integrated annual report 2015 - sharedata · 2011 r’000 total contractual rental income 271 864...

INTEGRATED ANNUAL REPORT 2015

1 Corporate profile

2 Executive report: Chairman and CEO

5 Report of executives

12 Board of directors

14 Sustainability review

18 Corporate governance report

21 Social and Ethics Committee report

23 Annual financial statements

66 Property portfolio schedule

68 Property portfolio information

71 Notice of annual general meeting

77 Annexure 1

79 Form of proxy

IBC Corporate information

IBC Shareholders’ diary

CONTENTS

SCOPE OF REPORT This integrated report is in line with the King III Corporate Governance requirements. It covers the group’s strategy, financial performance, operational highlights, governance, and social and sustainability overview. We view the reporting requirements as dictated by the JSE Listings Requirements as a means to improve our communication with stakeholders.

This integrated report covers the period 1 September 2014 to 31 August 2015 and has been prepared in line with International Financial Reporting Standards.

NATURE OF BUSINESSIngenuity derives its income from rentals received from property investments. The portfolio comprises offices, retail, gymnasiums, light industrial and parking situated predominantly in the Western Cape with a gross lettable area of 159 659 m2 and land with a combined site area of 17 212 m2 for future development. The total value of the property portfolio amounts to R3.3 billion, which includes investment properties under development of R247.1 million.

The annual financial statements have been audited in compliance with the requirements of the South African Companies Act 71 of 2008 by Mazars, were approved by the board of directors on 3 November 2015 and published on 5 November 2015.

PREPARER OF THE ANNUAL FINANCIAL STATEMENTSIn compliance with the disclosure requirements of the South African Companies Act 71 of 2008, the annual financial statements have been prepared by Lauren Combrink B.Compt (Hons), CTA, CA (SA) under the supervision of Mr M Wagenheim, B.Com (Hons), CTA, CA (SA).

CORPORATE PROFILEIngenuity Property Investments Limited

(“Ingenuity” or “the Company”) is a property

investment company with its core strategic

focus to acquire and develop or redevelop

properties within the Western Cape region.

INGENUITY

Integrated annual report

2015 1

ExECUTIvE REPORT: CHAIRMAN ANd CEO

Development remains a core function as this allows creation of new age and enduring assets. Many milestones were achieved during the year relating to development projects, creating exciting growth prospects in the years ahead. The resultant effect of the above has been growth in net asset value per share by 17% from 94 cents to 110 cents. The increase in size of the asset base has also increased our earnings capacity substantially with contractual income from investment property growing to R271.8 million (2014: R221.9 million).

A brief synopsis of the year’s achievements is as follows.

PROPERTY ACQUISITIONS CONCLUdEd• PinewoodPark,situatedinForestDrive,Pinelandsforaconsiderationof

R32.5 million. This property is currently fully let and was acquired for further development potential as it includes a large portion of vacant land.

• 167RivoniaRoad,Morningside,intheheartofSandton,withaneight year fully repairing lease, for a consideration of R40.5 million.

• 64WhiteRoad,Tokai,aprimehigh-techindustrialbuildingforaconsideration of R124.5 million.

Subsequenttoyear-endafurtherfivepropertieswerealsoacquired:

• RamsayMedia,HowardDrive,PinelandsforR25.5 million.

• StateHouse,RoseStreet,Cape TownforR35 million.Thepropertyissituated in the vibrant De Waterkant area and is ideal for redevelopment.

• ToffeeLaneandClaremontCentral,situatedinClaremont,foracombined consideration of R105 million and Laurel Lane, Claremont for R1.475 million. These three properties form part of an entire block in the heart of Claremont that Ingenuity owns directly opposite Cavendish Square. The combined site area of the three acquisitions together with the three properties already owned is 5 240 m2. This will allow for future prime development potential of approximately 31 000 m2 of bulk.

dEVELOPMENT INITIATIVES• Thedevelopmentof19LouisGradnerwascompletedatavalueof

R55 million. Almost the entire property has been let, barring 70 m2.

• PlanningapprovalhasbeenobtainedforafurtherbuildingontheReedssite on the Foreshore. This opportunity of approximately 17 600 m2 of offices facing the main freeway into Cape Town will add significant value going forward.

• PlanningapplicationhasbeenmadefortheredevelopmentoftheFood Lovers building in Claremont. This scheme will comprise 2 300 m2 adjacent to Cavendish Square.

• WecommencedthedevelopmentofAurecon2inMarch2015.This projectisearmarkedtobeoursecond5-StarGreenbuildingandissetforcompletionin February 2016. The building, consisting of 3 281 m2 of premium grade offices, has been let on a long lease to Aurecon South Africa Proprietary Limited. The total estimated capital expenditure is R100 million.

• Formalplanningapprovalforourdevelopmenttobeknownas117 Strand Street was obtained in August 2015. We also obtained demolition permits for the project and are in discussion with a few potential anchor tenants. We are hoping to commence construction during the first quarterof2016.Thismixed-useschemewillcompriseapproximately5 000 m2 of retail, 10 000 m2 of premium grade offices and 52 residential apartments. Anticipated completion of the project is the first quarter of 2018. The total estimated capital expenditure is R560 million.

• PVsolarplant.WecompletedtheinstallationofoneofthelargestPV solarplantsintheCapeCBD,spreadingover3000m2 on the roofs of the Parkalot and Atlantic Centre buildings. The plant is capable of producing 780 000 KWH per annum, an energy output equivalent to that requiredtopoweraround100medium-sizedhouseholds.The totalcapitalexpenditure is R8 million.

GENERALIngenuity remains a focused boutique operation. Our commitment is to create enduring wealth for shareholders, focusing on quality assets.

The group is pleased to announce its annual distribution to shareholders of 3.5 cents per share. This represents a 40% increase when compared to the prior year.

Our thanks go to the executive team for their dedication and commitment to the success of the group and to the shareholders for their support and encouragement.

ROdNEY SQUIRE-HOwE ARNOLd MARESkYChairman Chief Executive OfficerCape Town5 November 2015

Ingenuity is pleased to announce another solid year of good performance. Our investment property portfolio has grown from R2.5 billion

to just over R3 billion whilst investment property under development has grown from R183 million to R247 million. The focus has

remainedgeographicallycentralisedwithanemphasistogrowthroughqualitypropertydealsandvalue-addpropositions.

ARNOLD MAREsky RODNEy sqUIRE-HOWE

2

PV SOLAR PLANT

INGENUITY Integrated annual report

2015 3

MAZARS HOUSE

4

REPORT OF EXECUTIVES

GENERAL Ingenuity has continued on its drive to grow a focused niched property investment business. It has maintained and built a portfolio that will continue to deliver solid performance through years to come. The development focus has provided us with a unique ability to extract maximum value in both new grass root developments and building refurbishments. Our portfolio maintains its Western Cape flavour and provides us with a platform to perform strongly in a market best known to us. Our focus remains on quality deals, leases with blue-chiptenantsandstrongenduringcashflows.

During the year under review the total asset base, including development assets completed, increased in value by R553.6 million or 20% (due mainly to acquisitions of new properties, completion of property developments and fair value adjustments), whilst borrowings were maintained at appropriate levels. The increase in investment properties, due to properties acquired and developments completed, resulted in a substantial increase in contractual revenues, and, together with the fair value adjustments to investment properties, resulted in a significant increase in the deferred tax liability at year-end.

ThevacancypercentageofGLAasatyear-endwas3.3%,buthassubsequentlyreduced to 1.7%. This is below the industry norm and is attributable to proactive asset management.

The group remains focused to unlock land value and timeously deliver properties under development.

BORROwINGSThe group achieved a weighted average borrowing cost of 8.20% (2014: 7.98%).Totalborrowingsatyear-endamountedtoR1.991billion

(2014: R1.579 billion) all of which is floating at rates linked to prime. The increase in borrowings for the current year came about as a result of the acquisition of multiple properties during the year and borrowings on the completion of the redevelopment of 19 Louis Gradner.

Totalcashonhandatyear-endamountedtoR28.8 million(2014: R34.6 million).Excess cash is applied to reduce borrowings or to grow the asset base, where appropriate.Atyear-endthegrouphasfacilities/cashonaccessamountingtoR130.1 million.

Thegroup’sloantovalueratiois60%(2014: 56%)atyear-end.Thisisconsidered acceptable considering the development nature of the group and the fact that we seek to maximise growth of the business through leverage of the group’s own core asset base. Management is reviewing strategies to reduce debt.

Subsequenttoyear-endandaspartofourhedgingstrategy,twofiveyearswapstotallingR500 millionatanaverageall-inrateof9.68%wereimplemented.

The current portion of borrowings comprise mainly loans maturing within the next 12 months. It is Ingenuity’s intention to renew these loans.

PROSPECTS2015 has been another significant year for Ingenuity.

Despite volatility and uncertainty prevailing in many markets the Company remainswellpoisedforgoodgrowth.OurCape-basedassetsareconsideredtobe very attractive and there remain excellent prime development opportunities in our portfolio. The focused approach will continue to deliver solid investment returns.

key financial indicators2015

R’0002014

R’0002013

R’0002012

R’0002011

R’000Total contractual rental income 271 864 221 952 82 200 64 976 53 882Investment property portfolio at fair value 3 046 218 2 556 325 1 301 297 771 032 615 324Investment properties under development 247 086 183 417 87 790 286 562 158 701Growth of asset base (%) 20 97 31 36 31Borrowings 1 991 266 1 579 249 727 753 522 334 351 384Loan to value ratio (%) 60 56 52 46 45Marketcapitalisationatyear-end 1 090 323 1 029 749 684 718 443 130 342 446Number of shares in issue (net of treasury shares) 1 122 309 208 1 142 536 316 736 616 773 669 616 773 589 616 773Headline earnings per share (cents) 4.7 4.2 2.0 1.6 1.8Dividend per share (cents) 3.5 2.5 1.5 1.0 – Basic earnings per share (cents) 18.4 12.0 10.1 9.0 5.0Net asset value per share (cents) 110 94 84 75 68Growth in net asset value (%) 17 12 12 10 10


2015 5

CORE INVESTMENT PORTFOLIO

REEdS HOUSERetail / OfficesErf 250, 20 Christiaan Barnard Street, Cape Town

PARkALOTParking garageErf 250, Jack Craig Street, Cape Town

31 MARTIN HAMMERSCHLAGRetail / OfficesErf 30, Martin Hammerschlag Way, Cape Town

33 MARTIN HAMMERSCHLAGRetail / Offices / OtherErf 145, Martin Hammerschlag Way, Cape Town

SANTAM 1OfficesErf32140,1SporticaCrescent,TygerValley,CapeTown

SANTAM 2OfficesErf32140,1SporticaCrescent,TygerValley,CapeTown

GLACIER PLACEOfficesErf32140,1SporticaCrescent,TygerValley,CapeTown

142 EdwARd STREETOfficesErf38063,142EdwardStreet,TygerValley,CapeTown

ATLANTIC CENTRERetail / OfficesErf 34, 22 Christiaan Barnard Street, Cape Town

19 LOUIS GRAdNERRetail / Offices / OtherErf 31, 19 Louis Gradner Street, Cape Town

NEwSPAPER HOUSERetail / Offices / OtherErf 9420, 122 St Georges Mall, Cape Town

VIRGIN ACTIVE, LOwER LONG STREETGymErf 205 and Erf 211, Lower Long Street, Cape Town

17 LOwER LONG STREETOfficesErf 162, 17 Lower Long Street, Cape Town

CBd LOCATION, CAPE TOwN

TYGER VALLEY

6

FOOd LOVER’S MARkET, CLAREMONT RetailErf57393,VineyardRoad,Claremont,CapeTown

72 ON MAINRetailErf 55499, 72 Main Road, Claremont

14 dREYER STREETRetail / OfficesErf 170930, Claremont, Cape Town

VINEYARd CENTRERetail / OfficesErf58055,CnrVineyardRoadandDreyerStreet,Claremont

PALMYRA JUNCTIONRetail / OfficesErf 172014, 9 Palmyra Road, Claremont (Leasehold)

PINEwOOd PARkOfficesErf 4164, 98 Forest Drive, Pinelands

SOUTHERN SUBURBS

AURECON 1OfficesErf 6952, 1 Century City Drive, Century City, Cape Town

ESTUARIES NO. 1OfficesErf 6497, 12 The Estuaries, Century City, Cape Town

GATEwAYRetail / OfficesErf 6569, 2 Century City Boulevard, Century City, Cape Town

MAZARS HOUSEOfficesErf 6821, 1 Rialto Road, Grand Moorings Precinct, Century City, Cape Town

VIRGIN ACTIVE – CENTURY CITYGymErf 6563, 5A Century Boulevard, Century City, Cape Town

CENTURY CITY, CAPE TOwN


2015 7

117 STRANd STREETRetail / Offices / ResidentialErf 142633, 117 Strand Street, Cape Town

ARTIST IMPRESSION

TOKAI ON MAIN OFFICE PARKOfficesErf 11518, 2 Tokai Road, Tokai, Cape Town

TOKAI ON MAIN RETAILRetail Erf 12770, 3 Tokai Close, Tokai, Cape Town

64 WHITE ROADOffices / Industrial / OtherErf 127260, 64 White Road, Retreat, Cape Town

TOkAI

THE MOdERNRetail / OfficesErf 173153 Cnr Bree, Long and Mechau Streets, Cape Town

LANd FOR FUTURE dEVELOPMENT

LOERIE CENTRERetail / OfficesErf 4769, Cnr Meade and Hibernia Streets, George

GEORGE

167 RIVONIA ROADRetailPortion 1 of Erf 963, 167 Rivonia Road, Sandton

GAUTENG

CORE INVESTMENT PORTFOLIO >> CONTINUED

DEvELOPMENT PORTFOLIOARTIST IMPRESSION

ERF 38746 TYGER VALLEYRetail / OfficesErf38746,MispelRoad,TygerValley

ARTIST IMPRESSION

AURECON 2OfficesErf 7054, 1 Century City Drive, Century City

UNdER dEVELOPMENTARTIST IMPRESSION

8

ARTIST IMPRESSION 117 ON STRANd


2015 9

PORTFOLIO INFORMATIONVACANCIESVacanciesamountto3.34%(2014: 5%) of the total GLA of the portfolio. The vacancy reduced to 1.7% within the first three months post-financialyear-end.

