Hyprop Investments : FINANCIAL STATEMENTS

HYPROP INVESTMENTS LIMITED AND ITS SUBSIDIARIES

REGISTRATION NUMBER: 1987/005284/06

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS - AUDITED

FOR THE YEAR ENDED 30 JUNE 2023

The preparation of these Consolidated and separate financial statements has been supervised by: Brett Till CA(SA), CFO of the Group.

Contents

			Page					Page
	STATUTORY REPORTS			G	EQUITY AND RESERVES
	Responsibility statement on internal financial controls	3			G1	Share capital and treasury shares	77
	Declaration by the company secretary	3			G2	Reserves	78
	Report of the audit and risk committee	4
	Directors' report	10		H	FUNDING AND RELATED ITEMS
	Independent auditor's report to the shareholders of	17			H1	Borrowings	79
	Hyprop Investments Ltd				H2	Derivatives	83
						H3	Financial guarantees	85
	PRIMARY STATEMENTS				H4	Covenants and capital management	87
	Statements of profit or loss and other comprehensive income	23
	Statements of financial position	24		I	OTHER LIABILITIES
	Statements of changes in equity	25			I1	Deferred taxation	88
	Statements of cash flows	27			I2	Taxation payable	89
						I3	Trade and other payables	90
A	ACCOUNTING POLICIES AND CRITICAL JUDGEMENTS				I4	Provisions	91
	A1	Material accounting policies	28
	A2	Key judgements and estimates	29		J	CASH FLOW INFORMATION
	A3	Changes in accounting policies and disclosures	31			J1	Cash generated from operations	93
	A4	Standards issued but not yet effective	31			J2	Other cash flow notes	94
	A5	Going concern	32
					K	RELATED PARTIES
B	PERFORMANCE ANALYSES				K1	Related party transactions and balances	95
	B1	Distributable income and dividend per share	33
	B2	Dividends declared/paid during the year	33		L	REMUNERATION
	B3	Earnings per share	33			L1	Directors' remuneration	97
	B4	Net asset values	35			L2	Long-term incentives	100
						L3	Retirement benefits	103
C	SEGMENTAL ANALYSIS
	C1	Overview and definitions	36		M	FINANCIAL INSTRUMENTS
	C2	Segmental analyses - Profit or loss	37			M1	Classification of financial instruments	104
	C3	Segmental analyses - Financial position	39			M2	Fair value measurement methodologies	106
						M3	Measurement of financial instruments	107
D	PROFIT AND LOSS
	D1	Revenue	41		N	FINANCIAL RISK MANAGEMENT
	D2	Other operating income	42			N1	Risk management overview	111
	D3	Dividend income	42			N2	Liquidity risk and sensitivity	112
	D4	Expenses	43			N3	Interest rate risk and sensitivity	118
	D5	Net foreign exchange (losses)/ gains	45			N4	Currency risk and sensitivity	121
	D6	Interest	45			N5	Credit risk and sensitivity	127
	D7	Taxation	46
					O	OTHER INFORMATION
E	PROPERTY INVESTMENTS AND RELATED BALANCES				O1	Events after the reporting date	133
	E1	Investment property	48
	E2	Property, plant and equipment	54		P	PROPERTY DISCLOSURES
	E3	Capital commitments	55			P1	JSE Property disclosures	134
	E4	Investments in subsidiaries	56			P2	SA REIT Ratios	139
	E5	Investments in joint arrangements and associates	60
	E6	Assets and liabilities held-for-sale	64		Q	ADDITIONAL INFORMATION
	E7	Impairments	66			Q1	Earnings reconciliations	143
	E8	Changes in shareholding	69			Q2	Five-year review	144
						Q3	Group Structure	145
F	OTHER ASSETS
	F1	Loans receivable	73		R	SHAREHOLDERS' INFORMATION
	F2	Trade and other receivables	76			R1	Shareholders' analysis	146
	F3	Cash and cash equivalents	76			R2	Shareholders' Diary	147
						R3	Distribution details	147
						R4	Administration	147
						R5	Glossary	148

Basis of preparation

These consolidated and separate financial statements have been prepared in accordance with IFRS, the SA Financial Reporting Requirements 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 23 to 138, were approved by the Board of directors on 19 September 2023.

