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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
Directors’
report
for the year ended 30 June 2017
The directors have pleasure in submitting their report, which forms part of
the consolidated financial statements for the year ended 30 June 2017.
Responsibility statement
The directors are responsible for the preparation and fair presentation of
the consolidated financial statements of Hyprop, comprising the
consolidated statement of financial position, the consolidated statements
of profit or loss and other comprehensive income, changes in equity and
cash flows for the year then ended, as well as the notes to the consolidated
financial statements, which include a summary of significant accounting
policies and other explanatory notes, in accordance with International
Financial Reporting Standards and the requirements of the Companies Act
of South Africa, and the directors’ report.
The directors are also responsible for such internal control as the directors
determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to
fraud or error, and for maintaining adequate accounting records and an
effective system of risk management.
Introduction
Hyprop, a leading specialist shopping centre Real Estate Investment Trust
(REIT), operates a portfolio of shopping centres in major metropolitan
areas across South Africa (SA), sub-Saharan Africa (excluding SA) and
South-Eastern Europe.
There were no changes to the interests of the directors between year-end
and the date of approval of these consolidated financial statements.
Disposals
During the year, the following disposals were completed:
Sale price
Transfer date
Somerset Value Mart
R185 million September 2016
Glenfield Office Park
R180 million December 2016
Willowbridge South
R460 million
March 2017
Glenwood Office Park
R42 million
May 2017
Total
R867 million
Directors’ interests
The interests of directors in the shares of the company at 30 June 2017 were:
June 2017
June 2017
June 2016
June 2016
Beneficial
Non-beneficial
Beneficial
Non-beneficial
Direct
Indirect
Indirect
Direct
Indirect
Indirect
Non-executive
Gavin Tipper
4 000
4 000
Louis Norval
3 500 000
3 500 000
Stewart Shaw-Taylor
21 500
21 500
Kevin Ellerine
378 000
378 000
Nonyameko Mandindi
2 250
Executive
Pieter Prinsloo
325 202
305 049
Laurence Cohen
171 259
160 154
25 500
876 711
3 500 000
25 500
843 203
3 500 000
The core portfolio in South Africa includes super regional centre Canal
Walk, large regional centres, Clearwater Mall, The Glen Shopping Centre,
Woodlands Boulevard, CapeGate Shopping Centre, Somerset and
Rosebank Malls, and regional centre, Hyde Park Corner.
The sub-Saharan African portfolio (excluding SA) includes interests in
Accra Mall, West Hills and Achimota Mall (all in Accra, Ghana), Kumasi City
Mall in Kumasi, Ghana, Manda Hill Centre in Lusaka, Zambia and Ikeja City
Mall in Lagos, Nigeria.
Hyprop’s investments in South-Eastern Europe includes a 60% interest in
Delta City Belgrade, Serbia, Delta City Podgorica, Montenegro and Skopje
City Mall, in Skopje, Macedonia. In July 2017, Hyprop agreed to acquire a
60% interest in The Mall in Sofia, Bulgaria.
Strategy
Hyprop’s strategy is to own dominant, quality shopping centres, where
such assets can be acquired, or developed at attractive yields. Due to
limited acquisition opportunities in South Africa, consideration is given to
investments in other markets, where existing assets can be acquired at
attractive yields and where attractive development opportunities exist.
The sale of Willowbridge North for R225 million is unconditional and
transfer is anticipated in September 2017. Of the non-core properties that
were identified for sale, only Lakefield Office Park remains to be sold.
Willowbridge North and Lakefield Office Park were included under assets
held-for-sale in the consolidated statement of financial position at 30 June
2017.
Capital structure
Hyprop is structured as a REIT. South African REITs are exempt from capital
gains taxation. Provided they pay out 100% of distributable earnings as a
dividend to shareholders, they also do not pay corporate income taxation.
Hyprop currently pays out 100% of distributable earnings as dividends to
shareholders and therefore does not pay corporate income taxation.