Investec Property Fund Limited integrated annual report and financial statements
About this report
Investec Property Fund Limited is committed to promoting sustainable stakeholder confidence in our
conduct as a business and as a responsible corporate citizen.
For easy reading we have provided cross-referencing tools.
Audited information
Reporting standard
Denotes information in the risk and
remuneration reports that forms part of the
group’s audited annual financial statements
Denotes our consideration of a
reporting standard
Page references
Website
Refers readers to information elsewhere in
this report
Indicates that additional information
is available on our website:
www.investec.com
Contents
SECTION 1
Overview of Investec Property Fund Limited
About us
Our footprint
Property selection
Case studies
Socio-economic development
Property portfolio
SECTION 2
Executive reports
Chairman’s report
Chief executive officer’s report
Directorate
SECTION 3
26
32
35
36
Annual financial statements
Directors’ responsibility statement
Certificate of company secretary
Independent auditor’s report to the members of Investec Property Fund Limited
Report of the audit and risk committee
Directors’ report
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Segmental analysis
Notes to the annual financial statements
SECTION 5
14
17
24
Corporate governance and risk management
Corporate governance
Risk management
Our stakeholders
Sustainability report
SECTION 4
3
4
5
8
9
10
38
38
39
40
41
44
45
46
47
48
52
Shareholder information
Shareholder analysis
Shareholder diary
King III checklist
Notice of annual general meeting
Form of proxy
Notes to the form of proxy
77
79
80
84
89
91
Overview of Investec
Property Fund Limited
About us
The Fund’s clearly articulated philosophy
is that it is a focused Real Estate Fund
and not necessarily only an Income Fund
which means the Fund’s focus is to
make sound investment decisions based
on property fundamentals. Ultimately,
the Fund aims to maximise sustainable
returns to shareholders by investing in
quality properties in the office, industrial
and retail property sectors.
Our highlights
for the year
Full year distribution of 108.20cps
growth on prior year of
8.2%
Acquisitions concluded during the period
R1.4 billion
Investment into Australian property market
R288.7 million
Investment property comprises land and
buildings held to generate rental income
and capital growth over the long term.
Should any properties no longer meet the
Fund’s investment criteria and be sold, any
profits or losses will be of a capital nature
and will not be distributed to shareholders.
Effectively, all rental income, less operating
costs and interest on debt, is distributed to
shareholders semi-annually.
Notwithstanding the Fund being a
relative new comer to the listed
property sector, the managers,
Investec Property (Pty) Ltd, have
a long history of success in the
listed property sector dating back
to the mid-1990s. The senior
management team is highly
experienced not only in direct real
estate but in the listed space as well.
In the current year, the Fund issued
41 011 620 shares as part of an
accelerated bookbuild raising R600 million
of equity, inclusive of R29.3 million
antecedent dividends. A further
7 345 043 shares are to be issued as
part of the acquisition of a quality office
and industrial portfolio that was effected
by year end.
The driving force behind the Fund
is a combination of experienced,
entrepreneurial and young
professionals who are committed
to achieving the Fund’s objectives.
When the Fund listed on the
JSE on 14 April 2011, the
property portfolio comprised
29 properties in South Africa
with a total GLA of 369 189m2,
acquired for R1.7 billion. In the
subsequent three years from
listing, the portfolio has grown
3.6x to a value of R6.1 billion, to
include 69 properties with a GLA
of 693 256m2 valued at R5.8 billion
and a R0.3 billion investment in
Investec Australia Property Fund.
18.6% of Investec Australia Property Fund
Total portfolio over 3.6 times
the size since listing in April 2011
REIT status
obtained 1 April 2013
Capital structure converted
to all equity 16 August 2013
New equity raised
R600 million
Overview of Investec Property Fund Limited
Investec Property Fund Limited
(the Fund) launched as a variable
loan stock company on the JSE
on 14 April 2011 in the Real
Estate Holdings and Development
Sector. The Fund subsequently
became a Real Estate Investment
Trust (REIT) on 1 April 2013 and
converted its capital structure to
all-equity in August 2013.
oversubscribed accelerated bookbuild
The Fund made a strategic investment into
the Australian property market by investing
in the Investec Australia Property Fund
(IAPF) which is well placed to deliver on the
Fund’s objectives. The Fund holds 18.6% of
IAPF which equates to 4.4% of the Fund’s
total asset base. IAPF listed on the JSE
Main Board on 23 October 2013 and was
the first inward-listed Australian REIT on
the JSE.
The Fund is managed and operated
by Investec Property (Pty) Ltd (Investec
Property) in terms of an asset management
and property management agreement.
Investec Property is a wholly owned
subsidiary of Investec Limited.
Investec Property Fund Limited integrated annual report and financial statements 2014
Net asset value per share
up 12.5% on prior year
1 398.51c
Term debt market accessed
R500 million
Facility in place with syndicate of banks
Gearing remains low
16.8%
Headroom for growth
3
01
Our footprint
In a year in which the total portfolio grew 45%,
increasing the portfolio 3.6x since listing, the
Fund also grew distributions 8.2%
Our property
landscape
2
1
3
Office properties
Retail properties
Industrial properties
Overview of Investec Property Fund Limited
Limpopo
Mpumalanga
x3
x2
North West
Gauteng
x13
x1
x13
x21
01
Northern Cape
x1
Free State
x1
Western Cape
x3
4
Eastern Cape
KwaZulu-Natal
x3
x2
x1
x3
x1
x1
Investec Property Fund Limited integrated annual report and financial statements 2014
Property selection
Bryanston, Johannesburg
Nicol on Main
Acquisition date
March 2014
Overview of Investec Property Fund Limited
Major tenants | Yum, Boogertman Architects,
Continental Outdoor Media
Carrying value
R178.3 million
GLA – 6 616m2
Occupancy
100%
01
Rosebank, Johannesburg
The Firs
Major tenants | Bombela, The Fishmonger,
The Grillhouse
Investec Property Fund Limited integrated annual report and financial statements 2014
Carrying value
R337.0 million
GLA – 12 679m2
Acquisition date
October 2012
Occupancy
100%
5
Property selection (continued)
Alrode Multipark
Kriel Mall
Martin & Martin
Major tenants | HCS Home and Catering
Suppliers, Jas Forwarding, African Oxygen
Major tenants | Shoprite, Mr Price,
Super Spar
Major tenant | Martin & Martin
Carrying value
R334.0 million
GLA – 90 762m2
Acquisition date
April 2011
Occupancy
99.5%
Alberton, Gauteng
Overview of Investec Property Fund Limited
01
Acquisition date
December 2012
Occupancy
97.4%
Kriel, Mpumalanga
Carrying value
R88.5 million
GLA – 19 972m2
Acquisition date
December 2013
Occupancy
100%
Isando, Johannesburg
Nonkqubela Link Mall
Builders Warehouse
The Glen
Benoni Multipark
Major tenants | Shoprite,
Standard Bank, Pep
Major tenants | Builders Warehouse,
Tiger Wheel & Tyre
Major tenant | Tiger Brands
Culinary Division
Carrying value
R111.0 million
GLA – 7 874m2
Acquisition date
December 2012
Occupancy
100.0%
Khayelitsha, Western Cape
6
Carrying value
R236.0 million
GLA – 21 359m2
Carrying value
R135.0 million
GLA – 11 113m2
Acquisition date
January 2013
Gleneagles, Gauteng
Occupancy
100.0%
Carrying value
R108.0 million
GLA – 40 960m2
Acquisition date
January 2013
Occupancy
92.1%
Benoni, Gauteng
Investec Property Fund Limited integrated annual report and financial statements 2014
Property selection (continued)
BMW Boksburg
General Electric
Woolworths House
Major tenant | BMW
Major tenant | General Electric
Major tenant | Woolworths
Carrying value
R74.0 million
GLA – 7 526m2
Acquisition date
December 2012
Occupancy
100.0%
Boksburg, Johannesburg
Carrying value
R137.5 million
GLA – 11 180m2
Acquisition date
July 2012
Midrand, Gauteng
Occupancy
100.0%
Carrying value
R319.0 million
GLA – 30 435m2
Acquisition date
April 2011
Occupancy
100%
Central Business District, Cape Town
Overview of Investec Property Fund Limited
01
Umhlanga Rocks,
KwaZulu-Natal
Carrying value
R245.0 million
GLA – 6 543m2
Investec Durban
Major tenant | Investec
Investec Property Fund Limited integrated annual report and financial statements 2014
Acquisition date
April 2011
Occupancy
100%
7
Case studies
Carrying value
R349 million
GLA – 36 451m2
WALE 4.3 years
•
Balfour Mall
Overview of Investec Property Fund Limited
Sustainability
– Electro-mechanical
operating
efficiencies
extracted
– 17.9% reduction
in electricity
consumption
– Power factor
correction unit
to be installed –
expect electricity
consumption
to reduce by
an additional 5%.
Carrying value
R337 million
GLA – 12 697m2
WALE 3.1 years
•
01
Sustainability
– Property billing tariff
structure changed
and energy-efficient
lighting introduced
– Achieved a
17.7% reduction
in electricity
consumption.
The Firs
The Firs
8
Investec Property Fund Limited integrated annual report and financial statements 2014
Socio-economic development
Carrying value
R111 million
GLA – 7 874m2
WALE 3.6 years
•
Nonkqubela Link Mall
Investec Team and recipients of the
Nonkqubela Link Merit awards
Investec Property Fund Limited integrated annual report and financial statements 2014
9
Overview of Investec Property Fund Limited
Socio-economic
– Three top
Khayelitsha
students became
the inaugural
recipients of the
Nonkqubela
Link Merit Award
sponsored by
Investec Property
Fund in conjunction
with Nonkqubela
Link Mall
– Each student
received a R20 000
bursary towards
their tertiary studies
for the 2014
academic year
– Nonkqubela Link
Mall provides
essential retail
amenities to
the community
anchored by
Shoprite. The centre
also hosts a full
service Medicross
Clinic, major banks,
Ackermans, Pep
and others.
01
Property portfolio
Property
Office
345 Rivonia Road
230, 15th Road (ex Business Connexion)
373 Pretorius Street
4 Protea Place
5 Bond Street
5 Walnut Road
Bigen Africa
Clover Head Office
Greenhill Village
Innovation Group
Overview of Investec Property Fund Limited
01
Investec Durban
Investec Pretoria
Minolta Bellville
Nicol Main A, B and C
The Braes Office Park
The Firs
Vinebridge
Wellness Centre
Woolworths House
Industrial
17 Derrick Road
5 Endean Road
6 Nywerheid (ex Ampaglas Tunney)
8 Flamink (ex Voltex)
95 Main Reef Road
Aeroton
Alrode Multipark
Ampaglas East London
Beechwood House
Benoni Multipark
Boksburg Minipark
British American Tobacco
Capital Motors
General Electric
Gresmac
Heriotdale Minipark
Hycol Mini Units
Linbro Park
Makro Montague Gardens
Martin & Martin
Minolta Highveld
Monsanto
Renew It
SA Ladder
SABB Maitland
SABB Mayville
Scientific Building
Retail
Balfour Mall
BMW Boksburg North
Boxer Cofimvaba
Builders Warehouse Bloemfontein
Builders Warehouse Polokwane
Builders Warehouse Tiger Wheel & Tyre The Glen
Builders Warehouse Witbank
Builders Warehouse Zambesi Pretoria
Cashbuild Nongoma
Devland Oudtshoorn
Devland Silverlakes
Great North Road Plaza
Jet Umtata
Khayelitsha 2
Masscash Kimberley
Kriel Mall
Nissan Roodepoort
Nonkqubela Link Mall
Plastic Land Fourways
Shoprite Checkers Thabazimbi
Shoprite Checkers Vanderbijlpark
Super Group Greenstone
Tile World Supa Quick Fourways
Unitrans Polokwane
VW McCarthy Roodepoort
Bryanston Boulevard
Zenth Park, East Rand
Tenancy
M/S*
GLA
31 March
2012
m²
GLA
31 March
2014
m²
96 774
10 495
6 759
–
6 955
–
–
–
–
–
15 500
136 616
10 495
6 759
–
6 955
5 870
–
5 412
8 007
4 713
15 500
6 543
6 301
2 166
6 616
4 372
12 679
2 297
1 497
30 435
334 401
5 997
2 342
4 035
6 837
14 264
6 994
90 762
5 802
5 677
40 960
9 151
13 170
7 463
Address
Grade Province
Rivonia, Johannesburg
Randjiespark, Midrand
CBD, Pretoria
Sandown, Sandton
5 Bond Street, Midrand
Periphery CBD, Durban
Centurion, Pretoria
Constantia Kloof, Roodepoort
Lynwood, Pretoria
Randburg, Johannesburg
Ridgeside Office Park,
Umhlanga Rocks
Menlo Park, Pretoria
Bellville, Cape Town
Bryanston, Johannesburg
Bryanston, Johannesburg
Rosebank, Johannesburg
Tyger Valley, Cape Town
Bryanston, Johannesburg
CBD, Cape Town
A
B
C
A
A
C
A
A
A
B
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
KwaZulu-Natal
Gauteng
Gauteng
Gauteng
Gauteng
M
S
S
M
S
S
S
S
M
S
B
A
B
A
A
A
A
A
A
KwaZulu-Natal
Gauteng
Western Cape
Gauteng
Gauteng
Gauteng
Western Cape
Gauteng
Western Cape
S
S
S
M
M
M
M
M
S
Spartan, Kempton Park
Johannesburg
Tunney, Elandsfontein
Alrode
Boksburg North, Boksburg
Aeroton, Johannesburg
Alrode, Alberton
Wilsonia, East London
Silverton, Pretoria
Benoni Ext 12, Benoni
Boksburg North, Boksburg
Waltloo, Pretoria
CBD, Pretoria
Northmid Corporate Park,
Midrand
Epping Ext 4, Cape Town
Heriotdale, Johannesburg
Wynberg, Sandton
Linbro Park, Johannesburg
Montague Gardens,
Cape Town
Isando, Johannesburg
Highveld, Pretoria
Nuffield, Springs
Wynberg, Sandton
Alrode
Maitland, Cape Town
Mayville, Durban
Kya Sands, Randburg
B
C
C
C
C
B
B
B
B
C
B
B
B
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
Eastern Cape
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
S
S
S
S
M
S
M
S
S
M
M
S
S
6 543
6 301
–
–
–
13 787
–
–
30 435
291 079
5 997
2 342
4 035
6 543
14 264
6 994
90 762
5 802
–
40 960
9 151
13 170
7 463
A
B
C
C
B
Gauteng
Western Cape
Gauteng
Gauteng
Gauteng
S
M
M
M
S
11 180
13 395
4 851
2 350
–
A
B
A
B
B
C
C
C
A
Western Cape
Gauteng
Gauteng
Gauteng
Gauteng
Gauteng
Western Cape
KwaZulu-Natal
Gauteng
S
S
S
S
S
S
M
S
S
11 236
–
Highlands North, Balfour Park
Bardene, Boksburg North
Cofimvaba, Eastern Cape
Hospitaalpark, Bloemfontein
Polokwane
Gleneagles, Johannesburg
President Park, Emalahleni
Montana, Pretoria
Nongoma, KwaZulu-Natal
Oudtshoorn
Silverlakes, Pretoria
Musina, Limpopo
Umtata
Khayelitsha, Western Cape
Kimberley
Bronwyn Street, Kriel
Roodepoort, Johannesburg
Khayelitsha, Western Cape
Fourways, Johannesburg
Thabazimbi Ext 6, Thabazimbi
CBD, Vanderbijlpark
Edenvale, Johannesburg
Fourways, Johannesburg
Polokwane
Constantia, Johannesburg
Bryanston, Johannesburg
Boksburg
A
A
A
A
A
A
A
A
A
B
A
A
B
C
A
A
A
A
A
B
B
A
A
A
A
A
B
Gauteng
Gauteng
Eastern Cape
Free State
Limpopo
Gauteng
Mpumalanga
Gauteng
KwaZulu-Natal
Eastern Cape
Gauteng
Limpopo
Eastern Cape
Western Cape
Northern Cape
Mpumalanga
Gauteng
Western Cape
Gauteng
North West
Gauteng
Gauteng
Gauteng
Limpopo
Gauteng
Gauteng
Gauteng
M
S
S
M
M
M
S
S
S
M
M
M
M
M
S
M
S
M
S
S
S
S
M
S
S
M
M
9 819
5 013
–
16 017
4 003
5 733
180 297
36 451
7 526
–
9 378
8 500
11 103
5 512
8 907
–
–
–
13 561
3 721
–
–
20 848
4 893
7 786
1 296
4 125
15 497
5 686
2 400
4 322
2 595
6 190
–
568 151
Carrying value/
(fair value/
directors’
Additions at
Effective
valuation)
Disposals to
cost year to
date of 31 March 2012 31 March 2013 31 March 2013
acquisition
R
R
R
1 182 600 000
117 000 000
52 600 000
125 000 000
120 000 000
–
75 000 000
–
–
–
170 000 000
(200 000 000)
–
–
(125 000 000)
–
–
(75 000 000)
–
–
–
–
442 252 295
–
–
–
–
–
–
–
–
–
–
01/04/2011
01/04/2011
01/04/2011
01/04/2011
01/04/2011
01/04/2011
01/04/2011
01/04/2011
07/03/2014
01/04/2011
01/04/2011
01/12/2011
01/04/2011
225 000 000
–
–
–
–
–
–
–
298 000 000
779 800 000
18 200 000
10 500 000
21 000 000
11 000 000
15 000 000
26 200 000
235 000 000
8 500 000
–
70 000 000
14 000 000
44 000 000
20 000 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
169 952 295
–
–
–
272 300 000
–
–
–
119 057 332
–
–
–
–
–
–
–
–
–
–
–
–
–
11 180
13 395
4 851
2 350
3 246
25/07/2012
01/04/2011
01/04/2011
01/04/2011
07/03/2014
–
31 000 000
13 700 000
7 800 000
–
–
–
–
–
–
119 057 332
–
–
–
–
11 236
19 972
2 955
–
5 013
25 000
16 017
–
5 733
222 239
36 451
7 526
1 045
9 378
8 842
11 113
5 512
8 907
2 202
2 742
12 492
13 561
3 721
2 911
5 850
21 359
4 893
7 874
1 296
4 125
15 497
5 686
2 400
4 322
2 595
5 795
14 144
693 256
01/04/2011
12/12/2013
23/05/2013
01/04/2011
01/04/2011
09/04/2013
01/04/2011
01/04/2011
01/10/2011
82 500 000
–
–
28 600 000
22 000 000
–
49 000 000
17 000 000
34 800 000
103 000 000
–
–
–
–
–
–
–
–
–
–
–
–
48 000 000
–
–
–
–
–
–
14 500 000
40 500 000
–
–
–
–
–
–
2 065 400 000
01/04/2011
01/04/2011
01/04/2011
01/04/2011
01/05/2013
01/04/2011
01/10/2013
07/03/2014
07/03/2014
01/10/2011
01/04/2011
01/11/2012
23/05/2013
31/03/2014
07/03/2014
01/10/2012
07/03/2014
07/03/2014
01/04/2011
01/11/2012
20/12/2012
01/10/2013
20/12/2012
20/12/2012
15/01/2013
08/01/2013
29/01/2013
01/10/2013
01/10/2013
01/10/2013
06/06/2012
01/04/2011
01/10/2013
01/10/2013
11/12/2012
18/12/2012
14/12/2012
18/01/2013
01/04/2011
01/04/2011
05/02/2013
23/01/2013
20/12/2012
07/01/2013
20/12/2012
01/10/2013
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1 547 833 735
–
295 819 187
–
62 500 000
–
–
–
98 000 000
–
93 000 000
–
139 000 000
–
80 000 000
–
104 500 000
–
–
–
–
–
–
–
145 000 000
–
–
–
–
–
–
–
202 315 484
–
34 800 000
–
99 399 064
–
13 000 000
–
–
–
–
–
50 000 000
–
23 500 000
–
20 000 000
–
26 000 000
–
61 000 000
–
–
(200 000 000) 2 109 143 362
* Multi- or single-tenanted.
10
Investec Property Fund Limited integrated annual report and financial statements 2014
Total
capitalised
costs
year to
31 March
2014
(Including
acquisition
costs)
R
Revaluation/
(Impairment)
31 March
2014
R
Carrying value/
(fair value/
directors’
valuation)
31 March
2014
R
Average
gross rental
per square
metre
(excluding
parking)
31 March
2014
R
Total capitalised
costs year
to 31 March
2013 (including
acquisition
costs)
R
Revaluation/
(impairment)
31 March 2013
R
Carrying
value/
(fair value/
directors’
valuation)
31 March
2013
R
24 190 517
342 676
2 644 535
–
17 796 379
–
–
–
–
–
1 383 441
50 157 188
(7 342 676)
(10 244 535)
–
(12 996 379)
–
–
–
–
–
18 616 559
1 499 200 000
110 000 000
45 000 000
–
124 800 000
–
–
–
–
–
190 000 000
–
–
–
–
–
–
–
–
–
–
–
826 715 643
(5 396 338)
–
–
–
118 360 306
–
125 100 000
141 034 798
92 254 504
–
3 080 765
149 070
(3 001)
–
848 673
123 833
–
48 717
131 972
89 218
21 950
65 218 210
5 247 267
(4 996 999)
–
4 851 327
(123 833)
–
(48 717)
–
–
11 978 050
2 394 214 618
110 000 000
40 000 000
–
130 500 000
118 360 306
–
125 100 000
141 166 770
92 343 722
202 000 000
17 525
10 482
5 918
–
18 764
20 164
–
23 117
17 630
19 593
13 032
137
133
–
–
155
143
–
162
154
147
98
92.7%
100.0%
–
–
100.0%
–
100.0%
–
–
–
–
94.9%
100.0%
–
–
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
–
655 235
–
–
–
1 368 251
–
–
–
16 013 554
145 850
222 960
–
51 143
25 678
265 682
5 708 091
–
–
3 503 898
636 187
1 500 225
–
7 000 000
2 792 470
–
–
–
31 331 749
–
–
21 000 000
80 679 114
1 404 150
1 477 040
1 100 000
(51 143)
4 974 322
34 318
33 491 909
700 000
–
16 496 102
5 863 813
(500 225)
1 500 000
232 000 000
173 400 000
–
–
–
305 000 000
–
–
319 000 000
995 550 000
19 750 000
12 200 000
22 100 000
11 000 000
20 000 000
26 500 000
274 200 000
9 200 000
–
90 000 000
20 500 000
45 000 000
21 500 000
–
–
–
–
–
–
–
–
–
(40 600 000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24 600 000
178 101 352
83 638 441
–
41 158 676
27 863 903
–
278 563 272
–
–
–
–
–
–
–
–
50 748 117
–
–
–
–
–
2 000
77 613
238 363
81 030
1 209 272
33 363
28 692
–
40 257 446
217 505
72 470
16 163
15 810 561
1 661 667
14 123
12 985 852
13 563
61 143
4 238 498
887 695
121 585
14 145
13 000 000
4 598 000
(77 613)
–
–
30 790 728
–
–
–
70 146 293
(167 505)
(3 272 470)
3 383 838
3 044 439
5 838 333
2 985 878
46 814 148
286 438
–
13 761 502
12 305
2 878 415
(114 145)
245 000 000
178 000 000
24 600 000
178 339 716
83 719 471
337 000 000
41 192 039
27 892 595
319 000 000
1 343 917 011
19 800 000
9 000 000
25 500 000
29 855 000
27 500 000
29 500 000
334 000 000
9 500 000
50 809 260
108 000 000
21 400 000
48 000 000
21 400 000
37 445
28 251
11 357
26 956
19 149
26 578
17 933
18 632
10 481
4 019
3 302
3 843
6 320
4 367
1 928
4 218
3 680
1 637
8 950
2 637
2 339
3 645
2 867
273
161
98
193
158
212
128
134
66
38
35
51
55
33
42
42
37
16
84
33
40
35
27
100.0%
100.0%
–
–
–
99.7%
–
100.0%
98.2%
100.0%
100.0%
100.0%
100.0%
99.2%
100.0%
100.0%
100.0%
–
92.1%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
98.0%
100.0%
100.0%
100.0%
100.0%
95.4%
100.0%
99.5%
100.0%
100.0%
92.1%
82.0%
100.0%
100.0%
820 706
1 280 396
170 254
163 753
–
6 821 961
(280 396)
(170 254)
(163 753)
–
126 700 000
32 000 000
13 700 000
7 800 000
–
–
–
–
–
–
–
–
–
–
28 115 155
15 898
1 953 788
14 685
90 642
37 595
10 784 103
46 212
85 315
9 358
–
137 500 000
34 000 000
13 800 000
7 900 000
28 152 750
12 299
2 538
2 845
3 362
8 673
86
30
36
44
81
100.0%
93.0%
80.9%
100.0%
100.0%
100.0%
100.0%
87.5%
91.7%
100.0%
–
–
–
461 014
62 200
–
650 318
–
345 199
10 221 971
1 046 364
1 070 251
–
515 917
488 199
715 951
417 338
534 429
–
–
–
2 056 841
–
–
–
452 422
184 119
287 077
78 357
–
1 372 470
264 324
132 544
113 835
140 202
351 331
–
50 426 042
–
–
–
(461 014)
5 237 800
–
2 849 682
(5 000 000)
5 354 801
31 194 294
(865 551)
5 129 749
–
(515 917)
(488 199)
(715 951)
(417 338)
(534 429)
–
–
–
9 943 159
8 500 000
–
–
10 932 094
(184 119)
(186 141)
(78 356)
2 500 000
(822 470)
(264 324)
(132 544)
(113 835)
(140 202)
(351 331)
–
162 030 596
82 500 000
–
–
28 600 000
27 300 000
–
52 500 000
12 000 000
40 500 000
1 692 250 000
296 000 000
68 700 000
–
98 000 000
93 000 000
139 000 000
80 000 000
104 500 000
–
–
–
157 000 000
56 500 000
–
–
213 700 000
34 800 000
99 500 000
13 000 000
17 000 000
41 050 000
50 000 000
23 500 000
20 000 000
26 000 000
61 000 000
–
4 187 000 000
–
–
–
(28 600 000)
–
–
–
(12 000 000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(40 600 000)
–
88 500 000
36 200 000
–
–
75 000 000
–
–
–
287 957 984
43 657 984
–
6 000 000
–
–
–
–
–
7 600 000
13 800 000
76 200 000
–
–
31 900 000
27 000 000
–
–
3 800 000
–
–
–
–
–
–
–
–
78 000 000
1 393 236 899
–
90 045
92 564
–
478 436
498 255
856 079
–
14 490
9 868 201
5 557 819
9 715
18 846
–
–
17 688
–
–
13 373
32 165
136 591
173 974
–
280 449
22 237
4 030 015
16 700
523 972
–
–
(1 268 120)
–
161 860
–
16 555
17 975
106 388
53 206 411
(4 000 000)
(90 045)
(92 564)
–
1 721 564
(498 255)
(13 356 079)
–
85 510
96 624 863
3 604 797
5 290 285
(18 846)
(3 500 000)
(500 000)
(4 017 688)
600 000
(500 000)
(13 373)
(32 165)
(136 591)
21 326 026
4 000 000
–
(22 237)
18 269 985
1 683 300
7 176 028
2 850 000
1 500 000
1 268 120
11 500 000
7 038 140
2 200 000
4 683 445
12 482 025
(106 388)
231 989 366
78 500 000
88 500 000
36 200 000
–
29 500 000
75 000 000
40 000 000
–
40 600 000
2 086 701 049
348 820 600
74 000 000
6 000 000
94 500 000
92 500 000
135 000 000
80 600 000
104 000 000
7 600 000
13 800 000
76 200 000
178 500 000
60 500 000
32 180 449
27 000 000
236 000 000
36 500 000
111 000 000
15 850 000
18 500 000
41 050 000
61 500 000
30 700 000
22 200 000
30 700 000
73 500 000
78 000 000
5 824 832 677
6 986
4 431
12 250
–
5 885
3 000
2 497
–
7 082
9 389
9 570
9 833
5 742
10 077
10 461
12 148
14 623
11 676
3 451
5 033
6 100
13 163
16 259
11 055
4 615
11 049
7 460
14 098
12 230
4 485
2 649
10 816
12 792
5 137
11 830
12 683
5 515
8 402
75
32
92
–
41
30
23
–
65
83
140
78
46
77
76
89
106
91
29
38
57
93
141
96
39
90
78
120
99
35
12
101
107
50
106
113
43
73
100.0%
100.0%
–
100.0%
–
100.0%
–
100.0%
97.5%
94.1%
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
–
–
–
96.4%
100.0%
–
–
97.6%
100.0%
96.3%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
81.8%
–
97.3%
100.0%
100.0%
100.0%
–
100.0%
100.0%
100.0%
–
100.0%
98.0%
91.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
75.2%
100.0%
100.0%
100.0%
100.0%
100.0%
97.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
97.4%
Disposals
to
31 March
2014
R
Additions
at cost
year to
31 March
2014
R
Occupancy
rate
31 March
2013
%
Occupancy
rate
31 March
2014
%
11
Overview of Investec Property Fund Limited
Investec Property Fund Limited integrated annual report and financial statements 2014
Valuation
per
square
metre
31 March
2014
R
01
Property portfolio (continued)
Geographic spread
Weighted average
rent escalation (GLA)
Percentage
8.8
8.6
8.4
8.2
8.0
7.8
7.6
7.4
Revenue
GLA
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
1%
2%
70%
4%
5%
6%
0%
0%
12%
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
1%
1%
75%
1%
4%
3%
1%
1%
13%
Weighted average rental
per square metre (GLA)
Rand
160
140
120
100
80
60
40
20
0
Sectoral spread
Overview of Investec Property Fund Limited
Average annualised
property yields
Percentage
12.0
10.0
8.0
6.0
4.0
2.0
GLA
Revenue
Office
Industrial
Retail
19%
48%
33%
Office
Industrial
Retail
Asset value
33%
26%
41%
0
Office
Industrial
Retail
41%
22%
37%
Industrial
Office
Retail
01
Tenant profile
Single vs multi-tenanted
GLA
Revenue
A
B
C
12
63%
19%
18%
A
B
C
GLA
70%
15%
15%
Revenue
Single-tenanted
Multi-tenanted
46%
54%
Single-tenanted
Multi-tenanted
47%
53%
Investec Property Fund Limited integrated annual report and financial statements 2014
Executive
reports
Chairman’s report
The board of directors is pleased to report the total distribution for the year of 108.20cps
(31 March 2013: 99.99cpu), representing an 8.2% increase over the prior year, supported
by performance of the base portfolio and the underlying property fundamentals of
acquisitions made in both the current and previous financial years.
