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NOTES TO THE FINANCIAL STATEMENTS
continued
for the year ended 30 June 2016
Hyprop Investments Limited
Group annual financial statements 2016
148
35.
Financial instruments – Fair values and risk management
continued
35.3 Financial risk management
continued
ii. Interest rate risk
continued
Exposure to interest rate risk
The interest rate profile of the group’s interest-bearing financial instruments as reported to the management of the group is as follows:
GROUP
June 2016
R000
GROUP
June 2015
R000
Total bank debt and debt capital market funding:
9 708 925
6 691 909
Less non-controlling interest – Gruppo
(234 307)
Hyprop exposure
9 474 618
6 691 909
Total fixed debt
7 652 666
6 321 140
Total floating debt
1 821 952
370 769
9 474 618
6 691 909
Debt at fixed interest rate %
80,8
94,5
South African debt %
89,6
96,7
USD debt %
72,4
89,9
Maturity of fixes years
4,4
4,6
South African debt years
4,9
5,6
USD debt years
3,7
4,1
Cost of funding %
South African debt %
8,9
8,4
USD debt %
4,6
4,4
EUR debt %
1,7
Fair value sensitivity analysis for fixed rate instruments
The group does not account for any fixed rate financial assets or financial liabilities at fair value through profit or loss, and the group does not
designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest
rates at the reporting date would not affect profit or loss.
Interest rate sensitivity analysis for variable rate instruments
The sensitivity analysis includes the exposure to interest rates for both derivatives and non-derivative instruments at the end of the financial
year. For floating rate liabilities it is assumed that the liability outstanding at the end of the year was outstanding for the whole year.
Based on year-end floating debt, an interest rate increase/decrease of 150 basis points while all other variables are held constant, would
decrease/increase the group’s profit for the year ended 30 June 2016 by R27,3 million (2015: R5,6 million).
iii. Credit risk
Receivables
The group is exposed to credit risk due to trade receivables and loans receivable. The maximum exposure to credit risk at the reporting date
is the fair value of each class of receivable. Save for national tenants, a deposit in the form of cash or bank guarantee is obtained from the
tenant in terms of Hyprop’s deposit policy. Furthermore, and only if required, a deed of suretyship will be obtained from a tenant.
The credit risk in respect of loans receivable is generally mitigated by agreements with the counterparty. These agreements include claims
which provide legal protection for Hyprop which are common to such agreements.
Guarantees
The off-shore funding provided to Hystead and its subsidiaries has been supported by a guarantee from Hyprop. Hyprop has agreed to
guarantee the due and functional performance of obligations in terms of a EUR205 million bridge loan agreement and to give certain
undertakings to and in favour of FirstRand Bank Limited (acting through its Rand Merchant Bank division).