GROSS ANd NET COST-TO-REVENUE RATIOGross expenses are reflected as a percentage of gross income includingrecoveries.Thenetcost-to-revenue ratio of 12% (2014: 11%) remains favourable. This is what the Company carries as a landlord. We continue to strive to keep these ratios within the industry norms.

SECTORAL PROFILE BY RENTABLE AREAThe graph depicts the concentration of the portfolio in the office and retail sectors.

GEOGRAPHICAL PROFILE BY RENTABLE AREAIn line with our core strategy, the bulk of the properties are in the Western Cape.

LEASE EXPIRY PROFILEThe lease expiries for the financial year 2016 equate to 8% (2014: 4%) of the total GLA and to 8% (2014: 3%) of revenue of the portfolio. We continue to take proactive steps to renew all leases well before expiration dates. The graphs below depict a scenario of cumulative vacancies as the result of lease expiries as the years move forward and make no assumptions for letting of vacant space. This is unlikely and in most instances vacancies are taken up or leases are renewed.

Geographic profile by rentable area:

Total GLA – 159 659 m2

Western Cape 99%Gauteng 1%Gross 31%

Net 12%

Grossandnetcost-to-revenue ratio

Lease expiry profile (by area)Total GLA – 159 659 m2

Vacant 2016 2017 2018 2019 2020>

20203%

8% 8%

13%

20%

8%

40%

Lease expiry profile (by revenue)relative to prospective rental income to 31 August 2016

2016 2017 2018 2019 2020>

2020

8% 8%

13%

18%

6%

47%

Offices 2.72%Retail 0.04%Light industrial 0.58%Let 96.66%

Vacancyprofilebysector by rentable

area:Total GLA – 159 659 m2

Offices 66%Retail 22%Light industrial 7%Gym 5%

Sectoral profile by rentable area:

Total GLA – 159 659 m2

10

SALIENT FEATURES >> PROPERTy PORTFOLIO sUMMARy

Core investment property% share

ownedValuation

R’000GLA

m2

weighted average gross

rental per m2

CBd LOCATIONReeds House 100 130 440 7 603 88Parkalot 100 113 000 897 bays 764 per bay31 Martin Hammerschlag 100 23 800 1 489 7933 Martin Hammerschlag 100 94 250 7 482 89Atlantic Centre 100 190 000 11 245 9819 Louis Gradner 100 55 000 2 749 45Newspaper House 100 190 000 14 087 95VirginActive,LowerLongStreet 100 54 000 3 852 8217 Lower Long Street 100 51 000 3 122 102CENTURY CITYAurecon 1 100 222 000 7 589 170Estuaries No. 1 100 96 000 4 313 137Gateway 100 218 500 8 689 158Mazars House 100 197 000 7 035 165VirginActive,CenturyCity 100 116 800 4 053 182SOUTHERN SUBURBSFood Lovers Market, Claremont 100 20 900 740 16572 on Main 100 5 000 757 6314 Dreyer Street 100 100 000 2 925 162VineyardCentre 100 31 000 2 343 99Palmyra Junction (owned by subsidiary) 67 80 000* 2 867* 184Pinewood Park 100 33 000 1 997 94TYGER VALLEYSantam buildings 100 690 000 28 548 Santam 1 310 000 13 545 116Santam 2 85 000 3 663 142Glacier Place 295 000 11 340 140142 Edward Street 100 35 400 2 609 91TOkAITokai on Main Office Park 50 10 500 2 239* 69Tokai on Main Retail 50 47 500 6 581* 10664 White Road 100 144 000 18 233 56GEORGELoerie Centre 100 46 000 4 608 53GAUTENG167 Rivonia Road 100 49 000 1 904 175

3 044 090 159 659

development property and land % share

Cost/ Valuation

R’000’s

Sitearea

m2

The Modern 100 87 450 3 037 Erf 38746,TygerValley 100 25 000 7 916 117 Strand Street 100 92 513 3 390Aurecon 2 (currently under construction) 100 42 123 2 869

247 086 17 212

* Represents 100% of the property


2015 11

Rodney is currently a director of various investment and property companies. During his career he held both executive and director positions in the Norwich Life financial services and insurance group, involved primarily in the financial asset management and property companies of this group.Duringa15-yeartenure as managing director of the property company he was responsible for the development and management of a prime property portfolio throughout South Africa.

Subsequently, he was the co-founderoftheSpireProperty Services Group and, under the auspices of this group, was the chief executive of the listed Paramount Property Fund which assembled a substantial property and development portfolio throughout South Africa, which was subsequently sold to Growthpoint Properties Limited.

RC SQUIRE-HOwE (74)Independent non-executive (Chairman of the board and Nominations Committee)

With over 21 years’ experience in the property, construction and financial services industries, Arnold brings to the board a great depth of executive management and property experience. He has served ontheboardandsub-committees of Paramount Property Fund Limited. He initiated and managed some of Paramount’s major property development projects and played a vital role in formulating and driving the fund’s strategy and management. He is the primary driver of the growth of Ingenuity and oversees its overall investment strategy and development initiatives.

AA MARESkY (48)B.Com, PGDAExecutive – Chief executive officer

Mark was a partner at Grant Thornton (Chartered Accountants) for 12 years before moving into commerce in the retail, manufacturing and financial services industries. He was also the group financial director of a private financial services group which was listed on the JSE. He has been the financial director of Ingenuity since its listing.

M wAGENHEIM (59)B.Com (Hons), CTA, CA (SA)Executive – Chief financial officer, company secretary

John has many years’ experience in the property industry, involved in viability studies and the marketing of commercial property development and execution of projects. His responsibilities as part of the asset management team are for property performance, portfolio upgrades and redevelopments, as well as new property development initiatives.

J BIELICH (58)B.Eng (Civil), B.Eng (Hons) (Project Management), MBA (UCT) Executive

BOARD OF dIRECTORS

Joan is a chartered accountant who started her career at PricewaterhouseCoopers, where she was an audit manager before joining Nedbank Limited in 2003. Joan was a senior relationship manager in the Nedbank Corporate and Property Finance division where she built up a wealth of knowledge in analysing property transactions and finance structuring. She joined Ingenuity in May 2014 and was appointed as a director in August 2015.

J SOLMS (39)B.Acc, B.Compt (Hons), CA (SA)Executive – Chief Operating Officer

12

SUB-COMMITTEE STRUCTURES

Audit and Risk CommitteeRS Schur (Chairman)RCSquire-HoweDB FabianAll the executive directors and a representative of Mazars attend by invitation.

Remuneration CommitteeRS Schur (Chairman)RCSquire-HoweLH Cohen

Nominations CommitteeRCSquire-Howe(Chairman)LH CohenRS Schur

Social and Ethics CommitteeRS Schur (Chairman)AA MareskyM Wagenheim

Investments and Acquisition CommitteeRCSquire-Howe(Chairman)AA MareskyJ BielichLH CohenDB Fabian

Leon is the managing directorandco-founderofthe Rabie Property Group, one of South Africa’s most successful independent property development companies. The Rabie Property Group has pioneered many new concepts for South Africa, including plot and plan housingandpublic-privatesector partnerships. It has won both national and international recognition for manyofitsaward-winningprojects and is the developer ofthemulti-billionrandCentury City development in Cape Town.

LH COHEN (60)National Diploma: Construction Supervisors Non-executive

Ray is a chartered accountant and has served in executive positions with some of South Africa’s leading retail groups including the JD Group and Woolworths Holdings Limited. He served on the Woolworths Holdings audit committee until June 2005 and was chairman of the Paramount Property Fund’s audit committee until February 2007.

RS SCHUR (77)CA (SA)

Dennis is the principal and founding partner of Fabian Architects (est. 1975) who have been responsible for many significant property developments in Cape Town. Hewasanon-executivedirector of the JSE listed Spearhead Property Group Limited. He is also a director of numerous private property development and investment companies.

dB FABIAN (66)Pr.Arch, B.Arch (UCT), MIArch, CIA Independent non-executive

Andrew is a chartered surveyor with over 23 years’ experience in commercial property investment, valuation and management. Followingasuccessfulnine-year period at CB Richard Ellis Limited, one of the world’s largest property advisers, he established Andrew Branch Property Consultants Limited, specialising in advising, representing and overseeing clients’ property interests. The range of work undertaken includes formulating and implementing strategy, financial management, identifying asset management opportunities, lettings, acquisitions and sales. He is also a director ofvariousproperty-owningcompanies.

AJ BRANCH (50)B.Sc (Hons), MRICS Independent non-executive


2015 13

sUsTAINABILITy REVIEwThe board acknowledges that it has a responsibility for

determining policy and strategic direction on corporate

responsibility.

As an owner and developer of prime investment properties we understand the impact that the Company can have on the environment and all our stakeholders. Ingenuity has identified its main stakeholders as:

• shareholders;

• employees,directorindirect;

• tenantsandtheircustomers;

• suppliersandprofessionalconsultants;

• bankersandprovidersoffinance;

• governmentandlocalauthorities;and

• serviceprovidersofpropertyservices.

Stakeholder engagement is important to the Company’s ability to deliver on its strategic goals and objectives.

The key performance indicators for the current year included:

• deliveringsustainablegrowthandvaluecreationforstakeholders;

• successinouraimtoacquiregoodinvestmentanddevelopmentpropertyopportunities;

• unlockingvaluethroughtherefurbishmentandrenovationofselectedproperties;

• meetingtherequirementsofourtenants;

• securingoptimalbankingandlendingfacilities;

• maintainingandupgradingexistingproperties;

• achievinggrowthinrentalincome;

• curtailingoperatingcostincreases;

• securingperformingtenantsandimprovingtenantmix;

• minimisingvacancies;

• managingtheenvironmental,healthandsafetyaspectsinthedevelopmentofitsproperties;and

• disposalofnon-coreproperties.

ENVIRONMENTAL IMPACTThe Company is proactive in developing Green Rated properties and in reducing utility consumption in its property portfolio. Its core business does not have a significant impact on the environment.

During the development phase of constructing buildings, consultants are employed to advise on the environmental, health and safety aspects, and thereafter to monitor compliance. Particular attention is given to energy and water-savingmeasures.This includesdesigningenergy-savingtechniquesandusing available technology to achieve sustainable benefits for the Company and its tenants.

Through its property administration service provider it seeks to provide a safe, clean and secure environment in each of its properties.

Properties are maintained to the highest building standards.

SOCIAL IMPACTThe Company utilises its executive directors to manage the functions of property acquisitions and disposals, finance, and the monitoring of corporate governance policies. It has contracted out the property management function to experienced property administrators and has ensured that adequate controls exist at the administrator to protect the assets of the Company.

Ingenuity indirectly contributes to wealth creation and job creation through the employment of building contractors for the refurbishment and development of its property portfolio.

TheCompanyemploysthreefull-timeemployeesotherthantheexecutivedirectors and therefore has no worker participation or employment equity programmes.

The Company’s ability to achieve its strategic objectives is linked to the growth ofthecommunityinwhichitoperates.Itthereforefocusesitssocio-economicinitiatives in the areas in which it operates.

RISk MANAGEMENTIn pursuing its strategic goals, the Company has introduced a formal risk analysis process and has identified certain risk factors that may impact adversely on its ability to achieve its stated objectives.

14

These major risks are summarised in the following table:

Identified risk factor Possible impact Company strategy Progress in current year1 Global economic

crisis– Limiting access to capital– Uncertain interest rates– Reduced income of tenants– Increased costs resulting in

decreased earnings– Decrease in property values

– Maintaining loan to value* ratio– Consideration of renewing interest rate

swap agreements to hedge portion of the interest on borrowings

– Negotiating adequate banking facilities– Monitoring of vacancies– Monitoring of arrears and credit checks

on new tenants– Monitoring of costs and recoveries– Acquisitions committee authorises

property acquisitions and ongoing monitoring of property market including rentals and vacancies

– Loan to value* ratio currently 60% (2014: 56%), is well within the gearing covenant.