Market conditions
The past year has seen turbulence in the
financial markets stemming from the Fed’s
tapering of quantitative easing and resulting
in the outflow of once ‘easy’ capital from
emerging markets. This has had an obvious
impact on the local property sector, with
the listed sector shedding 110bps since
May last year and bond yields moving in a
similar direction. Now, more than ever, we
will continue to take a long-term view on
property as it becomes increasingly difficult
for other market participants to unlock
opportunities that are earnings-enhancing
in the short term. We have always said
that we would make dilutive acquisitions
for the right assets as we seek long-term
sustainable returns for our shareholders.
We believe that we are well positioned to
take advantage of the current environment
with a management team that has lived
through several cycles, supported by
a balance sheet that provides ample
headroom for growth.
The South African economy is also under
severe pressure, with GDP growth stunted
by continuing strikes across several sectors
and municipalities struggling to support the
growth demands of communities. Local
businesses are seeing margins shrinking on
the back of rising transport and municipal
Distribution growth
cpu/cps
120
8.2%
7.5%
100
80
60
7.1%
7.9%
7.8%
8.6%
40
20
Executive reports
2012
0
2013
UK and Other
First half Southern Africa
Australia
Second half
Full year
2014
Asset growth
02
R’billion
7 000
R6.1bn
6 000
69 properties
IAPF investment
5 000
R4.2bn
4 000
50 properties
R4.4bn
60 properties
3 000
2 000
R2.1bn
32 properties
R2.3bn
34 properties
1 000
0
Mar 12
14
Sep 12
Mar 13
Sep 13
Mar 14
Investec Property Fund Limited integrated annual report and financial statements 2014
Chairman’s report (continued)
costs, whilst consumer demand is starting
to tail off after its rapid rise on the back
of unsecured lending. Through ongoing
commitment to client retention, good
maintenance of the buildings and proactive
leasing, the defensiveness of the portfolio is
further enhanced.
Portfolio growth
During the year the Fund grew assets by
45% with acquisitions of R1.7 billion in
quality properties in SA, and an investment
in Australian real estate via acquisition
of 18.6% of newly JSE-listed Investec
Australia Property Fund.
The ability to unlock high-quality
opportunities in a very competitive
market is a differentiating factor and
the last 12 months bears testament to
this with acquisitions sourced through
Investec relationships and networks. The
acquisitions have brought into the portfolio
a mix of high-quality office, retail and
industrial properties, tenanted by highquality tenants.
Balance sheet strength
The Fund’s balance sheet continues to
provide the Fund with the capacity to
grow and to take advantage of market
opportunities. The Fund has further
diversified its funding sources, accessing
the term debt market during the year
through a syndicate of banks as well as
issuing commercial paper shortly after
the year end. The Fund’s credit ratings
remain stable as A- and AA- on an
unsecured and secured basis respectively,
providing support for future debt funding at
attractive rates.
During the year, the Fund was also
successful in raising R600 million of equity
by way of an accelerated bookbuild that
was heavily oversubscribed, the proceeds
of which were used to fund announced and
pipeline acquisitions.
The REIT legislation was finalised during
the year, with IPF receiving REIT status,
effective 1 April 2013. Subsequently, at IPF’s
annual general meeting on 16 August 2013,
shareholders and debenture holders voted
in favour of the conversion of the Fund’s
linked-unit structure to that of an all-equity
capital structure, which is in line with
international REITs.
Governance
As set out on pages 26 to 36 in this report,
the Fund’s board, management and
employees of the Manager are committed
to upholding the disclosure, transparency
and listing rules of all the applicable
regulations, statutes, (including the JSE
listings requirements), and the King Code
of Governance Principles for South Africa
(King III).
Thus all stakeholders can take assurance
from the fact that the Fund is being managed
ethically and in compliance with the latest
legislation, regulations and best practice.
During the current year the board and
its members committed themselves to
undergo a board evaluation review, a
process by which all the members of the
board assess whether or not the board
and its committees are carrying out the
prescribed duties with the requisite skill,
knowledge and due care. This process was
carried out by the lead independent director
through a series of questionnaires and
follow up one-on-one meetings with each
board member and results communicated
to the board for action, where applicable.
Sustainability
IPF acknowledges its responsibility to
its stakeholders, the environment and
the community at large and consistently
focuses on continual improvement of our
business and environmental sustainability.
During the year, the Fund expanded the
energy-efficiency programme launched
during 2012, with the introduction of
unique operating methods and deployment
of capital in areas that have proven to
deliver superior returns for both the Fund
and tenants.
Investec Property Fund Limited integrated annual report and financial statements 2014
The Fund is also committed to BEE,
with a strong focus on the procurement
processes of our property managers and
social-economic development initiatives.
The Fund will look to expand initiatives in
the forthcoming year.
Changes to the board
Effective 1 April 2014, I assumed the role
of non-executive chairman of Investec
Property (Pty) Ltd, the Manager of IPF.
As a result, my designation changed
from executive chairman to non-executive
chairman of the Fund, effective the
same date.
Going concern
The board has performed a thorough
review of the Fund’s budgets and cash
flow forecasts for FY15 and, based on this
review, the borrowing and financial positions
of the Fund and the property environment
in general, the board is satisfied that the
Fund continues to be a going concern and
has applied this principle in preparation of
the financials.
Prospects
The current IPF property and investment
portfolio of R6.1 billion represents a
diversified base of quality properties. The
portfolio’s income stream is underpinned by
strong tenant covenants with 46% single
tenant triple net leases, a WALE of 4.3
years, low vacancies of 2.6% and in-force
escalations of 8.1% which are comfortably
market related. Despite the uncertain
economic outlook, highly competitive
property landscape and upward pressure
on administration, operation and funding
costs, with the strength of the core portfolio
and efficiently capitalised and hedged
balance sheet, IPF is well positioned to
continue to deliver on its objective of
investing in quality income-producing
properties and delivering long-term
distribution and capital growth.
The board envisages growth for the
forthcoming year substantially in line with
historical growth.
This forecast is based on the assumptions
that the macro-economic environment
will not deteriorate markedly, no major
corporate failures will occur, budgeted
15
Executive reports
The Fund acquired an 18.6% interest in
Investec Australia Property Fund (IAPF),
through the acquisition of 25 000 000
IAPF units valued at A$1.00 each. IAPF
is an Australian-domiciled real estate
investment trust that debuted on the
JSE on 23 October 2013. This was a
strategic investment that will give the Fund
direct exposure into attractive Australian
property assets and the Australian Dollar.
The investments in IAPF represents
approximately 4.4% of IPF’s asset base.
REIT and capital
conversion
02
Chairman’s report (continued)
renewals will be concluded, that clients
will be able to absorb the recovery of
rising rates and utility costs and that the
ZAR/AUD exchange rate remains at similar
levels to the last financial year. Budgeted
rental income was based on contractual
escalations and market-related renewals.
The information and opinions contained
above are recorded and expressed in
good faith and are based upon sources
believed to be reliable. No representation,
warranty, undertaking or guarantee
of whatever nature is made or given
with regards to the accuracy and/or
completeness of such information and/or
the correctness of such opinions.
This forecast has not been reviewed
or audited by the Fund’s independent
external auditors.
Acknowledgements
My appreciation is extended to the board
for their commitment, support and active
contribution to the significant growth of the
Fund to the last 12 months. Thank you to
the management and employees of the
Manager who have been fundamental to
the strong performance of the Fund.
Innovation
Group Building
Major tenant | Innovation
Randburg,
Johannesburg
Carrying value
R202.0 million
GLA – 15 500m2
Executive reports
Acquisition date
October 2011
Occupancy
100%
5 Bond Street
02
Major tenant | Investec
5 Bond Street,
Midrand
Carrying value
R118.4 million
GLA – 5 870m2
16
Investec Property Fund Limited integrated annual report and financial statements 2014
Chief executive officer’s report
The Fund delivered distribution growth to
shareholders of 8.2% for the year, arising from
increases in net property income and supported
by quality acquisitions to the value of R1.7 billion.
This equates to asset growth of 45% with
R1.4 billion invested in direct real estate in South
Africa and circa R300 million into the recently
JSE-listed Investec Australia Property Fund which
comprises 18.6% of that Fund
We are pleased to report this performance
in the context of an uncertain operating
environment and often volatile
market conditions.
The Fund successfully raised R1.1 billion
of new funding during the year, including
R600 million of equity in an oversubscribed
capital raise in December 2013.
Management is consistent in its relentless
focus on effective hands-on management
of the underlying properties, balancing
the need for ongoing and appropriate
investment to sustain the properties, and
their competitiveness in their sub-markets
with the need to counter rising costs in the
interests of both owner and our tenants
or clients. This approach becomes all the
more critical when confronting the possible
headwinds in the South African economy.
These platforms will facilitate the ability
to continue to be aggressively acquisitive
particularly in a potentially rising interest
rate environment while retaining its core
commitment to quality property with
sustainable income growth over time.
Management has also embarked on
a sustainability programme with good
success in energy savings, and community
projects in areas where the Fund is
invested. The Fund will appropriately
expand such initiatives in conjunction with
the Investec group’s sustainability initiatives.
The Fund has established a strong property
platform for future growth with a longdated lease expiry profile, low vacancies, a
good blend of single to multi-tenants and a
quality tenant profile.
Similarly, the capital management is both
defensive and a robust springboard for
growth with gearing post-year end after
completion of announced acquisitions at a
low 21.0% and all in cost of debt of 8.5%,
which is 84.0% hedged with long-dated
profiles of three and four years, respectively.
Distribution per unit/share
2013
2014
99.99c
108.20c
Vacancy rate
2013
2014
2.9%
2.6%
Number of properties
As stated since listing, the Fund has a
long-term strategy and may make
acquisitions which are dilutive in the short
term in the interests of sustainable growth
in earnings over time. This strategy is
balanced in that management will continue
to not effect acquisitions when, in its
opinion and that of the board, pricing is
unrealistic and the risk is too high.
2013
2014
50
69
Operational performance
The Fund has had an active year and
continued its strategy of growing the
portfolio through the acquisition of quality
long-term income-producing assets.
The base portfolio of R2.1 billion
was bolstered by the integration of
the R2.2 billion of acquisitions executed
in the prior year as well as R1.7 billion
of acquisitions completed in the current
year, which comprised R1.4 billion of
direct property acquisitions and an
investment of R0.3 billion in Investec
Australia Property Fund.
Whilst aggressively growing the asset base,
the Fund’s performance in a challenging
operating environment attributable to
the strength of the Fund’s real estate
fundamentals evidenced by the following
key performance indicators:
Investec Property Fund Limited integrated annual report and financial statements 2014
•
The distribution growth of 8.2% is clean
and is derived predominantly from net
property income growth
•
Vacancies across the portfolio
decreased to 2.6%
•
Arrears represent only 0.3% of
total collectibles
•
71% of the portfolio is represented by
large listed and national tenants
•
Weighted average lease expiry
of 4.3 years
•
In force escalations across the portfolio
of 8.1%.
Executive reports
Driven by growth in the asset base of over
3.6 times since listing three years ago with
assets of R6.1 billion at year end and the
ethos of expanding skills and capability
ahead of the growth curve, management
has bolstered the operating team across
all the necessary disciplines, i.e. property,
finance and corporate finance, accounting
and administration.
Our key
performance
indicators
02
17
Chief executive officer’s report (continued)
The strength of the real estate fundamentals underpins the sustainability of the future net property income of the Fund.
Top 10 properties
Property
Balfour Mall
The Firs
Sector
Book value
(R’million)
% of
portfolio
by value
GLA
(m2)
% of
portfolio
GLA
Retail
348.8
6.0
36 451
5.3
Office
337.0
5.8
12 679
1.8
Industrial
334.0
5.7
90 762
13.1
Woolworths House
Office
319.0
5.5
30 435
4.4
Investec Durban
Office
245.0
4.2
6 543
0.9
Kriel Mall
Retail
236.0
4.1
21 359
3.1
Innovation Group
Office
202.0
3.5
15 500
2.2
Alrode Multipark
Great North Plaza
Retail
178.5
3.1
13 561
2.0
Nicol on Main
Office
178.3
3.0
6 616
1.0
Investec Pretoria
Office
Total
178.0
3.0
6 301
0.9
2 556.6
43.9
240 207
34.7
The period saw 69 726m2 of lease expiries of which the majority were in the industrial portfolio; 99.2% of the expiring GLA was let and
renewed with an average upward rental reversion of 11.1% and average escalations of 8.5%.
This strong letting performance was achieved through our active asset and property management approach which involves early
engagement with our tenants, allowing us to understand our tenants’ requirements and manage any potential vacancies well in advance of
expiries. This approach is evidenced in our vacancy of 2.6% which we believe to be one of the lowest in the sector.
Renewals and new leases
Expiry rent
R/(m2)
Sector
Office
Average
GLA
GLA
escalation
expiries and new releases/
(%) cancellations
renewals
–
–
–
–
–
32.33
37.63
8.8
(60 765)
59 503
Retail
145.80
150.55
8.1
(8 961)
9 664
Total
48.08
53.41
8.5
(69 726)
69 167
Industrial
Executive reports
02
New rent
R/(m2)
Lease expiry profile by sector —% of total revenue
Vacancies by sector — by GLA
Percentage
Percentage
40
10.0
35
8.0
30
25
6.0
5.1%
20
4.0
15
2.6%
10
2.0%
2.0
2.0%
5
0
0
15
Office
18
16
Industrial
17
Retail
18
Total
19
April 2019 onwards
Office
2013
Industrial
Retail
Total
2014
Investec Property Fund Limited integrated annual report and financial statements 2014
Chief executive officer’s report (continued)
Retail
Retail sectoral split
During the last 12 months the Fund’s retail portfolio showed strong underlying property
performance with the addition of R241 million of newly acquired properties, 87% of which
were big box retail. At year end, vacancy was low at 2.0% and the WALE was 3.7 years.
The retailing environment in general is being impacted by weaker consumer spending.
The active management, tenant mix and marketing of the shopping centres, while always
important, is now all the more critical. In addition, the Fund also continues to invest
appropriately in the shopping centres to ensure that the centres remain competitive in
its market and that the shopper experience remains positive.
The Fund’s prior shopping centre acquisition, Balfour Mall which is currently the subject of
a R60 million refurbishment to both the interior as well as to its presence to the street and
ease of access, Kriel Mall and Nonkqubela Mall in Khyalitsha all performed well delivering
returns above acquisition yields.
31 March 2014
Big box
Dealerships
Shopping centres
38.0%
11.0%
51.0%
These three centres as well as the dominant and excellently performing Great North Plaza
in Musina are all well located in their respective nodes and underpinned by national chain
tenancies of between 80% and 90%.
Whilst there was no material letting activity during the year with only 8 494m2 expiring
during the period, all of the expiring space was let as well as existing vacant GLA, with
3.3% positive rental reversions and 8.1% escalations.
Much of management’s time was focused to operational efficiencies with particular attention
on proactive management of the new buildings, energy and other sustainability initiatives
and our service providers. This yielded significant cost savings which we shared with our
tenants, reducing their cost of occupation.
Our key
performance
indicators
The slight increase in the cost to income ratio is due to the multi-tenanted retail acquisitions
completed in the prior year, being included for a full reporting reported.
Gross lettable area
Retail KPIs
2013
+\-
170.4
34.7
2.0
0.64
7.8
3.7
58.8
33.3
2.6
1.05
7.7
3.8
111.6
(1.4)
0.6
0.4
0.1
(2.6)
Industrial
2013
2014
2
568 151m
693 256m2
Property portfolio
2013
2014
R4.4 billion
R5.8 billion
The Fund’s industrial portfolio delivered like-for-like growth in line with the total portfolio
despite significant expiries falling due within the period.
Weighted average lease expiry
The last 12 months saw 60 765m2 of GLA expire, with 59 503m2 either renewed or re-let
with 16.8% positive revisions and 8.8% rental escalation achieved. This was gratifying
and testament to the operational and market focus of the management team as well as
to the defensive nature and competitiveness of the portfolio.
2013
2014
4.2 years
4.3 years
Despite the performance of the industrial portfolio in the current period, the impact of the
subdued economic growth in South Africa and Europe, which is South Africa’s second
largest trading partner, is evident in the manufacturing sector. The Fund expects small
manufacturing businesses to come under further pressure as a result of constrained growth
and export prospects. The Fund is actively engaging with tenants of this nature in its
industrial multiparks to ensure any potential tenant weakness is managed well in advance.
A small redevelopment of 6 800m2 was undertaken at the Flamink Road property in
November 2013, resulting in a 78% positive improvement in income. Management is
pursuing opportunities to develop the 20 000m2 of available bulk at the fully let Alrode
Multipark which boasts 90 762m2 of total GLA.
Investec Property Fund Limited integrated annual report and financial statements 2014
19
Executive reports
Net property income (R’million)
Cost to income ratio (%)
Vacancies (%)
Gross arrears (%)
Weighted average escalations (%)
WALE (years)
2014
02
Chief executive officer’s report (continued)
Industrial KPIs
Net property income (R’million)
Cost to income ratio (%)
Vacancies (%)
Gross arrears (%)
2014
2013
+\-
113.1
96.4
16.7
30.2
28
(2.2)
2.0
1.8
0.2
0.23
0.3
0.1
Weighted average escalations (%)
8.7
8.2
0.5
WALE (years)
3.5
2.7
29.6
Our key
performance
indicators
Cost to income ratios
Office
The Fund’s office portfolio is 83% let to A-grade tenants with a balanced tenant mix of 47%
of single-tenants and 53% multi-tenants. The net property income is underpinned by a
WALE of 7.1 years.
At year end, office vacancy remained low at 5.1%, almost entirely due to the vacancy of
one small building. During the period the Fund let 2 762m2 of vacant space at The Firs
and 345 Rivonia, covered by rental guarantees, with a 16.4% positive reversion and
8.3% average escalation over the rental guarantees.
Total
Office
Industrial
Retail
2013
2014
27.5%
23.8%
28.0%
33.3%
30.1%
23.9%
30.2%
34.7%
The Fund is mindful of the weakness in the office sector due to the continuing significant
oversupply of A-grade office space in prime nodes which, combined with the lack of
depth in tenant demand, then impacts on the sector as a whole. The Fund's strategy has
from the outset and continues to be focused to quality long-term corporates and niche
office buildings in key locations. The office portfolio is believed to be generally robust and
defensive to weather these conditions.
Office KPIs
Net property income (R’million)
Cost to income ratio (%)
Vacancies (%)
Executive reports
Gross arrears (%)
Weighted average escalations (%)
WALE (years)
2014
2013
+\-
146.8
116.6
30.2
23.9
23.8
(0.1)
5.1
7.3
2.2
0.04
0.28
0.2
8
8.1
(0.1)
5.6
6.7
(16.4)
02
20
Investec Property Fund Limited integrated annual report and financial statements 2014
Chief executive officer’s report (continued)
Growth and acquisitions
The past year has seen the Fund grow its property portfolio by R1.4 billion (38%) with high-quality investment across all three sectors,
despite a highly competitive and sometimes aggressively priced market. This again points to the value add of the Investec link and network
of the management team and board.
Acquisitions
Sector
Cost
(R’million)
GLA
(m²)
Date of
transfer
Big Box retail portfolio
Retail
208.8
38 475
October 2013
Nonkqubela Mall Link extension
Retail
32.2
2 911
March 2014
5 Bond Street
Office
118.5
5 870
May 2013
Minolta Belville
Office
24.7
2 166
May 2013
Bigen Africa
Office
125.1
5 412
October 2013
Nicol on Main
Office
178.3
6 616
March 2014
RPP portfolio
Industrial and Office
465.3
29 810
March 2014
Minolta Highveld
Industrial
36.3
2 955
May 2013
SA Ladder
Industrial
75.1
25 000
April 2013
Martin & Martin
Industrial
88.6
19 972
December 2013
1 352.9
139 187
Total acquisitions
The retail acquisitions of R241 million
consisted of a majority of ‘big box’ retail
and which have stable historic trading track
records. The properties are all well located
within their respective geographies and
are in close proximity to densely populated
residential areas.
The industrial property acquisitions of
R279 million further contribute to the quality
of the existing portfolio through the likes of
the single-tenanted production facilities of
SA Ladder in Alrode and Martin & Martin
in Isando. All of the acquisitions consist of
triple net long-dated leases.
The Fund’s acquisitions continue to further
contribute to the strength of the portfolio’s
real estate fundamentals.
Investec Australia
Property Fund
The Fund acquired a strategic holding of
18.6% of IAPF, which listed on the JSE
on 23 October 2013 with an initial postwithholding tax, ungeared yield of 7%. This
equated to an investment of R230 million
In accordance with IFRS requirements, we
have reported our investment in IAPF as an
Associate as a result of three IPF directors
holding positions on the board of IAPF.
It must be noted that the directors hold
the positions in their personal capacity and
not as a result of IPF’s investments.
Executive reports
During the year the Fund acquired
R833 million of quality office property, made
up of 71% triple net, long-term leases.
The acquisitions included Nicol on Main
Office Park, the Bigen Africa and Clover
head offices and several other properties
located in the desirable nodes of Constantia
Kloof, Tyger Valley and Bryanston.
which represents under 5% of the Fund’s
assets. The investment will give the Fund
direct exposure to Australian real estate
assets and exposure to the Australian
Dollar. During the period the Fund hedged
its expected final FY14 and interim FY15
distributions from IAPF, locking in attractive
forward exchange rates.
Capital funding
The Fund’s balance sheet remains well
positioned for growth. It is able to absorb
interest rate volatility with gearing at 16.8%,
a long-date debt and swap maturity profile
(2.8 years and 4.0 years, respectively)
and a current hedged position of 110%
after taking advantage of and locking in
lower forward rates during the year. This
will reduce to 84% after the completion of
R342 million of announced acquisitions.
The Fund continues to ensure a diversity of
funding sources to minimise the liquidity risk
and maximise pricing efficiency with access
to bank debt, medium-term and short-term
bond markets.
Investec Property Fund Limited integrated annual report and financial statements 2014
02
21
Chief executive officer’s report (continued)
31 March
2014
Pro forma*
Hedge position (%)
110
84
Average swap rate (%)
7.4
7.4
Average swap expiry (years)
4
4
All-in funding cost (%)
9.2
8.5
Average debt expiry (years)
2.8
3.0
Our key
performance
indicators
* Post-commercial paper issue and announced acquisitions.
At year end the Fund’s all-in cost of
borrowing was 9.2%, distorted by shortterm facilities used to bridge acquisitions
made in March 2014 and still in place
at year end. Funding costs will therefore
reduce and normalise to 8.5% post the
refinancing of the bridge facility in the
commercial paper market on 15 April 2014
and payment for R300 million of announced
acquisitions. We have the ability to minimise
the impact of the outward shift in long-term
interest rates, given our current hedged
position, but expect total borrowing costs
to move upwards as and when further
acquisitions are made.
During the year the Fund issued
41 011 620 shares as part of an
accelerated bookbuild, raising
R600 million inclusive of R29.3 million
antecedent dividends.
Debt and swap expiry profile
Executive reports
70
63.0%
60
50
40
32.0%
02
28.0%
27.0%
24.0%
20
13.0%
10
8.0%
4.0%
0
FY15
Debt
FY16
FY17
Swap
FY18
Consistent with general practice in the
listed property sector, we have included
a simplified statement of comprehensive
income and simplified statement of
financial position to make the annual
financial statements more understandable
and better aligned to the cash-based
basis of reporting operating results which
are relevant to paying distributions to
our shareholders and to eliminate fair
value adjustments and other non-cash
adjustments as required by IFRS. These
simplified statements do not comply with
IFRS. The IFRS-compliant statements are
set out on pages 45 to 75.
Conclusion
Percentage
30
Financial results and
simplified accounting
information
The performance of the Fund for the
year ended 31 March 2014 was pleasing
as the Fund continues to deliver on
its objectives of delivering long-term
growth in income and capital returns to
its shareholders.
Whilst the challenging operating and
market environment is expected to
continue the quality of the Fund’s real
estate fundamentals, low gearing, longdated interest rate maturity profile and
experienced board and management team
should enable the Fund to continue to
deliver distribution growth substantially in
line with that of previous years.
Hedged position
2013
2014
75%
84%*
Gearing
2013
2014
10.7%
16.8%
Weighted average swap expiry
2013
2014
3 years
4 years
Funding cost
2013
2014
8.2%
8.5%*
Weighted average debt expiry
2013
2014
2.3 years
2.8 years
*Post conclusion of commercial paper
issue and completion of announced
acquisitions
FY19
The Fund values its relationships with all its
stakeholders, and will continue to deliver to
meet stakeholders’ expectations.
