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HYPROP INVESTMENTS LIMITED - Condensed consolidated interim results for the six months ended 31 December 2018

Release Date: 01/03/2019 08:39
Code(s): HYP HILB10 HILB08 HILB09 HILB05 HILB06 HILB07 HILB04     PDF:  
 
Wrap Text
Condensed consolidated interim results for the six months ended 31 December 2018

HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP
ISIN: ZAE000190724
(Approved as a REIT by the JSE)
("Hyprop" or "the company" or "the group")

Condensed CONSOLIDATED INTERIM RESULTS for the six months ended 31 December 2018

Highlights

Hyprop is a leading specialist shopping centre Real Estate Investment Trust (REIT). We operate a 
portfolio of shopping centres in major metropolitan areas across South Africa, sub-Saharan Africa 
and South-Eastern Europe. 

- 8,8% Growth in distributable income from South African portfolio
- 16,6% Growth in distributable income from South-Eastern European portfolio
- Vacancies in the South African portfolio reduced to 1,6%, and to less than 0,1% in the 
  South-Eastern European portfolio
- Sale of last non-core asset - Lakefield office park

Condensed consolidated statement of comprehensive income
                                                                  Unaudited             Unaudited           Audited     
                                                                 six months            six months         12 months    
                                                           31 December 2018      31 December 2017      30 June 2018    
                                                                       R000                  R000              R000    
Revenue                                                           1 631 673             1 539 370         3 113 713    
Investment property income                                        1 651 072             1 544 712         3 117 560    
Straight-line rental income accrual                                 (19 399)               (5 342)           (3 847)    
Property expenses                                                  (587 669)             (521 113)       (1 049 892)    
Net property income                                               1 044 004             1 018 257         2 063 821    
Other operating expenses                                            (20 649)              (28 295)          (55 778)    
Operating income                                                  1 023 355               989 962         2 008 043    
Net interest                                                       (138 861)             (161 646)         (282 273)    
  Received                                                          161 218               151 132           312 550    
  Paid                                                             (300 079)             (312 778)         (594 823)    
                                                                                                                       
Net operating income                                                884 494               828 316         1 725 770    
Other income                                                         20 425                22 996            46 671    
Dividends                                                           111 434                78 820           182 778    
Net income before fair value adjustments                          1 016 353               930 132         1 955 219    
Change in fair value                                                110 485               498 723           767 052    
  Investment property                                               300 935               541 717           646 359    
  Straight-line rental income accrual                                19 399                 5 342             3 847    
  Derivative instruments                                              3 515                (6 943)           29 085    
  Financial asset                                                  (213 364)              (41 393)           87 761    
Derecognition of financial guarantees                                33 674                11 984            11 984    
Profit on disposal                                                                             86             2 697    
  Investment property                                                                          86             2 697    
Impairment of loan to joint venture                              (1 069 991)               (8 539)         (166 441)    
Impairment of joint venture                                                                                 (10 102)    
Profit before taxation                                               90 521             1 432 386         2 560 409    
Taxation                                                            (10 138)               (6 080)          (39 486)    
Profit for the period/year                                           80 383             1 426 306         2 520 923    
Other comprehensive income                                                                                             
Items that may be reclassified subsequently               
to profit or loss (net of taxation)                                        
Exchange differences on translation of foreign operations             1 628                (6 331)           15 471    
Total comprehensive income for the period/year                       82 011             1 419 975         2 536 394    
Total profit for the period/year attributable to:                                                                      
Shareholders of the company                                         181 895             1 436 930         2 529 466    
Non-controlling interests                                          (101 512)              (10 624)           (8 543)    
Profit for the period/year                                           80 383             1 426 306         2 520 923    
Total comprehensive income attributable to:                                                                            
Shareholders of the company                                         179 603             1 434 389         2 540 374    
Non-controlling interests                                           (97 592)              (14 414)           (3 980)    
Total comprehensive income for the period/year                       82 011             1 419 975         2 536 394    


Condensed reconciliation of headline earnings
                                                                  Unaudited             Unaudited           Audited     
                                                                 six months            six months         12 months    
                                                           31 December 2018      31 December 2017      30 June 2018    
                                                                       R000                  R000              R000    
Profit for the period/year                                          181 895             1 436 930         2 529 466    
Earnings                                                            181 895             1 436 930         2 529 466    
Headline earnings adjustments                                      (387 903)             (541 803)         (638 616)    
  Change in fair value of: Investment property                     (387 903)             (541 717)         (646 359)    
  Profit on disposal: Investment property                                                     (86)           (2 697)    
  Impairment of joint venture                                                                                10 102    
  Non-controlling interest                                                                                      338    
                                                                                                                       
Headline earnings                                                  (206 008)              895 128         1 890 850    
Total shares in issue                                           255 894 516           248 441 278       255 894 516    
Weighted average shares in issue                                255 424 601           248 137 264       249 024 221    
Diluted weighted average shares in issue                        255 631 464           248 335 543       249 207 302    
Total shares in issue for dividend per share                                                        
(excludes treasury shares)                                      255 540 828           247 995 018       255 448 256    
Basic earnings per share (cents)                                       71,2                 579,1           1 015,8    
Headline earnings per share (cents)                                   (80,7)                360,7            759,30    
Diluted earnings per share (cents)                                     71,2                 574,4           1 015,0    
Diluted headline earnings per share (cents)                           (80,6)                356,2             758,7    


Condensed consolidated statement of financial position
                                                                  Unaudited             Unaudited           Audited           
                                                                 six months            six months         12 months          
                                                           31 December 2018      31 December 2017      30 June 2018          
                                                                       R000                  R000              R000          
Assets                                                                                                                       
Non-current assets                                               33 558 090            33 100 805        33 951 124          
  Investment property                                            31 150 059            30 275 912        30 691 210          
    South African portfolio                                      29 325 705            28 409 403        28 621 856          
    Ikeja City Mall (Lagos, Nigeria)                              1 824 354             1 866 509         2 069 354          
  Building appurtenances and tenant installations                   153 573               151 382           163 068          
  Investments in sub-Saharan Africa (excluding SA)                2 054 164             2 656 209         2 918 721          
  Financial asset - right to receive dividends                      176 472                                 152 556          
  Loans receivable                                                   19 256                17 302            18 723          
  Derivative instruments                                              4 566                                   6 846          
Current assets                                                    1 197 556             1 366 529         1 015 095          
  Receivables                                                       289 496               263 468           258 071          
  Loans receivable                                                                                           40 716          
  Derivative instruments                                              6 938                 8 894               815          
  Cash and cash equivalents                                         901 122             1 094 167           715 493          
Non-current assets held-for-sale                                    206 060               189 746           199 257          
Total assets                                                     34 961 706            34 657 080        35 165 476          
Equity                                                           25 512 412            25 430 456        26 395 237          
  Stated capital and reserves                                    25 519 685            25 350 571        26 304 917          
  Non-controlling interest                                           (7 273)               79 885            90 320          
Liabilities                                                                                                                  
Non-current liabilities                                           6 435 082             6 042 607         8 203 399          
  Interest-bearing liabilities                                    5 872 230             5 648 768         7 815 651          
  Financial guarantee                                               348 577               193 264           185 686          
  Derivative instruments                                             23 470                61 822            24 060          
  Deferred taxation                                                 190 805               138 753           178 002          
Current liabilities                                               3 003 326             3 176 220           558 683          
Payables                                                            469 773               479 816           487 341          
Interest-bearing liabilities                                      2 531 009             2 695 583            69 343          
Derivative instruments                                                2 544                   821             1 999          
Liabilities directly associated with non-current 
assets held-for-sale                                                 10 886                 7 797             8 157          
Total liabilities                                                 9 449 294             9 226 624         8 770 239          
Total equity and liabilities                                     34 961 706            34 657 080        35 165 476          
Net asset value per share (R)                                         99,87                102,22            102,98          


