the

independent valuers took the prevailing

economic and Covid-19 circumstances into

account in performing the valuations.

The ARC also reviewed the adequacy of the

disclosures relating to investment properties

included in the financial statements.

5

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Hyprop Investments Limited published this content on 29 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 September 2022 15:13:00 UTC.