I wish to thank our tenants and suppliers
without whom we would not be in
existence, and the continued commitment
and support of the board, sub-committees
and the management team.
22
Investec Property Fund Limited integrated annual report and financial statements 2014
Chief executive officer’s report (continued)
Distribution reconciliation
R’000
Profit after taxation
Add: debenture interest
Less: fair value adjustments
Profit on disposal of investment property
Straight-line rental revenue adjustment
Antecedent interest
Distributable earnings
Less: interim dividends paid
Final distribution
Shares in issue and to be issued at 31 March
Final distribution per share/unit (cents)
Interim distribution per share/unit (cents)
Total distribution
2014
2013
506 735
119 935
(211 610)
(10 988)
(45 132)
32 925
391 865
(180 768)
211 097
365 576 663
57.74
50.46
108.20
171
236 576
82 856
(39 066)
(43 790)
11 500
248 247
(79 618)
168 629
317 220 000
53.16
46.83
99.99
Year ended
31 March
2014
Year ended
31 March
2013
Simplified statement of comprehensive income
R’000
565 994
(90 586)
475 408
(32 105)
443 303
211 610
10 988
7 354
(46 624)
(119 935)
39
506 735
375 188
(59 669)
315 519
(20 875)
294 644
(82 856)
39 066
–
(14 041)
(236 576)
(66)
171
Simplified statement of financial position
31 March
2014
31 March
2013
6 117 243
4 187 000
5 824 833
292 410
4 187 000
–
436 082
452 343
6 553 325
4 639 343
Shareholders’/unitholders’ interest
Non-current liabilities
Current liabilites
5 112 629
944 864
495 832
3 943 176
455 294
240 873
Total equity and liabilities
Net asset value per share/linked unit (cents)*
* Includes shares to be issued included in equity.
6 553 325
1 398.51
4 639 343
1 243.04
R’000
Assets
Non-current assets
Investment property
Other assets
Current assets
Total assets
Equity and liabilities
Investec Property Fund Limited integrated annual report and financial statements 2014
23
Executive reports
Revenue
Property expenses
Net property income
Operating expenses
Operating profit
Fair value adjustments
Profit on disposal of investment property
Income from investment
Net finance cost
Debenture interest
Taxation
Profit after tax
02
Directorate
Executive directors
Sam Hackner (58)
Executive chairman
BCom (Hons), Dip Acc, CA(SA)
Committees: Investment (chairman),
standing invitation to all committee meetings
Sam Hackner has over 33 years of
experience in the property industry and
at 31 March 2014 is the chief executive
officer and global head of Investec Property.
In 2003 he was appointed chairman of
Growthpoint, the largest property REIT
listed on the JSE. Sam resigned as
chairman of Growthpoint in July 2008, a
year after the property management and
asset management functions were sold by
Investec to Growthpoint. He is currently
chairman of Investec Property Fund, which
listed on the JSE in April 2011 and has
grown more than 300% since listing. He
is also a member of the board of directors
and advisory board of the Investec GLL
Global Special Opportunities Real Estate
Fund, a €375 million Luxembourg-based
fund for investment in global real estate,
and a non-executive director of Investec
Australia Property Fund.
Samuel R Leon (64)
Chief executive officer
LLB (London)
Committees: Investment, social and ethics,
standing invitation to all committee meetings
Executive reports
02
Sam Leon has over 37 years of experience
across all sectors of the property industry
with 23 years at Investec Property (Pty) Ltd,
firstly as a director, then managing director
and currently as deputy chairman. He
was a founder of the transformation of
Growthpoint into South Africa’s largest
listed property REIT and was a director until
Investec sold its interests in October 2007.
Sam was also a director of specialist
listed property fund Metboard Properties
Limited, until it was sold to Growthpoint in
April 2007, as well as a board member of
SAPOA (the South African Property Industry
body). He is currently chief executive
officer of Investec Property Fund and a
member of the board of directors and
advisory board of the Investec GLL Global
Special Opportunities Real Estate Fund (a
€375 million Luxembourg-based fund for
investment in global real estate) and a nonexecutive director and key driver of Investec
Australia Property Fund which listed on the
JSE in October 2013.
24
David AJ Donald (63)
Chief financial officer
BCom, HDip Taxation Law, CA(SA)
Committees: Audit and risk
Dave Donald has significant experience
in accounting and finance and is currently
a director of Investec Property (Pty) Ltd,
a position held since 2001, where he is
responsible for operational, accounting
and finance functions. From 1983 to 1997,
he was a partner at Coopers & Lybrand
in Johannesburg.
Non-executive directors
Michael P Crawford (71)
Lead independent non-executive director
Committees: Audit and risk, investment,
nominations
Michael Crawford has approximately
36 years of experience in property
development. He was the founding
shareholder of RPP Developments, a
successful property development fund,
and acted as managing director and later
chairman thereof. Michael is currently the
chairman of Stratford Property Ventures.
Major developments overseen by him
include Centurion Shopping Mall, Fourways
Golf Park (office park), Linbro Park
(industrial), Northgate Shopping Centre and
the Tygerberg Business Park (industrial),
and a non-executive director of Investec
Australia Property Fund.
Constance M Mashaba (52)
Independent non-executive director
BCom (Hons) Business Management
Committees: Audit and risk, social and ethics
Constance Mashaba has been with
Black Like Me products since inception in
1985, working as their financial manager.
She took over as managing director in
2005. She has been a board member of
Deutsche Bank Africa Foundation since
2009. Constance serves as non-executive
chairman of The Energy Company (Pty) Ltd
and as a non-executive director of African
Equity Corporation (Pty) Ltd. She has a
BCom (Hons) in finance and a certificate
in marketing from the AAA School
of Marketing.
Moses M Ngoasheng (56)
Independent non-executive director
BA Economics and Politics, BSoc
Sci (Hons), MPhil
Committees: Investment, nominations,
social and ethics (chairman)
Moses Ngoasheng previously worked in the
ANC’s economics department until 1993
when he joined Gencor’s Group Strategy
Department. The following year he founded
an investment company, Safika Holdings
(Pty) Ltd, of which he is currently the chief
executive officer. In 1995, he was requested
by deputy president Thabo Mbeki to
become his economic adviser. When
Mr Mbeki was made president in 1999,
Moses became economic adviser to the
President. In 2000, he returned to Safika
as chairman and assisted in building the
company into a substantial business.
Graham R Rosenthal (69)
Independent non-executive director
CA(SA)
Committees: Audit and risk (chairman),
nominations
Graham Rosenthal spent his entire
professional career with Arthur Andersen
and its predecessors, retiring as an
international partner in 2000 after having
been in charge of their South African
audit and business advisory practice. He
currently serves as a non-executive director
and chairman of the audit committees of
three listed companies, serves as a nonexecutive member of credit committees of
the Investec group and as a trustee of their
staff share schemes.
Suliman Mahomed (65)
Independent non-executive director
Committees: Investment
Suliman Mahomed has over 36 years’
experience in the investment and
development of commercial property. He
is presently chairman and chief executive
of the Solly’s Group of companies, Solly’s
Discount World, Solly Noor Properties and
Computron.
Luigi LM Giuricich (53)
Non-executive director
BCompt (Hons), CA(SA)
Committees: Investment
Luigi Giuricich completed his articles at
Peat Marwick Mitchell and Co (now KPMG).
He has over 24 years of experience across
all sectors of the construction and property
sectors. Starting as the financial director of
the S. Giuricich group of companies in 1990,
he currently holds numerous directorships of
group and associate companies.
Investec Property Fund Limited integrated annual report and financial statements 2014
Corporate governance and
risk management
Corporate governance
Sound corporate governance is a cornerstone of our values, culture, processes,
functions and organisational structure. Our business is structured in a manner that
ensures that our values and ethics remain embedded in all our business processes.
We continually strive to enhance these structures and processes and a written
statement of values serves as our code of ethics.
This section provides an overview of our corporate governance philosophy and practices.
Our culture and values
Stakeholders
(shareholders, regulators, clients, suppliers, communities)
Underpinning legislative, regulatory and
best practice requirements are Investec’s
values and philosophies which provide
the framework against which we measure
behaviour and conduct to ensure the highest
levels of corporate governance. Our values
require that directors and employees act
with integrity, displaying consistent and
uncompromising moral strength and
conduct in order to promote and maintain
trust amongst all our stakeholders.
Board of directors
Audit and risk
committee
Corporate governance and risk management
Board statement
The board, management and employees
of the Manager of the Fund are fully
committed to complying with all applicable
regulatory requirements as well as the King
Code of Governance Principles for South
Africa (King III). As a listed entity, we are
also obliged to comply with the JSE Limited
(JSE) listings requirements. Stakeholders
can rest assured at all times, that we are
managed ethically and in compliance
with current legislation and regulation in
accordance with recognised best practice.
Given the common brand, the Investec
group’s values and philosophies are the
benchmark against which we measure
behaviour and practices.
03
Social and ethics
committee
Investment
committee
Nominations
committee
Audit and compliance
implementation forums
Internal audit
Compliance
King III
The board is of the opinion that, in the year
under review, the Fund has complied with
the majority of the King III principles. This
is evidenced by the information disclosed
throughout this report.
An overview of the all the principles and the
extent of their application is illustrated on
pages 80 to 83.
The following principle of King III is currently
not being applied by Investec:
•
Sustainability reporting and disclosure
should be independently assured.
External auditors
Sustainability reporting and related
disclosure have not been independently
assured by an external expert. The audit
committee has overseen the integrated
annual report, including sustainability
disclosures, which have been verified by the
Internal Audit division.
We recognise the importance of
sustainability reporting and the need
for verification of our efforts in this area.
However, this is a developmental area
and we will aim to commission external
verification as the Fund grows and this
discipline evolves into the future.
Governance framework
The Fund has adopted a risk and governance structure which allows for the operation of the
various board committees.
A diagram of the governance framework is depicted above. The roles and responsibilities of
the various board committees can be found on page 30 of the corporate governance report.
26
Investec Property Fund Limited integrated annual report and financial statements 2014
Corporate governance (continued)
Financial reporting and
going concern
The board is required to confirm that it
is satisfied that the Fund has adequate
resources to continue in business for the
foreseeable future.
The assumptions underlying the going
concern statement are discussed at the
time of the approval of the annual financial
statements by the board. These include:
•
Budgeting and forecasts
•
Profitability
•
Capital
•
Liquidity.
In addition, the directors are responsible for
monitoring and reviewing the preparation,
integrity and reliability of the annual financial
statements, accounting policies and the
information contained in the integrated
annual report.
Our annual financial statements are
prepared on a going concern basis, taking
into consideration:
•
The Fund’s strategy and prevailing
market conditions and business
environment
•
Nature and complexity of our business
•
Risks we assume, and their
management and mitigation
•
Key business and control processes
in operation
•
Credit rating and access to capital
•
Needs of all our stakeholders
•
Operational soundness
•
Accounting policies adopted
•
Corporate governance practices
•
Desire to provide relevant and
clear disclosures
•
Operation of board committee support
structures.
Processes are in place to monitor internal
control effectiveness, identify and report
material breakdowns, and ensure that
timely and appropriate corrective action
is taken.
Furthermore, the board is of the opinion
that the risk management processes and
systems of internal control are effective.
The board of directors
Internal control
Risks and controls are reviewed and
monitored regularly for relevance and
effectiveness. The audit and risk committee
assists the board in this regard. Robust risk
management practices are promoted by
the group risk management function, which
is independent of operational management.
The board recognises its responsibility for
the overall risk and control framework and
for the ongoing review of its effectiveness.
The board is ultimately responsible for
the financial performance and corporate
governance of the Fund.
The board together with the constituted board
committees are responsible for assessing
and managing risk policies and philosophies,
ensuring appropriate internal controls,
overseeing major capital expenditure,
acquisitions and disposals, approving the
establishment of businesses and approving
the introduction of new products and
services. In fulfilling its responsibilities, the
board together with management implements
the plans and strategies.
Internal control is designed to mitigate,
not eliminate, significant risks faced.
It is recognised that such a system
provides reasonable, but not absolute,
assurance against material error, omission,
misstatement or loss. This is achieved
through a combination of risk identification,
evaluation and monitoring processes,
appropriate decision and oversight forums,
and assurance and control functions such
as risk management, internal audit and
compliance. These ongoing processes
were in place throughout the year under
review and up to the date of approval of the
integrated annual report and accounts.
The board seeks to exercise leadership,
integrity and judgment in pursuit of strategic
goals and objectives, to achieve long-term
sustainability, growth and prosperity. It
provides leadership within a framework
of prudent and effective controls which
ensures that risks are assessed and
properly managed.
Internal Audit reports any control
recommendations to senior management,
Group Risk Management and the audit and
risk committee. Appropriate processes,
including review by the audit and
compliance implementation forums, ensure
that timely corrective action is taken on
matters raised by Internal Audit.
•
Approves the Fund’s strategy
•
Ensures that the Fund complies with
the applicable laws and considers
adherence to non-binding rules
and standards
•
Is responsible for the governance
of risk, including that of information
technology (IT)
•
Acts as focal point for and custodian of
corporate governance
•
Provides effective leadership based on
an ethical foundation
•
Ensures the Fund is and is seen to be a
responsible corporate citizen.
Internal financial controls
Internal financial controls are based on
established policies and procedures.
Management is responsible for
implementing internal financial controls
by ensuring that personnel are suitably
qualified, that appropriate segregation
exists between duties, and that there is a
suitable level of independent review. These
areas are monitored by the board through
the audit and risk committee and are
independently assessed by Internal Audit
and Compliance.
Investec Property Fund Limited integrated annual report and financial statements 2014
The board is guided by a board charter,
which provides a framework within which
the board operates as well as the type of
decisions to be taken by the board and
which should be delegated to management.
The board:
Corporate governance and risk management
In undertaking this responsibility, the
directors are supported by an ongoing
process for identifying, evaluating and
managing the significant risks, the Fund
faces in preparing financial and other
information contained in this integrated
annual report. The process is implemented
by management and independently
monitored for effectiveness by the audit and
risk and other sub-committees of the board.
The board is of the opinion, based on its
knowledge of the workings of the Fund,
key processes in operation and specific
enquiries, that there are adequate resources
to support the Fund as a going concern for
the foreseeable future.
03
The board meets its objectives by reviewing
and guiding corporate strategy, setting
the values and standards, promoting
high standards of corporate governance,
approving key policies and objectives and
27
Corporate governance (continued)
•
Ensures information assets are
managed effectively
competent and experienced to perform the
role of company secretary.
•
Certain matters are specifically reserved
for the board. To achieve its objectives, the
board may delegate certain of its duties
and functions to various board committees,
or the CEO, without abdicating its
own responsibilities:
Ensures the appropriate risk
governance, including IT, are in place
including continual risk monitoring
by management, determines the
levels of risk tolerance and that risk
assessments are performed on a
continual basis
The company secretary is responsible for
the flow of information to the board and its
committees and for ensuring compliance
with board procedures. All directors have
access to the advice and services of the
company secretaries whose appointment
and removal are a board matter.
•
Ensures the integrity of the company’s
integrated annual report, which includes
sustainability reporting
Independent advice
•
•
Ensures the induction of, and ongoing
training and development of, directors
•
Evaluates the performance of
senior management and considers
succession planning.
ensuring that obligations to its shareholders
and other stakeholders are understood
and met. By understanding the key
risks, determining our risk tolerance and
approving and reviewing the processes in
operation, the board seeks to mitigate risk
from materialising.
•
The board has formally defined and
documented, by way of terms of
reference, the authority it has delegated
to the various board committees
In fulfilling its responsibilities, the
board is supported by management in
implementing the plans and strategies
approved by the board.
Furthermore, directly or through its subcommittees, the board:
•
Corporate governance and risk management
03
Assesses the quantitative and
qualitative aspects of performance
through a comprehensive system
of financial and non-financial
monitoring involving an annual budget
process, detailed monthly reporting,
regular review of forecasts and
regular management strategic and
operational updates
•
Approves annual budgets, capital
plans, projections and business plans
•
Monitors compliance with relevant
laws, regulations and codes of
business practice
•
•
•
•
•
28
Ensures there are processes in place
enabling complete, timely, relevant,
accurate and accessible risk disclosure
to stakeholders and monitors our
communication with all stakeholders and
disclosures made to ensure transparent
and effective communication
Identifies and monitors key risk areas
and key performance indicators
Reviews processes and procedures
to ensure the effectiveness of internal
systems of control
Ensures we adopt sustainable business
practices, including our social and
environmental activities
Assisted by the audit committee,
ensures appropriate IT governance
processes are in place, and ensures
that the process is aligned to the
performance and sustainability
objectives of the board
Membership
During the course of the year under review,
the board comprised three executive
directors and six non-executive directors.
At 31 March 2014, the board was
compliant with Chapter 2, Principle 2.18 of
King III in that the majority of non-executive
directors were independent.
A summary of the factors the board uses
to determine the independence of nonexecutive directors is detailed below:
Chairman and chief executive officer
The roles of the chairman and chief
executive officer are distinct and separate
with a clear division of responsibilities
that has been approved by the board.
The chairman leads the board and is
responsible for ensuring that the board
receives accurate, timely and clear
information to ensure that directors can
perform their duties effectively.
Lead independent director
Mike Crawford is the lead independent
director (LID) appointed in accordance
with King III to overcome any potential
issues arising from the existence of a nonindependent chairman. He is available to
address any concerns or questions from
shareholders and non-executive directors.
Through the chairman or the company
secretary, individual directors are entitled
to seek professional independent advice
on matters related to the exercise of their
duties and responsibilities at the expense
of the Fund.
Re-election of board members
In accordance with the Memorandum of
Incorporation, at least one-third of the nonexecutive directors will retire at each annual
general meeting.
Tenure
The board is of the view that none of the
current non-executive directors has served
on the board for a period which materially
interferes with their ability to act in the
Fund’s best interests. The board is of the
view that the non-executive directors are
independent of management and promote
the interests of stakeholders. The balance
of executive and non-executive directors
is such that there is a clear division of
responsibility to ensure a balance of power,
such that no one individual or group
can dominate board processes or have
unfettered powers of decision-making.
Skills, knowledge, experience
and attributes of directors
The board considers that the skills,
knowledge, experience and attributes of the
directors as a whole are appropriate for their
responsibilities and our activities. The directors
bring a range of skills to the board including:
•
International business and operational
experience
•
Understanding of the economics of the
sectors in which we operate
•
Knowledge of the regulatory
environments in which the
Fund operates
•
Financial, accounting, legal and
property experience and knowledge.
Company secretaries
The company secretarial role is performed
by Investec Bank Limited. The role of
company secretary is performed by Benita
Coetsee who oversees the company
secretarial services rendered by Investec
Bank Ltd to Investec Property Fund Ltd. Ms
Coetsee is not a director or a shareholder
of the Fund and the board is of the opinion
that Ms Coetsee maintains an arm’s
length relationship with the board and the
individual directors as envisaged by the JSE
listing requirements. The board maintains
the view that she is suitably qualified,
The skills and experience profile of the
board and its committees are regularly
reviewed to ensure an appropriate and
relevant composition from a governance,
succession and effectiveness perspective.
Investec Property Fund Limited integrated annual report and financial statements 2014
Corporate governance (continued)
Board and directors’
performance evaluation
Terms of appointment
The performance of the board, its
committees and individual directors’ are
formally evaluated on an annual basis
against recognised standards of corporate
governance and covers all areas of the
board’s processes and responsibilities.
The performance evaluation process takes
place both formally and informally, through
personal observations and discussions,
and/or in the form of evaluation
questionnaires. The results are considered
and deliberated upon by the board.
The LID holds one-on-one meetings with
each director to discuss the results of the
formal and informal evaluations and, in
particular, to seek comments on strengths
and developmental areas of the members,
the chairman and the board as a whole.
Individual training and development needs are
discussed with each board member and any
requests for training are communicated to the
company secretaries for implementation.
On appointment, non-executive directors
are provided with a letter of appointment.
The letter sets out, among other things,
duties, responsibilities and expected
time commitments, details of our policy
on obtaining independent advice and,
where appropriate, details of the board
committees of which the non-executive
director is a member.
Ongoing training and
development
On appointment, directors are provided
with an induction pack and participate in
an induction programme tailored to their
needs, to ensure they become familiar
with the business operations, senior
management, our business environment
and internal controls, policies, processes
and systems for managing risk.
Directors’ ongoing training and
development is a standing board agenda
item, including updates on various
training and development initiatives.
Board members receive regular formal
presentations on regulatory and governance
matters as well as on the business and
support functions.
Remuneration
Details of the directors’ remuneration are set
out in the remuneration report on page 41.
The Fund is managed by an external
management company, Investec Property
(Pty) Ltd (the Manager), and therefore has
no employees or personnel of its own.
The executive directors are not remunerated
by the Fund. Instead, they are remunerated
by the Manager, which in turn derives its
income from the asset management fee
paid to the Manager by the Fund.
The remuneration of non-executive directors
is determined according to the number
of board and sub-committee meetings
attended by the non-executive directors
during the financial year. The fees payable
to the non-executive directors are fully
disclosed and subject to the approval of the
company’s shareholders.
Board
meeting
Amount
Audit and risk
committee
meeting*
R26 250
R15 750
Investment
committee
meeting*
R15 750
Social and
ethics
committee
meeting*
Investment
committee
resolutions
R15 750
R5 250
* An additional R5 250 is paid to the chairman of these committees.
Board meetings
The board of the Fund meets at least four times annually. Five board meetings were held during the reporting period.
The chairman is responsible for setting the agenda for each meeting, in consultation with the chief executive officer and the company
secretaries. Comprehensive information packs on matters to be considered by the board are provided to directors in advance of the meetings.
Directors
Executive directors
Sam Hackner (chairman)
Samuel R Leon
(chief executive officer)
David AJ Donald
(chief financial officer)
Non-executive directors
Michael P Crawford (LID)
Constance M Mashaba
Graham R Rosenthal
Moses M Ngoasheng
Suliman Mahomed
Luigi LM Giuricich
Audit
Social
and risk
Investment and ethics
committee* committee^ committee
Independent
Years of
service
Board
No
No
3 years
3 years
5 (5)
5 (5)
No
3 years
5 (5)
*
Yes
Yes
Yes
Yes
Yes
No
3 years
2 years, 6 months
2 years, 7 months
2 years, 6 months
23 months
16 months
5 (5)
5 (5)
5 (5)
4 (5)
3 (5)
5 (5)
4 (4)
4 (4)
4 (4)
3 (3)
3 (3)
Nominations
committee**
03
2 (3)
3 (3)
–
3 (3)
2 (3)
2 (3)
3 (3)
3 (3)
–
–
* By invitation.
** No appointments were dealt with by the nominations committee in the current year.
^ Three meetings were held by the investment committee, in addition to various resolutions being passed during the current year.
Biographical details of the directors are set out on page 24.
The remuneration report, as set out on pages 41 and 42, contains details of Investec shares held by directors.
Investec Property Fund Limited integrated annual report and financial statements 2014
Corporate governance and risk management
The proposed remuneration of non-executive directors for the year ending 31 March 2015 is set out below.
29
Corporate governance (continued)
Directors’ dealings
Board committees
Directors’ dealings in the securities of
IPF are subject to a policy based on
regulatory requirements and governance
best practice. All directors’ dealings require
the prior approval of the compliance
function and the chairman or, in the
chairman’s absence, another independent
director or the LID. All dealings of persons
discharging management responsibilities
require approval by line management, the
compliance division and the chairman.
The board is empowered to delegate to
various board and executive committees.
The committees have specific terms
of reference, appropriately skilled
members and access to specialist advice
when necessary.
Board committees and responsibilities
Board of directors
•
•
•
•
Approves the Fund’s strategy
Ensures that the Fund complies with all
applicable laws
Is responsible for the governance of risk,
including that of information technology (IT)
Acts as focal point for, and custodian of,
corporate governance.
•
•
•
Provides effective leadership based upon an
ethical foundation
Approves the terms of reference of board
committees
Ensures the Fund operates as a responsible
corporate citizen.
Corporate governance and risk management
Remuneration
committee
The board is of the view that a remuneration
committee is not required. The operations of the
Fund are undertaken by the Manager, accordingly
the Fund does not have any employees. The
executive directors are employed by the Manager
and are not remunerated for their services as
directors of the Fund. The remuneration of the
non-executive directors is determined by the
board.
Audit and risk
committee
The audit and risk committee roles and
responsibilities include:
• Reviewing reports and annual financial
statements and the integrated annual report
• Reviewing the appropriateness of accounting
policies and application
• Overseeing the external audit process
• Considering the external audit scope
• Reviewing internal audit plans, reports,
capacity and capability
•
•
•
•
•
Ensuring compliance with legal requirements,
accounting standards and the JSE listings
requirements
Ensuring the finance functions of the Manager,
as they pertain to the Fund, are adequately
skilled, resourced and experienced
Ensuring the expertise and experience of the
financial director is appropriate.
Ensuring the effectiveness of the internal
financial controls
Ensuring that the external auditors are
independent.
03
Social and ethics
committee
Since the functions of the committee are universal
in nature, the board resolved to constitute the
committee to monitor the activities of the Fund.
There is a significant degree of overlap between
matters dealt with by the audit and risk committee
and the social and ethics committee.
assurance in relation to the compliance function,
control framework, procedure and processes as
well as any other matters where there may be an
overlap with issues dealt with by the audit and risk
committee or attending meetings of the SEC to
provide feedback.
The chairman of the audit and risk committee is
tasked with tabling a report at the SEC to give
30
Investec Property Fund Limited integrated annual report and financial statements 2014
Corporate governance (continued)
Board committees and responsibilities (continued)
Nominations
committee
Investment
committee
The nominations committee roles and
responsibilities include:
• Identifying and nominating suitable
candidates to fill vacancies on the board
• Determining and evaluating the adequacy,
efficiency and appropriateness of the
corporate governance structure and
practices
• Establishing and maintaining a board
directorship continuity programme to:
–
review the performance of and planning
for successors to the executive directors
and chairperson of the board
The investment committee roles and
responsibilities include:
• Review and approve any proposed
–
acquisitions or disposals of investment
properties or related investments
–
development or redevelopment
opportunities
–
any other investments or disinvestments
for which the board may require
investment committee approval
Operational risk
Our comprehensive risk management
process involves identifying, quantifying,
managing and mitigating the risks
associated with the business.
We endeavour to manage operational risk
exposures and events by maintaining and
embedding an operational risk management
framework which supports sound
operational risk management practices.
Risk awareness, control and compliance
are embedded in all our day-to-day
activities. Investec Group Risk Management
monitors, manages and reports on our risk
to ensure it is within the stated risk appetite
as mandated by the board of directors
through the operational risk function. The
Fund is ultimately responsible for specific
risks that arise.
We monitor and control risk exposure
through Operational, Compliance and Legal
Risk reporting teams. This approach is core
to assuming a tolerable risk and reward
profile, helping us to pursue sustainable
growth across our business.
•
•
•
•
•
ensure the continued presence of nonexecutive directors
–
conduct an annual self-assessment of
the board
Regularly reviewing the structure, size and
composition (including the skills, knowledge
and experience) of the board
Making recommendations to the board with
regard to any proposed board changes
Making recommendations to the board for
the retention of a current director.
Ensure all investment proposals approved by
them are in the best interests of the Fund
Assess whether any proposed deal is
capable of causing significant risk, conflict of
interest or embarrassment to the Fund.
