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Hyprop Investments Limited
Group annual financial statements 2016
96
Disposals
Agreements have been reached for the disposal of Somerset Value
Mart and Glenfield Office Park for R185 million and R180 million
respectively. Transfer of Somerset Value Mart is imminent, while
transfer of GlenfieldOffice Park is subject to approval from competition
authorities.
Efforts to dispose of Willowbridge Centre and the remaining
standalone office buildings are continuing.
Capital structure
Hyprop is a REIT and therefore 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 are commented on in the chairman, chief
executive officer and financial director’s reports and, are set out in the
group annual financial statements on pages 98 to 154.
Directorate
Independent non-executive director Louis van der Watt resigned from
the board on 4 May 2016.
Directors retiring by rotation at the upcoming annual general meeting
are Pieter Prinsloo, Lindie Engelbrecht and Mike Lewin, and being
eligible, they offer themselves for re-election.
Independent non-executive director, Ethan Dube, will retire from the
board at the upcoming annual general meeting.
Directors who served during the financial year are as follows:
GR Tipper
(1)
MJ Lewin
(1)
PG Prinsloo
(3)
L Norval
(2)
LR Cohen
(3)
S Shaw-Taylor
(2)
EG Dube
(1)
TV Mokgatlha
(1)
KM Ellerine
(2)
LLS van der Watt (resigned 4 May 2016)
(1)
L Engelbrecht
(1)
(1)
Independent non-executive
(2)
Non-executive
(3)
Executive
An abridged curriculum vitae for each director is set out on
pages 72 and 73.
Subsidiaries, joint arrangements and associates
Disclosure of the company’s investments in subsidiaries, joint
arrangements and associate is included in notes 4 to 7 in the group
annual financial statements.
Investments in South-Eastern Europe
The group’s investments in South-Eastern Europe are held by a joint
venture investment holding company, Hystead Limited (Hystead), a
United Kingdom registered company, in which the group has a 60%
equity interest. In terms of the Hystead shareholder agreement (the
shareholder agreement), Hyprop has joint control of Hystead.
The shareholder agreement also includes, to the extent that Hystead
has distributable earnings from its property investments, a contractual
right by the Hystead shareholders to receive dividends from Hystead.
This contractual right to receive dividends results in the investment in
Hystead being accounted for as an investment in a financial asset
(in terms of IFRS).
Refer to note 6.3 – Investment in joint ventures.
Hystead’s initial investments in South-Eastern Europe (in Serbia and
Montenegro) were funded with a funding structure in the Netherlands
(the Netherlands funding structure). The Netherlands funding structure
includes third-party bank funding for the majority (ie 99%) of the
South-Eastern European funding requirements.
The funding structure also includes loans by Hyprop to two companies
in the Netherlands funding structure, Vondelvlag Holding and
Vondelvlag Stichting, for Hyprop’s share of the remaining 1% of the
funding requirements,
refer to note 10 – Loans receivable.
Administration and management
Property management and asset management in Hyprop’s South
African operations are fully internalised. No property management or
asset management fees were paid during the year in South Africa.
Audit committee report
The audit committee fulfilled its responsibilities during the year (refer
to its report on page 94 for full 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
The auditor is responsible for reporting on whether the group financial
statements are fairly presented in accordance with the applicable
financial reporting framework.
KPMG Inc. was appointed as auditors in accordance with part C of
section 90 of the Companies Act of South Africa.
The auditors of the company were formerly Grant Thornton
(until 3 May 2016). KPMG Inc. were appointed in part to assist
with global co-ordination of the external audit process and in order
to increase the likelihood of engagement with a single firm in most
of the jurisdictions that Hyprop operates in.
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 – Related parties and related-party transactions
to the
group annual financial statements.
The directors have satisfied themselves that the company and its
subsidiaries are in a sound financial position and that they have access
to sufficient borrowing facilities to meet their foreseeable cash
requirements.
Going concern
The directors consider that the company and its subsidiaries 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 annual financial statements.
Trading statements
Hyprop uses dividend per share as the relevant measure of financial
results for trading statement purposes.
Approval of group annual financial statements
The group annual financial statements of Hyprop Investments Limited,
as identified in the first paragraph, were approved by the board of
directors on 2 September 2016.
Company annual financial statements
The integrated report includes the audited group annual financial
statements. The audited annual financial statements of the company
are available for review and inspection at the registered office of the
company.
GR Tipper
PG Prinsloo
Chairman
Chief executive officer
Johannesburg
2 September 2016
DIRECTORS’ REPORT
continued