Condensed consolidated statement of changes in equity
                                                                  Unaudited             Unaudited           Audited     
                                                                 six months            six months         12 months    
                                                           31 December 2018      31 December 2017      30 June 2018    
                                                                       R000                  R000              R000    
Balance at beginning of period/year                              26 395 237            24 882 553        24 882 553    
Total profit for the period/year attributable 
to Hyprop shareholders                                              181 895             1 436 930         2 529 467    
Non-controlling interest                                            (97 592)              (14 414)           (3 980)    
Profit/(loss) on vesting of shares                                    3 552                                  (2 542)    
Issue of shares                                                                                             778 676    
Treasury shares                                                       2 389                (7 990)           (7 990)    
Dividends                                                          (971 328)             (862 193)       (1 795 398)    
Share-based payment reserve                                             551                (1 890)            3 542    
Foreign currency translation reserve                                 (2 292)               (2 540)           10 909    
Balance at end of period/year                                    25 512 412            25 430 456        26 395 237    
Distribution details                                                                                                   
Total distribution for the period/year (cents)                        385,6                 376,3             756,5    
  Six months ended 30 June (cents)                                                                            380,2    
  Six months ended 31 December (cents)                                385,6                 376,3             376,3    


Condensed consolidated statement of cash flows
                                                                  Unaudited             Unaudited           Audited     
                                                                 six months            six months         12 months    
                                                           31 December 2018      31 December 2017      30 June 2018    
                                                                       R000                  R000              R000    
Cash flows from operating activities                               (147 832)               (1 551)           37 689    
  Cash generated from operations                                  1 054 372             1 056 760         2 133 136    
  Interest received                                                  54 133                85 525           283 289    
  Interest paid and capitalised                                    (282 721)             (279 974)         (580 208)    
  Taxation paid                                                      (2 288)               (1 669)           (3 130)    
  Dividends paid                                                   (971 328)             (862 193)       (1 795 398)    
Cash flows from investing activities                                 75 414               322 698           104 745    
  Acquisition of and additions to investment property               (58 777)             (147 988)         (263 640)    
  Additions to building appurtenances and                  
  tenant installations                                              (10 461)              (21 087)          (52 104)    
  Proceeds on disposal of assets classified            
  as held-for-sale                                                                        225 259           229 759    
  Increase in investment in South-Eastern Europe                                                            (30 979)    
  Advances of loans receivable from joint ventures                  (60 394)               (3 189)          (59 061)    
  Repayment of loans receivable from joint ventures                 108 229               182 335           157 934    
  Dividends received                                                 96 817                87 368           163 551    
  Increase in loans receivable                                                                              (40 715)    
Cash flows applied to financing activities                          257 460              (349 991)         (510 777)    
  Interest-bearing liabilities repaid                                (3 446)             (335 089)       (3 871 791)    
  Issue of shares                                                                                           778 676    
  Interest-bearing liabilities raised                               260 906                 3 262         2 600 502    
  Purchase of Hyprop shares (long-term                 
  staff incentive scheme)                                                                 (18 164)          (18 164)    
Net increase/(decrease) in cash and cash equivalents                185 042               (28 844)         (368 343)    
Translation effects on cash and cash                       
equivalents of foreign entities                                         587                (1 896)          (41 914)    
Cash reallocated to assets held-for-sale                                                     (843)                      
Cash and cash equivalents at beginning of period/year               715 493             1 125 750         1 125 750    
Cash and cash equivalents at end of period/year                     901 122             1 094 167           715 493    


Commentary
The board of directors is pleased to present the group's financial results for the six month period ended 
31 December 2018.

FINANCIAL RESULTS
Distributable earnings and dividend
The board of directors has declared a dividend of 385,6 cents per share for the six months ended 31 December 2018,
compared to 376,3 cents per share for the six months ended 31 December 2017. This dividend is based on cash earnings 
from the group's operating portfolios.  

Distributable income for the period increased by 5,6%, from R933 million for the six months ended 31 December 2017, 
to R985 million for the period. 

Distributable income
                         31 December 2018          % change            31 December 2017             30 June 2018
                                                          Cents                                                  
                                     Cents    Rands    per share                     Cents                       Cents 
                          Rands   per share       %            %       Rands      per share         Rands    per share    
South Africa            844 682       330,6     8,8          5,6     776 326          313,1     1 591 673        632,2    
Sub-Saharan Africa        4 405         1,7   (89,0)       (89,3)     40 025           16,1        78 368         31,1    
Hystead                 136 153        53,3    16,6         13,1     116 776           47,1       234 473         93,2    
Total                   985 240       385,6     5,6          2,5     933 127          376,3     1 904 514        756,5    
Number of shares                                                                                          
for distribution                                                                                          
purposes                        255 540 828                                     247 995 018                255 448 256

Distributable income from the South African portfolio increased by 8,8% compared to the six month period ended
31 December 2017. This was achieved despite the headwinds faced by the South African property sector, which included reduced
consumer demand and the resultant pressure on South African retailers. This performance bears testament to the high quality
of the group's South African property portfolio and its strong cash generating ability, which underpins the group's
financial strength and stability.

Distributable income from Hystead increased 16,6% from that for the six month period ended 31 December 2017. The
portfolio continues to exceed expectations with pleasing growth on the back of low vacancies and asset management
initiatives.

The investments in sub-Saharan Africa were affected by deteriorating economic and trading conditions in the region,
resulting in cash flow after servicing third-party borrowings and available for distribution to Hyprop, being
significantly lower than in the prior period. 

Taking into account the increase in the number of shares in issue from 248,0 million to 255,5 million as a result of
the share issue in April 2018, the distribution per share increased by 2,5%, from 376,3 cents to 385,6 cents per share. 