Corporate governance and risk management
Risk Management
–
Policies and procedures are developed
at an Investec group level to ensure
that operational risk is managed in an
appropriate and consistent manner. The
embedded risk managers (ERMs) manage
operational risk through review, challenge
and escalation of issues. Significant risk
exposures and events are subject to action
and escalation by the ERMs in terms of the
operational risk appetite policy. This policy
sets out the operational risk exposure that
the group is willing to accept or retain.
03
With oversight from the board,
management implements and embeds
policies and procedures to manage
operational risk and ensures alignment with
the approved risk appetite.
Investec Property Fund Limited integrated annual report and financial statements 2014
31
Risk management
Risk
Impact
Mitigation
Operational
risk due to
inadequate or
failed internal
processes
Loss or volatility of earnings
•
Promotion of appropriate and relevant operational risk
management practices.
Business
continuity risk
Loss of important management
information, delays in billing
and collections in revenue
or payment of expenditure
resulting in client queries and
inaccurate expenses.
•
The Manager forms part of the Investec global business
continuity management capability which focuses on building
an appropriate level of resilience into Investec’s operations to
mitigate the risk of severe operational disruptions occurring
and with information security being a key area of focus.
Regular testing exercises are conducted annually, to ensure
that its recovery capability remains appropriate
The property management process is sub-contracted to the
various property management companies, which adopt a
similar process to mitigate the risk of operational disruptions
at its business. The Fund has confirmed these processes with
the property management companies.
•
Corporate governance and risk management
Interest rate risk
Movements in interest rates will
result in increased borrowing
costs, and hence reduce the
distributable borrowings
•
•
75% of the borrowings are hedged by an interest rate swap
Monitoring of the costs of borrowings and restructuring the
borrowings whenever appropriate.
Liquidity risk
Inability to take advantage of
investment opportunities and
thus reducing the distributable
earnings
•
Manage our cash flows and monitor the liquidity needs via
accurate forecasts of cash requirements
Manage the maturity of debt to ensure evenly spread
Ensure there is a contingency funding plan (the R500 million
bridge loan facility).
•
Buying properties at prices
above market rates
Making investments where
the yield does not cover the
cost of financing
Capital erosion
Reduction of distributable
earnings
•
Client dissatisfaction and
non-renewal of leases
•
Investment risk
•
03
•
•
Poor service
from the property
managers
(Growthpoint,
Finlays,
Periscopic and
Hermans and
Romans)
32
•
•
•
•
•
•
•
Investment committee reviews and approves all investments
with reference to internal valuations and forecasts
Detailed due diligence process
Ensuring a fairly conservative approach seeking to acquire
properties that offer good value with consistent and reliable
income streams.
Service level agreements with the property managers outlining
minimum service levels expected
Constant and open communication with the property
managers to ensure their goals are aligned with those of
the Fund
Communication with clients to identify any deficiencies in the
quality of service.
Investec Property Fund Limited integrated annual report and financial statements 2014
Risk management (continued)
Risk
Impact
Mitigation
Vacancies
•
Loss of revenue
•
•
Decreased distributable
earnings
•
•
Erosion of rental income
and increases in property
holding costs
Increases in tenant
installation and letting
commissions
Potential of discounting
the rental rates to below
market rates
•
•
Reputation tarnished and
return to shareholders
reduced
Investments inappropriate
due to conflicts of interests
•
•
Lease expiries
concentrated in
a single period
•
•
Reputational risk
and conflicts of
interest
•
•
•
Monitoring the lease expiry profiles
Concentration of management on tenant retention and
renewals
Dedicated team of external brokers focused on securing
long-term leases.
Board of directors committed to integrity and honesty
Board-approved policy statement in place to ensure that we
comply with all relevant public disclosure obligations and
uphold the board’s communication and disclosure philosophy
Investment committee comprises a majority of independent
directors to mitigate any potential conflicts of interest that
may arise when considering acquisition opportunities from
the Investec group.
Property damage
or destruction
risk
•
Unforeseen damage to
properties could increase
expenses and thus reduce
the distributable earnings
•
The Manager maintains adequate insurance to cover key
insurable risks of the Fund.
Regulatory and
compliance risk
•
Potential non-compliance
with any regulatory
requirements may result
in reputational risk and
possible penalties
•
The board members endeavour to comply with the highest
professional standards of integrity and behaviour, which
builds trust
The Investec Group Compliance and Group Legal functions
ensure that the Fund and the Manager continuously comply
with existing and emerging regulations that impact on
its operations.
Information
security risk
•
Foreign
exchange risk
•
•
Leaks of information could
result in reputational risk
and loss of clients
•
Volatility of distributions
from investments in
foreign entities declaring
distributions in currencies
other than Rands
•
Investec Property Fund Limited integrated annual report and financial statements 2014
•
Corporate governance and risk management
•
Monitoring the tenancy schedules to ensure vacancies are
known about in advance
Asset managers continually looking for prospective clients and
meeting their needs.
03
Strong controls are in place over information systems and
data management
Group ERM focuses on ensuring confidentiality, integrity and
integrity of information.
Hedging strategies are implemented by taking out forward
exchange contracts to offset currency variation.
33
Risk management (continued)
Insurance
The Fund maintains the requisite insurance
to cover key insurable risks. The insurance
process and Risk Management and Group
Insurance Risk Management ensure that
there is an exchange of information in order
to enhance the mitigation of operational risks.
Business continuity
management
In the event of a major disruption, an
incident management framework is used
to manage the disruption. Continuity is
achieved through an orchestrated response,
which includes relocating impacted
business to the designated recovery site(s).
Dedicated resources ensure all governance
processes are in place with business and
technology teams responsible for activating
and managing the recovery process.
The group conducts regular exercises and
testing of recovery procedures to ensure that
its recovery capability remains appropriate.
Legal risk management
Corporate governance and risk management
03
Legal risk is the risk of loss resulting from
any of our rights not being fully enforceable
or from our obligations not being properly
performed. This includes our rights and
obligations under contracts entered into with
counterparties.
We seek to actively mitigate these risks by
identifying them, setting minimum standards
for their management and allocating clear
responsibility for such management to
legal risk managers, as well as ensuring
compliance through proactive monitoring.
Overall responsibility for this policy rests
with the board. The board delegates
responsibility for implementation of the
policy to the head of legal risk.
Internal Audit
Internal Audit activity is governed by an
internal audit charter which is approved
by the audit committee and is reviewed
annually. The charter defines the purpose,
authority and responsibilities of the function.
The head of internal audit reports to the
audit and risk committee meeting and has
a direct reporting line to the chairman of the
audit committee. He operates independently
of executive management but has access
to the chief executive officer. The head of
internal audit is responsible for coordinating
internal audit efforts to ensure coverage
is adequate and departmental skills are
leveraged to maximise efficiency.
Every year, Internal Audit conducts a formal
risk assessment of the entire business
from which a comprehensive risk-based
audit plan is derived. The assessment and
programme are validated by executive
34
management and approved by the audit
and risk committee.
to conduct an indicative assessment of the
Fund’s current BBBEE status.
Internal Audit also liaises with the external
auditors and other assurance providers to
enhance efficiencies in terms of combined
assurance. The annual plan is reviewed
regularly to ensure it remains relevant and
responsive, given changes in the operating
environment. The audit and risk committee
approves any changes to the plan.
The indicative rating yielded a score of
level 4. A formal verification has been
scheduled for 2014, with certification
due to be concluded during June 2014.
Amendments to the DTI Codes were
published on 11 October 2013. The Property
Sector Charter is in the process of being
amended to comply with the new Codes.
Significant control weaknesses are reported,
in terms of an escalation protocol, to the
assurance forums where remediation
procedures and progress are considered
and monitored in detail by management.
REIT legislation
The audit and risk committee receives a
report on significant issues and actions taken
by management to enhance related controls.
An update on the status of previously
raised issues is provided by Internal Audit
to the audit and risk committee; if there are
concerns in relation to overdue issues these
will be escalated to the executive risk review
forum to expedite resolution.
Compliance
The Fund endeavours to comply with the
highest professional standards of integrity
and behaviour, always keeping the interests
of our customers and shareholders at the
forefront of the corporate agenda. We
also seek to establish high standards of
compliance practice to build trust and
promote the quality of service to our
colleagues and clients.
Compliance risk is managed through
internal policies and procedures, which
include legal, regulatory and operational
requirements relevant to the business. In
addition to monitoring compliance with the
provisions prescribed by the respective
regulatory authorities, key compliance
functions include ensuring that the business
is not being used for money laundering,
terrorist financing or market abuse, that
customers are fairly treated and afforded
the necessary consumer protections and
that conflicts of interests are adequately
identified and managed.
The Fund was approved as a REIT by the
JSE with effect from 1 April 2013. The
conversion of the Fund’s capital structure
from a linked unit to an ordinary share was
approved by shareholders at the annual
general meeting held on 16 August 2013.
The MOI has been amended and registered
by the CIPC.
Protection of Personal
Information Act (POPI)
Once enacted in full, POPI will have a
material impact on all aspects of the Fund’s
business that concern the processing
of personal information in respect of
our clients.
Competition Commission
All transactions in excess of the prescribed
thresholds require Competition Commission
approval. All notifications and applications
are dealt with by attorneys who specialise in
this field of law. The acquisitions during the
period, including Nicol on Main, McCarthy
Menlyn and Barinor, were approved
without conditions.
Communication, public
disclosure obligations and
stakeholder relations
The board recognises that effective
communication is integral to building
stakeholder value and is committed to
providing meaningful, transparent, timely
and accurate financial and non-financial
information to primary stakeholders. The
aim is to enable stakeholders to make
meaningful assessments and informed
investment decisions about the Fund.
The board recognises that the objectives
of the charter are a vital component of the
overall sustainability of the company. It is a
stated intention, to develop strategies that
address each of the key components of the
charter. The Fund is required to comply fully
with the charter.
We endeavour to present a balanced and
understandable assessment of our position
by addressing material matters of significant
interest and concern. We seek to highlight
the key risks to which we consider ourselves
exposed and our responses to minimise the
impact of these risks. Another objective is
to show a balance between the positive and
negative aspects of our activities in order to
achieve a comprehensive and fair account
of our performance.
The social and ethics committee is
responsible for overseeing implementation
of the objectives of the charter. In the year
under review, Empowerdex was mandated
We comply with the disclosure obligations
contained in the JSE Listing Rules and with
any public disclosure obligations required by
the regulators.
Recent developments affecting compliance
in the sector include:
Property Sector Charter
Investec Property Fund Limited integrated annual report and financial statements 2014
Our stakeholders
Goal
To comply with
the disclosure
obligations
contained in
the applicable
JSE listings
requirements.
The company
secretary and
our sponsor –
the Corporate
Finance Division
of Investec Bank
Limited – ensure
that we meet our
public disclosure
obligations.
•
Significant announcements
are released directly to the
market primarily via the
services offered by the JSE.
These documents are also
released on our website
•
Maintenance of a
comprehensive investor
relations component to
the Fund’s website, which
ensures that all stakeholders
readily have access to
historical and current
information
•
Executive management meet
with the key shareholders at
least twice a year, after the
release of interim and yearend results
•
Shareholders are encouraged
to attend the annual general
meeting and to raise
issues and participate in
discussions on items included
in the notice of the annual
general meeting
•
The chairpersons of the
audit and risk, social and
ethics, investment and the
nominations committees, as
well as the LID, attend the
annual general meeting to
respond to relevant questions
•
All valid proxy appointments
are recorded and counted
and, at general meetings,
a schedule of the proxy
votes cast is available to
all shareholders
•
Separate resolutions are
posed on each substantially
separate issue and do not
bundle resolutions together
inappropriately. All resolutions
are determined on a poll
•
Shareholders are required
to approve the integrated
annual report, accounts
and the remuneration of our
non-executive directors. The
outcome of votes are released
on the stock exchange news
services (SENS) and posted
on our website
•
The chairperson and
the non-executive
directors are committed
to communicating with
shareholder representative
bodies to help develop a
balanced understanding of
their issues and concerns.
We will continue to engage
these bodies so as to
remain informed of emerging
governance issues.
Corporate governance and risk management
We have a boardapproved policy
statement in
place to ensure
that we comply
with all relevant
public disclosure
obligations and
uphold the board’s
communication
and disclosure
philosophy.
Processes to ensure compliance with public disclosure
03
Investec Property Fund Limited integrated annual report and financial statements 2014
35
Sustainability report
Sustainable business
practices
Our sustainability goals reflect our culture
of continuous advancement and reaffirm
our belief that sustainability in its broadest
sense is about managing and positioning
the business for the long term. IPF’s
sustainability philosophy is based on the
recognition that we are driven by our
commitment to our culture and values.
Corporate governance and risk management
Our approach to sustainability reflects our
acute awareness of the need for longevity
and an ingrained understanding of the
practices that underpin sustainability.
This approach is documented throughout
the integrated annual report. The Fund
has decided to report on a basis that
integrates both financial and non-financial
information in line with King III Code’s
recommendations. Thus this integrated
annual report to stakeholders reflects how
economic, social and environmental issues
have impacted on our business strategy
and, in turn, how these are considered
when making business decisions.
Sustainability is a key strategic issue and is
about:
•
Managing and positioning the Fund for
the long term
•
Building a sustainable business
model that allows us to make a
valuable contribution to society, to
macro-economic stability and to our
environment.
Environmental
sustainability
Investec Property Fund Limited
acknowledges that environmental
responsibility is an integral part of its
future success. As such, we have begun
a sustainability project not to only better
understand and reduce the impact of our
properties on the environment, but also
selectively introduce technologies that will
ensure more efficient use of utilities, thereby
benefiting both the Fund and our tenants.
Utility consumption and cost KPIs were
developed and a benchmarking exercise
was conducted on our entire portfolio to
establish a baseline per property. These
baselines were analysed and compared to
similar buildings in the portfolio and industry
and sectorial averages. Buildings that
were not performing optimally against the
benchmark were identified, and these were
further unpacked to identify opportunities
for the introduction of efficiency initiatives
and technologies. The short-term focus
was on the introduction of relatively low
cost initiatives producing immediate
returns, the ‘low hanging fruit’, and marked
savings in both cost and usage have
been achieved.
In line with the medium- to long-term
aim of the programme, other more
costly technologies will be evaluated
and introduced on a pilot basis, such as
energy-saving devices, water harvesting,
possible use of solar power and recycling.
The viability and appropriateness of such
initiatives and technologies will be tested
over the medium term and the successful
alternatives will, where appropriate, be
rolled out across the portfolio.
Of critical importance is ensuring that,whilst
our environmental responsibilities are
discharged, we invest in projects that will
be economically viable; as such, the Fund
will analyse those areas that will benefit
most – and provide the highest returns
to stakeholders – from investment in
new technologies.
Change in expense (R/m2) against benchmark
Percentage
20.0
17.6%
15.0
03
Electricity expense
10.0
5.0
0
(2.7%)
-5.0
(5.3%)
-10.0
(12.5%)
-15.0
Industrial
36
Retail
Commercial
Total portfolio
Industrial
Retail
Commercial
Total portfolio
Investec Property Fund Limited integrated annual report and financial statements 2014
Financial
statements
Directors’ responsibility statement
The directors are responsible for the
preparation and fair presentation of the
annual financial statements of Investec
Property Fund Limited.
These financials comprise:
•
Statement of financial position at
31 March 2014
•
Statement of comprehensive income
for the year ended 31 March 2014
•
Statement of changes in equity for the
year ended 31 March 2014
•
Statement of cash flows for the year
ended 31 March 2014
•
Notes to the annual financial
statements, which include a summary
of significant accounting policies and
other explanatory notes, and
•
Directors’ report,
in accordance with International Financial
Reporting Standards and the requirements
of the Companies Act, as amended.
The directors are also responsible for
such internal controls as they determine
necessary to enable the preparation of
annual financial statements that are free
from material misstatement, whether due to
fraud or error, and for maintaining adequate
accounting records and an effective system
of risk management.
The directors have made an assessment
of the ability of the company to continue
as a going concern and have no reason to
believe that the business will not be a going
concern in the year ahead.
The auditor is responsible for reporting on
whether the annual financial statements
are fairly presented in accordance with the
applicable financial reporting framework.
Approval of the
company’s annual
financial statements
The annual financial statements of Investec
Property Fund Limited, as identified in
the first paragraph, were approved by the
board of directors on 20 June 2014 and are
signed on their behalf by:
Sam Hackner
Chairman
Samuel R Leon
Chief executive officer
Annual financial statements
20 June 2014
Sandton
Certificate of company secretary
In terms of section 88(2)(e) of the Companies Act No 71 of 2008, as amended (the Act), we hereby certify that the company has filed the
required returns and notices in terms of the Act for the financial year ended 31 March 2014 and that, to the best of our knowledge and
belief, all such returns and notices are true, correct and up to date.
04
Benita Coetsee
Company secretary
Investec Bank Limited
20 June 2014
Sandton
38
Investec Property Fund Limited integrated annual report and financial statements 2014
Independent auditor’s report
to the members of Investec Property Fund Limited
We have audited the financial statements
of Investec Property Fund Limited, which
comprise the statement of financial position
at 31 March 2014, and the statement
of comprehensive income, statement
of changes in equity and statement of
cash flows for the year then ended, and
the notes, comprising a summary of
significant accounting policies and other
explanatory information.
the appropriateness of accounting policies
used and the reasonableness of accounting
estimates made by management, as well
as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
Directors’ responsibility
for the financial
statements
The company’s directors are responsible
for the preparation and fair presentation of
these financial statements in accordance
with the International Financial Reporting
Standards and the requirements of the
Companies Act of South Africa, and for
such internal control as the directors
determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
Auditor’s responsibility
Ernst & Young Inc.
Director – Rosanne de Lange
Registered Auditor
Chartered Accountant (SA)
102 Rivonia Road
Sandton
Johannesburg
2196
Annual financial statements
Our responsibility is to express an opinion
on these financial statements based on
our audit. We conducted our audit in
accordance with International Standards
on Auditing. Those standards require
that we comply with ethical requirements
and plan and perform the audit to obtain
reasonable assurance about whether
the financial statements are free from
material misstatement.
In our opinion, the financial statements
present fairly, in all material respects, the
financial position of Investec Property
Fund at 31 March 2014, and its financial
performance and cash flows for the
year then ended in accordance with the
International Financial Reporting Standards
and the requirements of the Companies Act
of South Africa.
20 June 2014
An audit involves performing procedures
to obtain audit evidence about the
amounts and disclosures in the financial
statements. The procedures selected
depend on the auditor’s judgement,
including the assessment of the risks of
material misstatement of the financial
statements, whether due to fraud or
error. In making those risk assessments,
the auditor considers internal control
relevant to the entity’s preparation and fair
presentation of the financial statements in
order to design audit procedures that are
appropriate in the circumstances, but not
for the purpose of expressing an opinion
on the effectiveness of the entity’s internal
control. An audit also includes evaluating
Investec Property Fund Limited integrated annual report and financial statements 2014
04
39
Report of the audit and risk committee
The audit and risk committee of the Fund
has pleasure in submitting this report to
shareholders as required by the Companies
Act No 71 of 2008 (the Companies Act)
and as recommended by the King III Code
of Governance Principles for South Africa
(the King III Code).
The activities of the audit and
risk committee (the committee),
which comprises three
independent non-executive
directors, are determined by its
terms of reference and mandate
as set out on page 30.
The committee is satisfied that it has
considered and discharged its
responsibilities in terms of its mandate
and terms of reference, the King III Code
and the Companies Act.
The committee carried out its duties by,
inter alia, reviewing the following:
Annual financial statements
•
Internal audit reports
•
Financial management reports
•
Information technology reports
pertaining to financial reporting
•
External audit reports
•
Management’s enterprise risk
assessment.
The abovementioned information,
together with interaction with the external
and internal auditors, management and
other invitees attending meetings in an
ex officio capacity, enabled the committee
to conclude that the risk management
process and systems of internal financial
control have been designed and were
operating effectively during the year.
company policy in this regard.
Accordingly, the committee nominates
Ernst & Young Inc. as independent
auditors to continue in office until
the conclusion of the 2015 annual
general meeting
•
The company has complied with the
majority of the principles of the King III
Code and the JSE listings requirements
•
It considered and approved the audit
fee payable to the external auditors in
respect of the audit for the year ended
31 March 2014 as well as their terms of
engagement and scope of the audit
•
That the appointment of the external
auditor and IFRS adviser are in
compliance with the Companies Act,
the Auditing Professions Act and the
JSE listings requirements
•
With the effectiveness of the internal
audit function and that the system
of internal financial control in all key
material aspects is effective and
provides reasonable assurance that
the financial records may be relied
upon for the preparation of the annual
financial statements
•
With the expertise and experience of
the chief financial officer and the overall
adequacy and appropriateness of the
finance function.
The committee, having fulfilled the oversight
role regarding the reporting process and
the integrated annual report, recommends
the integrated annual report and the annual
financial statements at and for the year
ended 31 March 2014 for approval by the
board of directors.
The committee is satisfied:
04
•
Its members have the requisite financial
skills and experience to contribute to
its deliberations
Graham Rosenthal
Chairman
Audit and risk committee
•
With the independence and
effectiveness of the external auditor,
including the provision of non-audit
services and compliance with the
20 June 2014
Sandton
40
Investec Property Fund Limited integrated annual report and financial statements 2014
Directors’ report
The Fund launched as a variable loan stock
company on the JSE on 14 April 2011 in the
Real Estate Holdings and Development Sector.
The Fund subsequently became a REIT on
1 April 2013 and converted its capital structure
to all-equity in August 2013.
Upon listing on the JSE on 14 April 2011,
the Fund had an initial investment
property portfolio of 29 properties. We
have concluded 21 acquisitions since the
previous integrated annual report with
effective dates or transfer dates prior to
year end and in addition have disposed
of two properties which brings our
current investment property portfolio to
69 properties in South Africa with a total
gross lettable area (GLA) of 693 257m²
valued at R5.8 billion.
Authorised and issued
share and debenture
capital
In addition, the Fund issued 41 011 620
ordinary shares as part of its accelerated
bookbuild undertaken in December 2013.
Therefore, at 31 March 2014 there are
358 231 620 ordinary shares in issue.
Financial results
The results of the Fund are set out in
the annual financial statements and
accompanying notes for the year ended
31 March 2014.
Graham R Rosenthal, Suliman Mahomed
and Luigi LM Giuricich retire by rotation at
the forthcoming annual general meeting
in terms of article 22 of the company’s
Memorandum of Incorporation, and offer
themselves for re-election.
Effective 1 April 2014, Sam Hackner
assumed the role of non-executive
chairman of Investec Property (Pty) Ltd, the
Manager of IPF. As a result, his designation
changed from executive chairman to nonexecutive chairman of the Fund, effective
the same date.
Directors’ interests
in shares
Distributions
An interim dividend number 5 of
50.4613 cents per share was declared for
the six months ended 30 September 2013.
The distribution was paid on
17 December 2013.
Shareholders were given notice of a
final dividend declaration number 6 of
57.744 cents per share for the six months
ended 31 March 2014. The final distribution
was paid on Tuesday, 17 June 2014.
Directors and secretary
The directors’ interests in shares
are set out on page 78.
Directors’ remuneration
Executive directors who are employed
by the Manager will not be remunerated
directly by the Fund for their services as
directors, as the Fund pays the asset
management fee to the Manager.
The remuneration paid to the executive
directors for their services as directors of
the Fund is paid by the Manager.
Annual financial statements
The authorised share capital of the
Fund is 1 000 000 000 ordinary shares
of no par value at 31 March 2014.
On 16 August 2013, shareholders and
debenture holders approved the conversion
of the Fund’s linked unit structure to that of
an all-equity capital structure. To achieve
this, each linked unit was replaced with
a delinked ordinary share with the fair
value of debentures capitalised to stated
capital and the Fund’s ordinary par value
shares converted to ordinary no par value
shares. The conversion was effected on
25 November 2013.
Details of the directors and
company secretary can be found
on pages 28 and 29 of these
annual financial statements.
The remuneration paid by the Manager to the executive directors for the current financial year for services on behalf of the Fund, and who
act as the prescribed officers of the Fund, is as follows:
Fees for
Salary other services
For the year ended 31 March 2014
R’000
Provident
pension
fund and
medical aid
contributions
Bonuses
Total
Director
Sam Hackner
1 786 000
–
–
–
1 786 000
Samuel R Leon
2 296 000
–
–
–
2 296 000
David AJ Donald
1 021 000
–
–
–
1 021 000
Total
5 103 000
–
–
–
5 103 000
The remuneration paid by the Fund to the non-executive directors for the current year is as follows:
Investec Property Fund Limited integrated annual report and financial statements 2014
41
04
Directors’ report (continued)
Directors’
fees
Fees for
other
services
Provident
pension
fund and
medical aid
contributions
Michael P Crawford
250 000
–
–
–
250 000
Luigi Giuricich
190 000
–
–
–
190 000
For the year ended 31 March 2014
R’000
Bonuses
Total
Director
Suliman Mahomed
120 000
–
–
–
120 000
Constance M Mashaba
230 000
–
–
–
230 000
Moses M Ngoasheng
210 000
–
–
–
210 000
Graham R Rosenthal
205 000
–
–
–
205 000
1 205 000
–
–
–
1 205 000
Total
Corporate governance
The Fund’s corporate
governance board statement and
governance framework are set
out on pages 25 to 36.
Interests in subsidiaries
Annual financial statements
04
Major shareholders
Ernst & Young Inc. have indicated their
willingness to continue in office as auditors
of Investec Property Fund Limited.
A resolution to appoint them as auditors
will be proposed at the annual general
meeting scheduled to take place on Friday,
25 July 2014.
Contracts
The Fund does not have any contracts
with directors.
42
•
Authority was granted to the company
to delink the company’s par value
shares and debentures comprising the
linked units
•
Authority was granted to the company
to capitalise the value allotted to a
debenture in the books of account
of the company to form part of the
company’s stated capital account
•
Authority was granted to the company
to terminate the Debenture Trust Deed
and to cancel the debentures without
payment to debenture holders
•
The company’s existing authorised
ordinary share capital of par value
shares be converted into no par value
shares without altering the substance
of the specific rights and privileges
associated with each share
•
The existing Memorandum of
Incorporation of the company be
amended to include a clause with
regards to the company’s REIT status
and to reflect the change to no par
value shares.
The largest shareholders of the
Fund are set out on page 77.
Special resolutions
At the annual general meeting of
shareholders and general meetings of
shareholders and debenture holders held
on 16 August 2013, special resolutions
were passed in terms of which:
•
Further details on the role
and responsibility of the audit
and risk committee are set out on page 30.
Auditors
Authority was granted to the company
to amend the Debenture Trust
Deed to authorise the delinking and
capitalisation of the debentures
The Fund does not have any subsidiaries.
Audit and risk committee
The audit and risk committee comprising
independent non-executive directors meets
regularly with the senior management of
the Manager, the external auditors, Investec
Operational Risk, Investec Internal Audit,
Investec Compliance and Investec Finance,
to consider the nature and scope of the
audit reviews and the effectiveness of our
risk and control systems.
•
•
A renewable authority was granted to
the directors to allot and issue linked
units for cash in respect of 6.96% of
the unissued linked units in terms of the
provisions of the Companies Act,
No 71 of 2008
A renewable authority was granted to
the company to acquire its own linked
units in terms of the provisions of the
Companies Act No 71 of 2008
•
A renewable authority was granted
to the company to approve directors’
remuneration in order to comply with
the provisions of sections 66(11)(h)
and 66(9) of the Companies Act,
No 71 of 2008
•
A renewable authority was granted
to the company to provide financial
assistance to subsidiaries and other
related entities in order to comply with
the provisions of sections 44 and 45 of
the Companies Act No 71 of 2008
Investec Property Fund Limited integrated annual report and financial statements 2014
Directors’ report (continued)
Accounting policies and
disclosure
The asset management fee paid by the
Fund to the Manager for the current year
amounted to R26.4 million.
