NOTES TO THE FINANCIAL STATEMENTS — NOTE 6

6. Investment in joint ventures
      Proportion of ownership interest and
voting power held by the group		  
Name of joint venture Principal activity Place of
incorporation
and operation		 June
2016		   June
2015		  
AttAfrica Limited (AttAfrica) Investing in indirect development or income producing property investments in sub-Saharan Africa (excluding SA) Mauritius 37,5%   37,5%  
Manda Hill Mauritius Limited (Manda Hill Mauritius) Property investment company Mauritius 50%   50%  
Hystead Limited (Hystead) Investing in income producing property investments in South-Eastern Europe United Kingdom 60%      
6.1 37,5% — Joint venture — AttAfrica Limited (AttAfrica)
  Hyprop Mauritius has a 37,5% interest in AttAfrica (formerly Atterbury Africa Limited), a Mauritius-based property investment company. The initial investment was made on 20 November 2012. Hyprop Mauritius has 50% of the voting rights on the board of AttAfrica. Hyprop Mauritius accordingly has joint control of AttAfrica.
  June 2016 
R000 		   June 2015 
R000 		  
Initial investment in equity #   #  
Share in equity-accounted profits        
# Less than R1 000        
         
At 30 June 2016, Hyprop Mauritius’ 37,5% share of AttAfrica’s liabilities exceeded its share of the assets by R130 million (2015: R39 million).        
Summary of audited financial information of AttAfrica is as follows (all figures reflect 100% of AttAfrica):        
Summary of audited statement of profit or loss and other comprehensive income        
Share of losses of associates       (3 575)   
Other income  48 400     44 397    
Property income  271 819     101 861    
Operational expenses  (137 223)    (223 802)   
Property expenses  (82 223)    (26 627)   
Interest income  91 539     45 964    
Finance cost  (371 483)    (181 409)   
Fair value gain on investment property  5 818          
Share of (losses)/profits of joint venture  (23 474)    121 871    
Loss before taxation  (196 827)    (121 320)   
Taxation  (30 694)    9 600    
Loss for the year  (227 521)    (111 720)   
Other comprehensive loss             
Foreign currency translation reserve  23 010     (5 730)   
Total comprehensive loss for the year  (204 511)    (117 450)   
Attributable to:             
Equity holders of the company  (163 316)    (59 693)   
Non-controlling interests  (41 195)    (57 757)   
Hyprop’s share of profits and losses of AttAfrica             
   — Share of gain on acquisition of Manda Hill Centre(1)        24 093    
   — Share of losses from joint venture        (24 093)   
Summary of audited statement of financial position             
Assets             
   Non-current assets  4 695 644     3 134 515    
   Investment property  2 877 074     1 787 992    
   Investment in associates        2 419    
   Investment in joint venture  426 421     374 243    
   Loan receivable  1 365 761     956 310    
   Deferred taxation  21 139     10 874    
   Property, plant and equipment  5 249     2 677    
Current assets  462 388     287 480    
   Trade and other receivables  413 103     48 321    
   Cash and cash equivalents  49 285     239 159    
Total assets  5 158 032     3 421 995    
Equity and liabilities             
Capital and reserves  (190 258)    38 613    
   Shareholders’ deficit  (332 287)    (104 765)   
   Non-controlling interest  156 106     138 373    
   Foreign currency translation reserve  (14 077)    5 005    
Non-current liabilities  5 141 012     3 235 094    
   Borrowings  5 141 012     3 235 094    
Current liabilities  207 278     148 288    
   Trade and other payables  179 232     148 288    
   Deferred taxation  28 046          
Total equity and liabilities  5 158 032     3 421 995    
Unrecognised share of losses in AttAfrica  129 887     39 287    
Commitments and contingent liabilities relating to AttAfrica             
Guarantees  742 305     469 545    
(1) Relates to restructure of AttAfrica, which took place on 1 July 2014.
6.2 50% — Joint venture — Manda Hill Mauritius Limited (Manda Hill Mauritius)
  Hyprop Mauritius has a 50% interest in Manda Hill Mauritius, a Mauritius-based property investment company. AttAfrica holds the other 50% of the shares in Manda Hill Mauritius. Hyprop Mauritius’ effective economic interest in Manda Hill Mauritius is 68,75%. The effective date of the investment is 1 July 2014. Hyprop Mauritius has 50% of the voting rights on the board of Manda Hill Mauritius. Hyprop Mauritius accordingly has joint control of Manda Hill Mauritius.
  June 2016 
R000 		   June 2015 
R000 		  
Initial investment in equity #   #  
# Less than R1 000        
As at 30 June 2016, Hyprop Mauritius’ 50% share of Manda Hill Mauritius’ assets exceeded its liabilities by R57 million (2015: R82 million).        
Summary of audited financial information of Manda Hill Mauritius is as follows (all figures reflect 100% of Manda Hill Mauritius):        
Summary of audited statement of profit or loss and other comprehensive income        
Rental income 179 388     139 374    
Property income        16 061    
Gain on bargain purchase        128 494    
Other income  52     5 424    
Operational expenses  (31 481)    (29 656)   
Other expenses  (104 289)    (31 745)   
Finance cost  (119 033)    (85 735)   
Profit before taxation  (75 363)    142 217    
Taxation  (6 651)    (432)   
(Loss)/profit for the year  (82 014)    141 785    
Other comprehensive loss             
Foreign currency translation reserve  54 343     21 399    
Total comprehensive (loss)/income for the year  (27 671)    163 184    
Attributable to:             
Equity holders of the company  (27 671)    163 184    
Hyprop’s share of (losses)/profits of Manda Hill Mauritius  (41 007)    70 893    
   — Share of gain on bargain purchase        64 247    
   — Share of (loss)/income from joint venture  (41 007)    6 646    
Summary of audited statement of financial position            
Assets            
Non-current assets  2 208 512     1 924 637   
   Investment property  2 190 940     1 896 202   
   Property, plant and equipment  17 572     28 435   
Current assets  26 855     8 871   
   Cash and cash equivalents  3 534     4 385   
   Trade and other receivables  23 321     4 486   
Total assets  2 235 367     1 933 508   
Equity and liabilities            
Capital and reserves  114 115     163 184   
   Shareholders’ equity  59 772     141 785   
   Foreign currency translation reserve  54 343     21 399   
Non-current liabilities  2 098 725     1 749 089   
   Shareholder loans  1 249 235     1 025 379   
   Borrowings  849 488     705 946   
   Other payables  2     17 764   
Current liabilities  22 527     21 235   
   Trade and other payables  22 527     21 235   
Total equity and liabilities  2 235 367     1 933 508   
Hyprop’s share of net assets in Manda Hill Mauritius  57 057     80 996   
   50% of net assets of Manda Hill Mauritius  57 057     70 893   
   Cost of “A” shares in Manda Hill Centre  10 103     10 103   
   Impairment of “A” shares in Manda Hill Centre  (10 103)        
Carrying amount  57 057     80 996   
Commitments and contingent liabilities relating to Manda Hill Mauritius          
Guarantees Nil Nil
6.3 60% — Joint venture (JV) — Hystead Limited (Hystead)
  Hyprop has a 60% interest in Hystead, a UK-based property investment company. The effective date of the investment is 3 December 2015.

