Directors' report

for the year ended 30 June 2014

The directors have pleasure in submitting their report, which forms part of the financial statements for the year ended 30 June 2014.

Introduction

Hyprop is one of Africa’s leading listed property companies, specialising in high-quality shopping centres. It is also one of South Africa’s oldest listed property companies (1988) and operates as an internally managed Real Estate Investment Trust (REIT), based in Rosebank, Johannesburg.

Hyprop is listed on the JSE’s retail REIT sector and directly owns 12 prime shopping centres in major metropolitan areas across South Africa.

The group’s growing presence in sub-Saharan Africa (excluding South Africa) is held through Atterbury Africa, a joint venture between Hyprop, Attacq and the Atterbury Group.

Strategy

Hyprop’s strategy is to invest in high-quality shopping centres in sub-Saharan Africa.

The core portfolio consists of premier shopping centres in South Africa, including super-regional Canal Walk; large regional centres, Clearwater Mall, The Glen Shopping Centre, Woodlands Boulevard, CapeGate Shopping Centre, Somerset Mall and Rosebank Mall; and regional centre, Hyde Park Corner.

Held for sale

In line with its strategy, Hyprop is disposing of its stand-alone office portfolio, as well as non-core retail assets, Stoneridge Centre, Willowbridge and CapeGate Lifestyle. As a result, these assets have been classified as held for sale.

Capital structure

At 30 June 2014, combined units comprised one ordinary share and one debenture and were traded on the JSE only. Full particulars of the authorised and issued share capital at 30 June 2014 are set out in note 14 to the financial statements on page 112, and full particulars on debentures are set out in note 17 on page 114.

Post-year-end and as part of the REIT conversion process, Hyprop’s combined unit structure was converted to an all-share structure. The necessary resolutions were passed by unitholders and the new all-share structure became effective on 18 August 2014. Future distributions will be classified as dividends. Hyprop became a REIT on 1 July 2013.

All rental income earned by the group, less property expenses and interest on debt, is distributed to shareholders semi-annually.

Review of activities

The results of the group and the company are commented on in the chairman, chief executive officer and financial director’s reports on pages 6 to 17 and set out in the financial statements on pages 76 to 139.

Directors’ interests

The interests of directors in the combined units of the company at 30 June 2014 were:

Directorate

During the year, the only change to the directorate was the appointment of Thabo Mokgatlha as an independent non-executive director and member of the audit committee, effective 28 August 2013. Directors resigning by rotation at the upcoming annual general meeting are LR Cohen, KM Ellerine, S Shaw-Taylor and GR Tipper, and being eligible, they offer themselves for re-election.

An abridged curriculum vitae for each director is set out on page 59.

Change to company secretary

Following the acquisition of the business of Probity Business Services (Proprietary) Limited by Computershare Investor Services (Proprietary) Limited (Computershare), CIS Company Secretaries (Proprietary) Limited, a subsidiary of Computershare, was appointed as company secretary of Hyprop, with effect from 2 June 2014.

Beneficial unitholders holding 5% or more

Subsidiaries, joint arrangements and associates

Disclosure of the company’s investments in subsidiaries, joint arrangements and associates is included in notes 5, 6, 7 and 8, respectively to the financial statements.

Administration and management

Property management and asset management are fully internalised. No property management or asset management fees were paid during the year.

Audit committee report

The audit committee has fulfilled its responsibilities during the year (refer to its report on page 75 for details). The committee has further satisfied itself as to the independence of the external auditors and their suitability for reappointment for the ensuing year.

Auditors

Grant Thornton will continue in office in accordance with part C of section 90 of the Companies Act of South Africa.

Directors’ interest in contracts

No material contracts in which the directors have an interest were entered into during the year, other than the transactions detailed in note 34 to the financial statements.

Going concern

The directors consider that the group and company have adequate resources to continue operating for the foreseeable future and that it is appropriate to adopt the going-concern basis in preparing the group and company financial statements.

The directors have satisfied themselves that the group and company are in a sound financial position and that they have access to sufficient borrowing facilities to meet their foreseeable cash requirements.

Special resolutions

The following special resolutions were passed by unitholders during the year (at the annual general meeting on 5 December 2013) and, where necessary, have been registered by the Companies and Intellectual Property Commission (CIPC):

	Special resolution providing authority for the provision of financial assistance to group interrelated entities (in terms of section 45 of the Companies Act)
	Special resolution providing approval for fees payable to non-executive directors for the year ended 30 June 2014
	Special resolution providing authority to repurchase combined units
	Special resolution providing approval for a new memorandum of incorporation.

In terms of subsidiaries, a newly incorporated subsidiary (Woolsure Investments) passed a special resolution changing its name to Hyprop Investments Employee Incentive Scheme with effect from 20 February 2014.

Johannesburg
29 August 2014