Accounting policies are set having regard
to commercial practice, and comply
with applicable South African law and
International Financial Reporting Standards.
Investec Property (Pty) Ltd has decided to
change some of the property management
companies to which it outsourced some of
the property management and, with effect
from 1 July 2014, Broll has been appointed
to attend to this function on behalf of
Investec Property (Pty) Ltd in replacement
of Growthpoint.
These policies are set out on
pages 52 to 55.
Financial instruments
Detailed information on the
Fund’s risk management process
and policy can be found in the
risk management report on
pages 31 to 34.
Information on the Fund’s use of
derivatives and hedges can be
found on pages 32 and 33 and in
note 27.
Management and
administration
We are committed to pursuing sound
environmental policies in all aspects of our
business and we seek to encourage and
promote good environmental practice with
our clients and the communities in which
we operate.
Capital commitments
At 31 March 2014 the Fund had entered
into agreements to purchase properties to
a value of R341.2 million.
Subsequent events
No events were recorded post the financial
year ended 31 March 2014.
Annual financial statements
With effect from 1 April 2011, Investec
Property (Pty) Ltd, a wholly owned
subsidiary of Investec, has been
undertaking, in terms of an asset
management and property management
agreement, the Fund’s asset management
and property management activities.
Investec Property (Pty) Ltd has, in turn,
outsourced all of the property management
to property management companies,
namely Growthpoint, Finlays, Periscopic
and Hermans & Romans.
Environmental policies
04
Investec Property Fund Limited integrated annual report and financial statements 2014
43
Statement of comprehensive income
For the year ended 31 March
R’000
Notes
Revenue, excluding straight-line rental revenue adjustment
Straight-line rental revenue adjustment
Revenue
2
Property expenses
3
Net property income
Other operating expenses
Operating profit
Fair value adjustments
5
Profit on sale of investment property
Income from investment
Finance costs
6
Finance income
7
Profit before debenture interest and taxation
Debenture interest
9
Profit before taxation
Taxation
8
Profit after taxation
Items that may be reclassified to profit and loss
Other comprehensive income: unrealised gain on cash flow hedge
2014
2013
520 862
331 398
45 132
43 790
565 994
375 188
(90 586)
(59 669)
475 408
315 519
(32 105)
(20 875)
443 303
294 644
211 610
(82 856)
10 988
39 066
7 354
–
(57 369)
(39 184)
10 745
25 143
626 631
236 813
(119 935)
(236 576)
506 696
237
39
(66)
506 735
171
276
–
Total comprehensive income attributable to equity holders
507 011
171
Number of shares
Shares
Linked units
358 231 620
317 220 000
Shares in issue at the end of the year
14
Annual financial statements
Shares to be issued
Weighted average number of shares in issue
Distribution per linked unit
Earnings per linked unit
Headline earnings per linked unit
7 345 043
–
330 736 792
236 430 502
Cents
Cents
9
–
99.99
10
–
100.13
–
119.44
Basic earnings per share
153.30
0.07
Headline earnings/(loss) per share
142.03
(40.60)
At year end there were no debentures in place and therefore no linked units.
04
44
Investec Property Fund Limited integrated annual report and financial statements 2014
Statement of financial position
At 31 March
R’000
Notes
2014
2013
Assets
Non-current assets
6 117 243
4 187 000
Investment property
11
5 708 131
4 115 125
Straight-line rental revenue adjustment
11
116 702
71 875
Derivative financial instruments
Investment
11
Current assets
3 714
–
288 696
–
436 082
452 343
Trade and other receivables
12
77 766
53 613
Cash and cash equivalents
13
358 316
398 730
6 553 325
4 639 343
Total assets
Equity and liabilities
Shareholders’ interest
Stated capital
14
Cash flow hedge reserve
Retained earnings
Debentures
15
Total shareholders’/unitholders' interest
Non-current liabilities
16
Long-term borrowings
Other non-current financial liabilities
Current liabilities
3 172
4 645 756
3 172
276
–
466 597
–
–
3 940 004
5 112 629
3 943 176
944 864
455 294
944 864
450 000
–
5 294
240 873
17
415 771
76 625
Current portion of other non-current liabilities
16
80 017
–
44
41
–
164 207
6 553 325
4 639 343
1 398.5
1 243.0
Linked unitholders for interest and dividends
Total equity and liabilities
Net asset value per share/linked unit (cents)*
Includes shares to be issued included in equity.
Annual financial statements
495 832
Trade and other payables
Taxation payable
*
5 112 629
04
Investec Property Fund Limited integrated annual report and financial statements 2014
45
Statement of changes in equity
For the year ended 31 March
R’000
Stated
capital
Other
Total
Retained comprehensive shareholders’
earnings
reserve
interest
Balance at 1 April 2012
1 700
–
–
1 700
Issue of ordinary shares
1 472
–
–
1 472
Total comprehensive income attributable to
equity holders
–
171
–
171
Dividends payable to ordinary shareholders
–
(171)
–
(171)
3 172
–
–
3 172
4 088 881
–
–
4 088 881
3 969 661
–
–
3 969 661
(715)
–
–
(715)
119 935
–
–
119 935
Balance at 31 March 2013
Capital conversion
Fair value of debentures to stated capital
Expenses on conversion
Fair value of debenture interest to stated capital
Total comprehensive income attributable to
equity holders
Equity raised
Dividends payable to ordinary shareholders
–
506 735
276
507 011
594 000
–
–
594 000
–
(180 768)
–
(180 768)
Share to be issued
100 333
–
–
100 333
Transfers between reserves
(140 630)
140 630
–
–
(20 695)
20 695
–
–
(119 935)
119 935
–
–
4 645 756
466 597
276
5 112 629
Antecedent dividends
Debenture interest
Balance at 31 March 2014
Annual financial statements
04
46
Investec Property Fund Limited integrated annual report and financial statements 2014
Statement of cash flows
For the year ended 31 March
R’000
Cash generated from operations
Notes
2014
2013
19
390 903
236 976
Finance income received
10 745
20 712
Finance costs paid
(48 494)
(29 887)
Taxation paid
(46)
(28)
(344 975)
(163 404)
8 133
64 369
Investment property acquired
(972 970)
(1 698 266)
Investment in IAPF
(235 500)
–
51 423
240 579
Distribution paid to shareholders/unitholders
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds on sale of investment property
Capital expenditure
Net cash outflow from investing activities
(60 500)
(27 977)
(1 217 547)
(1 485 664)
495 000
–
Cash flows from financing activities
Term loans raised
Bridge loans raised
Corporate bonds issued
Repayment of current loans
Proceeds from issue of shares
Proceeds from issue of debentures
Net cash inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
13
80 000
–
–
450 000
–
(130 900)
594 000
1 132
–
1 495 226
1 169 000
1 815 458
(40 414)
394 163
398 730
4 567
358 316
398 730
Annual financial statements
04
Investec Property Fund Limited integrated annual report and financial statements 2014
47
Segmental analysis
For the year ended 31 March 2014
R’000
Office
Industrial
Retail
Total
520 862
Statement of comprehensive income
Revenue, excluding straight-line rental revenue adjustment
174 860
134 470
211 532
Straight-line rental revenue adjustment
31 631
10 733
2 768
45 132
Property expenses
(28 036)
(21 382)
(41 168)
(90 586)
178 455
123 821
173 132
475 408
33 770
59 231
93 857
186 858
212 225
183 052
266 989
662 266
Segment results
Net investment property revaluation
Total segment results
Other operating expenses
(32 105)
Other fair value adjustments
24 752
Profit on sale of investment property
10 988
Finance costs
(57 369)
Finance income
10 745
Income from investment
7 354
Profit before debenture interest and taxation
626 631
Statement of financial position extracts at 31 March 2014
Investment property balance – 1 April 2013
Acquisitions
Disposals
Developments and capital expenditure
Fair value adjustments
Straight-line revenue adjustment
Investment property at 31 March
1 499 200
995 550
1 692 250
4 187 000
827 927
278 930
288 646
1 395 503
(40 600)
–
(40 600)
–
1 869
39 890
9 181
50 940
33 770
59 231
93 857
186 858
2 362 766
1 333 001
2 083 934
5 779 701
31 631
10 733
2 768
45 132
2 394 397
1 343 734
2 086 702
5 824 833
Other assets not managed on a segmental basis
Annual financial statements
04
728 492
Total assets at 31 March 2014
For the year ended 31 March 2014
R’000
6 553 325
Gauteng
Western
Cape
KwaZuluNatal
Eastern
Cape
7 090
Statement of comprehensive income
Revenue, excluding straight-line rental revenue adjustment
360 835
62 572
22 727
Straight-line rental revenue adjustment
32 821
8 441
4 340
186
Property expenses
(77 204)
(5 289)
(214)
(630)
Segment results
316 452
65 724
26 853
6 646
Total fair value adjustment on total investment property
154 132
(18 275)
8 646
3 673
Statement of financial position extracts at 31 March 2014
Investment property balance – 1 April 2013
2 613 100
585 500
244 000
65 700
Acquisitions
1 238 973
101 850
7 613
19 851
Disposals
(28 600)
–
(12 000)
–
Developments and capital expenditure
43 388
3 334
–
14
Fair value adjustments
Straight-line revenue adjustment
Investment property at 31 March
154 132
(18 275)
8 646
3 673
4 020 993
672 409
248 259
89 238
32 821
8 441
4 340
186
4 053 814
680 850
252 599
89 424
Other current assets not managed on a segmental basis
Total assets at 31 March 2014
48
Investec Property Fund Limited integrated annual report and financial statements 2014
Free State
Mpumalanga
Limpopo
Northern
Cape
Total
1 674
8 542
29 680
26 402
1 340
520 862
131
(825)
348
(1 143)
833
45 132
(61)
(881)
(4 328)
(1 840)
(139)
(90 586)
1 744
6 836
25 700
23 419
2 034
475 408
1 369
(2 675)
16 674
24 169
(855)
186 858
17 000
98 000
293 700
270 000
–
4 187 000
–
–
194
–
27 022
1 395 503
–
–
–
–
–
(40 600)
–
–
4 030
174
–
50 940
1 369
(2 675)
16 674
24 169
(855)
186 858
18 369
95 325
314 598
294 343
26 167
5 779 701
131
(825)
348
(1 143)
833
45 132
18 500
94 500
314 946
293 200
27 000
5 824 833
Annual financial statements
North West
04
728 492
6 553 325
Investec Property Fund Limited integrated annual report and financial statements 2014
49
Segmental analysis (continued)
For the year ended 31 March
R’000
Office
Industrial
Retail
Total
331 398
Statement of comprehensive income – 2013
Revenue, excluding straight-line rental revenue adjustment
139 648
115 047
76 703
Straight-line rental revenue adjustment
24 378
11 717
7 695
43 790
Property expenses
(23 045)
(18 682)
(17 942)
(59 669)
140 981
108 082
66 456
315 519
25 779
68 962
23 500
118 241
166 760
177 044
89 956
433 760
Segment results
Net investment property revaluation
Total segment results
Other operating expenses
(20 875)
Other fair value adjustments
(201 097)
Profit on sale of investment property
39 066
Finance costs
(39 184)
Finance income
25 143
Profit before debenture interest and taxation
236 813
Statement of financial position extracts at 31 March 2013
Investment property balance – 1 April 2012
1 182 600
779 800
103 000
2 065 400
Acquisitions
445 304
120 639
1 556 473
2 122 416
Disposals
(200 000)
–
–
(200 000)
Developments and capital expenditure
21 139
14 432
1 582
37 153
Fair value adjustments
50 157
80 679
31 195
162 031
1 499 200
995 550
1 692 250
4 187 000
Investment property at 31 March
Other assets not managed on a segmental basis
452 343
Total assets at 31 March 2013
Annual financial statements
For the year ended 31 March
R’000
4 639 343
Gauteng
Western
Cape
KwaZuluNatal
Eastern
Cape
6 293
Statement of comprehensive income – 2013
Revenue, excluding straight-line rental revenue adjustment
220 759
47 019
29 093
Straight-line rental revenue adjustment
24 103
10 572
5 667
556
Property expenses
(49 414)
(3 338)
(2 098)
(328)
Segment results
195 448
54 253
32 662
6 521
Total fair value adjustment on total investment property
105 607
23 383
2 000
9 200
Investment property balance – 1 April 2012
1 216 900
460 500
317 000
56 500
Acquisitions
1 380 580
99 686
–
–
(125 000)
–
(75 000)
–
Statement of financial position extracts at 31 March 2013
04
Disposals
Developments and capital expenditure
Fair value adjustments
Investment property at 31 March
35 013
1 931
–
–
105 607
23 383
2 000
9 200
2 613 100
585 500
244 000
65 700
Other current assets not managed on a segmental basis
Total assets at 31 March 2013
50
Investec Property Fund Limited integrated annual report and financial statements 2014
Free State
Mpumalanga
Limpopo
Total
1 594
2 290
8 195
16 155
331 398
92
491
1 188
1 121
43 790
(39)
(245)
(942)
(3 265)
(59 669)
1 647
2 536
8 441
14 011
315 519
2 500
(516)
10 515
9 342
162 031
14 500
–
–
–
2 065 400
–
98 516
283 185
260 449
2 122 416
–
–
–
–
(200 000)
–
–
–
209
37 153
2 500
(516)
10 515
9 342
162 031
17 000
98 000
293 700
270 000
4 187 000
Annual financial statements
North West
04
452 343
4 639 343
Investec Property Fund Limited integrated annual report and financial statements 2014
51
Notes to the annual financial statements
Accounting policies
Basis of preparation
The annual financial statements for the
year ended 31 March 2014 are prepared
in accordance with the International
Financial Reporting Standards, SAICA
Financial Reporting Guides as issued by
the Accounting Practices Committee and
Financial Reporting Standards Council,
as well as the requirements of the
Companies Act.
The annual financial statements have been
prepared on a historical cost basis, unless
otherwise indicated.
Fair value adjustments, where applicable,
do not affect the calculation of distributable
earnings per share to the extent that
adjustments are made to the carrying
values of assets and liabilities.
The annual financial statements are prepared
on the going concern basis and the
accounting policies set out below have been
applied consistently by the Fund, except
for IFRS 13.
Annual financial statements
04
The preparation of annual financial
statements in conformity with IFRS requires
the board to make judgements, estimates
and assumptions that affect the application
of policies and reported amounts of assets
and liabilities, income and expenses. The
estimates and associated assumptions
are based on historical experience and
various other factors that are believed to be
reasonable under the circumstances, the
results of which form the basis of making
judgements about carrying values of assets
and liabilities that are not readily apparent
from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions
are reviewed on an ongoing basis.
Revisions to accounting estimates are
recognised in the period in which the
estimate is revised if the revision affects only
that period, or the period of the revision and
future periods if the revision affects both
current and future periods.
The investment in the IAPF is considered
an associate in terms of IAS 28. The Fund
has elected to measure the investment at
fair value through profit or loss in both the
separate and consolidated annual financial
statements of the Investec Property Fund
using the venture capital exemption on
consolidation and classifying the investment
in terms of IAS 39 – Financial Instruments:
52
Recognition and Measurement at fair value
through profit and loss in the separate
annual financial statements. These
statements therefore constitute both the
consolidated and separate annual financial
statements of the Fund.
Interest income
Interest earned on cash invested with financial
institutions is recognised in the statement of
comprehensive income on an accrual basis
using the effective interest method.
Financial instruments
Segmental reporting
Determination and presentation of
operating segments
The Fund has the following operating
segments:
•
Retail properties
•
Office properties
•
Industrial properties.
The above segments are derived from the
way the business of the Fund is structured
and managed. The Fund manages its
business in the retail, office and industrial
property sectors where resources are
specifically allocated to each sector in
achieving the Fund’s stated objectives.
Segment results include revenue and
expenses directly attributable to a segment,
and the relevant portion of enterprise revenue
and expenses that can be allocated on a
reasonable basis to a segment. Segment
assets and liabilities comprise those assets
and liabilities that are directly attributable to
the segment on a reasonable basis.
Segment capital expenditure is the
total cost incurred during the period on
investment property in each segment.
Revenue recognition
Revenue consists of rental income
measured at fair value.
Revenue is recognised when it can be
reliably measureable and it is probable
that the economic benefits will flow to the
Fund. The following specific recognition
criteria must also be met before revenue
is recognised:
Revenue from the letting of investment
property in terms of rental agreements
comprises gross rental income and
recoveries of fixed operating costs, net of
value added tax. Rental income is recognised
in profit or loss on a straight-line basis over
the term of the rental agreement. Recoveries
of costs from lessees, where the Fund merely
acts as an agent and makes payment of
these costs on behalf of lessees, are offset
against the relevant costs.
Financial instruments are initially recognised
at their fair value plus, for financial assets or
financial liabilities not at fair value through
profit or loss, transaction costs that are
directly attributable to the acquisition or
issue of the financial assets or financial
liabilities. All other transaction costs are
charged to profit or loss in the statement of
comprehensive income immediately.
Any gains or losses on these instruments
arising from fair value adjustments, where
appropriate, do not affect distributable
earnings. The Fund recognises financial
instruments on the date it commits to
purchase or sell such instruments. From
this date, any gains and losses in the fair
value of the financial assets and financial
liabilities are charged to profit or loss in the
statement of comprehensive income.
Certain financial instruments are designated
upon initial recognition as at fair value
through profit or loss as this eliminates
or significantly reduces a measurement
or recognition inconsistency that would
otherwise arise from measuring assets or
liabilities or recognising gains or losses on
them on different bases.
The Fund 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 Fund is recognised as a separate asset
or liability. The Fund derecognises a financial
liability when its contractual obligations are
discharged, cancelled or expired.
Trade and other receivables
Trade and other receivables are initially
recognised and subsequently measured at
cost, which approximates fair value as the
effect of discounting is immaterial on these
instruments. Any gains or losses on trade
and other receivables are charged to profit
or loss in the statement of comprehensive
income. An estimate is made for credit
losses based on a review of all outstanding
amounts at the year end. Bad debts are
written off as an expense in the statement
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
of comprehensive income during the year in
which they are identified.
Cash and cash equivalents
Cash and cash equivalents comprise
cash balances and call deposits. Cash
equivalents are short-term, highly liquid
investments that are readily convertible to
known amounts of cash and which are
subject to an insignificant risk of change in
fair value. Cash and cash equivalents are
measured at amortised cost.
Trade and other payables
Trade and other payables are initially
recognised and subsequently measured
at amortised cost, which approximates
fair value as the effect of discounting is
immaterial on these instruments. Any gains
or losses on trade and other payables are
charged to profit or loss in the statement of
comprehensive income.
designated at fair value, as this eliminates
or significantly reduces a measurement
or recognition inconsistency that would
otherwise arise if this was subsequently
measured at amortised cost.
Other financial liabilities
Non-derivative financial liabilities, other than
debentures, trade and other payables and
long-term borrowings, are measured initially
and subsequently at fair value, with gains
or losses being recognised in profit or loss
in the statement of comprehensive income.
The fair value is estimated by discounting
the future cash payments using the market
rate applicable at the reporting date.
Financial assets and liabilities are offset
when there is both an intention to settle on a
net basis (or simultaneously) and a currently
enforceable legal right to offset exists.
Impairment of financial assets
Long-term borrowings
Long-term borrowings are initially
recognised and subsequently measured at
amortised cost for long-term borrowings
with a fixed interest rate. Long-term
borrowings with a variable interest rate are
At each statement of financial position
date the Fund reviews the carrying values
of financial assets for an indication of
impairment. The carrying value is compared
to the estimated recoverable amount,
with any excess of the carrying value over
the recoverable amount impaired and
recognised as an impairment.
For amounts due to the Fund, significant
financial difficulties of the debtor, probability
that the debtor will enter bankruptcy and
default of payments are all considered
indicators of impairment. Impairment losses
are recognised in profit or loss.
Impairments of receivables
The Fund assesses its receivables for
impairment at the end of each reporting
period and when an indicator of impairment
is identified. In determining whether an
impairment loss should be recorded in profit
or loss, the Fund makes judgements as to
whether there is observable data indicating
a measurable decrease in the estimated
future cash flows from a financial asset.
The impairment for receivables is calculated
on a portfolio basis, based on historical loss
ratios, adjusted for national and industry
specific economic conditions and other
indicators present at the reporting date that
correlate with defaults on the portfolio.
Investment property
Properties held by the Fund which are held
for capital appreciation or rental income
are classified as investment properties.
Investec Property Fund Limited integrated annual report and financial statements 2014
Investment property under construction is
measured at fair value. Direct costs relating
to major capital projects are capitalised
until the properties are brought into
commercial operation.
Subsequent to initial recognition,
investment properties are measured at
their fair value. Investment property is
maintained, upgraded and refurbished,
where necessary, in order to preserve or
improve the capital value as far as it is
possible to do so. Maintenance and repairs
which neither materially add to the value of
the properties nor prolong their useful lives
are charged against profit or loss in the
statement of comprehensive income.
Independent valuations are obtained on
a rotational basis, ensuring that every
property is valued at least once every three
years by an external independent valuer.
The directors value the remaining properties
that have not been independently valued
annually on an open market basis.
Directors’ valuations are prepared by
considering the aggregate of the net annual
rental receivable from the properties with
market evidence as support. The directors
are confident that their valuations accurately
represent the fair value.
Gains or losses on subsequent
measurement or disposals of investment
properties are recognised in profit or
loss in the statement of comprehensive
income. Such gains or losses are excluded
from the calculation and determination
of distributable earnings.
For all investment property that is measured
at fair value, the current use of the property
is considered the highest and best use.
Investment property is valued by using the
income capitalisation method. Under the
income capitalisation method a property’s
fair value is estimated based on the
53
Annual financial statements
Impairment
The Fund utilises derivative financial
instruments to hedge its exposure to
interest rate risk arising from its financing
activities as well as foreign exchange
risk relating to expected inflows from the
investment in IAPF. In accordance with its
treasury policy, the Fund does not hold
or issue derivative financial instruments
for trading purposes. Derivatives used to
hedge interest rate risk are not designated
as a hedge for accounting purposes and
are accounted for at fair value. Derivatives
held to hedge foreign exchange exposure
are designated as cash flow hedges
for accounting purposes.
Derivative financial instruments are initially
recognised at cost and subsequently
measured at fair value. In the case of
derivatives not designated as hedges, any
gains or losses are charged to profit or loss
in the statement of comprehensive income.
In the case of derivatives designated as
cash flow hedges, the ineffective portion of
the gain or loss on the hedging instrument
shall be recognised in profit and loss
immediately and the effective portion
recognised in other comprehensive income.
Should any properties no longer meet the
Fund’s investment criteria and are sold, any
profits or losses will be of a capital nature
Offset
Derivative financial instruments
All derivative instruments of the Fund are
recorded in the statement of financial
position at fair value.
Investment properties are carried in the
statement of financial position at fair value,
with fair value gains and losses recognised
in the statement of comprehensive
income. Investment property consists of
land and buildings, installed equipment
and undeveloped land held to earn rental
income and capital appreciation over the
long term. Properties are measured initially
at cost at acquisition, and subsequent
additions that will result in future economic
benefits and whose cost can be measured
reliably, are capitalised.
04
Notes to the annual financial statements (continued)
normalised net operating income generated
by the property, which is divided by the
capitalisation rate.
Impairment
At each statement of financial position
date the Fund reviews the carrying value of
non-financial assets, other than investment
property and deferred tax assets, for
indication of impairment. The recoverable
amount, being the higher of fair value less
cost to sell and value in use, is determined
for any assets for which an indication of
impairment is identified. If the recoverable
amount of an asset is less than its carrying
value, the carrying value of the asset is
reduced to its recoverable value.
Impairment losses are recognised as an
expense in the statement of comprehensive
income in the period in which they are
identified. Reversal of impairment losses
is recognised in income in the period in
which the reversal is identified, to the extent
that the asset is not revalued to a carrying
value that would have been calculated
without impairment.
Rental agreements
Annual financial statements
04
A finance lease is a lease that transfers
substantially all of the risks and rewards
incidental to ownership of an asset. An
operating lease is a lease other than a
financial lease.
The Fund is party to numerous rental
agreements in the capacity as lessor of the
investment properties. All rental agreements
are operating leases.
Where classified as operating leases,
rentals payable/receivable are charged/
credited in the statement of comprehensive
income on a straight-line basis over the
lease term. Contingent rentals (if any) are
accrued to the statement of comprehensive
income when incurred. This does not affect
distributable earnings. Turnover- based
rental is recognised when it is due in terms
of the relevant rental agreement.
Property-letting commissions
and tenant installations
When considered material, letting
commissions and tenant installations are
written off over the period of the lease to
which they relate.
Borrowing costs
Borrowing costs directly attributable to
the acquisition or construction of an asset
that necessarily takes a substantial period
of time to get ready for its intended use
54
or sale are capitalised as part of the cost
of the asset. All other borrowing costs
are expensed in the period in which they
occur. Borrowing costs consist of interest
and other costs that an entity incurs in
connection with the borrowing of funds
This view is applied given that this would
reflect the economic reality of the Fund as
being tax neutral.
The interest capitalised is calculated using
the Fund’s weighted average cost of
borrowings after adjusting for borrowings
associated with specific developments.
Where borrowings are associated with
specific developments, the amount
capitalised is the gross interest incurred
on those borrowings less any investment
income arising on their temporary
investment. Interest is capitalised as from
the commencement of the development
work until the date of practical completion.
The capitalisation of finance costs is
suspended if there are prolonged periods
when development activity is interrupted
As of 1 April 2013, secondary taxation
on companies (STC) was replaced with a
dividend withholding taxation and thus no
STC has been incurred in the current year.
Provisions, contingent liabilities
and contingent assets
The result is that no deferred tax is recognised
by the Fund on REIT assets and liabilities.
Related parties
Related parties include any shareholder
who is able to exert a significant influence
on the operating policies of the Fund.
Directors, their close family members
and any employee who is able to exert
a significant influence on the operating
policies of the Fund are also considered to
be related parties.
Any party appointed as the asset manager
and property asset manager of the Fund is
also considered to be a related party.
Provisions are liabilities of uncertain timing
or amount, and are recognised as soon
as the Fund has a legal or constructive
obligation which will lead to an outflow of
economic resources to settle the obligation
as a result of a past event. Contingent
assets and contingent liabilities are
not recognised.
Share capital
Provisions are determined by discounting
the expected future cash flows at a
pre-tax rate that reflects current market
assessments of the time value of money
and the risks specific to the liability.
Key management assumptions
Taxation and deferred tax
Current tax payable is provided on
taxable profits at rates that are enacted or
substantively enacted and applicable to
the relevant period. The Fund is registered
as a REIT, and as such will only pay tax
on profits not distributed to shareholders.
Current tax for current and prior periods
is, to the extent unpaid, recognised as a
liability. If the amount already paid in respect
of current and prior periods exceeds the
amount due for those periods, the excess is
recognised as an asset.
The Fund converted to a REIT on
16 August 2013. As a result, section 25BB
of the Income Tax Act will apply to qualifying
REIT income and expenses.
The Fund is of the view that the provisions
of IAS 12 – Income Taxes regarding different
tax rates for distributed and undistributed
profits are intended to apply where the only
significant factor determining the differential
tax rate is the retention or distribution of profit.
Ordinary share capital
Ordinary shares are classified as equity.
Dividends
Dividends are recognised when the
obligation to make payment arises.
