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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
101
1.
Accounting policies and presentation of consolidated financial statements
continued
1.8
Investments in associates and joint ventures
continued
When the reporting period of the investor is different to that of the associate or joint venture, the associate or joint venture prepares, for the use of
the investor, financial statements as at the same date as the consolidated financial statements of the investor.
Where a group entity transacts with an associate or joint venture of the group, unrealised profits and losses are eliminated to the extent of the group’s
interest in the relevant associate or joint venture.
1.9
Building appurtenances and tenant installations
Building appurtenances and tenant installations are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation
is provided on all building appurtenances and tenant installations to write down the cost, less residual value, by equal instalments over their useful
lives as follows:
■■
Tenant installations – period of lease
■■
Building appurtenances – three to fifteen years.
Subsequent expenditure is capitalised when it is probable that future economic benefits will flow to the group and its cost can be reliably measured.
All other expenditure is recognised as an expense in the period in which it is incurred. Gains and losses on the disposal of building appurtenances and
tenant installations are recognised in profit or loss and are calculated as the difference between the price and the carrying value of the item sold.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
1.10 Investment 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, costs incurred subsequently to extend or
refurbish investment property as well as the cost of any development rights.
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 rental income accrual, 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.
In instances when investment property is sold, but not yet transferred to the purchaser at year-end, the fair value is determined as the sale price.
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.
Realised gains or losses arising on the disposal of investment properties are recognised in profit or loss for the year and transferred to non-distributable
reserves in the statement of changes in equity.
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 in 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 in 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.
Derecognition of financial instruments
The group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is created or retained by the entity is recognised as a separate asset or liability. The group
derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.