Reconciliation of attributable net profit for the period to distributable earnings
                                                                  
                                                                  Unaudited             Unaudited         
                                                                 six months            six months           Audited    
                                                                31 December           31 December         12 months    
                                                                       2018                  2017      30 June 2018    
                                                                       R000                  R000              R000
Total profit for the period/year attributable to                                   
shareholders of the company                                         181 895             1 436 930         2 529 466    
Adjusted for:                                                       803 345              (503 803)         (624 952)    
Change in fair value - investment property                         (387 904)             (541 802)         (646 021)    
Change in fair value - derivative instruments                        (3 515)                6 943           (29 085)    
Change in fair value - financial asset                              213 364                41 393           (87 761)    
Derecognition of financial guarantee                                (33 674)              (11 984)          (11 984)    
Profit/(loss) on disposal - investment property                                                              (2 697)    
Impairment - loans to joint ventures                              1 069 991                 8 539           166 441    
Impairment - joint venture                                                                                   10 103    
Deferred and normal tax                                              10 138                 6 080            39 485    
Capital and other items*                                               (900)               14 721            (5 831)    
Income from sub-Saharan Africa*                                     (64 155)              (27 693)          (57 602)    
Distributable earnings                                              985 240               933 127         1 904 514    
* Net effect of converting IFRS earnings to distributable earnings                 

Distributable earnings statement and reconciliation to dividend declared
                                                                                        Distributable earnings
                                                                                    six months           six months    
                                                                              31 December 2018      31 December2017    
                                                                                          R000                 R000    
South African property portfolio                                                       991 362              952 345    
- Continuing operations                                                                991 326              944 034    
- Properties sold                                                                           36                8 311    
Fund management expenses                                                              (25 378)             (27 646)    
Net interest                                                                         (121 302)            (148 373)    
South African portfolio subtotal                                                       844 682              776 326    
Investments in sub-Saharan Africa (excluding SA)                                         4 405               40 025    
Investments in South-Eastern Europe                                                  115 728               91 615    
Other income                                                                            20 425               25 161    
                                                                                                                       
SEE portfolio subtotal                                                                 136 153              116 776    
Distributable earnings                                                                 985 240              933 127    
Total shares in issue                                                              255 894 516          248 441 278    
Treasury shares in issue                                                             (353 688)            (446 260)    
Shares in issue for distributable earnings                                         255 540 828          247 995 018    
Dividend per share (cents)                                                               385,6                376,3    
Dividend per share growth (%)                                                              2,5                  8,3    

HYPROP PROFILE
Hyprop is a specialist shopping centre Real Estate Investment Trust (REIT) with a R37,3 billion portfolio of shopping
centres in South Africa (SA), sub-Saharan Africa excluding SA, and South-Eastern Europe.

Hyprop's strategy is to own dominant, high quality shopping centres in major metropolitan areas, where such assets can
be acquired or developed at attractive yields.

The shopping centre portfolio in South Africa includes super-regional centre Canal Walk, large regional centres
Clearwater, The Glen, Woodlands, CapeGate, Somerset and Rosebank Malls, regional centre Hyde Park Corner and value centre
Atterbury Value Mart.

The sub-Saharan African portfolio includes interests in Accra Mall, West Hills Mall and Achimota Retail Centre, all in
Accra, Ghana; Kumasi City Mall in Kumasi, Ghana; Manda Hill Centre in Lusaka, Zambia, and Ikeja City Mall in Lagos,
Nigeria.

Hyprop's investments in South-Eastern Europe, held via a 60% interest in UK-based Hystead Limited (Hystead), include
interests in Delta City in Belgrade, Serbia; Delta City in Podgorica, Montenegro; Skopje City Mall in Skopje, Macedonia;
The Mall in Sofia,  Bulgaria, and a 90% interest (effective 54% interest for Hyprop) in City Centre One Zagreb East and
City Centre One Zagreb West, both in Zagreb, Croatia.

SOUTH AFRICAN PORTFOLIO
Revenue and distributable earnings
                                                  Unaudited six months                 Unaudited six months
                                                ended 31 December 2018               ended 31 December 2017
                                                           Distributable                         Distributable     
                                              Revenue           earnings3          Revenue            earnings3    
Business segment                                 R000                R000             R000                R000    
Shopping centres                            1 440 824             920 633        1 318 591             877 306    
Value centres                                  76 199              54 553           74 816              51 232    
Total retail                                1 517 023             975 186        1 393 407             928 538    
Total standalone offices1                      25 300              16 140           24 138              15 496    
Investment property                     
(excluding properties sold)                 1 542 323             991 326        1 417 545             944 034    
Properties sold2                                                       36           10 494               8 311    
Total investment property                   1 542 323             991 362        1 428 039             952 345    
1 Consists of Lakefield Office Park (held-for-sale) and Cradock Heights
2 Willowbridge North was sold during the prior period
3 Distributable earnings from properties before fund management expenses and interest

Despite the continuing difficult economic climate, the South African portfolio performed in line with expectations
bearing testament to the high-quality assets in the portfolio. Revenue increased by 8,0% relative to the six month period
ended 31 December 2017, underpinned by contractual rental escalations. Double-digit growth in rental income was achieved
at Clearwater Mall, Rosebank Mall and The Glen, partly as a result of the recent renovations and refurbishments at the
latter two malls. 

Property expenses increased by 15,8% compared to the six month period ended 31 December 2017 mainly as a result of a
27,1% increase in rates and taxes, increases in electricity and power-related costs at rates above inflation, and higher
provisions for bad debts. Net municipal costs (after recoveries from tenants) increased by 35,7%. As a result, the
cost-to-income ratio increased on both a gross and a net basis.

South Africa                                                                                                      
Cost-to-income ratio                                                                                              
                                                                            31 December 2018      30 June 2018    
Net basis (%)                                                                           17,6              15,8    
Gross basis (%)                                                                         35,7              33,0    

Hyprop has objected to the new municipal valuations for its Johannesburg-based investment properties.

Distributable earnings from all of the shopping centres showed positive growth, with the exception of Woodlands
Boulevard which was impacted by renovations of the food court. Feedback from customers and tenants following the 
reopening of the completed portions of the food court has been positive.

Other operating expenses decreased due to an increase in asset management fees received from Hystead and savings in
staff and related costs.

Tenant arrears
Tenant arrears continue to be closely monitored and managed. At 31 December 2018 rental arrears were R34,0 million,
compared to R18,9 million at 30 June 2018. This increase is partly seasonal, and reflects the difficulties facing
retailers, as well as back charges for increases in rates which were raised in November 2018. In line with the 
increase in tenant arrears, an additional amount of R11 million was provided during the period for potential 
doubtful debts.

Vacancies 
Vacancy levels across the portfolio remain below industry averages and Hyprop continues to benefit from demand 
by retailers for space in our malls. The overall vacancy rate reduced from 1,9% at 30 June 2018 to 1,6% at 
31 December 2018. This was as a result of a decrease in vacancies at The Glen, where an additional 1 150m2 
was let, Atterbury Value Mart which reduced vacancies by approximately 900m2, and Clearwater Mall, where the 
last of the space vacated by Stuttafords two years ago was let.

                                                     Change in                                                    
                                                vacancy during                                                    
Vacancy                           Rentable       the six month                  % of total          % of total     
                                 area (m2)              period               rentable area       rentable area     
Sector                    31 December 2018                 (m2)           31 December 2018        30 June 2018    
Retail                               7 447              (3 267)                        1,1                 1,6    
Office                               4 192                 938                         7,1                 5,5    
Total                               11 639              (2 329)                        1,6                 1,9    

Lettings
Leases of approximately 102 000m? (14% of total rentable area of the space) expire in the current financial year. 
To date, 56 970m2 have been renewed at a reversion rate of negative 2,2% and an average escalation rate of 7,3%.

At 31 December 2018, Edcon occupied 66 781m2 of space in Hyprop malls. This represented 9,2% of gross lettable area,
and 7,6% of rental income in South Africa. Since June 2018, Hyprop has worked with Edcon to reduce their space
requirements. Agreement has been reached with Edcon for 7 563m2 to be returned in the short term. New tenants have 
been secured for most of this space and Hyprop is confident of its ability to re-let the balance.

