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Hyprop Investments Limited
Integrated annual report 2016
36
RISK MANAGEMENT
continued
Strategic
objective
Key risk
Probable effects
Severity
of risk Stakeholder
FINANCE
Gearing
Deterioration of gearing profile
•
•
Inability to pursue
investment opportunities
Medium
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Managing
exposure to
interest rate
fluctuations
Potential increase in interest
rates
•
•
Increased borrowing costs
result in reduced
distributable income
Medium
•
•
Providers of capital (debt
and equity investors and
financial institutions)
EMPLOYEES
Attracting and
retaining the best
people
Shortage of industry skills may
result in an inability to recruit
required executive staff and
increase costs of retaining key
staff
•
•
Departure of executive
directors and key executives
may place strategy execution
at risk
Medium
•
•
Providers of capital (debt
and equity investors and
financial institutions)
•
•
Tenants
•
•
Suppliers
•
•
Employees
Succession planning
EMERGING MARKET INVESTMENT (EXCLUDING SOUTH AFRICA)
IN SUB-SAHARAN AFRICA
Increase
portfolio and
geographic
diversification
Currency exchange rate risk
•
•
Unable to repatriate funds
due to illiquid currency
markets or capital
restrictions
•
•
Reduced distributable
income
•
•
Weakening currencies place
country tenants under
pressure
•
•
Excessive volatility in
exchange rates
High
•
•
Tenants
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Slowdown in consumer spend
•
•
Leases not renewed
High
•
•
Tenants
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Operating environment
•
•
Operating cost increases
(specifically municipal rates
and taxes)
•
•
Cost of development
increases
High
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Investment risk
•
•
Returns below expectations
•
•
Default on shareholder
funding
High
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Development risk
•
•
Reduction in return or
inability to achieve target
return
High
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Tax risk
•
•
Changes to tax laws in
countries where Hyprop
invests
Medium
•
•
Providers of capital (debt
and equity investors,
financial institutions)
Internal risks (under control of management)
External risks (can be mitigated by management)
External risks (outside the control of management)