– Directors are monitoring quotes for interest rate swaps.

– Details of loans renegotiated are contained in note 12 to the annual financial statements.

– Vacanciesonpropertieshavebeenreducedto3% from 5% in the prior year.

– Bad debts are limited to R22 000 (2014: R86 975) for the year.

– Costs are monitored against budget and the finance team reviews costs on a regular basis to ensure costs recoverable from tenants are recovered.

– Three investment properties and one development property acquired in current year.

– Property values have increased in the current year. Fair value adjustment of R192.9 million (2014: R105.4 million).

2 deterioration of the CBd environment

– Decrease in property values– Loss of suitable tenants

– Close monitoring of nodal developments

– Engagement with authorities– Upgradingoftheareabysecuringup-

market tenants in quality buildings

– Ongoing monitoring in progress.– Completion of the 19 Louis Gradner

redevelopment in the Cape Town CBD and securing tenants for the building, as well as the intended redevelopment in Strand Street in the CBD.

3 Tenant default – Loss of revenue stream– Costs of litigation– Reletting risk

– Rigorous credit control– Regular tenant engagement– Renegotiation of lease rentals and

escalations– Constant monitoring of arrears– Legal costs incurred are charged to the

tenants

– Bad debts suffered in the current year limited to R22 000 (2014: R86 975).

4 Vacancies – Affecting income streams– Not achieving budgets– Letting of space at rentals

lower than market rentals

– Focus on retaining tenants– Maintaining and improving tenant

conditions– Flexibility in renegotiations, including

tenant incentives (i.e. tenant installations)

– Vacanciesaremonitoredandactiontaken to fill vacancies

– Functions are held on completion of new developments to show the space to brokers

– Upgrading of space in order to attract tenants and let space at market rentals

– Vacanciesaroseonthecompletionofdevelopmentproperties.Vacanciesatyear-endwere 3% (2014: 5%).

– Tenants were secured during the year, thus reducing vacancies.

– Vacanciesdecreasedto3%from5%intheprior year.

– Some vacant space was upgraded to make the space more attractive to potential tenants.

* Theloantovalueratioisdefinedasinterest-bearingdebtdividedbytotalassets(assetvalueofallpropertiesandinvestments).


2015 15

Identified risk factor Possible impact Company strategy Progress in current year5 Liquidity and bank

covenants– Inadequate funds for

investment opportunities– Incurring additional finance

costs– Non-compliancewiththe

banks’ loan covenants– Financing all of the

investment properties and development properties through one bank

– Maintaining adequate facilities– Timely renegotiation of facilities– Accurate budgeting of cash flows and

debt obligations– Close monitoring of bank covenants– Applying for finance with other banks

– Properties have been acquired and financed throughlong-termdebt.

– Certain loans have been renegotiated. See the directors’ report and note 12 to the annual financial statements.

– The banks’ loan covenants have been complied with this year.

– The Aurecon 1 property has been refinanced by Standard Bank and the Aurecon 2 development is also financed by Standard Bank.

6. Municipal service delivery failures

– Inability of tenants to sustain business due to failures such as water, electricity supply and costs

– Delays in planning and regulatory approvals

– Inability to transfer property– Time spent by employees

and the property administrator following up and dealing with the municipalities, detracting fromtheirday-to-dayduties

– Obtainingofhigh-qualitytenantswithlow risk of default

– Direct involvement by directors in obtaining of approvals

– Direct involvement by executives and professionals in executing approvals and transfers

– Matters followed up regularly with the municipalities and reference numbers obtained for all queries

– Bad debts of R22 000 (2014: R86 975) for the year, which amounts to 0.008% (2014: 0.04%) of the gross revenue for the year.

– These are constantly monitored to ensure no significant impact on the business and cash flows.

– Ingenuity’s property portfolio managers are directly involved in dealing with the municipalities as part of their duties, this is monitored by Ingenuity management.

7 Compliance with laws and regulations

– Non-compliancewithlawsand regulations

– Incurring penalties and legal costs

– Close monitoring of corporate governance policies

– Reputable attorneys are consulted on matters when necessary, including legal advice on laws and regulations, debt recovery and transactions

– Maintaining highest ethical standards– Monitoring by the financial director and

audit committee

– Nosignificantnon-compliancewithlawsandregulations has occurred in the financial year.

8 Transformation (BBBEE)

– Risksassociatedwithnon-compliance. Ingenuity has limited employees

– The new BBBEE codes are being evaluated to determine the effect on the Company

– The Company will consult with BBBEE advisers to determine an action plan going forward.

9. Energy crisis – Interrupted power supply– Tenants incurring losses

due to power supply interruptions and potential bad debts

– Installation of solar panels for certain properties on the Foreshore, which will result in a cost saving and reduction in electricity usage

– Installation of solar panels on other properties will be considered in future

– Tax allowances can be claimed on the cost of the solar panels

– The solar panels were installed during the current year.

10 Environmental impact

– Tenants may choose to do business with landlords with Green buildings, solar panel installationsandenergy/water management savings systems

– Tenants electing to choose landlords with solar power

– Buildings with Green Star ratings are Glacier Place, Aurecon 1 and Aurecon 2

– Installation of solar panels as referred to above

– Commencement of the development of Aurecon 2.

– Refer above.

SUSTAINABILITY REvIEW >> CONTINUED

16

CLAREMONT CENTRAL


2015 17

CORPORATE GOVERNANCE REPORTThe board of directors is responsible for ensuring that the Company adheres to sound corporate governance principles and is

accountable to shareholders, while also considering the interests of other stakeholders.

During the financial year under review the directors confirm that the Company has, except where noted, in all material respects

applied the King Code on Corporate Governance for South Africa (the “King Code”) and the corporate governance provisions in

the JSE Listings Requirements and complied with applicable laws and regulations and codes of best business practice. A register

relating to the application of the King Code on Corporate Governance is displayed on the Company’s website.

BOARd COMPOSITION, STRUCTURE ANd RESPONSIBILITIESTheCompanyhasaunitaryboardstructurewithfourfull-timesalariedexecutivedirectorsandfivenon-executivedirectors,ensuringahighlevelofindependence. The composition of the board ensures the necessary skills and experience to objectively judge matters of a strategic nature and to guide and lead the Company in its business effectively and ethically, achieving a balance between conforming to governance constraints and performing in an entrepreneurial way. The board appreciates that strategy, risk, performance and sustainability are inseparable. There is a clear division of responsibility and balance of power and authority.

The board is responsible for the proper management and ultimate control of the Company and for monitoring the performance, risk areas and performance indicatorsofthebusiness.Theboardhasdelegatedcertainfunctionstosub-committees.

The appointment of directors is a matter for the board as a whole. The board is assisted by the nominations committee who makes recommendations on the appointment of new directors, including making recommendations on the composition of the board and the balance between executive and non-executivedirectors.Appointmentstotheboardaredoneinaformalandtransparentmanner.One-thirdofthenon-executivedirectorsarerequiredto retire by rotation at the AGM of shareholders, although they may offer themselvesforre-election.

In the view of the board the qualifications, experience and personal characteristicsoftheindependentnon-executivedirectors,togetherwiththefactthat they have no significant contractual relationships with the Company, ensure that their judgement is exercised independently and in an unfettered way. The independenceofnon-executivedirectorsisassessedannuallybytheboard,whichconcluded that these directors remain correctly categorised as independent.

The formal board charter details the scope of authority, responsibilities, powers, composition and functioning of the board. It fully embraces the principles of purpose and values, leadership of the highest standard,

formulating strategy, balancing performance and conformance, and acts at all times in the interest of all stakeholders.

The Company has not implemented formal training and development programmes for directors or a formal evaluation procedure, but has ensured that each individual director has a working understanding of the effect of the applicable laws, rules, codes and standards as applicable to the Company. The Remuneration and Nominations Committees (chaired by the chairman of the Audit and Risk Committee and the Board, respectively) assess the competence and expertise of the directors on a regular basis. The CEO assesses competence and expertise by invitation.

INVESTMENT ANd ACQUISITION COMMITTEEThis committee is responsible for determining and recommending to the board the overall investment strategy of the Company. It reviews investment proposals as presented by the executive directors and is tasked to implement these within the mandates prescribed by the board. The committee’s authority level is currently R100 million. Expenditure and investments above this level require ratification by the full board. Capital expenditure up to R10 million may be undertaken by the executive directors.

The minimum number of members is five and the committee is chaired by a person appointed by the board. Meetings are held as and when required. Two meetings were held during the current financial year. This committee plays a vital role in the growth and strategic direction of the Company.

AUdIT ANd RISk COMMITTEEThe Company has constituted an Audit and Risk Committee, comprising three independentnon-executivedirectorswhoarefinanciallyliterate.

The Audit and Risk Committee’s primary objective is to assist the board in fulfilling its responsibilities relating to the safeguarding of assets, operation of adequate systems and control processes and the preparation of accurate financial reporting and statements in compliance with all statutory requirements, accounting standards and the requirements of the King Code.

18

This includes setting the principles for recommending the use of external auditorsandotherprofessionalsfornon-auditservices.

The Audit and Risk Committee has, during the financial year under review, assessed, evaluated and satisfied itself of the appropriateness of the expertise and experience of the financial director.

Thechairmanisappointedbytheboardandisanindependentnon-executivedirector.

The committee has considered the independence of directors with whom the entity transacts and is satisfied that the directors are independent.

The committee meets quarterly prior to the quarterly board meetings. Additional meetings are held on an ad hoc basis as and when required.

REMUNERATION ANd NOMINATIONS COMMITTEESThese committees advise the board on the structure and development of the Company’s policy on executive directors’ remuneration, including advisingonpolicyregardingandrecommendingnon-executivedirectors’remuneration. They also determine and recommend criteria to the board to measure performance of executive directors in discharging their functions and responsibilities.

Theboardrecommendsnon-executivedirectors’remunerationforapprovalbyshareholders annually in advance.

The remuneration policy is endorsed by shareholders annually in advance.

Thecommitteecomprisesthreenon-executivedirectorsandmeetsannuallyand when otherwise necessary.

dIRECTORS’ ANd OFFICERS’ INSURANCEDirectors and officers enjoy the benefit of liability insurance funded by the Company to cover instances where they could be held personally liable in cases of negligence, default or a breach of duty or trust. The cover excludes liability resulting from criminal, reckless or fraudulent behaviour. The level of cover is reviewed annually to ensure it is appropriate and within legislative requirements.

COMPANY SECRETARYThe company secretary performs the company secretarial function which ensures that board procedures and relevant legislation and regulation is observed and complied with, and is responsible for preparing meeting agendas and recording minutes of meetings. The company secretary also provides guidance to directors on governance, compliance and fiduciary responsibilities.

The board considered, based on a formal assessment by the Audit and Risk Committee, and is of the opinion, that the company secretary, who is a CA (SA), has the requisite competence, knowledge, qualifications and experience to

carry out the duties of a company secretary of a public company and, in the performance of his duties as company secretary, is able to effectively perform the role as the gatekeeper of good governance. The company secretary has over eight years’ experience in the industry and has been acting as company secretary since the company was relisted in 2007. The board has ensured through an independent review that the company secretary has adequately and effectively carried out his role and, where necessary, has consulted with external experts to ensure compliance with relevant legislation and rules pertaining to business operations. The company secretary has direct access to, and ongoing communication with, the chairman of the board. The board is satisfied that as far as is reasonably possible, an arm’s length relationship between the company secretary and the board is intact.

INTERNAL CONTROLThe Company strives to maintain internal controls of a standard aimed at ensuring that the systems of financial reporting contain complete, accurate and reliable information and safeguard the Company’s assets. The external auditors report to the Audit and Risk Committee and have access to all committees and directors. Due to the size of the executive management structure it is not considered necessary to have an internal audit function. The board has outsourced certain functions of the management of the Company’s property portfolio to Rabie Property Administrators Proprietary Limited which has extensive experience and has developed the necessary IT systems to ensure accurate and timely reporting and the board has satisfied itself that adequate controls exist over the collection of rental and payment of pre-authorisedexpenditure.

Internal controls are regularly reviewed by the Audit and Risk Committee and the executive management.

RISk MANAGEMENTThe board is responsible for the Company’s risk management process.

TheCompanyhastakenallnecessarystepstoensurethatbusiness-specificoperational and strategic risks, emerging risks and risks posed by the external environment are adequately and timeously identified and mitigated on a continual basis. Adequate disaster recovery processes are in place and all insurable risks have been adequately covered.

The Audit and Risk Committee monitors and reports to the board on the risks faced by the Company.