In preparation of the annual financial
statements, the Fund makes estimations
and applies judgement that could affect the
reported amount of assets and liabilities
within the next financial year. The key area
in which judgement is applied lies with the
valuation of investment properties. The
valuation is performed by capitalising the
budgeted net income of a property at the
market-related yield applicable at the time
assuming a constant yield.
Standards and interpretations
applicable to the Fund, not yet
effective
The following standards, which may have
an impact on the Fund in the future, have
been issued but are not yet effective.
IFRS 9 – Financial Instruments:
Classification and Measurement
This, the first phase of the IASB’s project
to replace IAS 39 in its entirety, addresses
the classification and measurement of
financial instruments.
Amendments published in October 2010
incorporate the existing derecognition
principles of IAS 39 directly into IFRS 9.
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
Financial assets
•
All financial assets are initially measured at
fair value.
Subsequent measurement of debt
instruments is only at amortised costs if
the instrument meets the requirements
of the ‘business model test’ and the
‘characteristics of financial asset test’.
All other debt instruments are subsequently
measured at fair value.
All equity instruments are subsequently
measured at fair value either through other
comprehensive income (OCI) or profit
and loss.
Embedded derivatives contained in nonderivative host contracts are not separately
recognised. Unless the hybrid contract
qualifies for amortised cost accounting, the
entire instrument is subsequently recognised
at fair value through profit and loss.
Financial liabilities
For liabilities measured at fair value through
profit and loss, the change in the fair value
of the liability attributable to change in credit
risk is presented in OCI. The remainder of
the change in fair value is presented in profit
and loss.
Effective for years beginning on or after
January 2018.
Status of financial instruments project
There are a number of matters relating
to IFRS 9 which are still to be completed
including:
•
Impairment, where the IASB is
pursuing a ‘three bucket’ credit
impairment approach under which
financial assets would initially be
included in one of three buckets
based on the credit quality of each
asset upon origination. The guiding
principle of the new approach is
to reflect the general pattern of
deterioration in credit quality based on
expected rather than incurred losses
Portfolio (macro) hedge accounting.
Proposals are still being developed
by the IASB in this area.
IFRS 9 – Mandatory effective date and
transition disclosures (amendments to
IFRS 9)
Antecedent dividends
Antecedent dividends refers to the portion
of dividends paid to shareholders that does
not accrue to those specific shareholders
as the shares were only issued to and
held by the shareholder for a portion of
the financial period the dividend payment
relates to. When the new shares are issued,
the anticipated antecedent portion of the
dividends to be declared after the end of
the financial period is included in the price
per share paid by the shareholder. The full
dividend is then declared and paid to the
shareholder as the antecedent portion was
already paid back to the fund upfront.
Mandatory effective date for IFRS 9 is
1 January 2018.
The impact of these amendments is
currently under evaluation.
Changes in accounting policy
and adoption of new standards
IFRS 13 establishes a definitive source of
guidance for all fair value measurements.
IFRS 13 does not change when an entity
is required to use fair value, but rather
provides guidance on how to measure
fair value under IFRS when fair value
is applicable. IFRS 13 defines fair value as
being a market-based disclosure.
IFRS 13 mainly impacts the disclosures of
the Fund as specific disclosures about fair
value measurements and disclosures of fair
values are required.
Annual financial statements
All other classification and measurement
requirements in IAS 39 have been carried
forward into IFRS 9.
•
General hedge accounting where
the IASB is proposing a hedging
model that is hoped to align the
accounting for hedging activities
with the risk management practices
of an entity. In addition, the IASB is
pursuing simplifying certain aspects
of hedge accounting
The disclosure requirements of IFRS 13
apply prospectively and do not need to be
provided for comparative periods before
initial application.
Accounting for associates
The associate is carried at fair value in
accordance with IAS 28:19 which provides
guidance on investments in associates
and joint ventures. Given IAPF’s structure
as a flow-through entity, the investment in
IAPF can be carried at fair value through
profit and loss in accordance with IAS 39
as opposed to equity accounting under
IAS 28.
Investec Property Fund Limited integrated annual report and financial statements 2014
04
55
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2.
452 124
299 523
Assessment rates recovered
25 663
15 225
Contracted operating cost recoveries
17 341
9 089
Other income
23 572
6 268
Turnover rental
2 162
1 293
520 862
331 398
45 132
43 790
565 994
375 188
2014
2013
35 098
22 361
3 904
2 822
Revenue, excluding straight-line rental revenue adjustment
Straight-line rental revenue adjustment
For the year ended 31 March
R’000
Property expenses
Assessment rates
Cleaning
Consulting fees
514
65
Electricity – net
(117)
1 452
Cost
70 313
35 955
Recovery
(70 430)
(34 503)
Impairment loss relating to tenants and related receivables
Insurance
Letting commissions
Annual financial statements
04
834
1 352
3 171
2 355
14 402
4 802
Property management expenses
11 022
8 231
7 129
6 501
11 598
7 430
1 763
1 481
Security
Tenant installation costs
Water and municipal charges – net
(938)
(17)
Cost
10 541
6 989
Recovery
(11 479)
(7 006)
90 586
59 669
2014
2013
For the year ended 31 March
R’000
Other operating expenses
Administration costs
–
135
Asset management fee
26 362
17 834
Auditor's remuneration
1 265
700
Audit fee
953
700
Other fees
312
–
–
240
–
(240)
Total other fees
Less: capitalised to debentures
Directors’ fees
Legal fees
Other Fund expenses
56
598
2 442
Other property expenses
Repairs and maintenance
4.
2013
Revenue
Contracted rental
3.
2014
1 205
885
95
263
3 178
1 058
32 105
20 875
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
5.
2014
2013
186 858
118 241
9 008
(4 125)
45 401
–
Fair value adjustments
Investment property revaluation
Fair value adjustment – gain/(loss) on interest rate swap derivatives
Fair value adjustment of investment
Fair value adjustment before debenture fair value adjustment
Debenture fair value adjustment
Total fair value adjustment
5.1
241 267
114 116
(29 657)
(196 972)
211 610
(82 856)
(4 469)
(114 116)
Debenture fair value adjustment
Debentures are adjusted to fair value which represents the net asset value attributable to
debenture holders, excluding intangible assets.
The adjustment consists of:
Fair value adjustment on other assets and liabilities
Straight-line rental revenue adjustment
(15 785)
(43 790)
(9 403)
(39 066)
(29 657)
(196 972)
Capital items
For the year ended 31 March
R’000
6.
2014
2013
Interest on corporate bonds
36 718
36 718
Interest on term debt
13 007
–
7 644
2 466
57 369
39 184
2014
2013
10 745
20 712
Finance costs
For the year ended 31 March
R’000
7.
Finance income
Interest received from banks
Interest received from antecedent divesture of distribution*
*
–
4 431
10 745
25 143
During the prior year, IPF acquired the Giuricich portfolio for which 17 million units were issued to Giuricich at R12.29 as part of
the overall consideration. These units only accrued the distribution from the date of transfer of the properties.
For the year ended 31 March
R’000
8.
2014
2013
39
(66)
Taxation
South African normal tax
Normal tax*
39
(66)
Deferred taxation charge
–
30 251
Deferred taxation credit
–
(30 251)
28%
28%
Effective tax rate
*
Prior period adjustment of R39 000 giving rise to nil tax charge in current year and no reconciling items.
Investec Property Fund Limited integrated annual report and financial statements 2014
57
Annual financial statements
Other interest
04
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
9.
2014
2013
Distribution per share/linked unit
Profit after taxation
506 735
171
Add: debenture interest
119 935
236 576
Less: fair value adjustments
(211 610)
82 856
Profit on disposal of investment property
(10 988)
(39 066)
Straight-line rental revenue adjustment
(45 132)
(43 790)
Antecedent interest
32 925
11 500
Distributable earnings
391 865
248 247
Less: interim dividends paid
(180 768)
(79 618)
Final distribution declared after year end
211 097
168 629
Shares in issue and to be issued at 31 March
365 576 663
317 220 000
Final distribution per share/unit (cents)
57.74
53.16
Interim distribution per share/unit (cents)
50.46
46.83
108.20
99.99
Total distribution
During the year, 41 011 620 shares were issued by way of an accelerated bookbuild at a price of R14.48 per share, which included
71.37 cents of antecedent dividends. R20.7 million was paid to shareholders in December 2013 with the remainder paid on
17 June 2014. Additionally, seven of the properties had an effective date of 7 March 2014 but shares where only issued on transfer,
post-year end. These shares are entitled to a distribution from 7 March 2014 with the antecedent portion comprising 49.747 cents
of the total distribution of 57.744 cents.
Annual financial statements
04
58
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
10. Earnings per share
Reconciliation of basic earnings to headline earnings
Total comprehensive income attributable to equity holders
507 011
171
Less: net fair value adjustment – investment property
(186 858)
(96 168)
(186 858)
(118 241)
–
22 073
Fair value adjustment excluding straight lining
Applicable taxation
Headline profit/(loss) attributable to shareholders before debentures adjustments
Add: net fair value adjustment – debentures
Fair value adjustment
Applicable taxation
320 153
(95 997)
29 657
141 820
29 657
196 972
–
(55 152)
Add: debenture interest paid
119 935
236 576
Headline earnings attributable to shareholders/unitholders
469 745
282 399
Cents
Cents
153.30
0.07
Headline earnings per share
142.03
(40.60)
Headline earnings per linked unit
–
119.44
Earnings per linked unit
–
100.13
Number of
shares
Number of
shares
Shares in issue and to be issued at the end of the year
365 576 663
317 220 000
Weighted average number of shares in issue
330 736 792
236 430 502
317 220 000
170 000 000
–
66 430 502
13 033 830
–
482 962
–
Reconciliation of weighted average number of shares in issue:
Shares at the beginning of the year
Rights offer
Bookbuild
RPP transaction
During the prior year the Fund closed a rights offer that resulted in the issue of 113.2 million new units for a consideration of
R1.5 billion. The rights issue was at a clean price of R13.25, which was less than the market value of R14.6 immediately prior to
the rights issue. The bonus element of the rights issue was taken into account when calculating the weighted number of shares
(WANOS) in accordance with IAS 33. Thus the prior period’s earnings per share, earnings per linked unit, headline earnings per
share and headline earnings per linked unit have been adjusted accordingly.
04
During the current year 41 011 620 shares were issued in terms of a bookbuild for a net consideration of R594 million. A further
7 345 043 shares will be issued in exchange for the RPP portfolio; these shares have been included in the WANOS due to an
effective transaction date of 7 March 2014.
Investec Property Fund Limited integrated annual report and financial statements 2014
Annual financial statements
Basic earnings per share
59
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
5 294 291
3 889 721
11. Investments
11.1 Investment property
Cost
Accumulated fair value adjustment
Investment properties as per statement of financial position
Straight-line rental revenue adjustment
Carrying value
413 840
225 404
5 708 131
4 115 125
116 702
71 875
5 824 833
4 187 000
Refer to the segmental analysis on page 48 for a breakdown of investment property on a geographic as well as sector basis.
Property to the value of R1.0 billion is held as security for the Domestic Medium Term Note (DMTN) programme currently drawn
down to a value of R450 million. Property to the value of R1.2 billion is held as security for bank funding drawn down to a value of
R500 million.
All of the investment properties, except for Woolworths House which is held under leasehold terminating in July 2047, are held
under freehold interests, and the register of deeds is available for inspection at the registered office.
Gains and losses recorded in profit or loss for recurring fair value measurements categorised within level 3 of the fair value hierarchy
amount to R186.6 million and are presented in profit and loss in the line item ‘fair value adjustment’.
The investment properties were valued at 31 March 2014 by MRB Gibbons of Mills Fitchet Magnus Penny (Proprietary) Limited
(Nat.Dip.Prop.Val.,MIV (SA), Professional Valuer) who is registered in terms of section 19 of the Property Valuers Professional Act,
No 47 of 2000.
The Fund is contractually obligated to purchase R341.7 million of properties at year end (31 March 2013: R253.9).
For the year ended 31 March
2014
2013
18.6%
–
11.2 Investments
Holding in Investec Australia Property Fund
Annual financial statements
Price at 31 March (cents)
Historical cost
Revaluation
1.176
–
235 500
–
45 401
–
Forward exchange contracts
Accrued distribution
Total
441
7 354
288 696
–
The investment is an investment in the newly JSE-listed Investec Australia Property Fund (IAPF). IAPF is a trust incorporated in
Australia with several property interests in Australia. Three of the directors of Investec Property Fund also serve on the board of
Investec Property Limited, the responsible entity of IAPF, in their personal capacity and not in their capacity as directors of the Fund.
The Fund holds less than 20% of IAPF. However, given the representation on the board of directors of IAPF by three directors
of the Fund, significant influence is evidenced. As a result of the Fund having significant influence over IAPF, IAPF is classified as
an associate in terms of IAS 28.
04
IAPF is classified as a related party in relation to the Fund in accordance with IAS 24 – Related Party Disclosures.
The investment in IAPF is 4.4% of non-current assets and is viewed not material from the Fund's perspective.
60
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
3 624
3 740
(832)
(487)
12. Trade and other receivables
Rental debtors
Impairment of receivables
Prepaid expenses
18 100
621
Municipal deposits
3 741
1 701
Property manager
17 812
15 092
Value-added tax
574
2 309
Sundry debtors
15 119
14 889
Accrued recoveries
19 628
15 748
77 766
53 613
In calculating the impairment of receivables, consideration is given to all failed rental payments as well as outstanding amounts
past due.
For the year ended 31 March
R’000
2014
2013
13. Cash and cash equivalents
Cash set aside for effective date acquisitions
–
35 689
398 730
Cash and cash equivalents
358 316
398 730
2014
2013
1 000 000
1 000 000
On listing – 170 000 000 ordinary shares
170 000
170 000
Rights issue – 113 220 000 ordinary shares
113 220
113 220
Vendor placements – 34 000 000 ordinary shares
34 000
34 000
Bookbuild – 41 011 620 ordinary shares
41 012
–
358 232
317 220
For the year ended 31 March
000’s
14. Stated capital
Authorised
1 000 000 000 ordinary shares
Issued
In issue at year end
Shares to be issued – under RPP transaction
Total shares
7 345
–
365 577
317 220
The authorised share capital is one billion ordinary shares of no par value at 31 March 2014. On 16 August 2013, shareholders
approved the conversion of the Fund’s linked-unit structure to that of an all-equity capital structure. To achieve this, each linked unit
was replaced with a delinked ordinary share with the value of the fair value of debentures capitalised to stated capital and the Fund’s
ordinary par value shares converted to ordinary no par value shares.
Investec Property Fund Limited integrated annual report and financial statements 2014
61
Annual financial statements
322 627
Cash held on call account
04
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
15. Debentures
170 000 000 variable rate, unsecured, subordinated debentures
Fair value at the beginning of the year
Issued during the year
Fair value adjustment of debentures
Fair value adjustment of debenture interest on conversion
Expenses on conversion
Rights offer expenses
Fair value at conversion
3 940 004
1 836 379
–
1 922 843
29 657
196 972
119 935
–
(715)
–
–
(16 190)
4 088 881
3 940 004
–
3 940 004
3 621 143
3 621 143
318 861
138 079
Fair value adjustment current year
29 657
196 972
Debenture interest on conversion
119 935
–
(715)
–
–
(16 190)
Carrying value at year end
Issue value
Fair value adjustment previous years
Expenses on conversion
Rights offer expenses
On 1 April 2013, National Treasury introduced South African REIT regulations. The Fund applied to and received from the JSE, REIT
status with effect from 1 April 2013, being the first day of the current financial year ended 31 March 2014. The capital structure of
Annual financial statements
04
62
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
the company was converted, as set out in note 14.
For the year ended 31 March
R’000
Capital
repayment date
Interest rate
2014
2013
16. Borrowings
Loans – unsecured
Investec bridge – R500 million facility
30 April 2015
Jibar + 2.25%
Total nominal value of loans – unsecured
80 017
–
80 017
–
Loans – secured – DMTN programme
Tranche 1
13 April 2015
three-month Jibar + 1.40%
134 000
134 000
Tranche 2
13 April 2016
three-month Jibar + 1.55%
40 000
40 000
Tranche 3
13 April 2017
three-month Jibar + 1.65%
50 000
50 000
Tranche 6
13 April 2017
Fixed at 8.80%
226 000
226 000
–
Loans – secured – bank debt
Nedbank – A facility
1 October 2018
three-month Jibar + 1.70%
200 000
Nedbank – B facility
1 October 2018
three-month Jibar + 1.70%
50 000
–
Standard Bank – A facility
1 October 2016
three-month Jibar + 1.55%
200 000
–
Standard Bank – B facility
1 October 2016
three-month Jibar + 1.55%
50 000
–
950 000
450 000
(5 136)
–
944 864
450 000
1 024 881
450 000
–
5 294
1 024 881
455 294
12 months – at nominal value
(80 017)
–
Total non-current financial liabilities
944 864
455 294
Total long-term borrowings – secured
Less: amortised fees
Total long-term borrowings – secured
Total nominal value of interest-bearing
borrowings
Fair value of swap derivative
loans and derivatives
Less: portion repayable within the next
During the year, the company created a new SPV to facilitate the raising of secured bank debt.
During the prior year the Fund registered a R3 billion DMTN programmme, of which R450 million was drawn down at year end.
Annual financial statements
Fair value of long-term interest-bearing
Refer to note 11.1 for disclosure of property provided as security for the DMTN programme and bank funding.
For the year ended 31 March
R’000
2014
2013
Accrued expenses
52 545
39 376
Accrued interest
22 705
13 046
Client deposits
14 356
12 202
17. Trade and other payables
Property management creditor
Trade creditors
Acquisitions payable
Income received in advance
Investec Property Fund Limited integrated annual report and financial statements 2014
537
216
3 001
2 222
322 627
–
–
9 563
415 771
76 625
63
04
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
18. Deferred taxation
18.1 Taxable temporary differences
Investment property component
Fair value adjustment – investment property assets
Deferred tax rates applied to temporary differences:
–
162 031
–
162 031
Rate
Investment property component
Fair value adjustment – investment property assets
18.7%
Deferred tax liability
–
30 251
–
30 251
–
196 972
18.2 Deductible temporary differences
Debenture component
Fair value adjustment – debentures
Other assets and liabilities
Fair value adjustment – loss on fair value of interest rate swap derivatives
–
4 125
–
201 097
–
55 152
Deferred tax rates applied to temporary differences:
Debenture component
Fair value adjustment – debentures
28.0%
Other assets/liabilities
Fair value adjustment – loss on fair value of derivatives
Annual financial statements
–
1 155
Potential deferred tax asset
28.0%
–
56 307
Deferred tax asset not recognised
–
26 056
Deferred tax asset
–
30 251
As a result of the Fund receiving REIT status on 1 April 2013 capital gains tax on the disposal of capital assets no longer applies due
to section 25BB of the Income Tax Act. Thus, the deferred tax on fair value adjustments will fall away from that date.
Investec Property Fund is of the view that the provisions of IAS 12 – Income Taxes, regarding different tax rates for distributed and
undistributed profits are intended to apply where the only significant factor determining the differential tax rate is the retention or
distribution of profit. This view is applied given that this would reflect the economic reality of Investec Property Fund as being tax
neutral, and would not result in deferred taxation being raised at each reporting date merely to be reversed after the end of the
reporting date when distributions are declared to shareholders.
This results in no deferred tax being recognised by Investec Property Fund on REIT assets and liabilities.
The recovery of deferred tax assets is dependent on the generation of sufficient future taxable income. In order to recognise the
asset, it must be probable that deductible temporary differences in excess of existing taxable temporary differences will be used.
As of 2014 this no longer applies.
04
In order for the current treatment to prevail, the REIT status of the entity must be maintained. In the event of not qualifying for REIT
status, the tax implications would differ substantially.
For the year ended 31 March
R’000
2014
2013
18.3 Movement in deferred tax
64
Balance at the beginning of the year
–
–
Movement in deferred tax liability
–
(30 251)
Movement in deferred tax asset
–
30 251
Balance at the end of the year
–
–
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
For the year ended 31 March
R’000
2014
2013
443 303
294 644
(45 132)
(43 790)
(598)
(2 113)
19. Cash generated from operations
Operating profit
Straight-line rental revenue adjustment
Non-cash items
Working capital movement
(6 670)
(11 765)
Trade and other receivables
(24 153)
(41 550)
Current liabilities
17 483
29 785
390 903
236 976
2014
2013
341 655
253 860
341 655
253 860
2014
2013
Cash generated from operations
20. Borrowing powers
The borrowing capacity of the Fund is unlimited in terms of its Memorandum of Incorporation.
For the year ended 31 March
R’000
21. Capital commitments
Authorised and contracted
The capital expenditure will be financed from existing funding facilities.
22. Minimum contracted rental
The Fund leases a number of retail, office and industrial properties under operating leases which
typically run for a period of three to five years.
Contractual amounts due in terms of operating lease agreements:
Less than one year
Between one and five years
More than five years
481 757
390 990
1 895 895
1 664 172
605 570
223 043
2 983 222
2 278 205
Lessees are entitled to the use of the properties leased to them for their own business purposes for the duration of the contracted
lease period.
All leases currently take the form of operating leases as per IAS 17 as no lease transfers substantially all the risks and rewards of
incidental ownership.
Investec Property Fund Limited integrated annual report and financial statements 2014
65
Annual financial statements
For the year ended 31 March
R’000
04
Notes to the annual financial statements (continued)
23. Related party transactions
Investec Limited is the controlling shareholder of the Fund and through its wholly owned subsidiary Investec Property (Pty) Ltd is the
Asset and Property Manager of the Fund, and therefore Investec Limited and its subsidiaries are related parties to the Fund.
All related party transactions are conducted at arm's length.
Set out below are the related party transactions with Investec Limited and its subsidiaries that were concluded during the year:
For the year ended 31 March
R’000
Acquisition of properties
Office
Number of properties
Gross lettable area (GLA)/(m²)
Cost of acquisition (R'000)
Industrial
Retail
Total
2014
Total
2013
2
2
6
10
4
11 415
44 972
38 475
94 862
67 719
243 460
163 500
208 600
615 560
857 128
2014
2013
For the year ended 31 March
R’000
Investec Property (Pty) Ltd
Asset management fee
(26 362)
Capital expenditure
(16 290)
–
–
(2 103)
9 058
6 375
Interest expense – vendor loans
(17 834)
In respect of the unlet space at 345 Rivonia Road and The Firs, Investec Property Limited has
undertaken to pay to the Fund the gross rental in respect of the unlet space for a period up to
1 April 2014 and 30 September 2015, respectively:
Amounts received in the current year
Investec Bank Limited
Sponsor fee
Annual financial statements
(150)
(150)
Corporate advisory, capital raising and structuring fees
(11 800)
(21 006)
Rental received in respect of Durban and Pretoria offices
41 300
24 418
The Fund holds its call accounts and fixed deposit accounts with Investec Bank Limited
and earns interest income thereon.
Borrowings*
Investec bridge – R500 million facility
80 017
–
(388)
(362)
Fair value of swap derivative
3 714
(5 294)
Interest on swap derivative
(9 259)
(2 040)
445
–
358 316
398 730
10 552
20 020
Interest on related party borrowings
Derivatives**
Fair value of foreign exchange contracts
04
Cash accounts
Cash and cash equivalents
Finance income
Interest is earned at the overnight safex call rate, currently 5.30%.
*
**
66
See note 16 for terms or borrowings.
See note 27.7 for terms of interest rate swap derivative.
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
For the year ended 31 March
2014
2013
Shares
Linked units
358 231 620
317 220 000
24. Net asset value
Shares in issue at the end of the year
Shares to be issued
Shares in issue including shares to be issued
7 345 043
–
365 576 663
317 220 000
Net asset value per share/linked unit*
*
Cents
Cents
1 398.51
1 243.04
Including shares to be issued under RPP transaction.
REIT status requirements
IPF status
25. REIT requirements
JSE requirements
Taxation requirements
• Distribute at least 75.0% of distributable profits
✔
• Rental income must comprise 75.0% of revenue
✔
• Total liabilities cannot exceed 60.0% of total assets
✔
• 75.0% of gross income must comprise rental income
✔
26. Subsequent events
As per IAS 10 which deals with Events after the Reporting Period, the declaration of the Fund's dividend occurred after the end of
the reporting period and is a non-adjusting event. Throughout prior periods the distribution took the form of debenture interest that
accrued throughout the year as well as a dividend.
At 31 March 2014
R’000
Held for
trading
Designated
at fair value
Non-financial
instruments
Amortised
cost
Total
Non-current assets
Investment property
Straight-line rental revenue adjustment
Derivative financial instruments
Investment
–
–
–
–
–
292 410
–
–
3 714
288 696
5 824 833
5 708 131
116 702
–
–
–
–
–
–
–
6 117 243
5 708 131
116 702
3 714
288 696
Current assets
Trade and other receivables
Cash and cash equivalents
–
–
–
–
–
–
–
–
–
436 082
77 766
358 316
436 082
77 766
358 316
Total assets
–
292 410
5 824 833
436 082
6 553 325
Liabilities
Non-current liabilities
Debentures
Long-term borrowings
Other non-current liabilities
–
–
–
–
718 864
–
718 864
–
–
–
–
–
226 000
–
226 000
–
944 864
–
944 864
–
Current liabilities
Trade and other payables
Current portion of other non-current liabilities
Taxation payable
Linked unitholders for distributions
–
–
–
–
–
80 017
–
80 017
–
–
44
–
–
44
–
415 771
415 771
–
–
495 832
415 771
80 017
44
–
Total liabilities
–
798 881
44
641 771
1 440 696
27. Financial risk management
27.1 Total financial assets and liabilities
Investec Property Fund Limited integrated annual report and financial statements 2014
67
Annual financial statements
The table below sets out the Fund's accounting
classification of each class of financial asset and
liability and their fair values at 31 March 2014:
Assets
04
Notes to the annual financial statements (continued)
At 31 March 2013
R’000
Held for
trading
Designated
at fair value
Non-financial
instruments
Amortised
cost
Total
27. Financial risk management
(continued)
27.1 Total financial assets and liabilities
(continued)
The table below sets out the Fund's accounting
classification of each class of financial asset and
liability and their fair values at 31 March 2013:
Assets
Non-current assets
–
–
4 187 000
–
4 187 000
Investment property
–
–
4 115 125
–
4 115 125
Straight-line rental revenue adjustment
–
–
71 875
–
71 875
Current assets
–
–
–
452 343
452 343
Trade and other receivables
–
–
–
53 613
53 613
Cash and cash equivalents
–
–
–
398 730
398 730
Total assets
–
–
4 187 000
452 343
4 639 343
Liabilities
Non-current liabilities
–
4 169 298
–
226 000
4 395 298
Debentures
–
3 940 004
–
–
3 940 004
Long-term borrowings
–
224 000
–
226 000
450 000
Other non-current liabilities
–
5 294
–
–
5 294
Annual financial statements
Current liabilities
–
–
–
240 832
240 832
Trade and other payables
–
–
–
76 625
76 625
Linked unitholders for distributions
–
–
–
164 207
164 207
5 294
4 169 298
–
466 832
4 636 130
Total liabilities
04
68
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
27. Financial risk management (continued)
27.2 Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method, defined as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date
Level 2 – inputs other than quoted prices included within level 1 that are observable for the assets and liabilities, either directly
(i.e. as prices) or indirectly (i.e. derived from prices). Please refer to note 29 for disclosure of significant inputs and
measurement methods
Level 3 – inputs for the assets and liabilities that are not based on observable market data (unobservable inputs)
For cash and cash equivalents, trade and other payables as well as trade and other receivables which are not carried at fair value,
the carrying value is a reasonable approximation of fair value. In accordance with IFRS 7.29 no disclosure around fair value is
required for these items.