Hyprop has agreed to support Edcon as part of its restructuring proposal, which may include Hyprop subscribing for an
equity interest in Edcon. Based on current estimates, the financial effect of the transaction, should it be implemented, 
will be a reduction in Hyprop's distributable earnings of 0,8% in the 2019 financial year, and a further 2,3% reduction 
in the 2020 financial year.

Valuations
The market value of the South African portfolio increased by R694,8 million (2,4%) from R29,0 billion at 
30 June 2018 to R29,7 billion at 31 December 2018. The average exit cap rate used in determining the market 
value was unchanged at 6.5%.

Valuations
                                                                                                     Value per    
                                                        Value attributable to Hyprop             rentable area    
                                  Rentable area      31 December 2018      30 June 2018       31 December 2018    
Business segment                           (m2)                  R000              R000                 (R/m2)   
Shopping centres                        653 571            27 940 317        27 351 847                 46 889    
Value centres                            48 641             1 400 000         1 303 000                 28 782    
Total retail                            702 212            29 340 317        28 654 847                 45 634    
Total standalone offices1                20 354               332 300           323 000                 16 326    
Investment property                     722 566            29 672 617        28 977 847                 44 809    
1 Consists of Lakefield Office Park (held-for-sale) and Cradock Heights

Reconciliation to statement of financial position
to fair values
Investment property South Africa                                                  29 325 705        28 621 856   
Non-current assets held-for-sale                                                     198 000           198 000   
Building appurtenances                                                               153 573           163 068   
Ikeja Building appurtenances consolidated                                             (3 016)           (3 157)   
Centre management assets included                                                     (1 645)           (1 920)   
Investment property                                                               29 672 617        28 977 847   

Capital expenditure
The following projects were successfully completed during the period:
                                                                   Hyprop's share                                 
Shopping centre            Project                                              %      Completion date            
Woodlands                  Nu-Metro and Food court upgrade                    100      Phase 2 - December 2018    
Rosebank Mall              Re-glazing of the curtain wall and     
offices                    upgrades to the building auditorium                100      August 2018                

Phase 3 of the Woodlands upgrade is scheduled for completion in April 2019.
Future capital expenditure projects will be carefully considered in the context of the difficult South African
economic environment. Hyprop, however, remains cognisant of the need to invest in our properties to ensure that 
they remain relevant in an ever-changing retail, technology and on-line shopping environment. 

Capital projects are planned for The Glen, where a portion of the space currently occupied by Edcon will be taken 
over by Checkers, and for Canal Walk, which will be upgrading its food court and toilet facilities and developing a 
new "Ratanga Junior" entertainment area. Further capital projects will become necessary as the group's exposure to 
Edcon is managed down. These projects will involve the introduction of new high profile anchor tenants, with a view to
optimising the tenant mix, foot fall and retail turnovers. 

Disposals
The sale of Lakefield Office Park was finalised on 4 January 2019 and the sale proceeds have been received. 

INVESTMENTS IN SOUTH-EASTERN EUROPE
Hyprop's investments in South-Eastern Europe are held through a UK company, Hystead, in which Hyprop has a 60%
interest. Hyprop has joint control of Hystead and accounts for Hystead as a financial asset.

The South-Eastern European portfolio continued to perform well during the period. Average rental rates and trading
densities at all of the malls have increased from 2017, despite the low inflation environments, contributing to growth in
net operating income and distributions. Turnover rentals increased as a result of the success of many of the larger
retail tenants in the portfolio.

Following the acquisitions of The Mall in Sofia, Bulgaria, and City Centre One East and City Centre One West in
Zagreb, Croatia in the second half of the 2018 financial year, Hystead attained critical mass in the region. Capital 
projects of EUR25 million have been approved, or are planned, for the coming year. The projects include a major upgrade 
to portions of the Mall in Sofia which will see the introduction of approximately 40 new retail outlets and an 
exhibition court.

Distributable earnings
Distributable earnings from Hystead comprise dividends from Hystead and guarantee fees from PDI Investment 
Holdings (PDI). Total distributable income from Hystead increased by 16,6% from R116,8 million for the period 
ended 31 December 2017 to R136,2 million in the current period.

The guarantee fee is based on a percentage of the dividends declared by Hystead to PDI.  As a result of the additional
in-country asset-backed finance raised by Hystead during the previous financial year, this percentage reduced to 11%
for the period ended 31 December 2018. 

Dividends received from Hystead were positively impacted, in Rand terms, by foreign exchange rate hedges.

Hyprop share of investment property
At 31 December 2018, Hyprop's attributable share of the Hystead portfolio was R7,6 billion (EUR460 million) 
(30 June 2018: R7,1 billion (EUR444 million)). The valuation of the European property portfolio is based on a 
weighted average capitalisation rate of 7,5% (30 June 2018: 7,5%). 

Vacancies
The Hystead portfolio remains almost fully let, as reflected in the table below.

Investments in South-Eastern Europe
                                                       Hyprop's                                                
                                                      effective       Rentable        31 Dec       30 June     
                                                         share-           area          2018          2018     
                                                        holding       Dec 2018       vacancy       vacancy     
Vacancies                    City/country                     %             m2             %             %    
Delta City Belgrade          Belgrade, Serbia              60,0         29 862           0,0           0,0    
Delta City Podgorica         Podgorica, Montenegro         60,0         23 753           0,0           0,0    
Skopje City Mall             Skopje, Macedonia             60,0         36 264           0,0           0,0    
The Mall, Sofia              Sofia, Bulgaria               60,0         51 211           0,0          0,37    
CCO East                     Zagreb, Croatia               54,0         48 574           0,2          0,28    
CCO West                     Zagreb, Croatia               54,0         46 760           0,0           0,0    
Total portfolio                                                        236 424           0,0           0,1    

INVESTMENTS IN SUB-SAHARAN AFRICA (EXCLUDING SA) 
The group's investments in sub-Saharan Africa comprise six shopping centres in Nigeria, Zambia and Ghana, with a 
total value of R3,9 billion at 31 December 2018 (30 June 2018: R5,0 billion).

Investments in sub-Saharan Africa (excluding SA)
                                                       Hyprop's                                          
                                                      effective       Rentable        31 Dec       30 June     
                                                         share-           area          2018          2018     
                                                        holding       Dec 2018       vacancy       vacancy     
Vacancies                    City/ country                    %             m2             %             %    
Ikeja City Mall              Lagos, Nigeria                75,0         22 223           3,1           3,1    
Manda Hill                   Lusaka, Zambia                68,8         42 002           7,2           4,1    
Accra Mall                   Accra, Ghana                  17,6         21 311           6,3           6,8    
West Hills Mall              Accra, Ghana                  16,8         28 272          15,6          10,4    
Achimota Mall                Accra, Ghana                  28,1         15 534           3,4           1,9    
Kumasi City Mall             Kumasi, Ghana                 28,1         18 604         12,73          13,0    
Total portfolio                                                        147 946           8,4           6,4    

Hyprop is reviewing its portfolio of investments in Africa, with a view to reducing the exposure. 

Trading conditions in Nigeria, Ghana and Zambia remain difficult with low economic growth, weakening currencies and
political instability. Challenges for tenants include logistical constraints in importing stock and maintaining stock
levels, and increases in effective occupancy costs as a result of currency devaluations. Landlords face a shortage of high
quality retailers following the withdrawal of a number of South African retailers from these markets, leading to growing
vacancy levels. In addition, increased competition from other malls impacted the performance at Manda Hill, which is
expected to recover given its dominant position in the market.