INFORMATION TECHNOLOGY The board is responsible for information technology governance. The board has aligned IT with the performance and sustainability objectives of the Company. Certain property management functions are outsourced to Rabie Property Administrators Proprietary Limited and IT support is outsourced to MediaCloud Networks Proprietary Limited. IT risks are monitored and evaluated by the


2015 19

CORPORATE GOVERNANCE REPORT >> CONTINUEDAudit and Risk Committee on a quarterly basis. The committee assesses the following on a quarterly basis:

• whetherinformationsystemsarereliableandwhetherdataisrelevant,accurateandtimely;

• whetheradequatesecuritysystemsareinplaceandthatadequatebackupproceduresareinplace;

• whetherbusinessinterruptionanddisasterrecoveryproceduresareadequate; and

• nosignificantITriskshavebeenfacedbytheCompany.

COMMUNICATIONS wITH SHAREHOLdERSThe Company is committed to timeously and effectively communicating to shareholders.

Communication with shareholders is based on the principles of timely, balanced, clear and transparent information. Interactions with institutional investors take place at the interim and final results presentations. The most recent and historic financial information is also published on the Company’s website. All matters are communicated in a transparent fashion. The board is responsible for ensuring disputes are resolved timeously and effectively, should disputes with shareholders arise.

SHARE dEALINGS BY dIRECTORSAll dealings are regulated and monitored as required by the Listings Requirements of the JSE Limited. The company secretary biannually advises the directors of the relevant legislative provisions prohibiting dealing in the Company’ssharesorencouragingotherstotrade,whileinpossessionofnon-public,price-sensitiveinformation,ordisclosingthisinformation.

Details of directors’ shareholdings are set out in this integrated annual report (refer to the directors’ report).

GOING CONCERNThe annual financial statements for the 2015 financial year have been prepared on the going concern basis. Based on the Company’s positive cash flows and cash balances, the level of unutilised borrowing facilities and the revenue and cash budgets forecast for the 2016 financial year, the directors believe that the Company has adequate resources to continue in operation for the year ahead. The board has processes in place to timeously identify and address underperforming investments.

dIRECTORS’ ATTENdANCE AT MEETINGSThetablebelowsetsouttheattendanceofdirectorsatboardandsub-committeemeetingsheldduringtheyear.Attendanceishighandindicatesanactiveandcommitted board.

Director Status

BoardAudit and Risk

Committee

Remuneration and Nominations

CommitteeSocial and Ethics

Committee

Investments and Acquisition Committee

A B A B A B A B A B

RCSquire-Howe(Chairman) NE-I 5 5 4 4 1 1 2 1

AJ Branch NE-I 5 1

AA Maresky E 5 5 4 4* 1 1* 3 3 2 2

DB Fabian NE-I 5 4 4 3 2 2

J Bielich E 5 5 4 4* 2 2

LH Cohen NE 5 5 1 1 2 2

M Wagenheim E 5 5 4 4* 3 3

RS Schur NE-I 5 4 4 4 1 1 3 3

Column A is the number of meetings held during the period that a director was eligible to attend.Column B is the number of meetings attended by a director.

Note that Mrs Joan Solms was appointed on 28 August 2015 and therefore did not attend any of the above meetings. I–Independent NE–Non-executive E–Executive *–Attendbyinvitation

20

SOCIAL ANd ETHICS COMMITTEE REPORTThe chairman of the Social and Ethics Committee reports to shareholders on the matters within the committee’s mandate for the

year ended 31 August 2015 as follows.

This report is provided in accordance with the Companies Regulations 2011, issued in terms of the South African Companies Act,

No. 71 of 2008, as amended.

APPOINTMENT ANd COMPOSITIONThe members of the committee were appointed by the board. The members appointed to the committee are Messrs RS Schur (chairman) (independent, non-executivedirector),AAMareskyandMWagenheim(executivedirectors).The company secretary also acts as the secretary of the committee.

RESPONSIBILITIESThe objectives and responsibilities of the committee are recorded in its written charter and are aligned with the statutory functions as set out in the Companies Regulations 2011.

The committee has a duty to:

• monitorsocialandeconomicdevelopment,governance,employmentandenvironmentalactivitiesoftheCompany;

• drawmatterswithinitsmandatetotheattentionoftheboard;and

• reportannuallytoshareholdersattheCompany’sAGMonthematterswithin its mandate.

MEETINGS ANd PROCEdURESThe committee met three times during the year under review.

At its meetings the committee reviews a formal checklist of matters required to be considered by the committee with regard to fulfilling its mandate.

CONCLUSION The committee is of the view that the Company takes its environmental, social andgovernanceresponsibilitiesseriously.Nosubstantivenon-compliancewithlegislationandregulation,ornon-adherencewithcodesofbestpractice,relevant to the areas within the committee’s mandate has been brought to itsattention.Thecommitteehasnoreasontobelievethatanysuchnon-complianceornon-adherencehasoccurred.

The committee recognises that the areas within its mandate are constantly evolving and that management’s responses will also evolve as the environmental, social and governance agenda enjoys increased attention from stakeholders.

RS SCHURSocial and Ethics Committee Chairman

Cape Town5 November 2015


2015 21

ARTIST'S IMPRESSION ROGGEBAAI CENTRE

22

24 Directors’ responsibility for the annual financial statements

24 Declaration by company secretary

25 Audit and Risk Committee report

26 Independent auditor’s report

27 Directors’ report

30 Statements of financial position

31 Statements of profit or loss and other comprehensive income

32 Statements of changes in equity

34 Statements of cash flows

35 Notes to the annual financial statements

65 Analysis of shareholders

66 Property portfolio schedule

68 Property portfolio information

ATLANTIC CENTRE (right)

ANNUAL FINANCIAL STATEMENTS


2015 23

The Company’s directors are responsible for the preparation and fair presentation of the consolidated annual financial statements and separate annual financial statements, comprising the statements of financial position at 31 August 2015, and the statements of profit and loss and other comprehensive income, the statements of changes in equity and statements of cash flows for the year then ended, and the notes to the annual financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors’ report, in accordance with International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and the requirements of the South African Companies Act No. 71 of 2008.

The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud orerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccounting estimates that are reasonable in the circumstances.

The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management.

The directors have made an assessment of the group’s and the Company’s ability to continue as a going concern and have no reason to believe 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 CONSOLIdATEd ANNUAL FINANCIAL STATEMENTS ANd SEPARATE ANNUAL FINANCIAL STATEMENTSThe consolidated annual financial statements and separate annual financial statements of Ingenuity Property Investments Limited were approved by the board of directors on 5 November 2015 and are signed on its behalf by

AA MARESkY M wAGENHEIMDirector (CEO) Director (Financial Director)

dIRECTORS’ RESPONSIBILITY FOR THE ANNUAL FINANCIAL sTATEMENTs for the year ended 31 August 2015

DECLARATION By COMPANY SECRETARYIn my capacity as company secretary, I hereby confirm, in terms of the South African Companies Act No. 71 of 2008, that for the year ended 31 August 2015, the Company has lodged with the Companies and Intellectual Property Commission all such returns as are required of a public company in terms of this Act and that all such returns are true, correct and up to date.

M wAGENHEIMCompany Secretary


24

AUdIT ANd RISk COMMITTEE REPORTWe are pleased to present our report to shareholders for the financial year ended 31 August 2015. The Audit and Risk Committee (“the audit committee”) is a formal committee of the board and operates within written terms of reference. The audit committee has an independent role with accountability to both the board and shareholders. The audit committee’s responsibilities include the statutory duties prescribed by the South African Companies Act No. 71 of 2008, activities recommended by the King Code and the responsibilities assigned by the board.

AUdIT COMMITTEE MEMBERS, MEETING ATTENdANCE ANd ASSESSMENTThe audit committee meets at least four (4) times a year as required by the charter.

The composition and attendance is explained in the corporate governance report.

External auditors attended the audit committee meetings. All the executive directors attended the meetings by invitation.

ROLES ANd RESPONSIBILITIESThe audit committee reviews the ongoing effectiveness of the internal financial and operating controls and frameworks on behalf of the board of directors.

External auditor appointment and independenceThe external auditors report to the audit committee who reviews the external audit findings. The audit committee monitors the independence of the external auditors and is of the view that the external auditors are independent of the Company. The audit committee nominates the appointment of external auditorstoshareholdersoftheCompany.Theauditcommitteepre-approvescontractsfornon-auditservicestoberenderedbytheexternalauditors.

The audit committee has satisfied itself that both Mazars and Ms Yolandie Ferreira are accredited with the JSE Limited as required.

The minutes of the audit committee meetings are presented to the members of the board for inspection. There is close communication between the board of directors, the audit committee and the external auditors. Areas of control weakness will be brought to the attention of all relevant parties and remedial

action will be taken immediately to ensure no loss or misstatement due to inadequacy of the internal control environment.

Financial statements and accounting practicesThe audit committee has evaluated the consolidated annual financial statements and separate annual financial statements of the Company for the year ended 31 August 2015 and, based on the information provided to the audit committee, considers that they are prepared in accordance with International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and the requirements of the South African Companies Act No. 71 of 2008.

Financial directorThe audit committee has considered the competence, experience and qualifications of the financial director, Mr Mark Wagenheim CA (SA) and are satisfied that the financial director has the expertise and experience to perform his role as financial director.

GOING CONCERNThe audit committee has reviewed the executive management’s assessment, including key assumptions, on the going concern status of the Company. The audit committee concurs with the board of directors and executive management that the adoption of the going concern premise in the preparation of the annual financial statements is appropriate.

The audit committee has therefore recommended the adoption of the consolidated annual financial statements and separate annual financial statements by the board of directors.

RS SCHURAudit and Risk Committee Chairman

Cape Town 5 November 2015


2015 25

We have audited the consolidated and separate annual financial statements of Ingenuity Property Investments Limited set out on pages 30 to 69, which comprise the statements of financial position as at 31 August 2015, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

dIRECTORS’ RESPONSIBILITY FOR THE CONSOLIdATEd ANNUAL FINANCIAL STATEMENTSThe Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate annual financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act No. 71 of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate annual financial statements that are free from material misstatement, whether due to fraud or error.

AUdITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these consolidated and separate annual 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 consolidated and separate annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and separate annual financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated and separate annual 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 consolidated and separate annual 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 the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,

as well as evaluating the overall presentation of the consolidated and separate annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINIONIn our opinion the consolidated and separate annual financial statements present fairly, in all material respects, the consolidated and separate financial position of Ingenuity Property Investments Limited as at 31 August 2015, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act No. 71 of South Africa.

OTHER REPORTS REQUIREd BY THE COMPANIES ACT As part of our audit of the consolidated and separate annual financial statements for the year ended 31 August 2015, we have read the directors’ report, the Audit and Risk Committee report, the company secretary’s certificate and the Social and Ethics Committee report for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate annual financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate annual financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

MAZARSRegistered AuditorPartner: Yolandie FerreiraRegistered Auditor


INdEPENdENT AUdITOR’S REPORT to the shareholders of Ingenuity Property Investments Limited

26

The directors have pleasure in presenting their report for the year ended 31 August 2015.

NATURE OF BUSINESSIngenuity Property Investments Limited carries on the business of a property investment company in South Africa with its core strategic focus to acquire, develop and redevelop properties predominantly within the Western Cape region.

GENERAL REVIEw OF OPERATIONSThe results and financial position of the group are set out in the accompanying annual financial statements and notes.

Thetotalgrossrentalincome,inclusiveofstraight-liningrentaladjustments,amounted to R298.0 million (2014: R261.2 million).

All assets have been tightly managed and current vacancies have been reduced to 3% (2014: 5%) and are well within the general industry norms. In the year ahead management expects no material vacancies.

Atyear-endtheinvestmentpropertyportfoliowasrevaluedtoR3 046.2 million(2014: R2 556.3 million) which includes the acquisitions during the current year at a cost of R197.5 million (2014: R961.6 million) and the properties for development which were completed during the current year at a cost of R59.6 million (2014: R79.4 million) and brought into use;whilstthepropertiesfordevelopmentwerereflectedatafairvalueof R247.1 million (2014: R183.4 million). The net asset value per share is 110 cents (2014: 94 cents).

BORROwINGSThe Company achieved a weighted average borrowing cost of 8.20% (2014: 7.98%).Totalborrowingsatyear-endamountedtoR1991.3 million(2014: R1 579.2 million) all of which is floating at rates linked to prime.

Thecompany’sloantovalueratiois60%(2014: 56%)atyear-endandhas increased due to increasing borrowings to fund the multiple property acquisitions, the completion of the redevelopment of 19 Louis Gradner and the development of Aurecon 2 which commenced during the current financial year.

SHARE CAPITALThe Company’s issued share capital consists of 1 211 469 543 (2014: 1 211 469 543) ordinary shares of R0.01 each.

The authorised share capital of the Company consists of 2 000 000 000 (2014: 2 000 000 000) ordinary shares of R0.01 each.

