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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
99
Notes to the consolidated
financial statements
for the year ended 30 June 2017
1.
Accounting policies and presentation of consolidated financial statements
1.1
Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the JSE Limited Listings Requirements and the requirements of the Companies Act of South Africa, 2008.
1.2
Basis of preparation
These consolidated financial statements have been prepared on the historical cost basis, except for the measurement of investment properties,
investment property classified as held-for-sale and certain financial instruments at fair value, and incorporate the principal accounting policies set out
below. All values are presented in Rand thousands unless indicated otherwise.
Item
Measurement basis
Investment property
Fair value
Derivative financial instruments
Fair value
Investment property held-for-sale
Fair value
Joint venture – Hystead
Fair value
Fair value adjustments do not affect the determination of distributable earnings, but have an effect on net asset value per share to the extent that
such adjustments are made to the carrying values of assets and liabilities. All accounting policies applied in the preparation of these consolidated
financial statements are consistent with those applied in the consolidated financial statements for the year ended 30 June 2016. Various new
accounting standards, or revisions to current accounting standards, have been issued with effective dates applicable to future consolidated financial
statements. Refer to
note 1.25 – Standards issued but not yet effective
for further information.
Going concern
The directors consider that the group and its subsidiaries have adequate resources to continue operating for the foreseeable future and that it is
appropriate to adopt the going concern basis in preparing these consolidated financial statements.
The directors have satisfied themselves that the group and its subsidiaries are in a sound financial position and that they have access to sufficient
borrowing facilities to meet their foreseeable cash requirements.
1.3
Basis of consolidation
These consolidated financial statements incorporate the consolidated financial statements of the company and entities controlled by the company.
Control is achieved when the company:
■■
Has power over the investee
■■
Is exposed, or has rights, to variable returns from its involvement with the investee
■■
Has the ability to use its power to affect its returns.
The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control listed above.
The consolidated financial statements incorporate the assets, liabilities, income, expenses and cash flows of the group. The results of subsidiaries
acquired or disposed of during the year are included in the consolidated financial statements from the date of acquisition or up to the date of
disposal, as applicable. All intragroup transactions, unrealised profits and balances between group entities are eliminated on consolidation.
1.4
Business combinations
The group applies the acquisition method in accounting for business combinations. The consideration transferred by the group to obtain control of
a subsidiary is calculated as the sum of the acquisition date fair values of assets transferred, liabilities incurred and the equity interests issued by the
group, which includes the fair value of any asset or liability arising from the acquisition. Acquisition costs are expensed as incurred.
The group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been recognised
in the acquiree’s annual financial statements prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition date fair
values.
Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of (a) fair value of consideration
transferred, (b) the recognised amount of any non-controlling interest in the acquiree and (c) acquisition date fair value of any existing equity interest
in the acquiree, over the acquisition date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated
above, the excess amount (ie gain on bargain purchase) is recognised in profit or loss immediately.
Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
When the group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests
and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured
at fair value when control is lost.