As a result of a decline in the operating performance at Ikeja City Mall, the directors reduced the valuation of the
property by R347,8 million in the current period, of which Hyprop's share is R260,9 million. Ikeja City Mall is reflected
in the consolidated statement of financial position at R1,8 billion after the positive effect of changes in the
Rand:Dollar exchange rate. 

Good progress has been made in identifying potential buyers for certain of the African investments. As a result of
these initiatives, the market conditions described above and the operating performance of certain of the African
investments, other than Ikeja, the Hyprop directors have reviewed the valuations of the African investments and consider 
it prudent to adjust these to align with current market conditions. This resulted in an impairment of Hyprop's investment 
in AttAfrica and Manda Hill of R1,1 billion in the current period.

Distributable earnings 
Accounting income from the African portfolio comprises trading profits from Ikeja City Mall and interest on loans
advanced by Hyprop Mauritius to AttAfrica and Manda Hill. As a consequence of the adverse trading and economic conditions
noted above, distributable earnings from the sub-Saharan African investments reduced from R40,0 million for the period
ended 31 December 2017 to R4,4 million in the current period. Distributable earnings are likely to remain at relatively
lower levels until there are recoveries in the economies in which we are operating.

Vacancies and foot count
Notwithstanding the difficult trading environment, foot counts at Ikeja City Mall and Accra Mall increased by 2% year
on year. Vacancy levels at Achimota and Kumasi malls reduced during the period, with vacancies in the other 
sub-Saharan Africa malls increasing.

Exchange rates
The functional and reporting currencies for the investments in sub-Saharan Africa (excluding SA) and South-Eastern
Europe are the US Dollar and Euro, respectively. The relevant exchange rates used to convert foreign currency amounts 
to Rands were as follows:
                                               31 December 2018                       30 June 2018                   
                                                              Half year-end                         Year-end     
                                           Average rate           spot rate      Average rate      spot rate    
                                                      R                   R                 R              R    
US Dollar                                         14,18               14,38             12,47          13,70    
Euro                                              16,32               16,48             15,32          16,00    
Realised average exchange rate - USD                                                    12,53                   
Realised average exchange rate - Euro             17,04                                 14,80                   

The realised average exchange rate is the weighted average of the actual exchange rates at which foreign currency
dividends were received in South Africa and converted to Rand.

NET ASSET VALUE
The group's net asset value at 31 December 2018 was R99,87 per share, equating to a premium of 22,5% to the share
price at that date of R81,50. 

Borrowings
In March 2018, Moody's Investor Services Inc (Moody's) conducted a rating review and placed Hyprop on a negative
outlook. On 13 February 2019, following a further review, Moody's lowered Hyprop's credit rating from Baa3 to Ba1.
Concurrently, Moody's lowered Hyprop's long-term national scale issuer rating to Aa3.za from Aa1.za and affirmed 
the short-term national scale rating of Prime-1.za.

The main reason cited for the decrease in the rating is that Moody's estimates that Hyprop's debt-to-asset ratio,
adjusted for the full consolidation of Hystead, increased to 41% at 30 June 2018 from 33,4% in 2017, as a result of 
debt funded acquisitions in Eastern Europe. Moody's calculate this ratio as 38,6% when considering only the portion of 
the Hystead gross debt guaranteed by Hyprop. Moody's further stated that Hyprop will rely on external financing to cover 
R5 billion of debt coming due in the next 18 months, including the Hystead debt that it guarantees.

Hyprop's debt-to-asset ratio, as calculated by Hyprop taking into account Hyprop's attributable share of the net
assets of Hystead, the full Hystead debt guaranteed by Hyprop, and the back-to-back security Hyprop holds from PDI 
in relation to the guarantees, was 32,6% at 30 June 2018.

Hyprop has taken cognisance of Moody's comments and is taking steps to address the issues raised, including a review
of the local and off-shore funding strategies. Hyprop has historically been able to refinance its debt with no
difficulties and based on interactions with its major lenders, remains confident of its ability to continue to do so.

Details of the Group's borrowings (including Hystead borrowings guaranteed by Hyprop) are set out in the 
table below.
 

Debt summary                                                                                               
                                                   Group statement             Hyprop's           Hyprop's 
                                                      of financial         Attributable       Attributable 
                                                          position                share              share 
                                                  31 December 2018     31 December 2018       30 June 2018 
                                                                Rm                   Rm                 Rm 
South African debt                                           3 199                3 199              2 950 
Bank debt                                                      600                  600                600 
Corporate bonds                                              2 599                2 599              2 350 
USD (Rand equivalent)                                        5 204                4 744              4 513 
Total consolidated debt                                      8 403                7 943              7 463 
Debt at fixed rates (excludes EUR funding)                                                                 
 South African debt                                                              101,6%             113,6% 
 USD debt (Rand equivalent)                                                       58,1%              63,5% 
Maturity of interest rate swaps                                               2,5 years          3,1 years 
 South African debt                                                           2,9 years          3,3 years 
 USD debt (Rand equivalent)                                                   2,0 years          2,4 years 
Maturity of facilities                                                        2,7 years          3,1 years 
 South African debt                                                           3,3 years          3,8 years 
 USD debt (Rand equivalent)                                                   2,2 years          2,7 years 
Cost of funding                                                                    6,8%               6,6% 
 South African debt                                                                9,5%               9,4% 
 USD debt                                                                          5,0%               4,8% 
Debt capital market (DCM) % of total debt                                           20%                21% 
Loan-to-value                                                                                              
Total consolidated debt                                      8 403                7 943              7 463 
EUR (Rand equivalent)1                                                            5 177              4 963 
Total debt                                                   8 403               13 120             12 426 
Cash and cash equivalents                                     (901)                (893)              (704) 
Net borrowings                                               7 502               12 227             11 722 
Portfolio assets                                                                                           
South African assets                                        29 686               29 686             28 983 
Investment property South African portfolio                 29 326               29 326             28 621 
Building appurtenances                                         154                  154                163 
Assets held-for-sale                                           206                  206                199 
USD assets                                                   3 879                3 422              4 471 
EUR assets2                                                                       4 148              3 843 
Portfolio assets                                            33 565               37 256             37 297 
Loan-to-value                                                22,4%                32,8%              31,2% 
1 Hyprop's attributable share of Hystead debt guaranteed by Hystead shareholders
2 Hyprop's attributable share of Hystead NAV (after deducting in-country debt)


South African debt
The South African bank debt is secured against South African investment property, while the DCM funding is unsecured.

On 17 September 2018, a 3,5-year unsecured corporate bond was issued, raising R250 million at an interest rate margin 
of 1,44%. 

US Dollar denominated debt
The Rand value of the US Dollar denominated debt increased from 30 June 2018 to 31 December 2018 mainly as a result of
an increase in the exchange rate used to translate the US Dollar debt to Rands. USD100 million of debt in Hyprop
Mauritius is due for refinancing in August 2019, discussions with potential lenders in respect of which have commenced.

Euro denominated debt
At 31 December 2018, Hyprop had guaranteed EUR360 million of interest-bearing loans advanced by banks to Hystead. This
debt is not consolidated in Hyprop's statement of financial position, however, the financial support results in the
recognition of a financial guarantee in Hyprop's statement of financial position. In exchange for providing guarantees 
on a portion of the debt in excess of Hyprop's 60% shareholding in Hystead, Hyprop receives a credit enhancement fee 
from PDI equivalent to 11% of the dividends declared by Hystead.

