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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
Material risks identi ed in terms of their probability and potential impact are shown below. Each risk has been mapped to the strategic objective that it
could impact, affected stakeholders, management’s strategic response and related key performance indicators.
Approach
Hyprop’s system of internal controls is designed to provide reasonable assurance as to the integrity and reliability of the nancial statements, and are
intended to safeguard, verify and maintain accountability of the company’s assets. They are also designed to identify and minimise significant fraud,
potential liability, loss and material misstatement, while complying with applicable laws and regulations.
Risk and opportunity matrix 2017
(High-risk category only)
Strategic
objective
Key risk
Probable effects
Opportunity
South African economy
Focus on
sustainable
income
growth
Low GDP growth impacts
business growth in South
Africa
Slower retail sales growth affects
retailers’ financial positions and
ability to pay rent
Continually improve the quality of our portfolio
through acquisitions, developments and disposals. This
focus ensures that we attract and retain quality
tenants, while maintaining/increasing shopper footfall
in our shopping centres. The depressed economy may
also facilitate local acquisition opportunities
Slowing consumer spend
affects retailers’ trading
densities and rent ratios
Leases not renewed
Discounted rentals to retain tenants
Tenants more cautious on renewals
and new lettings
Tenants taking less space, slower
extension plans
Downgraded sovereign
credit rating
Increased borrowing costs
The quality of our assets, scale of our organisation, and
international diversification strategy will assist in
mitigating the effects of a downgrade
BBBEE
Trans-
formation and
business
opportunities
BBBEE level
Major tenants prefer landlord to have
a reasonable BBBEE rating
Embrace transformation
Negative impact of new
codes
Transformation required in
ownership
Water
Reliable
supply of
water services
Negative impact of
disrupted water supply at
Hyprop shopping centres
Prolonged water outages mean
sub-optimal trading conditions
Seek sustainable technology options to limit our
reliance on local utility suppliers
Key:
n
Internal risks (under control of management)
n
External risks (can be mitigated by management)
n
External risks (outside control of management)
Risk and opportunity
management
Principle 4&11