The shareholders’ agreement between Hyprop and the remaining 40% shareholder (the JV partner) includes reserve matters and voting rights such that Hyprop has effective joint control of Hystead.

The purpose of Hystead is to invest (directly or indirectly) in shopping centres in South-Eastern Europe.

The fair value of Hyprop’s investment in Hystead has been determined as R1,5 billion (EUR89,8 million) at the date of acquisition. The day-one gain of R1,5 billion (EUR89,8 million) was deferred (in accordance with IFRS), since the valuation method includes assumptions which are derived from unobservable inputs.

Hyprop provided a financial guarantee to fund the acquisition of Hystead’s investments in the Delta City shopping malls in Serbia and Montenegro. (Refer to note 35 — Financial instruments — Fair values and risk management.) The value of the guarantee provided by Hyprop was determined to be negligible. The JV partner has also provided an indemnity and security equivalent to 10% of the acquisition cost.

Since credit enhancement was provided by Hyprop the JV partner will reimburse Hyprop in the form of an increased right by Hyprop to dividends from Hystead (ie disproportionate to shareholding), while the guarantee is in place. Hyprop has accounted for its economic interest in Hystead in determining the fair value of its investment.

  June 2016 
R000 		   June 2015
R000		  
Percentage ownership interest 60%          
Percentage entitlement to dividends (economic interest) 78%          
Dividends received by Hyprop  31 944          
         
Summary of audited statement of financial position             
(all figures below reflect 100% of Hystead unless otherwise indicated):             
Non-current assets  3 385 254          
Current assets  124 313          
Total assets  3 509 567          
Non-current liabilities  2 523 323          
Current liabilities  921 153          
Capital and reserves  65 091          
Total equity and liabilities  3 509 567          
Group’s share of net assets (60%) 39 055          
         
Summary of audited statement of profit or loss and other comprehensive income             
Revenue  182 354          
Expenses  (60 426)         
Taxation  (7 812)         
Profit for the year  114 116          
         
The following table shows a reconciliation from the opening balances to the closing balances for the Hystead investment:             
Balance at 1 July             
Acquisition of 60% equity investment in Hystead at cost  #          
Net change in fair value of right to receive dividends  1 472 754          
Deferral of unrealised fair value change, calculated with reference to unobservable inputs  (1 472 754)      
Balance at 30 June        
# Values less than R1 000
6.4 Reconciliation of share of net assets to statement of financial position
  June 2016
R000		   June 2015
R000		  
AttAfrica        
Manda Hill Mauritius 57 057   80 996  
Hystead        
  57 057   80 996  

NOTES TO THE FINANCIAL STATEMENTS — NOTE 6