During the period, EUR183,1 million of bank loans advanced to Hystead were refinanced for three years at an average
interest rate of 2,0%. This resulted in new financial guarantees with an initial value of R196,6 million being 
recognised, and the derecognition of financial guarantees of R33,7 million relating to the retired debt. 

Board changes
As previously announced:
- Zuleka Jasper was appointed to the board as an independent non-executive director on 5 July 2018;
- Also on 5 July 2018, Wilhelm Nauta joined the board as an executive director;
- Laurence Cohen resigned as financial director with effect from 31 July 2018;
- Brett Till was appointed as CFO, effective 1 October 2018;
- With effect from 30 November 2018, Lindie Engelbrecht resigned from the board. Thabo Mokgatlha has replaced Lindie
  as chair of the audit and risk committee and as a member of the remuneration and nominations committee with effect 
  from 30 November 2018;
- Morn? Wilken joined the board of directors as incoming CEO on 27 December 2018; and 
- Pieter Prinsloo resigned as a director and CEO of Hyprop with effect from 30 January 2019. The board expresses its
  gratitude and thanks to Pieter for his leadership. 

Prospects
Hyprop expects growth in distributions per share for the year ending 30 June 2019 of approximately 2%. This is a
downward revision from the guidance provided in August 2018 of 5% to 7%, the main reasons for which are the decrease 
in distributable earnings from operations in sub-Saharan Africa (other than SA), the anticipated impact of the Edcon
restructuring and the current difficult economic conditions in South Africa.

This guidance is based on the following key assumptions:
- Forecast investment property income is based on contractual rental escalations and market-related renewals;
- Appropriate allowances for vacancies have been incorporated into the forecast;
- No major corporate and tenant failures will occur, including Edcon;
- The proposed Edcon restructuring will commence on 1 April 2019;
- Earnings from offshore investments will not be materially impacted by exchange rate volatility or disruptions in 
  the financial markets; and
- Exchange rates (which have not been hedged) have been assumed at R13,50 and R15,50 to the US Dollar and Euro,
  respectively.

The forecast has not been reviewed or reported on by the company's auditors.

Payment of dividend
A dividend of 385,55078 cents per share for the six months ended 31 December 2018 will be paid to shareholders as
follows:

                                                            2019  
Last day to trade cum dividend                  Monday, 18 March  
Shares trade ex dividend                       Tuesday, 19 March  
Record date                                     Friday, 22 March  
Payment date                                    Monday, 25 March  

Shareholders may not dematerialise or rematerialise their shares between Tuesday, 19 March and Friday, 22 March 2019,
both days inclusive. Payment of the dividend will be made to shareholders on Monday, 25 March 2019. In respect of
dematerialised shareholders, the dividend will be transferred to the CSDP accounts/broker accounts on Monday, 
25 March 2019. Certificated shareholders' dividend payments will be deposited on or about Monday, 25 March 2019.
 
An announcement relating to the tax treatment of the dividend will be released separately.

Basis of preparation
The condensed consolidated interim financial statements (the interim financial statements) for the six months ended 
31 December 2018 were prepared in accordance with International Financial Reporting Standards, IAS 34 Interim 
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, and 
Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies 
Act of South Africa.

All amendments to standards that are applicable to Hyprop for its financial year beginning 1 July 2018 have been 
considered, and, except as described below, the accounting policies applied in these interim financial statements 
are the same as those applied in the group's consolidated financial statements for the year ended 30 June 2018. 
Based on management's assessment, the amendments to the applicable accounting standards and adoption thereof does 
not have a material impact on the group's interim financial statements.

The group has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments with effect from 
1 July 2018.

The effects of initially applying these new standards are the following:
IFRS 9 Financial Instruments
(i)  Classification and measurement of financial assets and financial liabilities
     In applying IFRS 9, the group had to reconsider the classification and measurement of financial assets and 
     liabilities. The following table and the accompanying notes set out the categories under IAS 39 and the new 
     measurement categories under IFRS 9 for each class of the group's financial assets as at 1 July 2018.
     
                                               Original classification       New classification            
     Financial assets                          under IAS 39                  under IFRS 9                  
     Financial asset - Hystead                 Designated as at FVTPL        FVTPL                         
     Derivative instruments - non-current      Designated as at FVTPL        FVTPL                         
     Derivative instruments - current          Designated as at FVTPL        FVTPL                         
     Loans receivable - non-current            Amortised cost                FVTPL and amortised cost      
     Loans receivable - current                Amortised cost                Amortised cost                
     Trade and other receivables               Amortised cost                Amortised cost                
     Cash and cash equivalents                 Amortised cost                FVTPL and amortised cost      
     
     Certain loans receivable, previously classified at amortised cost, are now classified at FVTPL. The group 
     intends to hold the assets to maturity to collect contractual cash flows, however, these cash flows do not 
     consist solely of payments of principal and interest on the principal amount outstanding. Therefore they 
     do not qualify for classification at amortised cost in terms of IFRS 9.

     IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial 
     liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held to maturity, 
     loans and receivables and available for sale. The adoption of IFRS 9 has not had a significant effect on the 
     group's accounting policies related to financial liabilities and derivative financial instruments as the group 
     does not apply hedge accounting to its derivative financial instruments.

(ii) Calculation of impairment losses recognised on financial assets
     IFRS 9 sets out new requirements for assessing the carrying amounts of financial assets at 1 July 2018 (the 
     date of initial adoption) and impairment requirements, including consideration of expected credit losses (ECLs) 
     and credit impaired financial assets. The application of IFRS 9 did not have any material effect on the carrying 
     amounts of financial assets at 1 July 2018. The loans receivable from AttAfrica and Manda Hill are not considered 
     to be credit impaired as interest payments continue to be made for a large proportion of the interest accrued on 
     these loans during the period.

     Further disclosure with regard to the qualitative and quantitative impact of the implementation of IFRS 9 will 
     be provided in the full set of financial statements for the year ending 30 June 2019.

IFRS 15 Revenue from Contracts with Customers
The adoption of IFRS 15 Revenue from Contracts with Customers had no material impact on either the timing or amount 
of the group's revenue.

Going concern
The interim financial statements have been prepared on the going concern basis as the directors have reason to 
believe that the company and its subsidiaries have adequate resources to continue operations for the foreseeable 
future.

Executive management have already engaged with banks and advisers on refinancing the current portion of 
interest-bearing borrowings of R2,5 billion. Hyprop has historically been able to refinance its debt with no 
difficulties and, based on interactions with its major lenders, remains confident of its ability to continue 
to do so.

These condensed consolidated interim financial statements have not been reviewed or audited by Hyprop's independent 
external auditors. The financial information was prepared under the supervision of Brett Till CA(SA) in his capacity 
as chief financial officer.