During the year under review the Group bought back 20.227 million shares (2014: nil)atanaveragepurchasepriceof86cents(2014: n/a).Atyear-end89.160 million (2014: 68.933 million) shares are held as treasury shares. The average purchase price of these shares is 61 cents (2014: 51 cents) which represents a 32% (2014: 46%) discount to the current net asset value per share.The collectiveeffectofbuy-backsresultsinanenhancementofthenetasset value per share. The group will continue, as and when it is opportune, to buy back shares in the open market.

dIVIdENdS TO SHAREHOLdERSIn respect of the current year the board of directors has declared a final cash dividend of 3.5 cents per share (2014: 2.5 cents per share), to be paid to shareholders who are registered on the record date of 11 December 2015. The total estimated dividend to be paid by the group is R42.401 million (2014: R30.287 million).

dIRECTORSAs at the date of this report the following directors held office:

Non-executive:MessrsRCSquire-Howe(Chairman),AJBranch,LHCohen,DB Fabian and RS Schur

Executive: Messrs AA Maresky, J Bielich, M Wagenheim and Mrs J Solms (appointed 28 August 2015)

In terms of the memorandum of incorporation the following directors retire attheforthcomingannualgeneralmeetingandareeligibleforre-election:Messrs RC Squire-HoweandLHCohen.

SECRETARYThe company secretary is Mr M Wagenheim.

Business and postal address: Suite 102, 1st Floor, Intaba, 25 Protea Road, Claremont, 7708.

CORPORATE GOVERNANCEThe Company’s position with regard to corporate governance and internal controls is set out in a separate statement in this integrated annual report.

dIRECTORS’ REPORT for the year ended 31 August 2015


2015 27

dIRECTORS’ REPORT for the year ended 31 August 2015 (continued)

dIRECTORS’ SHAREHOLdINGSAs at the reporting date the following shares were held by directors of the Company:

2015

Beneficial

direct Indirect Total % held

J Bielich 6 000 000 – 6 000 000 0.5

AJ Branch 2 160 005 – 2 160 005 0.2

LH Cohen – 111 020 981 111 020 981 9.2

DB Fabian 12 000 000 – 12 000 000 1.0

AA Maresky 23 584 610 5 550 000 29 134 610 2.4

RS Schur 600 000 – 600 000 0.0

J Solms 40 000 3 036 500 3 076 500 0.3

RCSquire-Howe 100 000 3 300 000 3 400 000 0.3

M Wagenheim 2 300 000 – 2 300 000 0.2

46 784 615 122 907 481 169 692 096 14.1

There have been no changes to the director’s interests between the end of the reporting period and the date of the directors’ report.

2014

Beneficial

Direct Indirect Total % held

J Bielich 6 000 000 – 6 000 000 0.5

AJ Branch 2 160 005 – 2 160 005 0.2

LH Cohen – 110 898 599 110 898 599 9.2

DB Fabian 12 000 000 – 12 000 000 1.0

AA Maresky 22 334 610 – 22 334 610 1.8

RS Schur 600 000 – 600 000 0.0

RCSquire-Howe 100 000 3 300 000 3 400 000 0.3

M Wagenheim 2 300 000 – 2 300 000 0.2

45 494 615 114 198 599 159 693 214 13.2

In terms of the Companies Act the executive directors are identified as the prescribed officers with remuneration details as disclosed in note 23.4.

The high percentage of shares held by the directors is evidence of their confidence in and their commitment to the Company.

28

SUBSIdIARIESThe Company directly holds 100% of the issued share capital in a subsidiary company, Withmore Investments 3 Proprietary Limited, which is incorporated in the Republic of South Africa, as presented in note 5 to the annual financial statements. The subsidiary company carries on the business of an investment holding company.

The company directly holds 67% of the issued share capital in a subsidiary company, Insight Property Developers (Palmyra Road) Proprietary Limited, which is incorporated in the Republic of South Africa, as presented in note 5 to the annual financial statements. The subsidiary company carries on the business of a property investment company.

The company directly holds 100% of the issued share capital in a subsidiary company, Wespin 42 Proprietary Limited, which is incorporated in the Republic of South Africa, as presented in note 5 to the annual financial statements. The subsidiarycompanycarriesonthebusinessofacoffeeshop/restauranttrading as the “Lunch Depot” in Atlantic Centre.

dIRECTORS’ INTERESTS IN CONTRACTSThe Company contracted with Fabian Architects (partnership) to attend to architectural work completed on19 Louis Gradner during the current financial year. Mr DB Fabian is a director of Ingenuity Property Investments Limited and a partner in Fabian Architects. The contract was made on terms equivalent to those that prevail in the market on an arm’s length basis.

Refer to note 23.

AUdITORSA resolution to appoint Mazars as auditor will be proposed at the annual general meeting scheduled to take place on 22 January 2016.

EVENTS AFTER THE REPORTING PERIOdThe registration of transfer of Erf 172704, Claremont, known as Claremont Central, took place on 2 September 2015 at a cost of R85 million and was financed by way of borrowings and internal cash resources.

The registration of transfer of Erf 57529, Claremont, known as Toffee Lane, took place on 9 September 2015 at a cost of R20 million and was financed by way of borrowings and internal cash resources.

The registration of transfer of Remainder Erf 851, Cape Town and Erf 9405, Cape Town, known as State House, took place on 17 September 2015 at a cost of R35 million and was financed by way of borrowings and internal cash resources.

The registration of transfer of Erf 3549, Pinelands and Remainder Erf 2241, Pinelands, known as Ramsay Media Building, took place on 6 October 2015 at a cost of R25.5 million and was financed by way of borrowings and internal cash resources.

The Company signed an agreement of sale with the City of Cape Town on 7 September 2015 to acquire three small erven (measuring in total 133 m2) known as “Laurel Lane” in Claremont, which is situated between two properties owned by the Company (72 on Main and 14 Dreyer Street, Claremont) for an amount of R1.475 million. The purchase price will be paid out of cash resources. Transfer is expected to be registered during December 2015.

Subsequenttotheyear-endtwofiveyearinterestrateswapstotallingR500 millionatanaverageall-inrateof9.68%wereimplemented.

Other than as mentioned above, there are no other material reportable events after the reporting period which have occurred since the end of the financial year being reported on and the date of this report.

SPECIAL RESOLUTIONSThe following special resolutions were passed at the annual general meeting of the company held on 23 January 2015:

• remunerationpayabletonon-executivedirectors;

• authoritytoprovidefinancialassistancetosubsidiaries,relatedorinterrelatedcompaniesandentities;and

• generalapprovaltorepurchaseshares.


2015 29

sTATEMENTs OF FINANCIAL POSITION at 31 August 2015

Group Company

Notes2015

R’0002014

R’0002015

R’0002014

R’000

ASSETS

Non-current assets 3 303 156 2 741 516 3 317 153 2 744 403

Investment properties 2 2 939 032 2 475 239 2 857 345 2 397 544

Straight-lineleaseaccrual 2 102 616 76 333 102 325 75 904

Investment properties under development 3 247 086 183 417 247 086 183 417

Property and equipment 4 14 422 6 527 13 938 5 930

Interests in subsidiaries 5 – – 20 719 20 719

Loans receivable 6 – – 75 740 60 889

Current assets 134 162 53 176 132 261 51 152

Trade and other receivables 7 13 137 12 682 11 695 11 423

Straight-lineleaseaccrual 2 4 570 4 753 4 420 4 694

Prepayments 8 87 646 – 87 646 –

Tax receivable – 1 105 – 1 105

Cash and cash equivalents 9 28 809 34 636 28 500 33 930

Total assets 3 437 318 2 794 692 3 449 414 2 795 555

EQUITY ANd LIABILITIES

Shareholders’ interest 1 236 359 1 072 904 1 267 373 1 091 468

Share capital 10 12 115 12 115 12 115 12 115

Share premium 693 540 693 540 693 540 693 540

Treasury shares 11 (52 296) (34 928) – –

Non-distributablereserve 412 603 257 317 403 192 250 888

Retained earnings 156 147 132 393 158 526 134 925

Total equity attributable to equity holders of the parent 1 222 109 1 060 437 1 267 373 1 091 468

Non-controlling interest 14 250 12 467 – –

Non-current liabilities 2 121 054 1 679 808 2 101 652 1 661 112

Borrowings 12 1 959 949 1 576 279 1 950 580 1 565 880

Finance lease 13 4 069 3 740 – –

Deferred tax 14 157 036 99 789 151 072 95 232

Current liabilities 79 905 41 980 80 389 42 975

Trade and other payables 15 26 463 19 101 28 475 20 966

Current portion of borrowings 12 31 317 2 970 30 270 2 234

Prepaid rent received 12 882 10 012 12 709 9 878

Taxation 308 – – –

Share-basedpayment 26 8 935 9 897 8 935 9 897

Total equity and liabilities 3 437 318 2 794 692 3 449 414 2 795 555

30

sTATEMENTs OF PROFIT OR LOSS ANd OTHER COMPREHENSIVE INCOME for the year ended 31 August 2015

Group Company

Notes2015

R’0002014

R’0002015

R’0002014

R’000

Revenue 1.9 297 964 261 216 288 244 251 912

Contractual 1.9 271 864 221 952 262 097 212 735

Straight-lining 2 26 100 39 264 26 147 39 177

Net operating expenses (85 358) (74 861) (81 758) (70 640)

Profit before fair value adjustments 16 212 606 186 355 206 486 181 272

Fair value gains on investment and development properties 222 127 105 407 217 984 96 521

Fair value losses on investment and development properties (29 237) – (29 237) –

Total fair value adjustment 192 890 105 407 188 747 96 521

Profit before interest and taxation 405 496 291 762 395 233 277 793

Interest received 17 2 254 1 303 4 371 3 146

Interest paid 18 (140 544) (111 239) (139 031) (109 650)

Profit before taxation 267 206 181 826 260 573 171 289

Taxation 19 (57 395) (44 777) (55 680) (40 221)

Profit for the year 209 811 137 049 204 893 131 068

Attributable to:

Equity holders of the parent 208 028 132 024 204 893 128 127

Non-controllinginterest 1 783 5 025 – 2 941

209 811 137 049 204 893 131 068

Basic and diluted earnings per share (cents) 20.1 18.4 12.0

Profit for the year 209 811 137 049 204 893 131 068

Other comprehensive income:

To be reclassified subsequently to profit or loss:

Cash flow hedges – 1 440 – 1 440

Income tax relating to components of other comprehensive income – (403) – (403)

Other comprehensive income for the year, net of tax – 1 037 – 1 037

Total comprehensive income for the year 209 811 138 086 204 893 132 105

Total comprehensive income attributable to:

Equity holders of the parent 208 028 133 061 204 893 129 164

Non-controllinginterest 1 783 5 025 – 2 941

209 811 138 086 204 893 132 105

INGENUITY


2015 31

sTATEMENTs OF CHANGES IN EQUITY for the year ended 31 August 2015

Group

Share capital

R’000

Share premium

R’000

Treasury shares R’000

Non-distributable reserve

R’000

Share-based

payment R’000

Retained earnings

R’000

Non-con-trolling

interest R’000

Total equity R’000

Balance at 1 September 2013 8 055 361 224 (34 928) 171 464 – 102 412 6 867 615 094

Decreaseinnon-controllinginterest–(settlementofagreement) – – – – – – (9 808) (9 808)

Increaseinnon-controllinginterest–businessacquired (note 5) – – – – – – 10 383 10 383

Total comprehensive income for the year – – – 1 037 – 132 024 5 025 138 086

Profit for the year – – – – – 132 024 5 025 137 049

Other comprehensive income – – – 1 037 – – – 1 037

Net change in fair value of cash flow hedge recognised directly in other comprehensive income – – – 1 037 – – – 1 037

Issue of 405 919 543 shares (note 10) 4 060 332 316 – – – – – 336 376

Transfertonon-distributablereserve–fairvalueadjustments to properties – – – 84 816 – (84 816) – –

Dividend paid – 1.5 cents per share – – – – – (17 227) – (17 227)

Balance at 31 August 2014 12 115 693 540 (34 928) 257 317 – 132 393 12 467 1 072 904

Total comprehensive income for the year – – – – – 208 028 1 783 209 811

Profit for the year – – – – – 208 028 1 783 209 811

Other comprehensive income – – – – – – – –

Purchase of 20 227 108 treasury shares (note 11) – – (17 368) – – – – (17 368)

Transfertonon-distributablereserve–fairvalueadjustments to properties – – – 155 286 – (155 286) – –

Dividend paid – 2.5 cents per share – – – – – (28 988) – (28 988)

Balance at 31 August 2015 12 115 693 540 (52 296) 412 603 – 156 147 14 250 1 236 359

Comprising:

Fair value reserve 412 603

32

Company

Share capital

R’000

Share premium

R’000

Non-distributable reserve

R’000

Share-based

payment R’000

Retained earnings

R’000

Non-con-trolling

interest R’000

Total equity R’000

Balance at 1 September 2013 8 055 361 224 171 464 – 102 412 6 867 650 022

Decreaseinnon-controllinginterest–(settlementofagreement) – – – – – (9 808) (9 808)

Total comprehensive income for the year – – 1 037 – 128 127 2 941 132 105

Profit for the year – – – – 128 127 2 941 131 068

Other comprehensive income – – 1 037 – – – 1 037

Net change in fair value of cash flow hedge recognised directly in other comprehensive income – – 1 037 – – – 1 037

Issue of 405 919 543 shares (note 10) 4 060 332 316 – – – – 336 376

Transfertonon-distributablereserve–fairvalueadjustments to properties – – 78 387 – (78 387) – –