2

Responsibility statement on internal financial controls

for the year ended 30 June 2023

Each of the directors, whose names are stated below, hereby confirm that:

• the AFS set out on pages 23 to 138, fairly present in all material respects the financial position, financial performance and cash flows of Hyprop 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 AFS false or misleading;
• internal financial controls have been put in place to ensure that material information relating to Hyprop and its consolidated subsidiaries has been provided to effectively prepare the financial statements of Hyprop;
• the internal financial controls are adequate and effective and can be relied upon in compiling the AFS, 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 ARC and the auditors any deficiencies in design and operational effectiveness of the internal financial controls and taken steps to remedy the deficiencies; and
• We are not aware of any fraud involving directors.

MC Wilken	BC Till
CEO	CFO
Johannesburg
19 September 2023

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 2023, 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

19 September 2023

3

Report of the Audit and Risk committee

for the year ended 30 June 2023

INTRODUCTION

The audit and risk committee (the ARC) has the pleasure of submitting its report for the year ended 30 June 2023, as required by section 94(7)(f) of the Companies Act of South Africa.

The primary role of the ARC is to assist the Board in monitoring risk and the Group's systems and processes to identify, assess and manage risks, and monitor the integrity of financial reporting systems, internal controls and financial disclosures in the Group's annual financial statements (AFS).

FOCUS AREAS IN 2023

Areas of focus included:

• Global events: Monitoring and considering the impact of rising interest rates and inflation on the Group's operations and borrowing costs, particularly in West Africa, where the effects of these factors were compounded by severe devaluations of local currencies against the US Dollar;
• Borrowings and interest rate exposure: Monitoring implementation of the Group's debt refinancing initiatives and compliance with banking covenants in the light of rising interest rates, and approving the revised interest rate hedging policy; and
• Risk management: Recommending the updated risk management policy to the Board for approval and monitoring implementation thereof across all portfolios, including the revised risk reporting framework.

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 GovernanceTM (King IV) and:

• Overseeing integrated reporting, including consideration of significant judgements and reporting decisions;
• Monitoring compliance with the risk policy and procedures;
• Ensuring that a combined assurance model is applied to provide a coordinated approach to all assurance activities;
• Reviewing the expertise, resources and experience of the Company's finance function, and satisfying itself as to the suitability of the expertise and experience of the Chief Financial Officer;
• Overseeing internal audit, and in particular, the appointment and/or rotation of the internal audit service providers;
• Overseeing the external audit process and recommending the re-appointment of the external auditor; and
• Submitting any relevant matter concerning the Company's accounting policies, financial controls, records, reporting and risk management to the Board.

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:

• Reviewing the work of the internal auditors, particularly for the eastern European portfolio which was integrated into the Group's internal audit and other risk management processes;
• Monitoring established guidelines for the use of the external auditor for non-audit services to maintain independence;

4

Report of the Audit and Risk committee

for the year ended 30 June 2023

• 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;
• Considering significant technical accounting matters and management's proposed accounting treatment there-of;
• Reviewing the Company's assessment of whether it has any prescribed officers to ensure compliance with the Companies Act and the JSE Listings Requirements;
• Reviewing the updated risk management policy and recommending same to the Board for approval, as well as updates to various other policies within its mandate; and
• Considering improvements to the Group's 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 Annual 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.

Stewart Shaw-Taylor retired by rotation as a director and a member of the ARC at the annual general meeting held on 25 November 2022 and did not make himself available for re-election. The ARC thanks Stewart for his significant contribution to the Committee and the Company over the years.

The ARC met four times during the year. 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:

	Key issue	Judgement in financial reporting	Audit and risk committee review	Conclusion
1	Valuation of	Investment property is the	Broll Valuation and Advisory Serves and	The ARC
	investment	Group's most significant asset	Viking Valuation (South Africa), CBRE	endorsed the
	properties	and is measured at fair value,	(Eastern Europe) and Mills Fitchet (sub-	independent
	with changes in fair value	Saharan Africa) continued to serve as	valuations of
		recognised in profit or loss.	independent valuers for the Group. De	the investment
		The Group uses independent	Leeuw Group was appointed as an	properties and
		independent valuer in South Africa for	the relevant
		valuers to value its investment	the year ended 30 June 2023, replacing	disclosures in
		properties.	Jones Lang LaSalle.	the financial
		The valuation involves making	The ARC considered the independence	statements.
		significant judgements,	and qualifications of the appointed
		especially regarding the current	independent valuers, as well as the
		market conditions, discount and	rotation of properties between the
		capitalisation rates, rental	three valuers in South Africa.
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