Hyprop Investments : AFS

Registration number: 1987/005284/06

Consolidated and Separate

Financial Statements - Audited

for the year ended 30 June 2022

Excerpt from the 2022 Integrated Annual Report

financial statements has been supervised by: Brett Till CA(SA), CFO of the Group.

Contents

STATUTORY REPORTS

Responsibility statement on internal financial controls

90

Statements of profit or loss and other comprehensive income

105

Declaration by the Company Secretary

91

Statements of financial position

106

Report of the audit and risk committee

92

Statements of changes in equity

107

Directors' report

96

Statements of cash flows

109

Independent auditor's report to the shareholders of Hyprop Investments Ltd

100

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

E3

Capital commitments

141

A

ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS

J

CASH FLOW INFORMATION

A1

Significant accounting policies

110

E4

Investments in subsidiaries

142

J1

Cash generated from operations

188

A2

Key judgements and estimations

110

E5

Investments in joint arrangements and associates 147

J2

Other cash flow notes

189

A3

Changes in accounting policies and disclosures

114

E6

Financial asset - Hystead

151

K

RELATED PARTIES

A4

Standards issued but not yet effective

114

E7

Assets and liabilities held-for-sale

154

K1

Related party transactions and balances

190

A5

Going concern

115

E8

Changes in shareholding

156

L

REMUNERATION

B

PERFORMANCE ANALYSES

F

OTHER ASSETS

L1

Directors' remuneration

194

B1

Distributable income and dividend per share

116

F1

Loans receivable

161

L2

Long-term incentives

196

B2

Earnings per share

116

F2

Trade and other receivables

164

L3

Retirement benefits

198

B3

Net asset values

118

F3

Cash and cash equivalents

165

M

FINANCIAL INSTRUMENTS

F4

Intangible assets

166

C

SEGMENTAL ANALYSIS

M1

Classification of financial instruments

200

C1

Overview and definitions

119

G

EQUITY AND RESERVES

M2

Fair value measurement methodologies

202

C2

Segmental analyses - Profit or loss

120

G1

Share capital and treasury shares

167

M3

Measurement of financial instruments

203

C3

Segmental analyses - Financial position

122

G2

Other Reserves

168

N

FINANCIAL RISK MANAGEMENT

D

PROFIT AND LOSS

H

FUNDING AND RELATED ITEMS

N1

Risk management overview

207

D1

Revenue and minimum lease payments

124

H1

Borrowings

169

N2

Liquidity risk and sensitivity

207

D2

Other operating income

126

H2

Derivatives

173

N3

Interest rate risk and sensitivity

213

D3

Expenses

126

H3

Financial guarantees

177

N4

Currency risk and sensitivity

216

D4

Operating expense commitments

127

H4

Covenants and capital management

181

N5

Credit risk and sensitivity

223

D5

Interest

127

I

OTHER LIABILITIES

O

OTHER INFORMATION

D6

Dividend income

128

I1

Deferred taxation

183

O1

Events after the reporting date

230

D7

Taxation

128

I2

Trade and other payables

185

O2

JSE Property disclosures

230

E

PROPERTY INVESTMENTS AND RELATED BALANCES

I3

Provisions

186

E1

Investment property

131

I4

Taxation payable

187

E2

Property, plant and equipment

140

Q3

Impact of Category 1 acquisition

243

246

P

REIT DISCLOSURES

R3

Distribution details

P1

SA REIT Ratios

236

Q4

Group Structure

244

R4

Administration

246

R5

Glossary

247

Q

ADDITIONAL INFORMATION

R

SHAREHOLDERS' INFORMATION

Q1

Earnings reconciliations

241

R1

Shareholders' analysis

245

Q2

Five-year review

242

R2

Shareholders' Diary

246

BASIS OF PREPARATION

These consolidated and separate financial statements have been prepared in accordance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting. Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies Act of South Africa and the JSE Listings Requirements.

APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS

The Audited Consolidated and Separate Annual Financial Statements, set out on pages 105to 235, were approved by the board of directors on 29 September 2022.

Integrated Report 2022 // HYPROP 89

Responsibility statement on internal financial controls

for the year ended 30 June 2022

The directors, whose names are stated below, hereby confirm that:

• the annual financial statements set out on pages 105to 235, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS;
• to the best of our knowledge and belief, no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;
• internal financial controls have been put in place to ensure that material information relating to the issuer and its consolidated subsidiaries have been provided to effectively prepare the financial statements of the issuer;
• the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function as executive directors with primary responsibility for implementation and execution of controls;
• where we are not satisfied, we have disclosed to the audit committee and the auditors any deficiencies in design and operational effectiveness of the internal financial controls, and have taken steps to remedy the deficiencies; and
• we are not aware of any fraud involving directors.