Dividend paid – 1.5 cents per share – – – – (17 227) – (17 227)

Balance at 31 August 2014 12 115 693 540 250 888 – 134 925 – 1 091 468

Total comprehensive income for the year – – – – 204 893 – 204 893

Profit for the year – – – – 204 893 – 204 893

Other comprehensive income – – – – – – –

Transfertonon-distributablereserve–fairvalueadjustments to properties – – 152 304 – (152 304) – –

Dividend paid – 2.5 cents per share – – – – (28 988) – (28 988)

Balance at 31 August 2015 12 115 693 540 403 192 – 158 526 – 1 267 373

Comprising:

Fair value reserve 403 192

INGENUITY


2015 33

sTATEMENTs OF CASH FLOwS for the year ended 31 August 2015

Group Company

Notes2015

R’0002014

R’0002015

R’0002014

R’000

Cash flows from operating activities

Cash generated from operations 21.1 199 234 158 522 193 190 157 790

Interest received 21.2 2 254 1 303 4 371 3 146

Interest paid 21.3 (135 967) (112 529) (135 137) (111 476)

Taxation received 21.4 1 265 – 1 265 –

Dividends paid (28 988) (17 226) (28 988) (17 226)

Net cash inflow from operating activities 37 798 30 070 34 701 32 234

Cash flows from investing activities

Additions to property and equipment 4 (8 133) (6 609) (8 124) (5 957)

Acquisitions/additionstoinvestmentproperties 2 (216 321) (1 027 707) (216 321) (1 027 707)

Interest capitalised to investment properties and investment properties under development 3 (6 710) (2 778) (6 710) (2 778)

Acquisitions/additionstoinvestmentpropertiesunderdevelopment 3 (116 543) (110 417) (116 543) (110 417)

Prepaymentsforinvestmentpropertyacquiredafteryear-end 8 (87 646) (104) (87 646) (104)

Loans advanced 6 – – (19 807) (25 961)

Loans repaid 6 – – 4 955 –

Business combinations 22 – (42 922) – –

Shares acquired in subsidiary 5 – – – (20 719)

Net cash outflow from investing activities (435 353) (1 190 537) (450 196) (1 193 643)

Cash flows from financing activities

Treasury shares acquired 11 (17 367) – – –

Proceeds from the issue of shares 10 – 336 375 – 336 375

Financial liabilities raised 12 473 114 815 539 472 065 838 511

Financial liabilities repaid 12 (63 765) – (62 000) –

Repayments of finance lease 13 (254) (225) – –

Proceeds from loan 22 – 22 961 – –

Net cash inflow from financing activities 391 728 1 174 650 410 065 1 174 886

Net(decrease)/increaseincashandcashequivalents (5 827) 14 183 (5 430) 13 477

Cash and cash equivalents at the beginning of the year 34 636 20 453 33 930 20 453

Cash and cash equivalents at the end of the year 9 28 809 34 636 28 500 33 930

34

NOTEs TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 August 2015

1. ACCOUNTING POLICIES INGENUITY PROPERTY INVESTMENTS LIMITED (the “Company”) is a

company domiciled in South Africa. The consolidated financial statements of the Company as at and for the year ended 31 August 2015 comprise the Company and its subsidiaries (together referred to as the “group”).

The annual financial statements are prepared on the going concern basis and the accounting policies set out below have been applied consistently to all periods presented.

1.1 Basis of preparation (i) Statement of compliance The consolidated and separate annual financial statements

have been prepared in accordance with International Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and the requirements of the South African Companies Act No. 71 of 2008.

The consolidated and separate annual financial statements were approved by the board of directors on 5 November 2015.

(ii) Basis of measurement The annual financial statements are prepared on the historical

cost basis, except for investment properties, derivative financial instruments and share-based payment liabilitieswhich are measured at fair value.

(iii) Functional and presentation currency These annual financial statements are presented in

South African Rands, which is the group’s functional currency. All information presented in South African Rands has been rounded to the nearest thousand.

(iv) International Financial Reporting Standards The preparation of annual financial statements in conformity

with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Judgements and estimates made by management in the application of IFRS that have a significant effect on the annual financial statements are discussed in the annual financial statement notes below.

1.2 Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the group. The group

controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated annual financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are aligned with the policies adopted by the group.

(ii) Joint operations Jointly held investment properties are classified as joint

operations and are accounted for in the group annual financial statements on a line-by-line basis, applying thegroup’s percentage ownership share to the underlying assets, liabilities, income and expenditure.

(iii) Transactions eliminated on consolidation and accounting policies

Inter-group balances and transactions, and any unrealisedincome and expenses arising from inter-group transactions,are eliminated in preparing the consolidated annual financial statements.

The accounting policies of the subsidiaries and joint operations are consistent with those of the holding company.

In the Company’s separate annual financial statements interests in subsidiaries are stated at cost less accumulated impairment losses.

1.3 Financial instruments (i) Non-derivativefinancialinstruments Non-derivative financial instruments comprise loans

receivable, trade and other receivables, cash and cash equivalents, borrowings and trade and other payables.

A financial instrument is recognised when the group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the group’s contractual rights to the cash flows from the financial asset expire or if the group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Financial liabilities are derecognised when the group’s obligations specified in the contract expire or are discharged or cancelled.

Non-derivativefinancialinstrumentsarerecognisedinitiallyatfair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent toinitialrecognitionnon-derivativefinancialinstrumentsaremeasured as described below.

Other non-derivative financial instruments aremeasured atamortised cost using the effective interest method, less any impairment losses.

(ii) Finance leases Finance leases are recognised in accordance with the

accounting policy for finance leases (accounting policy note 1.10).

(iii) Financial assets Loans receivable, trade and other receivables and prepayments

are classified as loans and receivables and are carried at amortised cost using the effective interest method. Cash and cash equivalents are classified as loans and receivables, and are initially measured at fair value and subsequently at amortised cost using the effective interest method.

Letting commission paid is classified as trade and other receivables and amortised to profit and loss over the period of the lease.


2015 35


1. ACCOUNTING POLICIES (continued) Cash and cash equivalents comprise cash on hand and call

deposits and are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Prepayments forpropertiesacquired subsequent toyear-endare presented separately in the statement of financial position.

(iv) Financial liabilities Loans, borrowings and trade and other payables are carried at

amortised cost using the effective interest method.

1.4 Equity (i) Ordinary shares Ordinary shares are classified as equity. Incremental costs

directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Where any subsidiary purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(ii) Non-distributablereserves The fair value reserve comprises the cumulative fair value

adjustments, net of deferred tax on the investment properties and investment properties under development.

(iii) Capital-raisingexpenses Expenses incurred in the raising of capital are written off

against equity if directly related to the equity raised. Indirect expenses relating to the raising of equity are expensed through profit and loss.

1.5 Non-controllinginterests Non-controlling interests included in the statement of profit or

loss and other comprehensive income and statement of financial position represents the portion of profit or loss and net assets due to thenon-controllinginterest.Non-controllinginterestsarepresentedseparately in profit or loss and within equity in the consolidated statement of financial position.

1.6 Dividends Dividends are recognised as a liability in the period in which they are

declared.

1.7 Property and equipment (i) Recognition and measurement Items of property and equipment are measured at cost

less accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset.

When parts of an item of property and equipment have different useful lives they are accounted for as separate items (major components) of property and equipment.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of equipment and are recognised net within net operating expenses in profit or loss.

(ii) Subsequent costs The cost of replacing part of an item of property and

equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing ofproperty and equipment are recognised in profit or loss as incurred.

(iii) Depreciation Depreciation is recognised inprofitor lossonastraight-line

basis over the current estimated useful lives of each part of an item of property and equipment.

The estimated useful lives for the current and comparative periods are as follows:

Computer equipment 3 years Office furniture and fittings 3 to 6 years Owner-occupiedproperty 20years Solar plant 40 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

1.8 Impairment (i) Financial assets A financial asset is assessed at each reporting date to

determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics with reference to prevailing industry trends.

All impairment losses on financial assets measured at amortised cost are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in profit or loss.

(ii) Non-financialassets The carrying amounts of the group’s non-financial assets,

other than investment property, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

36

The recoverableamountofanassetor cash-generatingunitis the greater of its value in use and its fair value less costs to sell. In assessing value in use the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cashinflowsoftheotherassetsorgroupofassets(the“cash-generating unit”).

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimatedrecoverable amount. Impairment losses are recognised in profitorloss.Impairmentlossesrecognisedinrespectofcash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.9 Revenue RevenuecomprisesrentalincomeexcludingVAT.Rentalincomefrom

investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of the lease.

Revenue from the sale of investment and development property is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs can be estimated reliably, there is no continuing management involved with the goods and the amount of revenue can be measured reliably. Transfer of risks and rewards depends on the terms of the contract of sale.

Rental on leased premises which is received prior to the due date is recorded as a current liability.

Contingent rents, including turnover rental, are included in revenue when the amounts can be reliably measured.

1.10 Lease payments Payments made under operating leases are recognised in profit or

lossonastraight-linebasisoverthetermofthelease.

A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not eventually be transferred.

Finance leases are recognised as assets and liabilities in the statement of financial position at the lower of fair value of the leased land or present value of minimum lease payments discounted at an appropriate interest rate, determined at inception of the lease.

Minimum lease payments are apportioned between finance charges and the outstanding liability. The asset has been classified as an investment property in the statement of financial position and is measured in terms of accounting policy 1.16.

1.11 Finance income and expenses Finance income comprises interest income on funds invested.

Interest income is recognised as it accrues in profit or loss using the effective interest method.

Finance expenses comprise interest expense on borrowings. Borrowing costs are recognised in profit or loss using the effective interest method, net of borrowing costs capitalised.

1.12 Borrowing costs capitalised Borrowing costs that are directly attributable to the acquisition,

construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as the aggregate of actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset (less any temporary investment of those borrowings) and the weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when expenditures for the asset have occurred when borrowing costs have been incurred and the activities that are necessary to prepare the asset for its intended use or sale are in progress.

The capitalisation of borrowing costs is suspended during extended periods in which active development is interrupted and the capitalisation of borrowing costs finally ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs arising on the borrowing of funds are recognised as an expense in profit or loss in the interest paid line item, in the period in which they are incurred.

1.13 Income tax Taxation expense comprises current and deferred tax. Taxation

expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised through other comprehensive income.

Current tax is the expected tax payable on or recovered from the taxable income for the year using the tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and joint arrangements to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill.


2015 37

1. ACCOUNTING POLICIES (continued) Deferred tax is measured at the tax rates that are expected to be

applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.Deferredtaxassetsandliabilitiesareoff-setifthereisalegallyenforceablerighttooff-setcurrenttaxliabilitiesandassets,andtheyrelate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

1.14 Earnings per share The group presents basic and diluted earnings per share (“EPS”) data

for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

1.15 Determination of fair values A number of the group’s accounting policies and disclosures

requirethedeterminationoffairvalueforbothfinancialandnon-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on methodsdetailed below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Fair value hierarchy The determination of the fair value of financial instruments

measured as such in the statement of financial position is made using the fair value measurement hierarchy. The fair value hierarchy is identified in levels as follows:

• Level1:Quotedprices(unadjusted)inactivemarketsforidentical assets or liabilities.

• Level2: Inputsotherthanquotedpricesincludedwithinlevel 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices).

• Level3:Inputsfortheassetorliabilitythatarenotbasedon observable market data (that is, unobservable inputs).

(ii) Investment property and investment property under development

An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values one-third of thegroup’s investmentpropertyportfolio annually whilst the remaining balance is valued by the directors. Fair values are determined as the price that would be received to sell assets in orderly transactions between market participants at the measurement date. Both the valuers and the directors use either the discounted cash

flow method or the capitalisation of net income method or a combination of these methods. Gains or losses arising from changes in the fair values are included in profit or loss in the period in which they arise.

1.16 Property assets (i) Investment property Investment property is property held either to earn rental

income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. The cost of investment properties comprises the purchase price and directly attributable expenditure. Subsequent expenditure relating to investment properties is capitalised when it is probable that future economic benefits from the use of the asset will be increased. Expenditure on tenant installations is capitalised and amortised over the period of the lease. The carrying amount of investment properties includes receivables relating to the straight lining of leases. Investment property is measured at fair value (see note 1.15(ii)) with any change therein recognised in profit or loss. Subsequently, unrealisedgains,netofdeferredtax,aretransferredtoanon-distributable reserve in the statement of changes in equity. Unrealised losses, net of deferred tax, are transferred against a non-distributablereservetotheextentthatthedecreasedoesnotexceedtheamountheldinthenon-distributablereserve.On disposal of an investment property the difference between the net disposal proceeds and the fair value at the date of the last valuation is charged to profit or loss.

(ii) Investment property under development Investment property under development is classified within

investment property, measured initially and subsequently at fair value. The presumption that the fair value of investment property under development can be measured reliably may be rebutted only on initial recognition. If it is determined that the fair value of an investment property under development is not reliably measurable but is expected to be reliably measurable when construction is complete, it is measured at cost until either its fair value becomes reliably measurable or construction is completed (whichever is earlier). At the date of reclassification the difference between fair value and cost is recorded in profit or loss for the period and subsequently transferredtoanon-distributablereserve.