On behalf of the board

GR Tipper            MC Wilken           BC Till    
Chairman             CEO                 CFO        

1 March 2019


Investment in Hystead Limited

The following disclosures are made for the group's 60% investment in Hystead which is accounted for 
as a financial asset, measured at fair value through profit or loss.
                                                                   Six months           Six months         12 months    
                                                             31 December 2018     31 December 2017      30 June 2018    
                                                                         R000                 R000              R000    
(a)  Statement of profit or loss and other 
     comprehensive income                                                                                
(i)  Net change in fair value of financial asset                     (213 364)             (41 393)           87 761    
       Change in fair value of financial asset                        (16 799)                               121 576    
       Fair value adjustment for new financial guarantees issued     (196 565)             (41 393)          (33 815)    
(ii) Distributions                                                                                      
     Distributions received/dividends                                 111 434               76 566           180 525    
     Credit enhancement fee received*                                  20 425               22 996            46 672    
     Net distributable earnings                                       131 859               99 562           227 197    
     * included in the consolidated statement of profit or 
       loss and other comprehensive income under other income  
 
(b)  Statement of financial position                                                                               
     Financial asset                                                                                    
     Capital contributions - at cost                                   71 695                   (1)           30 979    
     Fair value of financial asset                                    104 777                                121 576    
     Balance at end of period/year                                    176 472                                152 555    
     Reconciliation of statement of financial position
     Opening balance                                                  152 555                                          
     Capital contributions                                             40 716                   (1)           30 979    
     Change in fair value of financial asset                          (16 799)                               121 576    
     Balance at end of period/year                                    176 472                                152 555    
     (1) Value less than R1 000                                                                                

                                                                  Six months            Six months         12 months    
                                                            31 December 2018      31 December 2017      30 June 2018    
                                                                     Vacancy               Vacancy           Vacancy    
                                              Rentable                     %                     %                 %    
                                                  area                                                                  
(c)  Property disclosures                                                                                               
     Vacancies                                                                                                          
     Total portfolio                           236 424                   0,0                   0,0               0,1    

                                                                  Six months            Six months         12 months    
                                                            31 December 2018      31 December 2017      30 June 2018    
                                                                        R000                  R000              R000    
     Hyprop's share of Hystead's investment property               7 585 810             4 082 900         7 111 183    
     Debt - asset-backed finance                                                                                 
     Total asset-backed finance                                    3 448 399               515 088         3 302 082    
     Debt - loans with recourse to Hyprop                                                                                 
     Total loans with recourse to Hyprop                           5 882 798             5 331 230         5 684 140    
     Hyprop's effective economic interest (%)                             71                    72                73    
     Equity interest (%)                                                  60                    60                60    
     Guarantee as % of dividends/distribution                             11                    12                13    
     Closing exchange rate EUR:ZAR used in above disclosures         16,4848               14,7995           16,0014    
     Average exchange rate EUR:ZAR used in above disclosures         16,3245               15,7836           15,3245    

Fair value disclosures
Fair value disclosures on financial instruments in respect of June 2018 have not changed. Please refer 
to disclosures in Hyprop's integrated report for the year ended June 2018 on Hyprop's website.

Financial guarantees

Hyprop and PDI Investment Holdings Limited (PDI) have guaranteed EUR400,8 million of loans advanced by 
banks to Hystead as follows:
- Hyprop   EUR360,8 million (90%)
- PDI      EUR40 million (10%)

PDI has provided back-to-back guarantees to Hyprop for a further EUR46,8 million (equivalent to 11,7% 
of the EUR400,8 million guaranteed debt).

For the remaining EUR73,5 million of debt (18,3% of the EUR401 million guaranteed debts) which Hyprop has 
guaranteed in excess of its pro rata 60% interest in Hystead, Hyprop receives 60% of the related dividends 
declared to PDI from Hystead, which equates to 11% (60% x 18,3%) of the dividends paid by Hystead (the 
credit enhancement fee).

This agreement is in place until May 2021, when the shareholders' agreement between Hyprop and PDI, as 
shareholders in Hystead, expires.

The guarantees issued by Hyprop are recognised as financial liabilities on the statement of financial 
position, initially at fair value.

During the financial period loans of EUR242 million (EUR202 million of which were guaranteed by Hyprop) 
were refinanced and Hyprop provided new guarantees for EUR198 million of the new loan. This resulted in 
the derecognition of the guarantees given in respect of the expired loans and recognition of the new 
guarantees as financial liabilities.

The initial fair values of the guarantees issued are determined by an independent specialist and are 
dependent on estimated credit spreads, forecast cash flows and forecast interest rates, which require 
significant judgement.

Details of movement in financial guarantees
                                                                               Six months            Six months    
                                                                         31 December 2018      31 December 2017    
                                                                                     R000                  R000    
Balance at beginning of the period/year                                           185 686               163 855    
Net change                                                                        162 891                29 409    
Recognition of new financial guarantees (refer to financial asset)                196 565                41 393    
Derecognition of expired guarantees                                               (33 674)              (11 984)    
Balance at end of period/year                                                     348 577               193 264    

Financial instruments
A Accounting classifications and fair values
  The following table reflects the carrying amounts and fair values of financial assets and financial 
  liabilities, including their levels in the fair value hierarchy. It does not include fair value 
  information for financial assets and financial liabilities not measured at fair value if the 
  carrying amount is a reasonable approximation of the fair value. The risks associated with the 
  balances are also indicated.
                                                               Carrying amount                  Fair value and fair value 
                                                                                                hierarchy
                                                                                                (The group has no financial  
                                                                                                instruments classified as level 1)
                                                      Fair value                                                                   
                                                         through                                                                   
                                                          profit      Amortised                                                   
                                                         or loss           cost         Total    Level 2    Level 3      Total    
                                                            R000           R000          R000       R000       R000       R000    
  December 2018                                                                                                                   
  Financial assets measured at fair value                                                                                         
  Financial asset                                        176 472                      176 472               176 472    176 472    
  Derivative instruments - non-current                     4 566                        4 566      4 566                 4 566    
  Derivative instruments - current                         6 937                        6 937      6 937                 6 937    
                                                         187 975                      187 975     11 503    176 472    187 975    
  Financial assets not measured at fair value                                                                                     
  Loans receivable - non-current                         423 881      1 630 283     2 054 164                                     
  Loans receivable - current                                             19 256        19 256                                     
  Trade and other receivables                              7 348        244 898       252 246                                     
  Cash and cash equivalents (including held-for-sale)        712        901 122       901 834                                     
                                                         431 941      2 795 559     3 227 500                                     
  Financial liabilities measured at fair value                                                                                    
  Derivative instruments - non-current                    23 471                       23 471     23 471                23 471    
  Derivative instruments - current                         2 545                        2 545      2 545                 2 545    
                                                          26 016                       26 016     26 016                26 016    
  Financial liabilities not measured at fair value                                                                                
  Long-term portion of interest-bearing borrowings                    5 872 230     5 872 230                                     
  Short-term portion of interest-bearing borrowings                   2 531 009     2 531 009                                     
  Financial guarantees - non-current                                    348 577       348 577                                     
  Trade and other payables                                10 886        374 853       385 739                                     
                                                          10 886      9 126 669     9 137 555                                     