MC Wilken	BC Till
CEO	CFO
Johannesburg
29 September 2022

Integrated Report 2022 // HYPROP 90

Declaration by the Company Secretary

I declare that, to the best of my knowledge, the Company has lodged with the Companies and Intellectual Property Commission, for the financial year ended 30 June 2022, all such returns as are required of a public company in terms of section 88 of the Companies Act of South Africa, as amended, and that all such returns are true, correct and up to date.

F Nkosi

Company Secretary

Johannesburg

29 September 2022

Integrated Report 2022 // HYPROP 91

Report of the Audit and Risk committee

for the year ended 30 June 2022

Introduction

The audit and risk committee (the ARC) is pleased to submit its report for the year ended 30 June 2022, as required by section 94(7)(f) of the Companies Act of South Africa.

Events of the past two years, including the outbreak of Covid-19 in 2020, political riots in South Africa in July 2021, Russia's invasion of Ukraine in February 2022 and the floods in KwaZulu-Natal in April 2022, have re-emphasised the need for businesses to implement sound risk management practices. Monitoring and managing risk, and monitoring the integrity of financial reporting systems, internal controls and financial disclosures are at the heart of the responsibilities of the ARC.

Focus areas in 2022

Areas of special focus included:

• Global events: Monitoring and considering the impact of Russia's invasion of Ukraine, rising energy costs, particularly in the Eastern European portfolio, and increases in inflation and interest rates on the Group's activities. The ARC continued monitoring the Group's response and risk management strategies to address the impact of the Covid-19 pandemic, noting that these risks have reduced over the financial year as the impact of Covid-19 dissipates;
• Borrowings and foreign currency exposure: Assessing and monitoring implementation of the Group's funding strategy, including steps taken to reduce the Group's Euro denominated borrowings, and the impact of the acquisition of the 4 Eastern European properties from Hystead (the Hyprop Europe transaction) on borrowing covenants;
• Corporate activity: Reviewing the accounting implications of the Hyprop Europe transaction and the changes in the accounting treatment of the Financial asset - Hystead; and
• Information technology: Monitoring the information technology risks the Group faces and overseeing ongoing improvements in information technology risk management policies and processes.

Statutory duties

The ARC is governed by a formal charter that codifies its independent role and responsibilities in providing oversight and recommendations to the Board for consideration and final approval. These responsibilities include those recommended by the King IV Report on Corporate Governance™ (King IV).

The primary responsibilities of the ARC are to:

• Oversee integrated reporting, including consideration of significant judgements and reporting decisions;
• Ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities;
• Review the expertise, resources and experience of the Company's finance function, and satisfy itself as to the suitability of the expertise and experience of the chief financial officer;
• Oversee internal audit, and in particular, the appointment and/or rotation of the internal audit service provider;
• Monitor compliance with the risk policy and procedures;
• Recommend the appointment of the external auditor and oversee the external audit process; and
• Make submissions to the Board on any relevant matter concerning the Company's accounting policies, financial controls, records, reporting and risk management.

Functions

In addition to the above, the ARC covered matters relating to compliance, litigation, budgeting and forecasting, taxation and accounting policy choices, and supported the Board in the following areas:

• Advising on the accounting implications of the Hyprop Europe transaction, including reviewing the forecasts and financial effects presented in the circular to shareholders dated 22 February 2022;
• Reviewing adherence to Hyprop's systems of internal controls and, where necessary, monitoring improvements;
• Monitoring established guidelines for the use of the external auditor for non-audit services, to maintain independence. The ARC recommended the use of KPMG as the Independent Reporting Accountant for the Hyprop Europe transaction;
• Monitoring compliance with Real Estate Investment Trust (REIT) requirements, in accordance with the JSE Listings Requirements, and confirming that the risk management policy, which prohibits the Company from entering into derivative transactions not in the ordinary course of business, has been complied with in all material respects;

• Monitoring implementation of policies and procedures to ensure compliance with the Protection of Personal Information Act (POPI) which came into force on 1 July 2021; and
• Considering financial reporting in line with the results of the JSE proactive monitoring process and the Group's own internal objectives.

Composition and meetings

Details of the ARC members and their attendance at meetings during the year are set out in the Governance section of the integrated report. All members of the ARC are independent non-executive directors, in compliance with the Companies Act of South Africa and as recommended by King IV.

Mr Tipper stepped down as a member of the ARC at the annual general meeting held on 26 November 2021, in line with the recommendations of King IV. He continues to attend meetings of the ARC as an invited attendee.

The external and internal auditors and executive management are invited to attend ARC meetings.

Significant financial statement reporting issues

A significant part of the financial reporting process includes making estimates and exercising judgement. The ARC reviewed and evaluated the main judgements, estimates and assumptions made by management and the conclusions drawn from the available information and evidence.

The ARC ensured that these matters were covered by the work of the external auditor.

The key issues involving estimates and judgements during the year are set out below:

Integrated Report 2022 // HYPROP 92