All costs, including tenant installations directly associated with the purchase and construction of a property, and all subsequent capital expenditures for the development qualifying as acquisition costs, are capitalised. If the resulting carrying amount of the asset exceeds its recoverable amount, impairment is recognised.

1.17 New standards and interpretations adopted In the current year the group has adopted the following standards

and interpretations that are effective for the current financial year and that are relevant to its operations:

(i) Amendments to IFRS 10, IFRS 12 and IAS 27 The group has adopted these amendments for the first time in this

financial reporting period 31 August 2015. These amendments provide an exception to the consolidation requirement for


38

entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit and loss. The amendment has had no impact on the recognised assets, liabilities and profit and loss of the group.

(ii) AmendmentstoIAS32:Off-settingFinancialAssetsandFinancial Liabilities

The group has adopted these amendments for the first time in this financial reporting period 31 August 2015. The amendment clarifies that an entity currently has a legally enforceablerighttoset-offif thatright isnotcontingentona future event, and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all counterparties. The amendments further clarify that gross settlement is equivalent to net settlement if, and only if, the gross settlement mechanism has features that eliminate or result in insignificant credit and liquidity risk, and process receivables and payables in a single settlement process or cycle. The amendment has had no impact on the recognised assets, liabilities and profit and loss of the group.

(iii) Amendments to IAS 36: Recoverable Amount Disclosures for Non-financialAssets

The group has adopted these amendments for the first time in this financial reporting period 31 August 2015. The amendment reverses the unintended requirement in IFRS 13:

IFRS/IFRIC Title and details Effective

IFRS 5 Non-currentAssetsheldforSaleandDiscontinuedOperations Annual periods commencing on or after 1 January 2016

IFRS 7 Financial instruments – Disclosures Annual periods commencing on or after 1 January 2016

IFRS 9 Financial Instruments Annual periods commencing on or after 1 January 2018

IFRS 10 Consolidated Financial Statements Annual periods commencing on or after 1 January 2016

IFRS 11 (Amendment) Joint Arrangements Annual periods commencing on or after 1 January 2016

IFRS 12 Disclosure of Interests in Other Entities Annual periods commencing on or after 1 January 2016

IFRS 15 Revenue from Contracts with Customers Annual periods commencing on or after 1 January 2018

IAS 1 Presentation of Financial Statements Annual periods commencing on or after 1 January 2016

IAS 16 Property, Plant and Equipment Annual periods commencing on or after 1 January 2016

IAS 34 Interim Financial Reporting Annual periods commencing on or after 1 January 2016

FairValueMeasurement to disclose the recoverable amountof every cash-generating unit towhich significant goodwillor indefinite-life intangible assets have been allocated.Under the amendments recoverable amount is required to be disclosed only when an impairment loss has been recognised or reversed. The amendment has had no impact on the recognised assets, liabilities and profit and loss of the group.

(iv) Amendment to IAS 40: Clarification of Scope – When Exercising Judgement to Determine Whether an Acquisition of a Property is the Acquisition of an Investment Property or a Business Combination

The group has adopted these amendments for the first time in this financial reporting period 31 August 2015. The description of ancillary services differentiates between investment property and owner-occupied property. The amendmentclarifies that IFRS 3, not the description of ancillary services in IAS 40, is used to determine if the transaction is the purchase of an asset or business combination. The amendment has had no impact on the recognised assets, liabilities and profit and loss of the group.

The Company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Company’s accounting periods beginning on or after 1 September 2015 or later periods:


2015 39

1. ACCOUNTING POLICIES (continued) The group has yet to assess the effect of the above standards and interpretations.

1.18 Financial risk management (i) Overview The group has exposure to the following risks from its use of

financial instruments: • creditrisk; • liquidityrisk;and • marketrisk.

This note presents information about the group’s exposure to each of the above risks; the group’s objectives, policies andprocesses formeasuringandmanagingrisk;andthegroup’smanagement of capital. Further quantitative disclosures are included throughout these financial statements.

The board of directors has overall responsibility for the establishment and oversight of the group’s risk management framework. The board has delegated the responsibility for developing and monitoring the group’s risk management policies to the executive directors. The executive directors report to the board of directors on their activities.

The group Audit and Risk Committee oversees how the executive directors monitor compliance with the group’s risk management policies and procedures, and reviews adequacy of the risk management framework in relation to the risks faced by the group.

(ii) Credit risk Credit risk is the risk of financial loss to the group if a customer

or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and other entities and cash and bank balances.

Trade and other receivables Trade and other receivables relate mainly to the group’s

tenants and deposits with municipalities.

The group’s exposure to credit risk is influenced mainly by the individual characteristics of each tenant. The group's widespread tenant base reduces credit risk.

Management has established a credit policy under which each new tenant is analysed individually for creditworthiness before the group’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 group’s review includes external ratings.

In monitoring tenant credit risk, tenants are grouped according to their credit characteristics, including whether they are an individual or legal entity, industry, size of business and existence of previous financial difficulties.

The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.

The main component of this allowance is a specific loss component that relates to individually significant exposures.

Cash and cash equivalents Cash and cash equivalents are only invested with reputable

financial institutions with high credit quality standing (Absa Bank Limited) and, where applicable, held in trust as governed in terms of section 32(4) of The Estate Agency Affairs Act of 1976.

(iii) Liquidity risk Liquidity risk is the risk that the group will not be able to meet

its financial obligations as they fall due. The group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.

The group monitors cash flow requirements taking account of rentals receivable on a monthly basis. Surplus funds are utilised to reduce borrowings. Typically the group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extremecircumstances that cannot reasonably be predicted, such as natural disasters. In addition, the group maintains a line of credit of a R4.45 million overdraft facility that is unsecured. Interest would be payable at the prime bank overdraft rate. The facility is reviewed on an annual basis.

(iv) Market risk The group’s exposure to interest rate risk relates to bank

accounts and deposits, borrowings and other financial liabilities. Market risk is the risk that changes in market prices, such as interest rates, will affect the group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk The group’s exposure to interest rate risk relates to bank

balances and deposits, borrowings and other financial liabilitieswhicharesubjecttovariablemarket-relatedinterestrates. In order to manage the exposure to changes in interest rates on borrowings, the group may enter into interest rate swaps to fix interest rates. All such transactions are carried out within the guidelines set by the executive directors. No interestrateswapswereenteredintoatyear-end.

(v) Capital management The board’s policy is to maintain a strong capital base so as

to maintain investor, creditor and market confidence, and to sustain future development of the business. The board of directors monitors the return on capital, which the group defines as net operating income divided by total shareholders’ equity. Net operating income is defined as income before fair value adjustments and interest.

The board also ensures compliance with borrowings covenants.

There were no changes in the group’s approach to capital management during the year. The Company and its


40

subsidiaries are not subject to externally imposed capital requirements.

1.19 Employee benefits Short-termemployeebenefits Short-term employee benefits include salaries, bonuses and

allowances.Short-termemployeebenefitobligationsaremeasuredon an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid if the group has a present legal or constructive obligation to pay the amount and the obligation can be estimated reliably.

Share-basedpaymenttransactions Thegroupoperatesacash-settledshare-basedpaymentplanunder

which the entity receives services from employees as consideration for rights to cash payments based on equity instruments of the group. The fair value of these rights granted in exchange for the employee services rendered is recognised as an expense, with a corresponding increase in liabilities.

The amount to be expensed is determined by reference to the fair value of the rights granted and includes market performance conditions (for example share price and dividend yield).

The expense is recognised over the vesting period. At the end of each reporting period the group revises its estimates of the fair value of the right and the expense is recognised in profit or loss, with a corresponding adjustment to liabilities.

1.20 Segment reporting The group determines and presents operating segments based on

the information that is internally provided to the executive directors, thegroup’soperatingdecision-makingforum.

An operating segment is a component of the group that is engaged in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components. An operating segment’s operating results are reviewed regularly by the executive directors to make decisions about resources to be allocated to the segment and assess its performance, and for which distinct financial information is available.

Segmentresultsandproperty-relateditemsthatarereportedtotheexecutive directors include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items are reported by location and comprise mainly loans and financial liabilities and related expenses, corporate assets and head office expenses, and income tax expenses.

The group has the following operating segments: • Offices • Retail • Gym • Parking • Lightindustrial • Other

1.21 Significant accounting estimates and judgements In preparing the annual financial statements, management is

required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of

judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:

(i) Share-basedpaymentexpensecalculation The group uses the Black-Schöles valuation model to

determine the fair value of the options granted. The significant inputs into the model are disclosed in note 26.

(ii) Taxation Judgement is required in determining the provision for

income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(iii) Investment property and investment properties under development valuations

Judgements are made in the valuation of investment properties and investment properties under developments’ fair values. Fair values are determined as the price that would be received to sell assets in orderly transactions between market participants at the measurement date. Both the valuers and the directors use either the discounted cash flow method or the capitalisation of net income method or a combination of these methods. Changes in market conditions may result in capitalisation rates being revised and the fair value of the investment properties being adjusted significantly. Judgements are made on a per property basis and independent valuers are used in determining the fair value of the investment properties and investment properties under development – refer to notes 2 and 3.

(iv) Consolidation of the Ingenuity Employee Share Trust The trust was established in terms of a trust deed with the

objective of holding shares on behalf of employees and was designed to pass the benefits of share ownership on to the employees in the form of share appreciation rights. Funding is provided by the Company and it has the right to appoint the trustees. The Company is exposed to variable returns from the trust as it is exposed to certain changes in the trust’s net asset value;thetrustalsoaccomplishesthefunctionofremuneratingthe Company’s employees during the vesting period. The Company has therefore concluded that it controls the trust.

(v) Classification of finance lease Thegrouphas a 45-year lease over landwith theoption to

renew for a further 45 years at the end of the lease. Significant judgement was applied in concluding that the lease of the land was a finance lease. The lease term is for the major part of the economic life of the asset even if title is not transferred to the lessee.

(vi) Business combination versus asset acquisition The directors have assessed the properties acquired and have

concluded that where an acquisition is a business combination


2015 41

in terms of International Financial Reporting Standards, it is accounted for in terms of that standard. The directors consider various factors to determine whether a property acquisition constitutes the acquisition of a business as defined in IFRS 3 or an acquisition of investment property. These factors include whether the business has employees who are required to follow policies and processes related to relevant activities of the business as well as whether the business is capable of being conducted and managed as a business by a market participant.

(vii) Property, plant and equipment The determination of the useful life and residual values of property, plant and equipment is subject to estimation. The group reviews the useful lives

and residual values of property, plant and equipment at each reporting date.

Group Company

2015R’000

2014 R’000

2015R’000

2014 R’000

2. INVESTMENT PROPERTIES ANd RELATEd RECEIVABLESCost 1 844 539 1 628 539 1 777 941 1 561 941

Subsequent expenditure 503 952 448 346 504 255 448 649

Cumulative capitalised interest 26 412 24 798 26 412 24 798

Fair value adjustment 532 046 339 157 519 018 330 271

Tenant installations 29 956 32 217 29 719 31 885

Land subject to finance lease 2 127 2 182 – –

Investment properties 2 939 032 2 475 239 2 857 345 2 397 544

Straight-liningofleases 107 186 81 086 106 745 80 598

–long-termreceivable 102 616 76 333 102 325 75 904

–short-termreceivable 4 570 4 753 4 420 4 694

Fair value 3 046 218 2 556 325 2 964 090 2 478 142

Movement in investment properties and related receivables

Carrying value at the beginning of the year 2 556 325 1 301 297 2 478 142 1 301 297

Additions 197 500 892 389 197 500 892 389

Acquisitions through business combinations – 69 236 – –

Transfer from investment property under development 59 584 79 351 59 584 79 351

Subsequent improvements 16 081 47 667 16 136 47 721

Fair value adjustment 192 890 120 198 188 747 111 311

Straight-liningreceivablerecognised 26 100 39 264 26 147 39 177

Tenant installations (2 262) 6 923 (2 166) 6 896

Fair value at the end of the year 3 046 218 2 556 325 2 964 090 2 478 142

Operating lease receivables

Non-cancellableoperatingrentalsarereceivableasfollows:

Less than one year 258 980 216 514 252 353 210 056

Between one and five years 893 773 814 947 878 335 802 138

More than five years 395 083 444 421 394 781 442 874

1 547 836 1 475 882 1 525 469 1 455 068

Lessstraight-lineportion (1 440 650) (1 394 796) (1 418 724) (1 374 470)

Receivable raised 107 186 81 086 106 745 80 598


42

These investment properties, as disclosed in the property portfolio schedule, are encumbered as per note 12.

One-thirdinnumberoftheinvestmentpropertieswereindependentlyvaluedat31August2015byMrMRBGibbonsofMillsFitchetMagnusPennyProprietaryLimited, a professional valuer with current valuation experience in the location and category of the properties being valued and who is registered with the South AfricanInstituteofValuers.

