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1. Accounting policies and presentation of annual financial statements
continued
1.10 Investment property and development property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under development
for such purposes).
Investment property is initially recognised at cost including transaction costs. Cost includes initial costs as well as costs incurred
subsequently to extend or refurbish investment property.
Investment property is subsequently measured at fair value as determined on a semi-annual basis by an independent registered
valuer. The valuations are done on an open-market basis and valuers use the discounted cash flow method. Gains or losses
arising from changes in fair value, after deducting the straight-line lease income adjustment, are included in net profit or loss for
the period in which they arise. These gains or losses are transferred to non-distributable reserves in the statement of changes
in equity.
Realised gains or losses arising on the disposal of investment properties are recognised in net profit or loss for the year and
transferred to non-distributable reserves in the statement of changes in equity.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use
and no future economic benefits are expected from the property. Any gain or loss arising on derecognition of the property is
included in profit or loss in the period in which the property is derecognised. The gain or loss is calculated as the difference
between the net disposal proceeds and the carrying amount of the asset.
Investment property under development is recorded at fair value. If the fair value cannot be reasonably determined it is stated
at cost.
Investment property under development is categorised as being under development until development work ceases and the
property becomes income producing, at which time the categorisation “under development” will cease and the property will
be included with other investment property.
1.11 Non-current assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale
rather than through continuing use, are classified as held for sale. This condition is regarded as met only when the sale is highly
probable and the non-current asset or disposal group is available for sale in its present condition subject only to terms that are
usual and customary for sales of such assets. For the sale to be highly probable, the appropriate level of management must be
committed to a plan to sell the asset or disposal group.
Investment property classified as held for sale is measured in accordance with IAS 40
Investment Property
at fair value with gains
and losses on subsequent measurement being recognised in profit or loss.
Disposal groups and non-current assets held for sale are presented separately from other assets and liabilities on the statement
of financial position. Prior periods are not reclassified.
1.12 Financial instruments
Financial instruments are contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
Financial assets and financial liabilities are recognised on the statement of financial position when the group becomes party to
the contractual provisions of the instrument. The group classifies financial instruments, or their component parts, on initial
recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual
arrangement. Financial assets and financial liabilities are initially measured at fair value. All transaction costs relating to financial
instruments measured at fair value through profit or loss are immediately expensed.
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Hyprop Investments Limited
Integrated Report 2015