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NOTES TO THE FINANCIAL STATEMENTS
continued
for the year ended 30 June 2016
Hyprop Investments Limited
Group annual financial statements 2016
110
1.
Accounting policies and presentation of financial statements
continued
1.24 Key estimations and uncertainties
Estimates and assumptions are an integral part of financial reporting and as such have an impact on the amounts reported for the group’s
income, expenses, assets and liabilities. Judgement in these areas is based on historical experience and reasonable expectations relating to
future events.
Information on the key estimations and uncertainties that have the most significant effect on amounts recognised is set out below:
Investment property valuations
The valuation of investment properties requires judgement in the estimation of future cash flows, appropriate discount rates and capitalisation
rates.
Refer to note 2 – Investment property
.
Interests in co-ownerships
In terms of the co-ownership agreements for Canal Walk and The Glen, material capital expenditure requires mutual consent of the
co-owners. The majority of capital expenditure (subject to an annual increase in terms of an inflation adjusted formula) undertaken is
material, and accordingly these centres are not considered to be solely controlled by Hyprop.
The interests in these centres are therefore treated as joint operations.
Business combination versus asset acquisition
During the year the group acquired interests in Ikeja City Mall in Lagos, Nigeria as well as Delta City Malls in Belgrade, Serbia and Podgorica,
Montenegro. Management assessed the acquisitions during the year and concluded that the acquisitions are business combinations in terms
of IFRS 3
Business combinations
and were therefore accounted for in terms of that standard. In the opinion of management, the properties
acquired constitute businesses as defined in terms of IFRS 3
Business combinations
.
Control over an investee
Hystead Limited (Hystead) is the investment holding company for Hyprop’s investments in South-Eastern Europe. Hyprop has a 60% equity
interest in Hystead.
Management assessed the acquisition of its interest in Hystead and whether it has control over Hystead. It was concluded that the company
has joint control over Hystead.
Investments in joint ventures – equity-accounted investments versus financial instruments
Management assessed the acquisition of Hystead during the year to determine whether it should form part of joint ventures and be equity
accounted or whether the contractual right to receive dividends should be accounted for as a financial asset.
It was concluded that by virtue of the contractual right to receive dividends the investment in Hystead should be accounted for as a financial
asset.
1.25 Standards issued but not yet effective
At the date of approval of these financial statements, certain new accounting standards, amendments and interpretations to existing
standards have been published but are not yet effective, and have not been early adopted by the group.
Management anticipate that all of the pronouncements will be adopted in the group’s accounting policies for the first period beginning after
the effective date of the pronouncements. Information on new standards, amendments and interpretations that are expected to be relevant
to the group’s financial statements or those for which the impact has not yet been assessed, is provided. Certain other new standards and
interpretations have been issued but are not expected to have a material impact on the group’s financial statements namely:
•
•
IFRS 14
Regulatory deferral accounts
•
•
IAS 16
Property, plant and equipment
and IAS 38
Intangible assets
– clarification of acceptable methods of depreciation and amortisation
•
•
IFRS 10
Consolidated financial statements
and IAS 28
Investments in associates and joint ventures
– sale or contribution of assets
between an investor and its associate or joint venture and investment entities: applying the consolidation exception
•
•
IFRS 11
Joint arrangements
– accounting for acquisitions of additional interests in joint operations
•
•
IFRS 5
Non-current assets held-for-sale and discontinued operations
– changes in methods of disposal
•
•
IFRS 7
Financial instruments: disclosures
– continuing involvement for servicing contracts and offsetting disclosures in condensed interim
financial statements
•
•
IAS 19
Employee benefits
– discount rate: regional market issue.
•
•
IFRS 15
Revenue from contracts with customers
•
•
IAS 12
Income taxes
– recognition of deferred tax assets for unrealised losses