                                                               Carrying amount                  Fair value and fair value 
                                                                                                hierarchy
                                                                                                (The group has no financial  
                                                                                                instruments classified as level 1)
                                                      Designated
                                                   at fair value                                                                   
                                                         through                                                                   
                                                          profit      Amortised                                                   
                                                         or loss           cost         Total    Level 2    Level 3      Total    
  December 2017                                             R000           R000          R000       R000       R000       R000
  Financial assets measured at fair value
  Financial asset                                             (1)                                                (1)          
  Derivative instruments - current                         8 894                        8 894      8 894                 8 894    
                                                           8 894                        8 894      8 894                 8 894    
  Financial assets not measured at fair value                                                                                     
  Loans receivable - non-current                                      2 646 106     2 646 106                                     
  Loans receivable - current                                             17 302        17 302                                     
  Trade and other receivables                                           221 631       221 631                                     
  Cash and cash equivalents                                           1 094 882     1 094 882                                     
                                                                      3 979 921     3 979 921                                     
  Financial liabilities measured at fair value                                                                                    
  Derivative instruments - non-current                    61 822                       61 822     61 822                61 822    
  Derivative instruments - current                           821                          821        821                   821    
                                                          62 643                       62 643     62 643                62 643    
  Financial liabilities not measured at fair value                                             
  Long-term portion of interest-bearing borrowings                    5 648 768     5 648 768  
  Short-term portion of interest-bearing borrowings                   2 695 583     2 695 583  
  Financial guarantees - non-current                                    193 264       193 264  
  Trade and other payables                                              405 314       405 314  
                                                                      8 942 929     8 942 929  
  (1) Value less than R1 000

B Measurement of fair value
  Details of valuation techniques
  The following tables show the valuation techniques used in measuring level 2 and 3 fair values, as well 
  as the significant unobservable inputs used:

                                                                                                     Inter-relationship     
                                                                                                     between significant    
                                                                               Significant           unobservable inputs    
                                                                               unobservable          and fair value         
  Type                    Valuation technique                                  inputs                measurement            
  Financial asset -       Discounted cash flow: The valuation model            Annual growth         The estimated          
  Hystead                 uses the present value of the future net cash        rate and terminal     fair value would       
  Limited (Hystead)       flows expected to be generated by the                growth rate           increase               
                          underlying shopping centres after deducting                                (decrease) if:         
                          the head office costs within the Hystead             Exit cap rates        - The annual           
                          group. The cash flow projections include             and                     growth rate is       
                          specific estimates for 10 years. The expected        discount rates          higher (lower);      
                          net cash flows are discounted using a risk                                   or                   
                          adjusted discount rate as well as a risk                                   - The exit cap         
                          adjusted cap rate.                                                           rate is lower        
                                                                                                       (higher)  

  Derivatives             Market comparison: The valuation of the              Not applicable        Not applicable         
                          derivative instruments was determined by             - level 2             - level 2              
                          discounting the future cash flows using the                                                       
                          JIBAR or OIS swap curves as applicable.                                                           
                          Similar contracts are traded in active markets                                                    
                          and the quotes reflect actual transactions in                                                     
                          similar instruments.                                                                              

  Transfers between levels                                                                              
  There were no transfers in either direction between levels 1 and 2 during the current or prior periods, 
  nor were there any transfers out of level 2 or 3 during the current or prior periods.
  
  Valuation assumptions
  
  Level 3 - significant unobservable inputs          Six months       Six months           12 months    
  (% unless otherwise stated)                       31 December      31 December             30 June    
                                                           2018             2017                2018    
  Financial asset - Hystead Limited (Hystead)                                                           
  Annual growth rate                                          0         Between             Between     
                                                                     0,2 and 2,6      (17,8) and 0,6

  Weighted average annual growth rate                         0              1,2               (0,3)    
  Terminal growth rate                                  Between           Between            Between     
                                                      1,8 and 2        0 and 0,4           0,8 and 2
  
  Weighted average terminal growth rate                     1,8              0,2                 1,5
  
  Discount rate                                         Between          Between             Between     
                                                        6 and 8          7 and 8             7 and 8    
  Weighted average discount rate                            6,9              7,4                 7,4
  
  Exit capitalisation rates                             Between          Between             Between     
                                                      5 and 7.3      5.5 and 7.3         5.3 and 7.3  
 
  Weighted average exit capitalisation rate                 5,8              6,2                 6,0    


Related-party disclosures

Related parties and related-party transactions
The group, in the ordinary course of business, entered into various sale and purchase transactions on an arm's 
length basis at market rates with related parties.

Related parties with whom the group transacted during the period were:
                                                            Six months            Six months         12 months    
                                                      31 December 2018      31 December 2017         June 2018    
                                                                  R000                  R000              R000    
AttAfrica - co-investor and joint venture                                                                         
  Loan receivable                                            1 630 283             2 123 744         2 375 009    
  Interest received                                            120 067               111 602           221 568    
Manda Hill Mauritius - joint venture                                                                              
  Investment in joint ventures                                                        10 102                      
  Loan receivable                                              423 881               522 362           543 712    
  Interest received                                             13 927                10 238            19 689    
Hystead Limited (UK) - joint venture                                                                              
  Financial asset                                              176 472                   (1)           152 555    
  Asset management and accounting fee income                    12 714                 7 443            17 338    
  Dividend declared/received                                   111 434                76 566           180 525    
  Dividends receivable included in trade 
  and other receivables                                         91 101                48 709            76 484    
  Loan receivable                                                                                       40 716    
  Other receivables                                                987                 4 432                      
  Debt guaranteed by Hyprop (Rand equivalent)                5 882 798             5 331 230         5 684 140    
    Fair value of financial guarantees reflected on            
    statement of financial position                            348 577               193 264           185 686
    Investment properties mortgaged to                  
    secure guarantees on behalf of Hystead                  12 548 175            10 353 189        13 633 426    
PDI Investment Holdings Limited - 
co-investor and directorship                                                    
  Credit enhancement fee: income                                20 425                22 996            46 672    
  Credit enhancement fee: receivable 
  included in trade                      
  and other receivables                                         16 698                14 613            17 789
Directors' remuneration                                                                                           
  Independent non-executive directors                            1 762                 1 463             2 961    
  Non-executive directors                                          370                   339               686    
  Total executive directors                                     11 620                12 035            15 760    
    Basic salary                                                 4 172                 3 163             6 516    
    Pension fund contributions                                     315                   255               606    
    Performance bonus (paid in December)                         5 894                 5 257             5 257    
    Share incentive scheme (IFRS 2 charge)                       1 042                 3 184             3 184    
    Other benefits                                                 197                   177               197    
Directors' interest in Hyprop shares                         3 762 311             4 432 941         4 380 796    
Independent non-executive directors                             28 440                28 440            28 440    
Non-executive directors                                      3 206 170             3 878 000         3 825 855    
Executive directors                                            527 701               526 501           526 501    
(1) Values less than R1 000

Corporate information

Directors
GR Tipper*! (Chairman)
MC Wilken (CEO)
BC Till (CFO)
AW Nauta
KM Ellerine*
Z Jasper*!
MJ Lewin*!
N Mandindi*!
TV Mokgatlha*!
L Norval*
S Shaw-Taylor*!
*Non-executive  !Independent 

Registered office
Second Floor 
Cradock Heights 
21 Cradock Avenue 
Rosebank
(PO Box 52509, Saxonwold, 2132)

JSE bond issuer code: HYPI

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue 
Rosebank
PO Box 61051, Marshalltown, 2107

Company secretary
CIS Company Secretaries Proprietary Limited

Sponsor
Java Capital 

Investor relations
Singular Systems IR
Telephone +27 10 003 0661  
Email: michele@singular.co.za

www.hyprop.co.za
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