For the
year ended
31 March
R’000
Total
financial
instruments
recognised
at fair value
Level within the fair value hierarchy
Level 1
Level 2
Level 3
–
2014
Assets
Investment in IAPF
Swap derivative
Total assets
288 696
288 696
–
3 714
–
3 714
–
292 410
288 696
3 714
–
Liabilities
Debentures
Long-term borrowings
Current portion of other non-current liabilities
Total liabilities
–
–
–
–
718 864
–
80 017
–
80 017
–
–
–
–
–
798 881
–
798 881
–
–
–
–
–
3 940 004
–
3 940 004
–
224 000
–
224 000
–
5 294
5 294
–
–
4 169 298
5 294
4 164 004
–
2013
Total assets
Liabilities
Debentures
Long-term borrowings
Other non-current liabilities
Total liabilities
04
Details of changes in valuation techniques
There have been no significant changes in valuation techniques during the year under review.
Significant transfers between level 1, level 2 and level 3
During the prior year the inputs making up the debenture fair value were reviewed, and the fair value hierarchy for the debentures
was changed from a level 3 to a level 2. The significant inputs became more observable and motivated the transfer to level 2 in the
prior year.
Investec Property Fund Limited integrated annual report and financial statements 2014
Annual financial statements
Other non-current liabilities
–
718 864
69
Notes to the annual financial statements (continued)
27. Financial risk management (continued)
27.3 Fair value hierarchy – investment property
For all investment property that is measured at fair value, the current use of the property is considered the highest and best use.
Under the income capitalisation method a property's fair value is estimated based on the normalised net operating income
generated by the property, which is divided by the capitalisation rate.
The income capitalisation method is a generally accepted valuation methodology used within industry. Valuation policies and
procedures are agreed upon by management along with the internal valuation department.
Valuation techniques used to derive level 3 fair values
For all classes of investment property the significant unobservable inputs listed below are used in the income capitalisation method
to determine the fair value measurement at the end of the reporting period.
Significant unobservable inputs
Relationship between unobservable inputs and fair value measurement
Expected rental value (ERV)
Increases in ERV would increase estimated fair value
Equivalent yield
Increases/(decreases) in the equivalent yield would result in decreases/(increases) in the
estimated fair value (range 8% – 11%)
Long-term vacancy rate
Increases/(decreases) in the long-term vacancy rate would result in decreases/(increases)
in the estimated fair value
Given the high tenancy rates of the Fund's property portfolio, the long-term vacancy rate may not always be applicable.
The table above includes the following descriptions and definitions relating to key unobservable inputs made in determining
fair value.
Annual financial statements
Expected rental value (ERV)
The rent at which space could be let in the market conditions prevailing at the date of
valuation.
Equivalent yield
The equivalent yield is defined as the internal rate of return of the cash flow from the
property, assuming a rise to ERV at the next review, but with no further rental growth
Long-term vacancy rate
The ERV of the expected long-term average structural vacant space divided by ERV
of the whole property. Long-term vacancy rate can also be determined based on the
percentage of estimated vacant space divided by the total lettable area.
There are inter-relationships between ERV, the long-term vacancy rate and the equivalent yield. Having a lower/(higher) vacancy rate
would increase/(decrease) the ERV for a property.
The following factors influence the equivalent yield applied by management when determining the fair value of a building:
04
•
Vacancy rate
•
Expected rental
•
Lease term
Across the portfolio of properties held at 31 March 2014 it was determined that if the equivalent yield applied per property
increases/(decreases) by 50 basis points the overall value of the portfolio will (decrease) by 4.8% if the equivalent yield is increased
and an increase of 5.6%if the equivalent yield is decreased.
For properties acquired close to year end the purchase price of those properties were accepted as the best indicator of fair value at
31 March 2014.
70
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
27. Financial risk management (continued)
27.3 Fair value hierarchy – investment property (continued)
Designated at fair value
For the year ended 31 March
R’000
Total gain or
(loss) in
the period in
the income
statement
Level 1
Level 2
Level 3
Retail
–
–
2 086 701
93 857
Office
–
–
2 394 215
33 769
Industrial
–
–
1 343 917
59 232
Total assets
–
–
5 824 833
186 858
Retail
–
–
1 692 250
23 499
Office
–
–
995 550
56 301
Industrial
–
–
1 499 200
38 441
Total assets
–
–
4 187 000
118 241
2014
Total assets
Investment property
2013
Total assets
Investment property
Details of changes in valuation techniques
There have been no significant changes in valuation techniques during the year under review.
Significant transfers between level 1, level 2 and level 3
Annual financial statements
There have been no transfers between hierarchy levels.
Management and the internal valuation team consider the observability of inputs on an annual basis.
All gains and losses recorded in profit or loss for recurring fair value measurements categorised within level 3 of the fair value
hierarchy are attributable to changes in unrealised gains or losses relating to investment property held at the end of the
reporting period.
Please refer to the reconciliation of investment property provided under note 27.3 which facilitates full IFRS 13 compliance in
combination with the disclosure in this note.
27.4 Other financial risk management considerations
The financial instruments of the Fund consist mainly of cash and cash equivalents, including deposits with banks, borrowings,
derivative instruments, trade and other receivables and trade and other payables. The Fund purchases or issues financial instruments
in order to finance operations and to manage the interest rate risks that arise from these operations and the source of funding.
The Fund has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk.
The board has overall responsibility for the establishment and oversight of the Fund’s risk management framework. The board has
established the audit and risk committee, which is responsible for developing and monitoring the Fund’s risk management policies.
The audit and risk committee reports regularly to the board on its activities.
The Fund’s risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Fund’s activities.
The audit and risk committee oversees how management monitors compliance with the Fund’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Fund. The audit and
risk committee is assisted in its oversight role by Investec Internal Audit, which undertakes both regular and ad hoc reviews of risk
management controls and procedures, the results of which are reported to the audit and risk committee.
Investec Property Fund Limited integrated annual report and financial statements 2014
71
04
Notes to the annual financial statements (continued)
27. Financial risk management
(continued)
27.5 Credit risk
Credit risk is the risk of financial loss to the Fund if a client or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from derivatives, as well as trade and other receivables. There is no significant concentration
of credit risk as exposure is spread over a large number of counterparties.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
For the year ended 31 March
R’000
2014
2013
77 766
3 714
53 613
–
358 316
398 730
Trade receivables
Interest rate swap
Cash and cash equivalents
Derivative assets and cash and cash equivalents
Exposure to credit risk is limited by investing in liquid funds and entering into derivative financial instruments with counterparties who
have a high percentage tier 1 capital and strong credit ratings assigned by international credit rating agencies.
Trade receivables
The Fund’s exposure to credit risk is mainly in respect of clients and is influenced by the individual characteristics of each client.
The Fund’s widespread client base reduces credit risk.
Management has established a credit policy under which each new client is analysed individually for creditworthiness before the
Fund’s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at
least one month’s rental. When available, the Fund's credit review includes external ratings.
Impairment losses have been recorded for those debts whose recovery was not reasonably assured at year end. The maximum
credit exposure at the reporting date was 1.7 million, of which 0.8 million has been provided for.
27.6 Market risk
Annual financial statements
Interest rate risk
The Fund is exposed to interest rate risk and adopts a policy of ensuring that at least 75% of its exposure to changes in interest
rates on borrowings is on a fixed basis. This is achieved by entering into fixed for variable rate swap instruments. All such
transactions are carried out within the guidelines set by the audit and risk committee. As a consequence, the Fund is exposed
to fair value interest rate risk in respect of the fair value of its interest rate financial instruments, which will not have an impact on
distributions. Short-term receivables and payables and investments are not directly exposed to interest rate risk.
It is estimated that for the year ended 31 March 2014, a 1% increase/decrease in interest rates on the variable rate borrowings
would have decreased/increased the Fund’s profit after tax by approximately R2.6 million.
At 31 March 2014 110% of interest-bearing borrowings were hedged for a weighted average of four years.
Net notional
amount
swap expiring
At 31 March
R’million
04
Financial year
2017
50.0
2018
138.3
2019
717.5
In addition, the Fund has a fixed-term bond in issue for R226 million expiring in 2018 at a rate of 8.8%.
72
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
Currency risk
The Fund is exposed to currency risk as a result of its investment in IAPF. IAPF distributions will be declared in Australian Dollars
and this exposes the Fund to changes in the value of the distribution as a result of currency fluctuations. This risk is not material and
has been hedged out.
Liquidity risk
Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund’s policy is to seek
to minimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk. In effect, the Fund
seeks to borrow for as long as possible at the lowest acceptable cost. The Fund regularly reviews the maturity profile of its financial
liabilities and will seek to avoid concentration of maturities through the regular replacement of facilities, and by using a selection of
maturity dates.
The tables below set out the maturity analysis of the Fund’s financial liabilities based on the undiscounted contractual cash flows.
31 March
R’000
Within
one year
One to
two years
Two to
five years
Over
five years
Total
2014
Debentures
–
–
–
–
–
Long-term borrowings
–
134 000
316 000
–
450 000
80 017
–
500 000
–
580 017
401 415
–
14 356
–
415 771
Bank debt
Trade and other payables
Linked unitholders for distributions
–
–
–
–
–
481 432
134 000
830 356
–
1 445 788
Debentures
–
–
–
3 621 143
3 621 143
Long-term borrowings
–
–
450 000
–
450 000
2 288
2 288
4 003
–
8 579
64 423
–
12 202
–
76 625
Total liabilities
2013
Interest rate swap
Trade and other payables
164 207
–
–
–
164 207
Total liabilities
230 918
2 288
466 205
3 621 143
4 320 554
Annual financial statements
Linked unitholders for distributions
04
Investec Property Fund Limited integrated annual report and financial statements 2014
73
Notes to the annual financial statements (continued)
27. Financial risk management (continued)
27.6 Market risk (continued)
Liquidity risk (continued)
Cash flows are monitored on a monthly basis to ensure that cash resources are adequate to meet the funding requirements of
the Fund. The nominal value of interest-bearing borrowings may not exceed 50% of the value of investment property (including
investment property reclassified as held for sale).
For the year ended 31 March
R’000
2014
2013
Value of investment property and investment in IAPF
6 113 529
4 187 000
Nominal value of interest-bearing borrowing utilised at year end
1 024 881
450 000
16.8%
10.7%
Current ratio of interest-bearing borrowings to value of investment property and investment in IAPF
27.7 Derivatives
Derivative instruments are used to hedge the Fund’s exposure to any increases in interest rates on variable rate loans. Interest
rate swap contracts are entered into whereby the Fund hedges out its variable rate obligation to provide a maximum fixed rate
obligation. Details of the interest rate fixed for variable swap instruments are as follows:
Financial institution
Notional
Expiry
amount
date
R’million Financial year
Swap rate
31 March 2014
Investec
50.0
2017
6.69%
Investec
138.3
2018
7.12%
Investec
717.5
2019
7.54%
See note 27.6 for details on fixed rate instrument.
Annual financial statements
Forward exchange contracts (FECs) are entered into to hedge out foreign exchange exposure. The details of the FEC instruments
and cash flow hedge are as follows:
Notional
amount
A$’000
Start date
Expiry date
Investec
700
04/02/2014
12/07/2014
Investec
750
04/02/2014
11/12/2014
Financial institution
31 March 2014
04
74
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the annual financial statements (continued)
28. Capital management
In terms of its Memorandum of Incorporation, the Fund has unlimited borrowing capacity. The Fund is funded partly by stated share
capital and partly by external borrowings.
In terms of its covenants entered into during the year, the Fund is committed to a maximum value of external borrowings of 50% of
the value of investment property and investment assets. In practice, the Fund aims to keep gearing levels between 30% and 40%
over the long term. At 31 March 2014, the nominal value of borrowings was equal to 16.8% of the value of investment property.
The board’s policy is to maintain a strong capital base, comprising its shareholders' interest, so as to promote investor, creditor and
market confidence and to sustain future development of the business. It is the Fund’s stated purpose to deliver medium- to longterm sustainable growth in distributions per share. All net profits are distributed on a six-monthly basis. The board monitors the level
of distributions to shareholders and ensures that no profits of a capital nature are distributed. There were no changes in the Fund’s
approach to capital management during the year. The company is not subject to externally imposed capital requirements.
29. Estimation of fair value
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments:
Trade receivables
These are valued at their nominal value (less cumulative impairment losses) as the time value of money is considered to be
immaterial for these current assets. Impairment losses are estimated at the year end by reviewing amounts outstanding and
assessing the likelihood of recoverability.
Non-current liabilities (excluding debentures) at fair value
As a Real Estate Investment Trust (REIT), the Fund relies on long-term borrowings to fund the acquisition of investment properties.
The Fund adopts the fair value model to measure the investment properties, with fair value adjustments being recorded through
profit or loss. In order to eliminate any mismatch that would otherwise arise from measuring the non-current liabilities on a different
basis, non-current liabilities are also measured at fair value through profit or loss. The value of these liabilities is estimated using
a discounted cash flow analysis. Each future cash flow is discounted using the market rate indicated on the interest rate curve
(see definition below) at the dates when the cash flows will take place.
Debentures
Derivatives
Derivative financial instruments consist of interest rate hedging instruments as well as foreign exchange hedging instruments.
Interest rate hedging instruments are valued by discounting future cash flows using the market rate indicated on the interest rate
curve (see definition below) at the dates when the cash flows will take place. Foreign exchange hedging instruments are valued by
making reference to market prices for similar instruments and discounting for the effect of the time value of money.
Trade payables
Trade payables are valued at their nominal value as the time value of money is considered to be immaterial for these
current liabilities.
Definition of ‘interest rate curve’
The interest rate curve is the South African swap curve which represents a benchmark interest rate curve for all Jibar-related
transactions in the market. Jibar itself is a benchmark short-term interest rate and, as such, the swap curve gives a representation
of future expectations of Jibar. It is constructed using both short-dated financial instruments such as forward rate agreements
(FRAs), as well as longer-dated instruments (such as swaps) where the movements in the curve are reflected through price changes
of the underlying instruments.
Investec Property Fund Limited integrated annual report and financial statements 2014
75
Annual financial statements
Debentures are designated as held at fair value through profit or loss financial liabilities. It is believed that this method results in
the most relevant measure of the debenture liability as it represents the net asset value attributable to debenture holders after all
other liabilities and assets are reflected at fair values. In addition, this method eliminates possible measurement inconsistencies
that may arise by valuing the debenture liability on some other basis. These instruments are measured initially at issue price, and
subsequently at fair value. Fair value represents the net asset value attributable to debenture holders after adjusting all other assets
and liabilities to fair value. Debentures have been replaced with shares under the REIT structure and are no longer relevant.
04
Shareholder
information
Shareholder analysis
At 31 March 2014 the Fund had 358.23 million shares in issue.
Spread of shareholders at 31 March 2014
Holdings
Number of
shareholders
% of total
shareholders
Number of
shares in issue
% of issued capital
1 939
67.49%
6 976 210
1.95%
1 –
10 000
10 001 –
50 000
643
22.38%
13 829 613
3.86%
50 001 – 100 000
101
3.52%
7 437 605
2.08%
100 001 and over
188
6.61%
329 988 192
92.12%
2 871
100.00%
358 231 620
100.00%
Number of
shareholders
Number of
shares held
% holding
2 857
177 513 689
49.55%
Shareholder classification at 31 March 2014
Public*
Non-public
Non-executive directors
4
4 395 499
1.23%
Executive directors
3
11 164 993
3.12%
Directorate of the Manager
5
3 447 272
0.96%
Holding company
2
161 710 167
45.14%
2 871
358 231 620
100.00%
Number of
shares held
% holding
161 710 167
45.14%
*
Per JSE listings requirements’ definitions.
Largest shareholders at 31 March 2014
Coronation Fund Managers
29 711 274
8.29%
STANLIB Asset Management
21 098 023
5.89%
S Giuricich Group^
17 000 000
4.75%
Public Investment Corporation
14 748 711
4.12%
Arzteversorgung Niedersachsen
9 158 549
2.56%
Investec Asset Management
8 223 576
2.30%
Hackner, S
7 053 865
1.97%
Absa Asset Management
6 543 832
1.83%
Catalyst Fund Managers
4 678 317
1.31%
Leon, SR
Total
^
4 026 089
1.12%
283 952 403
79.27%
Includes the 4 250 000 shares beneficially held by L Giuricich.
Investec Property Fund Limited integrated annual report and financial statements 2014
77
Shareholder information
Investec Ltd
05
Shareholder analysis (continued)
Directors’ interests in shares
Balance at
31 March
2014
Balance at
31 March
2013*
Sam Hackner
7 053 865
6 146 664
Samuel R Leon
4 026 089
3 118 888
85 039
65 039
Executive directors
David AJ Donald
Non-executive directors
Graham R Rosenthal
Constance M Mashaba
Moses M Ngoasheng
Luigi Giuricich^*
Michael P Crawford
Suliman Mahomed
2 999
2 999
60 000
60 000
82 500
40 000
4 250 000
4 250 000
–
–
–
–
15 560 492
13 683 590
2014
2013
– Year end
14.49
16.21
– High
18.69
18.79
– Low
12.50
10.50
*
^
Non-beneficial indirect holding of 17 000 000.
Indirectly held through S Giuricich Group and related companies.
Share statistics
Closing market price (Rm)
Shareholder information
Shares in issue (million)
Market capitalisation (R’million)
Daily average volume of shares traded
358
317
5 191
5 716
159 999
146 208
05
78
Investec Property Fund Limited integrated annual report and financial statements 2014
Shareholder diary
Financial year end
31 March 2014
Publication of financial results
22 May 2014
Final distribution paid to shareholders
17 June 2014
Annual report posted to shareholders
26 June 2014
Annual general meeting
25 July 2014
Distributions
An interim dividend number 5 of 50.456 cents per share (after applying dividend withholding tax of 15% would provide a net dividend
of 42.888 cents per share) was declared for the six months ended 30 September 2013. The distribution was paid on Tuesday,
17 December 2013.
Shareholders were given notice of a final dividend declaration number 6 of 57.744 cents per share (after applying dividend withholding tax of
15% would provide a net dividend of 49.082 cents per share) for the six months ended 31 March 2014. The final distribution will be paid on
Tuesday, 17 June 2013.
Distribution details
Distribution
number
2014
cents
30 September 2013
5
50.456
31 March 2014
6
Distributions
Six months ended
Total
57.744
108.200
Shareholder information
05
Investec Property Fund Limited integrated annual report and financial statements 2014
79
King III checklist
Principle
number
Description status
Status
Ethical leadership and corporate citizenship
1.1
The board should provide effective leadership based on an ethical foundation.
√
1.2
The board should ensure that the company is and is seen to be a responsible corporate citizen.
√
1.3
The board should ensure that the company’s ethics are managed effectively.
√
Boards and directors
Shareholder information
05
2.1
The board should act as the focal point for and custodian of corporate governance.
√
2.2
The board should appreciate that strategy, risk, performance and sustainability are inseparable.
√
2.3
The board should provide effective leadership based on an ethical foundation.
√
2.4
The board should ensure that the company is and is seen to be a responsible corporate citizen.
√
2.5
The board should ensure that the company’s ethics are managed effectively.
√
2.6
The board should ensure that the company has an effective and independent audit committee.
√
2.7
The board should be responsible for the governance of risk.
√
2.8
The board should be responsible for information technology (IT) governance.
√
2.9
The board should ensure that the company complies with applicable laws and considers adherence to
non-binding rules, codes and standards.
√
2.10
The board should ensure that there is an effective risk-based internal audit.
√
2.11
The board should appreciate that stakeholders’ perceptions affect the company’s reputation.
√
2.12
The board should ensure the integrity of the company’s integrated annual report.
√
2.13
The board should report on the effectiveness of the company’s system of internal controls.
√
2.14
The board and its directors should act in the best interests of the company.
√
2.15
The board should consider business rescue proceeding or other turnaround mechanisms as soon as
the company is financially distressed as defined in the Companies Act.
√
2.16
The board should elect a chairman of the board who is an independent non-executive director.
The CEO of the company should not also fulfil the role of chairman of the board.
√
2.17
The board should appoint the chief executive officer and establish a framework for the delegation
of authority.
√
2.18
The board should comprise a balance of power, with a majority of non-executive directors. The majority
of non-executive directors should be independent.
√
2.19
Directors should be appointed through a formal process.
√
2.20
The induction of and ongoing training and development of directors should be conducted through
formal processes.
√
2.21
The board should be assisted by a competent, suitably qualified and experienced company secretary.
√
2.22
The evaluation of the board, its committees and the individual directors should be performed every year.
√
80
Investec Property Fund Limited integrated annual report and financial statements 2014
King III checklist (continued)
Principle
number
Description status
Status
2.23
The board should delegate certain functions to well-structured committees, but without abdicating its
own responsibilities.
√
2.24
A governance framework should be agreed between the group and its subsidiary boards.
√
2.25
Companies should remunerate directors and executives fairly and responsibly.
√
2.26
Companies should disclose the remuneration of each individual director and certain senior executives.
√
2.27
Shareholders should approve the company’s remuneration policy.
√
Audit and risk committee
The board should ensure that the company has an effective and independent audit committee.
√
3.2
Audit committee members should be suitably skilled and experienced independent
non-executive directors.
√
3.3
The audit committee should be chaired by an independent non-executive director.
√
3.4
The audit committee should oversee integrated annual reporting.
√
3.5
The audit committee should ensure that a combined assurance model is applied to provide a
coordinated approach to all assurance activities.
✗
3.6
The audit committee should satisfy itself of the expertise, resources and experience of the company’s
finance function.
√
3.7
The audit committee should be responsible for overseeing the internal audit.
√
3.8
The audit committee should be an integral component of the risk management process.
√
3.9
The audit committee is responsible for recommending the appointment of the external auditor and
overseeing the external audit process.
√
3.10
The audit committee should report to the board and shareholders on how it has discharged its duties.
√
Shareholder information
3.1
The governance of risk
4.1
The board should be responsible for the governance of risk.
√
4.2
The board should determine the levels of risk tolerance.
√
4.3
The risk committee or audit committee should assist the board in carrying out its risk responsibilities.
√
4.4
The board should delegate to management the responsibility to design, implement and monitor the risk
management plan.
√
4.5
The board should ensure that risk assessments are performed on a continual basis.
√
4.6
The board should ensure that the frameworks and methodologies are implemented to increase the
probability of anticipating unpredictable risks.
√
4.7
The board should ensure that management considers and implements appropriate risk responses.
√
4.8
The board should ensure continual risk monitoring by management.
√
4.9
The board should receive assurance regarding the effectiveness of the risk management process.
√
4.10
The board should ensure that there are processes in place enabling complete, timely, relevant, accurate
and accessible risk disclosure to stakeholders.
√
Investec Property Fund Limited integrated annual report and financial statements 2014
05
81
King III checklist (continued)
Principle
number
Description status
Status
The governance of information technology
5.1
The board should be responsible for information technology (IT) governance.
√
5.2
IT should be aligned with the performance and sustainability objectives of the company.
√
5.3
The board should delegate to management the responsibility for the implementation of an
IT governance framework.
√
5.4
The board should monitor and evaluate significant IT investments and expenditure.
√
5.5
IT should form an integral part of the company’s risk management.
√
5.6
The board should ensure that information assets are managed effectively.
√
5.7
A risk committee and audit committee should assist the board in carrying out its IT responsibilities.
√
Compliance with laws, codes, rules and standards
6.1
The board should ensure that the company complies with applicable laws and considers adherence to
non-binding rules, codes and standards.
√
6.2
The board and each individual director should have a working understanding of the effect of the
applicable laws, rules, codes and standards on the company and its business.
√
6.3
Compliance risk should form an integral part of the company’s risk management process.
√
6.4
The board should delegate to management the implementation of an effective compliance framework
and processes.
√
Internal audit
Shareholder information
7.1
The board should ensure that there is an effective risk-based internal audit.
√
7.2
Internal audit should follow a risk-based approach to its plan.
√
7.3
Internal audit should provide a written assessment of the effectiveness of the company’s system of
internal control and risk management.
√
7.4
The audit committee should be responsible for overseeing internal audit.
√
7.5
Internal audit should be strategically positioned to achieve its objectives.
√
05
82
Investec Property Fund Limited integrated annual report and financial statements 2014
King III checklist (continued)
Principle
number
Description status
Status
Stakeholder relationships
8.1
The board should appreciate that stakeholders’ perceptions affect a company’s reputation.
√
8.2
The board should delegate to management to proactively deal with stakeholder relationships.
√
8.3
The board should strive to achieve the appropriate balance between its various stakeholder groupings,
in the best interests of the company.
√
8.4
Companies should ensure the equitable treatment of shareholders.
√
8.5
Transparent and effective communication with stakeholders is essential for building and maintaining
their trust and confidence.
√
8.6
The board should ensure that disputes are resolved as effectively, efficiently and expeditiously
as possible.
√
Integrated reporting and disclosure
9.1
The board should ensure the integrity of the company’s integrated annual report.
√
9.2
Sustainability reporting and disclosure should be integrated with the company’s financial reporting.
√
9.3
Sustainability reporting and disclosure should be independently assured.
√
Shareholder information
05
Investec Property Fund Limited integrated annual report and financial statements 2014
83
Notice of annual general meeting
Investec Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/011366/06)
Share code: IPF | ISIN: ZAE000180915
(the Fund or the company)
Property Fund Limited
Directors of the Fund
Sam Hackner (chairman, non-executive)
Samuel R Leon (chief executive officer)
Michael P Crawford (lead independent non-executive director)
David AJ Donald (chief financial officer)
Luigi LM Giuricich (non-executive)
Suliman Mahomed (independent non-executive)
Constance M Mashaba (independent non-executive)
Moses M Ngoasheng (independent non-executive)
Graham R Rosenthal (independent non-executive)
Notice is hereby given that the annual
general meeting of the Fund will be held
in the 2nd Floor Executive Boardroom,
Investec Bank Limited, 100 Grayston Drive,
Sandown, Sandton 2196 at 09:00 on Friday,
25 July 2014 to: (i) deal with such business
as may lawfully be dealt with at the meeting,
and (ii) consider and, if deemed fit, to pass,
with or without modification, the following
ordinary and special resolutions of the Fund
as set out hereunder.
Shareholder information
05
Kindly note that in terms of section 63(1)
of the Companies Act No 71 of 2008, as
amended (the Act), meeting participants
(including proxies) will be required to provide
reasonable satisfactory identification before
being entitled to participate in or vote at
the annual general meeting. Forms of
identification that will be accepted include
original and valid identity documents, driver’s
licences and passports.
Electronic participation
Shareholders entitled to attend and vote
at the annual general meeting, or proxies
of such shareholders, shall be entitled to
participate in the meeting (but not vote)
by electronic communication. Should a
shareholder wish to participate in the meeting
by electronic communication, the shareholder
concerned should advise the company
thereof by submitting via registered mail
addressed to the company (for the attention
of the company secretary, PO Box 785700
Sandton 2196) relevant contact details, as
well as full details of the shareholder’s title to
relevant securities issued by the company
accompanied with proof of identity, in the
form of certified copies of identity documents
and share certificates (if in certificated form)
or written confirmation from the shareholder’s
CSDP confirming the shareholder’s title to
dematerialised shares (if in dematerialised
84
form), to reach the company by no later than
09:00 on Friday, 18 July 2014. Upon receipt
of the required information by the company,
the shareholder concerned will be provided
with a secure code and instructions to
access the electronic communication during
the annual general meeting. Shareholders
must note that access to the electronic
communication will be at the expense of
the shareholder who wishes to utilise the
facility. Shareholders making use of the
electronic participation facility are requested
to submit their proxy forms to the company,
as directed in this notice, as voting at the
annual general meeting will not be enabled
via electronic means.
Record dates, proxies
and voting
In terms of sections 59(1)(a) and (b) of the
Act, the board of the company has set the
record date for the purpose of determining
which shareholders are entitled to:
•
•
Receive notice of the annual general
meeting (being the date on which a
shareholder must be registered in the
company’s securities register as a
shareholder in order to receive notice of
the annual general meeting) as Friday,
20 June 2014
Participate in and vote at the annual
general meeting (being the date on which
the shareholder must be registered in
the company’s securities register as a
shareholder in order to participate in and
vote at the annual general meeting) as
Friday, 18 July 2014.
Shareholders who have not dematerialised
their shares or who have dematerialised
their shares with ‘own name’ registration,
and who are entitled to attend, participate
in and vote at the annual general meeting,
are entitled to appoint a proxy (or more than
one proxy in respect of different shares held
by them) to attend, speak and vote in their
stead. A proxy need not be a shareholder
and shall be entitled to vote on a show of
hands or a poll. It is requested that proxy
forms be forwarded so as to reach the
transfer secretaries in South Africa by no
later than 48 (forty-eight) hours before the
commencement of the annual general
meeting. If shareholders who have not
dematerialised their shares or who have
dematerialised their shares with ‘own name’
registration, and who are entitled to attend,
participate in and vote at the annual general
meeting, do not deliver proxy forms to
the transfer secretaries in South Africa by
the relevant time, such shareholders will
nevertheless be entitled to lodge the form
of proxy in respect of the annual general
meeting immediately prior to the exercising of
the shareholders’ rights at the annual general
meeting, in accordance with the instructions
therein, with the chairman of the annual
general meeting.
Shareholders who have dematerialised their
shares, other than those shareholders who
have dematerialised their shares with ‘own
name’ registration, should contact their
CSDP or broker in the manner and within the
time stipulated in the agreement entered into
between them and their CSDP or broker:
•
To furnish them with their voting
instructions, or
•
In the event that they wish to attend
the annual general meeting, to obtain
the necessary letter of representation
to do so.
Every shareholder present in person or
represented by proxy and entitled to vote
shall, on a show of hands, have only one
Investec Property Fund Limited integrated annual report and financial statements 2014
Notice of annual general meeting (continued)
vote irrespective of the number of shares
such shareholder holds. On a poll, every
shareholder present in person or represented
by proxy and entitled to vote shall be
entitled to one vote for each share such
shareholder holds.
Presentation of annual
financial statements
To present to shareholders:
•
The audited annual financial statements
of the Fund for the year ended
31 March 2014, together with the
reports of the directors and the auditors
•
The report by the chairman of the audit
and risk committee
•
The report by the chairman of the social
and ethics committee.
The complete set of the audited
annual financial statements,
together with the abovementioned reports, are set out
on pages 38 to 75 of the 2014
integrated annual report.
To consider and, if deemed fit, to pass, with
or without modification, the following ordinary
and special resolutions of the Fund:
2. To re-elect Suliman Mahomed, as a
director of the Fund in accordance with
the provisions of the Memorandum of
Incorporation of the Fund.
3. To re-elect Graham R Rosenthal, as a
director of the Fund in accordance with
the provisions of the Memorandum of
Incorporation of the Fund.
Messrs Giuricich, Mahomed and
Rosenthal are due to retire by rotation.
For brief biographical details of the
directors to be elected or re-elected
refer to page 24 of the 2014 integrated
annual report.
4. To elect Michael P Crawford as
a member of the audit and risk
committee, with effect from the end of
this annual general meeting, in terms of
section 94(2) of the Act.
5. To elect Constance M Mashaba
as a member of the audit and risk
committee, with effect from the end
of this annual general meeting, in terms
of section 94(2) of the Act.
The members of the audit and risk
committee have been nominated by
the board of the Fund for election as
members of the Fund’s audit and risk
committee in terms of section 94(2) of
the Act. The board has reviewed the
proposed composition of the audit and
risk committee against the requirements
of the Act and the Regulations under
the Act and has confirmed that if all
the individuals referred to above are
elected, the committee will comply with
the relevant requirements and have
the necessary knowledge, skills and
experience to enable it to perform its
duties in terms of the Act.
7. To re-appoint Ernst & Young Inc.,
102 Rivonia Road Sandton 2196
South Africa (Private Bag X14,
Northlands 2116, South Africa) as
independent external auditors of the
Fund, until such time as the conclusion
of the next annual general meeting of
the Fund.
In terms of section 90(1) of the Act,
each year at its annual general meeting,
the company must appoint an auditor
who complies with the requirements
of section 90(2) of the Act. Following
a detailed review, which included an
assessment of its independence, the
current audit and risk committee of
the company has recommended that
Ernst & Young Inc. be reappointed as
the auditors of the company.
8. To authorise any director or the company
secretary of the Fund to do all things
and sign all documents which may
be necessary to carry into effect the
resolutions contained in this notice to the
extent the same have been passed and,
where applicable, filed.
9. Ordinary resolution: Authorising the
directors to allot and issue authorised but
unissued shares:
Resolved that:
• to the extent required by and
subject to the Memorandum of
Incorporation of the Fund, the
Act and the listings requirements
of the JSE Limited (JSE listings
requirements), each as presently
Investec Property Fund Limited integrated annual report and financial statements 2014
The directors have decided to seek
annual renewal of this authority
in accordance with best practice.
The exercise of the authority will be
subject to the provisions of the Act
and the JSE listings requirements. The
directors consider it advantageous
to attain the authority to enable the
company to take advantage of any
business opportunity that may arise
in future.
10. Special resolution No 1: Directors’
authority to allot and issue shares for
cash in respect of 18 889 966 (3.04%)
of the unissued shares:
Resolved that:
•
to the extent required by, and
subject to the listings requirements
of the JSE Limited (JSE listings
requirements), the Fund’s
Memorandum of Incorporation
and the Companies Act No 71
of 2008, as amended (the Act),
each as presently constituted
and as amended from time to
time, the directors of the Fund are
authorised by way of a general
authority, which authority shall not
extend beyond the date of the
next annual general meeting of
the Fund to be held in 2015 or the
date of the expiry of 15 (fifteen)
months from the date of the
annual general meeting of the
Fund convened for 25 July 2014,
whichever period is shorter, to allot
and issue 18 889 966 (eighteen
million eight hundred and eightynine thousand nine hundred and
sixty-six) shares for cash (i.e. other
than by way of rights offer, to the
existing shareholders in proportion to
85
Shareholder information
1. To re-elect Luigi LLM Giuricich, as a
director of the Fund in accordance with
the provisions of the Memorandum of
Incorporation of the Fund.
constituted and as amended from
time to time, the directors of the
Fund are authorised, as they in
their discretion think fit, to allot and
issue 56 669 897 (9.11%) of the
authorised but unissued shares
in the Fund to such person(s) and
upon such terms and conditions
as the directors may determine,
such authority to expire at the
next annual general meeting of the
Fund. In terms of the company’s
Memorandum of Incorporation, read
with the JSE listings requirements,
the shareholders of the company
may authorise the directors to,
inter alia, issue any unissued shares
of the company, as the directors in
their discretion think fit.
6. To elect Graham R Rosenthal as a
member of the audit and risk committee,
with effect from the end of this annual
general meeting, in terms of section
94(2) of the Act, subject to his re-election
as a director pursuant to resolution No 3.
05
Notice of annual general meeting (continued)
their then existing holdings), subject
to the limitations as required by
the JSE listings requirements from
time to time, it being recorded that
at 20 June 2014, the JSE listings
requirements provide, inter alia, that:
(i)
a press announcement giving
full details, including the impact
on net asset value and earnings
per share, will be published at
the time of an issue of shares
for cash representing, on a
cumulative basis within 1 (one)
financial year, 5% (five percent)
or more of the number of shares
in issue prior to such issue;
(ii) the issue of shares for cash in
the aggregate in any 1 (one)
financial year will not exceed
15% (fifteen percent) of the
number of the Fund’s shares
in issue, including instruments
which are compulsorily
convertible;
Shareholder information
(iii) in determining the price at
which an allotment and issue
of shares may be made in
terms of this authority, the
maximum discount permitted
will be 5% (five percent) of the
weighted average traded price
of the shares in question as
determined over the 30 (thirty)
business days prior to the date
that the price of the issue is
agreed to between the directors
of the Fund and the party
subscribing for the shares; and
(iv) the shares issued for cash must
be issued to persons qualifying
as ‘public shareholders’, as
defined in the JSE listings
requirements, and not to
‘related parties’.
05
The directors are seeking an authority
to allot and issue up to 18 889 966
(3.04%) (three point zero four percent) of
the number of unissued shares for cash
which represents 5% (five percent) of the
number of the Fund’s issued shares as at
the date of this notice of annual general
meeting, which is in line with the 15%
(fifteen percent) permitted in terms of the
JSE listings requirements.
The authority will be exercised subject
to the provisions of the Act, the Fund’s
Memorandum of Incorporation and the
JSE listings requirements.
86
The directors consider it beneficial
to obtain the authority to enable the
company to take advantage of any
business opportunity that may arise
in future.
11. Special resolution No 2: Directors’
authority to acquire shares:
Resolved that:
•
the Fund is authorised (to the extent
required), by way of a general
authority, which authority shall not
extend beyond the date of the next
annual general meeting of the Fund
to be held in 2015 or the date of
the expiry of 15 (fifteen) months
from the date of the annual general
meeting of the Fund convened for
25 July 2014, whichever period is
shorter, to acquire shares issued by
the Fund, from any person, upon
such terms and conditions and in
such number as the directors of
the Fund may from time to time
decide, but subject to the provisions
of the Fund’s Memorandum of
Incorporation, the Companies Act
No 71 of 2008, as amended (the
Act), and the listing requirements
of the JSE Limited (JSE listings
requirements), each as presently
constituted and as amended from
time to time, it being recorded that
at 20 June 2014, the JSE listings
requirements provide, inter alia, that:
(i)
any such acquisition of shares
shall be effected through the
order book operated by the
JSE trading system and done
without any prior understanding
or arrangement between the
company and the counterparty;
(ii) an announcement containing
full details of such acquisitions
will be published as soon as
the Fund has acquired shares
constituting, on a cumulative
basis, 3% (three percent) of the
number of the Fund’s shares
in issue (at the time that this
authority is granted) and for each
3% (three percent) in aggregate
of the initial number of such
shares acquired thereafter;
(iii) acquisitions of shares by the
Fund in aggregate in any 1 (one)
financial year may not exceed
20% (twenty percent) of the
Fund’s issued shares as at the
date of passing of this special
resolution No 2;
(iv) in determining the price at which
shares issued by the Fund are
acquired by it in terms of this
general authority, the maximum
price at which such shares may
be acquired will be 10% (ten
percent) above the weighted
average of the market value at
which such shares are traded
on the JSE as determined
over the 5 (five) business days
immediately preceding the date
of acquisition of such shares, by
the Fund;
(v) at any point in time, the Fund
may only appoint 1 (one) agent
to effect any acquisition on the
Fund’s behalf;
(vi) a resolution is passed by the
board of directors that it has
authorised the acquisition, that
the Fund (and where applicable,
its subsidiaries) has passed
the solvency and liquidity test
and that, since the test was
performed, there have been no
material changes to the financial
position of the Fund; and
(vii) the Fund may not acquire any
shares during a prohibited
period as defined by the JSE
listings requirements unless
there is in place a repurchase
programme where dates and
quantities of securities to be
traded during the prohibited
period are fixed and full
details of the programme
have been disclosed in an
announcement over SENS prior
to the commencement of the
prohibited period.
Special resolution No 2 is sought to allow
the Fund, by way of a general authority,
to acquire its own shares in issue from
time to time, subject to the Fund’s
Memorandum of Incorporation, the Act
and the JSE listings requirements.
At the present time, the directors of
the Fund have no specific intention of
making any such acquisition, but believe
that the Fund should retain the flexibility
to take action if future acquisitions are
considered desirable and in the best
interests of shareholders, taking into
account prevailing market conditions.
The directors of the Fund are of the
opinion that, after considering the
effect of such acquisition of shares, if
Investec Property Fund Limited integrated annual report and financial statements 2014
Notice of annual general meeting (continued)
implemented and on the assumption that
the maximum of 20% (twenty percent) of
the current issued shares of the Fund will
be acquired, using the mechanism of the
general authority at the maximum price
at which the acquisition may take place
and having regard to the price of the
shares on the JSE at the last practical
date prior to the date of the notice of
annual general meeting of the Fund
convened for 25 July 2014:
• The Fund will be able, in the ordinary
course of business, to pay its debt
for a period of 12 (twelve) months
after the date of the notice of
annual general meeting of the Fund
convened for 25 July 2014
• The assets of the Fund will be in
excess of the liabilities of the Fund,
each recognised and measured in
accordance with IFRS, for a period
of 12 (twelve) months after the
date of the notice of annual general
meeting of the Fund convened for
25 July 2014
• The Fund will have adequate capital
and reserves for ordinary business
purposes for a period of 12 (twelve)
months after the date of the notice
of annual general meeting of the
Fund convened for 25 July 2014
Litigation statement
In terms of section 11.26 of the
JSE listings requirements, the
directors, whose names appear on
page 24 of the 2014 integrated annual
report, are not aware of any legal or
arbitration proceedings that are pending
or threatened, that may have or have
had in the recent past, being at least the
previous 12 (twelve) months, a material
effect on the Fund’s financial position,
other than disclosed in the notes to the
annual financial statements.
The directors, whose names appear on
page 24 of the 2014 integrated annual
report, collectively and individually
accept full responsibility for the accuracy
of the information given pertaining to
this special resolution No 2 and certify
that, to the best of their knowledge
and belief, there are no facts that have
been omitted which would make any
statement false or misleading and that
all reasonable enquiries to ascertain
such facts have been made and that the
special resolution contains all information
required by law and the JSE listings
requirements.
Material changes
Other than the facts and developments
reported on in the 2014 integrated
annual report, there have been no
material changes in the affairs or financial
position of the Fund since the date of
signature of the audit report and up to
the date of this notice of annual general
meeting of the Fund.
The following additional information is
provided in terms of the JSE listings
requirements for purposes of the
general authority:
• Largest shareholders: page 77 of
the 2014 integrated annual report
• Directors: page 24 of the 2014
integrated annual report
• Directors’ interests in shares:
page 42 of the 2014 integrated
annual report
• Issued capital of the Fund: page
61 note 14 of the 2014 integrated
annual report.
12. Special resolution No 3: Directors’
remuneration
Resolved that:
• in terms of section 66(9) of the
Companies Act No 71 of 2008, as
amended (the Act), payment of the
remuneration of the directors of the
Fund for their service as directors be
approved as follows:
(i)
for the period 1 April 2014 to
31 March 2015: as set out on
page 41 of the 2014 integrated
annual report;
(ii) thereafter but only until
the expiry of a period of
24 (twenty-four) months from
Investec Property Fund Limited integrated annual report and financial statements 2014
the date of the passing of this
special resolution No 3 (or until
amended by a special resolution
of shareholders prior to the
expiry of such period), on the
same basis as above, escalated
as determined by the board of
the Fund, up to a maximum of
5% (five percent) per annum per
amount set out as aforesaid.
Special resolution No 3 is proposed
to enable the Fund to comply with the
provisions of sections 65(11)(h), 66(8)
and 66(9) of the Act, which stipulate
that remuneration to directors for their
service as directors may be paid only
in accordance with a special resolution
approved by the shareholders within the
previous two years.
The remuneration proposed for approval
has been determined mindful thereof
that the role of non-executive directors
is under increasing focus of late with
greater accountability and risk attached
to the position.
For further information on the proposed
directors’ remuneration, please refer to
page 41 of the annual financial report.
13. Special resolution No 4: Financial
assistance to subsidiaries and other
related and interrelated entities.
Resolved that:
• to the extent required by the
Companies Act No 71 of 2008, as
amended (the Act), the board of
directors of the Fund may, subject
to compliance with the requirements
of the Fund’s Memorandum of
Incorporation, the Act and the
listing requirements of the JSE
Limited (JSE listings requirements),
each as presently constituted and
as amended from time to time,
authorise the Fund to provide direct
or indirect financial assistance
by way of loan, guarantee, the
provision of security or otherwise, to
any of its future subsidiaries
and/or any other company or
entity that is or becomes related
or interrelated to the Fund, for any
purpose or in connection with any
matter, including, but not limited
to, the subscription of any option,
or any securities issued or to be
issued by the Fund or a related or
interrelated company, or for the
purchase of any securities of the
Fund or a related or interrelated
87
Shareholder information
• The working capital of the Fund
will be adequate for ordinary
business purposes for a period of
12 (twelve) months after the date
of the notice of annual general
meeting of the Fund convened for
25 July 2014. The Fund will ensure
that its sponsor will provide the
necessary letter on the adequacy
of the working capital in terms
of the JSE listings requirements,
prior to the commencement of any
acquisition of the Fund’s shares on
the open market.
Directors’ responsibility statement
05
Notice of annual general meeting (continued)
company, such authority to endure
until the next annual general meeting
of the Fund.
The Fund would like the ability to
provide financial assistance to related
or interrelated entities, such as its
subsidiaries, if necessary. Furthermore,
it may be necessary or desirable for the
Fund to provide financial assistance
to related or interrelated companies
and entities to subscribe for options or
securities or purchase securities of the
Fund or another company related or
interrelated to it. Under sections 44 and
45 of the Act, the Fund will, however,
require a special resolution to be
adopted before such financial assistance
may be provided. In the circumstances
and in order to, amongst others, ensure
that the Fund’s related and interrelated
companies and entities have access
to financing and/or financial backing
from the Fund (as opposed to banks),
it is necessary to obtain the approval
of shareholders, as set out in special
resolution No 4.
It should be noted that this resolution
does not authorise financial assistance
to a director or a prescribed officer
of the company or any company or
person related to such a director or
prescribed officer.
Shareholder information
05
By order of the board
B Coetsee
Investec Bank Limited
Company secretary
20 June 2014
Registered office
100 Grayston Drive
Sandown
Sandton
2196
PO Box 785700
Sandton
2146
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
88
Investec Property Fund Limited integrated annual report and financial statements 2014
Form of proxy
Investec Property Fund Limited
(Incorporated in the Republic of South Africa) | (Registration number 2008/011366/06)
Share code: IPF | ISIN: ZAE000180915
(Investec Property Fund or the Fund or the company)
Property Fund Limited
For use by certificated and ‘own name’ dematerialised shareholders only.
For use by certificated and ‘own name’ registered dematerialised shareholders of the Fund, recorded in the Fund’s securities register
at Friday, 18 July 2014, in the exercise of their voting rights in respect of the ordinary shares in the capital of the company, at an annual
general meeting of the Fund to be held at 09:00 on Friday, 25 July 2014 at the 2nd Floor Executive Boardroom, Investec Bank Limited,
100 Grayston Drive, Sandown, Sandton 2196.
I/We: (please print names in full)
of (address)
being the holder/s of
shares in the Fund, appoint (see note 1):
1.
or failing him/her,
2.
or failing him/her,
3. the chairman of the annual general meeting,
as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering, and
if deemed fit, passing, with or without modification, the ordinary and special resolutions to be proposed thereat and at any adjournment
thereof and to vote for and/or against such resolutions and/or abstain from voting in respect of the share component of the shares registered
in my/our name/s, in accordance with the following instructions (see note 3):
Number of votes
(one vote per share)
Against
Shareholder information
For
Abstain
Ordinary resolution No 1: To re-elect Luigi LLM Giuricich as a director of the Fund
Ordinary resolution No 2: To re-elect Suliman Mahomed as a director of the Fund
Ordinary resolution No 3: To re-elect Graham R Rosenthal as a director of the Fund
Ordinary resolution No 4: To elect Michael P Crawford as a member of the audit and risk committee
Ordinary resolution No 5: To elect Constance M Mashaba as a member of the audit and
risk committee
Ordinary resolution No 6: To elect Graham R Rosenthal as a member of the audit and risk
committee, subject to his re-election as a director pursuant to ordinary resolution No 3
05
Ordinary resolution No 7: To re-appoint Ernst & Young Inc. as designated auditors of the Fund
for the year to 31 March 2015
Ordinary resolution No 8: To provide the directors or the company secretary with the authority to
take action in respect of the resolutions approved by shareholders
Ordinary resolution No 9: Authorising the directors to allot and issue 56 669 897 (9.11%) of the
authorised but unissued shares (15.00% of shares in issue)
Special resolution No 1: To provide the directors with general authority to allot and issue
18 889 966 (3.04%) of the authorised but unissued shares (5.00% of shares in issue) for cash
Special resolution No 2: To provide the directors with general authority to acquire shares
Special resolution No 3: Directors’ remuneration
Special resolution No 4: Financial assistance to subsidiaries and other related and interrelated entities
Investec Property Fund Limited integrated annual report and financial statements 2014
89
Form of proxy
Certificated shareholders
If you are a certificated shareholder or have dematerialised your shares with ‘own name’ registration and you are unable to attend the annual
general meeting of the Fund to be held at 09:00 on Friday, 25 July 2014 at the 2nd Floor Executive Boardroom, Investec Bank Limited,
100 Grayston Drive Sandown Sandton 2196 and wish to be represented thereat, you are requested to complete and return this form of
proxy in accordance with the instructions contained herein and to lodge it with, or post it to, the Transfer Secretaries, namely Computershare
Investor Services (Pty) Ltd, so as to be received by them by no later than 09:00 on Wednesday, 23 July 2014.
Dematerialised shareholders, other than those with ‘own name’ registration
If you hold dematerialised shares in the Fund through a CSDP or broker, other than with an ‘own name’ registration, you must timeously
advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat in order
for your CSDP or broker to provide you with the necessary letter of representation to do so, or should you not wish to attend the annual
general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to
vote in accordance with your instruction at the annual general meeting.
Signed at:
on
Signature:
Assisted by me where applicable:
Name:
Capacity:
2014
Signature:
Please read the notes that follow.
Shareholder information
05
90
Investec Property Fund Limited integrated annual report and financial statements 2014
Notes to the form of proxy
Notes and summary of rights
under section 58 of the
Companies Act 2008
1. A shareholder entitled to attend and
vote at the annual general meeting
is entitled to appoint any one or
more individual (who need not be a
shareholder of the company) as a
proxy to attend, speak and vote in his
place at the annual general meeting,
provided that, if more than one
proxy is concurrently appointed by a
shareholder, each proxy is appointed to
exercise the rights attached to different
shares held by that shareholder. Such
shareholder may insert the name of a
proxy or the names of two alternative
proxies of the shareholder’s choice in
the space provided, with or without
deleting ‘the chairman of the meeting’,
provided that any such deletion must
be signed in full by the shareholder.
The person whose name stands first
on the proxy form and who is present
at the annual general meeting will be
entitled to act as proxy to the exclusion
of those whose names follow. Should
a proxy not be specified, this will be
exercised by the chairman of the annual
general meeting.
•
•
Marking the appropriate box with
an ‘X’ next to the resolution (i.e. in
favour of and/or against and/or by
way of abstention), in which event
the proxy will cast all your votes in
the manner so specified, or
Setting out the number of votes to
be cast in the appropriate box next
to the resolution, provided that, if
for any resolution the aggregate
number of votes to be cast would
exceed the total number of shares
held, you will be deemed to have
given no specific instruction as to
how you wish your proxy to vote in
respect of that resolution.
Your proxy will have discretion to vote
in respect of your total holding on any
resolution on which you have not (or
are deemed not to have) given specific
instruction as to how to vote and,
unless instructed otherwise, on any
business which may properly come
before the meeting.
4. If you are signing in a representative
capacity, whether for another person
or for an organisation, then, in order
for this form to be valid, you must
include a power of attorney or other
written authority that authorises you to
sign (or a certified copy of such power
or authority).
5. In the case of a company, the proxy
form should either be sealed by the
company or signed by a director or an
authorised signatory (and the provisions
of paragraph 4 shall apply to such
authorised signatory).
6. In the case of joint shareholders, only
one need sign. If more than one joint
shareholder votes, whether in person
or by proxy, only the most senior
shareholder who casts a vote, whether
in person or by proxy, will be counted.
For this purpose, seniority is determined
by the order in which shareholders’
names appear in the securities register
for that share.
7. Any alteration or correction made to
this form of proxy must be signed in
full and not initialled by the signatory or
signatories.
8. A minor must be assisted by his/
her parent/guardian and the relevant
documentary evidence establishing
his/her legal capacity must be
attached to this form of proxy unless
previously recorded by the company or
waived by the chairman of the annual
general meeting.
9. The chairman of the annual general
meeting may reject or accept any form
of proxy which is completed and/or
received other than in compliance with
these notes.
• is revocable in which case the
shareholder may revoke the proxy
appointment by:
– cancelling it in writing or making
a later inconsistent appointment
of a proxy
– delivering a copy of the
revocation instrument to the
proxy and to the company.
13. Should the instrument appointing a
proxy or proxies have been delivered
to the company, as long as the
appointment remains in effect,
any notice that is required by the
Companies Act No 71 of 2008, or
the company’s Memorandum of
Incorporation to be delivered by such
company to the shareholder, must be
delivered by such company to:
• The shareholder, or
• The proxy or proxies, if the
shareholder has directed the
company to do so in writing and has
paid any reasonable fee charged by
the company for doing so.
14. The proxy appointment remains valid
only until the end of the relevant meeting
at which it was intended to be used
(including any adjournment thereof),
unless revoked as contemplated in
section 58(5) of the Companies Act.
15. It is requested that this form of proxy
be deposited at the company’s transfer
secretaries:
Computershare Investor Services
(Pty) Ltd
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
not later than 09:00 (South African time)
on Wednesday, 23 July 2014.
10. The return of this form of proxy will not
prevent you from attending the meeting
and voting in person.
11. A proxy may not delegate his/her
authority to act on behalf of the
shareholder to another person.
12. The appointment of a proxy or proxies:
• Is suspended at any time to the
extent that the shareholder chooses
to act directly and in person in
the exercise of any rights as
a shareholder;
Investec Property Fund Limited integrated annual report and financial statements 2014
Shareholder information
2. A shareholder or his proxy shall have
one vote for every share held. You are
not obliged either to cast all your votes
or to cast all your votes in the same
way. Please instruct your proxy how to
vote by either:
3. The date must be filled in on this form of
proxy when it is signed.
91
05
Corporate information
Investec Property Fund Limited
Sponsor
Incorporated in the Republic of South Africa
Registration number 2008/011366/06
Share code: IPF | ISIN: ZAE000180915
Investec Bank Limited
100 Grayston Drive
Sandown, Sandton 2196
PO Box 785700
Sandton 2196
Secretary and registered office
C/o Company Secretarial
Investec Bank Limited
100 Grayston Drive
Sandown, Sandton 2196
PO Box 785700 Sandton 2196
Directorate
Refer to page 24
Internet address
www.investecpropertyfund.com
Auditors
Ernst & Young Inc.
102 Rivonia Road
Sandton
Johannesburg 2196
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Telephone (27 11) 370 5000
For queries regarding information in this document:
Investor Relations
Shareholder information
Telephone (27 11) 286 7070
e-mail: [email protected]
Internet address: www.investec.com/en_za/#home/investor_relations.html
Preparer
This integrated annual report and annual financial statements have been prepared under the
supervision of the chief financial officer, DAJ Donald CA(SA).
05
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Investec Property Fund Limited integrated annual report and financial statements 2014
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