The balance of the investment properties were valued by the directors.

The valuations determine the current market value of the properties, taking into account market factors. Fair values are determined as the price that would be received to sell assets in orderly transactions between market participants at the measurement date.

Valuation technique The investment properties were valued using a combination of the capitalisation of net income valuation method and the discounted cash flow method of valuation. The capitalisation of net income method assumes a rental stream into perpetuity and uses the capitalisation rate to account for the risk of projected market, business and financial volatility, and to adjust for the sustainability of the cash flow going forward in perpetuity. Once the capitalisation value has been calculated further adjustments are made to the valuations relating to projected costs and values. Bulk space available is also taken into account. The specific adjustments are assessed on a per property basis. The discounted cash flow method calculates a net present value for each property by discounting the forecasted future cash flows and a residual value at the end of the cash flow projection period by the discount rate for the particular property. The residual value is calculated by capitalising the net income forecasted for the year immediately following the final year of the cash flow at the exit capitalisation rate.

The net income for the forthcoming financial year is estimated using current lease information, lease escalations, market information and forecast property expenses. Significant unobservable inputs used to calculate the net income include vacancies, future rentals and estimated property expenses.

Thecapitalisationratetakesintoaccountthefollowing:marketindicators;leasefactorsincludingtenants,durationofleases,rentalscomparedtomarketrentals,leaseescalationsandvacancies;natureofthebuilding;locationofthebuilding;andmarket-relatedexpenses(comparedtoactualforecastexpenses).Thediscountrateisdeterminedbyaddingagrowthrateperproperty,basedonforecastedmarket-relatedrentalincreases,tothecapitalisationrateforthepropertyandtestedfor reasonability against market data. The capitalisation rate and discount rates are significant unobservable inputs.

Significant unobservable inputs used were as follows:

A capitalisation rate, ranging between 7.25% and 9% (2014: 7.5% and 9.5%), has been used.

The discount rates applied range between 12.5% and 14.5% (2014: 13% and 14.25%).

The fair value of the properties are sensitive to changes in the significant unobservable inputs. The fair values of the properties would increase or decrease based on increases or decreases in the significant unobservable inputs.

Fair value hierarchyThe fair value measurement for investment property of R3 046.2 million (2014: R2 556.3 million) has been categorised as a level 3 fair value based on the inputs to the valuation technique used. Refer to accounting policy 1.15(i) for detail on the fair value hierarchy. A reconciliation of the opening balances to the closing balances for level 3 valuations is disclosed above.

Operating lease income represents rentals received by the group for its investment properties. Leases are negotiated for periods up to ten years. Escalations on leases vary between 4.5% and 10% (2014: 5% and 11.5%) per annum. Contingent rental income for the year amounted to R2.3 million (2014: R2.1 million).


2015 43

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

3. INVESTMENT PROPERTIES UNdER dEVELOPMENTCost 214 648 183 163 214 648 183 163Subsequent expenditure 37 745 10 657 37 745 10 657Cumulative capitalised interest 17 114 12 018 17 114 12 018Fair value adjustment (22 421) (22 421) (22 421) (22 421)Carrying value 247 086 183 417 247 086 183 417

Movement in investment properties under developmentCarrying value at the beginning of the year 183 417 87 790 183 417 87 790Additions 49 985 104 500 49 985 104 500Subsequent expenditure 66 558 82 490 66 558 82 490Capitalised interest 6 710 2 778 6 710 2 778Fair value adjustment – (14 790) – (14 790)Transfer to investment property (59 584) (79 351) (59 584) (79 351)Carrying value at the end of the year 247 086 183 417 247 086 183 417

The investment properties under development were valued by the directors and Mr MRB Gibbons of Mills Fitchet Magnus Penny Proprietary Limited, a professional valuer with current valuation experience in the location and category of the properties being valued and who is registered with the South African Institute of Valuers,atfairvalue,whichisthepricethatwouldbereceivedtosellassetsinorderlytransactionsbetweenmarketparticipantsatthemeasurementdateforproperties where development has not commenced and market information is available, or at capitalised cost when development has not commenced and market information is not available.

Investment properties under development which were measured at fair value were valued on the same basis as investment properties (refer to note 2). The fair value measurement has been categorised as a level 3 fair value. Refer to note 2 describing the valuation techniques and significant unobservable inputs. A reconciliation of the opening balances and closing balances is disclosed above.

In the current financial year the development of the property known as 19 Louis Gradner was completed and the carrying value on completion was transferred to investment property and valued using the net income valuation method.

These investment properties under development, as disclosed in the property portfolio schedule, are encumbered as per note 12.


44

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

4. PROPERTY ANd EQUIPMENTCostComputer equipment 394 306 335 248Furniture and fittings 1 085 1 002 483 408Owner-occupiedproperty 5 587 5 587 5 587 5 587Solar plant 7 962 – 7 962 –

15 028 6 895 14 367 6 243

Accumulated depreciationComputer equipment 231 181 205 174Furniture and fittings 366 183 215 135Owner-occupiedproperty 9 4 9 4Solar plant – – – –

606 368 429 313

Carrying valueComputer equipment 163 125 130 74Furniture and fittings 719 819 268 273Owner-occupiedproperty 5 578 5 583 5 578 5 583Solar plant 7 962 – 7 962 –

14 422 6 527 13 938 5 930

Schedule of movementOpening carrying value 6 527 61 5 930 61Additions 8 133 6 609 8 124 5 957Depreciation (238) (143) (116) (88)Closing carrying value 14 422 6 527 13 938 5 930

Company investments Percentage holding2015

R’0002014

R’0002015

%2014

%

5. INTERESTS IN SUBSIdIARIES ANd JOINT OPERATIONS SubsidiariesWithmore Investments 3 Proprietary Limited – 1 000 issued ordinary shares of R0.01 each * * 100 100Ingenuity Employee Share Trust – – – –Insight Property Developers (Palmyra Road) Proprietary Limited – 67 issued ordinary shares of R1 each 20 719 20 719 67 67Wespin 42 Proprietary Limited (no par value shares) – 100 issued ordinary shares of no par value – – 100 100Total 20 719 20 719

Joint operationsThe Modern – – n/a 50Tokai on Main – – 50 50

* Amount less than R1 000.

Withmore Investments 3 Proprietary Limited was created to hold treasury shares in the Company. The shares held are ordinary shares of R0.01 each. The Ingenuity Employee Share Trust holds shares in the Company – as per note 11 below.In the prior year the company purchased 67% of the issued share capital and shareholders loan in Insight Property Developers (Palmyra Road) Proprietary Limited for a total consideration of R43.68 million, which includes the shares for R20.719 million. In the prior year the company also acquired 100% of the share capital in Wespin 42 Proprietary Limited for a total consideration of RNil (100 no par value shares).Theabovejointarrangementsareclassifiedasjointoperationsandarethereforeaccountedforonaline-by-linebasis.Thegroupacquiredtheremaining50%ofTheModern and now owns 100% of the property held for development, therefore the joint arrangement was terminated.The above subsidiaries’ and joint operations’ principal place of business is the Republic of South Africa.

INGENUITY

Integrated annual report 2015 45

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

6. LOANS RECEIVABLENon-current assets

Ingenuity Employee Share Trust (“Share Trust”) – – 8 500 8 500

Withmore Investments 3 Proprietary Limited (“Withmore”) – – 43 796 26 428

Wespin 42 Proprietary Limited (“Wespin”) – – 1 310 1 065

Insight Property Developers (Palmyra Road) Proprietary Limited (“Insight”) – – 22 134 24 896

– – 75 740 60 889

6.1 The loans to the Share Trust and Withmore bear no interest and are repayable on demand (2014: the repayment terms had not been determined). The intention is that these loans will be repaid on realisation of the underlying assets. These loans are carried at cost as they are interest free and are repayable on demand (2014: no repayment terms).

6.2 The loan receivable from Wespin is unsecured, bears no interest and is repayable on demand (2014: the repayment terms had not been determined). The loan is carried at cost as it is interest free and is repayable on demand (2014: no repayment terms).

6.3 TheloanreceivablefromInsightisunsecured,bearsinterestatprimeandisrepayableondemandsubjecttoa12-monthnoticeperiod(2014: norepaymentterms).

6.4 Credit quality of loans receivable The credit quality of loans receivable are evaluated by management on an ongoing basis. The loans are considered to be recoverable by management

based on a review of the value of the underlying assets held by Withmore and the Share Trust and forecasts of future cash flows for Wespin and Insight. Management is of the opinion that the loans are fully recoverable. There were no loans receivable past due or impaired.

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

7. TRAdE ANd OTHER RECEIVABLESTrade receivables 6 448 6 524 5 061 5 382

Prepayments 455 134 447 134

Deposits 446 464 446 464

Other receivables 2 923 3 470 2 902 3 353

Unamortised letting commission 2 865 2 090 2 839 2 090

13 137 12 682 11 695 11 423

Trade and other receivables pledged as securityTrade receivables are encumbered as per note 12.

There were no trade receivables past due or impaired.

Credit quality of trade and other receivablesThe credit quality of trade and other receivables that are neither past due nor impaired are evaluated by management on an ongoing basis and management is satisfied that no trade receivables are impaired. The assessment performed by management is based on payment history and credit ratings of the tenants.


46

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

8. PREPAYMENTS Capitalprepaymentsforpropertiesacquiredsubsequenttoyear-end 87 646 – 87 646 –

Prepayments comprise costs and funding for properties acquired for which transfertookplacesubsequenttoyear-end.

9. CASH ANd CASH EQUIVALENTSCurrent account 20 485 24 973 20 177 24 971

Cash on call 4 718 89 4 718 89

Cash on hand 2 2 1 1

Deposits 3 043 6 261 3 043 6 261

Funds in trust 561 3 311 561 2 608

28 809 34 636 28 500 33 930

10. SHARE CAPITALAuthorised

2 000 000 000 (2014: 2 000 000 000) ordinary shares of R0.01 (2014: R0.01) each 20 000 20 000 20 000 20 000

Issued

1 211 469 543 (2014: 1 211 469 543) ordinary shares of R0.01 (2014: R0.01) each 12 115 12 115 12 115 12 115

Reconciliation of the number of shares outstandingNumber

of sharesNumber

of sharesNumber

of sharesNumber

of shares

Opening balance 1 211 469 543 805 550 000 1 211 469 543 805 550 000

Shares issued* – 405 919 543 – 405 919 543

Closing balance 1 211 469 543 1 211 469 543 1 211 469 543 1 211 469 543

* During the year no shares (2014: 405 919 543 shares) were issued. In the prior year shares were issued in terms of vendor placements at prices between R0.80 and R0.90 per share to fund part of the purchase prices of various properties.

The unissued shares are under the unrestricted control of the directors until the next annual general meeting.


2015 47

11. TREASURY SHARESThere were two entities created in 2008 that are controlled by the Company. Both of these entities have shareholdings in the Company.

Ingenuity Employee Share Trust (“Share Trust”)17 000 000 ordinary shares were issued on 3 March 2008 at R0.50 per share, which were all acquired by this Trust. This Trust is considered to be controlled by the Company and therefore the shares purchased have been accounted for in the group financial statements. The shares were purchased for a consideration of R8.5 million,fundedbyaninterest-freeloanmadebytheCompanytotheTrust.

withmore Investments 3 Proprietary Limited (“withmore”)Duringtheyearunderreviewthegroupboughtback20.227millionshares(2014: nil)atanaveragepurchasepriceof86cents.Atyear-end72.160 million(2014: 51.933 million) shares are held as treasury shares. The average purchase price of these shares is 61 cents (2014: 51 cents) which represents a 32% (2014: 46%) discount to the current net asset value per share.

A reconciliation of the movement of treasury shares is presented below:

Group

2015 2014

Treasury sharesNumber

of sharesCost

R’000 Numberof shares

Cost R’000

Share Trust 17 000 000 8 500 17 000 000 8 500

Withmore 72 160 335 43 796 51 933 227 26 428

89 160 335 52 296 68 933 227 34 928

Reconciliation of the number of treasury shares

Opening balance 68 933 227 34 928 68 933 227 34 928

Shares acquired by Withmore 20 227 108 17 368 – –

Closing balance 89 160 335 52 296 68 933 227 34 928


48

Group Company

Facility Facility expiry date2015

R’0002014

R’0002015

R’0002014

R’000

12. BORROwINGS12.1 Nedbank

Facility A R13.804 million 31 January 2018 13 275 13 278 13 275 13 278

Facility B R7.98 million 31 May 2016 7 980 7 980 7 980 7 980

Facility C R18.750 million 31 May 2016 18 750 18 750 18 750 18 750

Facility D R203.3 million 31 July 2017 187 464 191 015 187 464 191 015

Facility E R143.1 million 31 January 2017 119 185 119 068 119 185 119 068

Facility F R48.024 million 30 November 2016 48 000 48 000 48 000 48 000

Facility G R136.1 million 28 February 2017 136 100 136 100 136 100 136 100

Facility H R200 million 31 July 2018 200 000 200 000 200 000 200 000

Facility I R62.6 million 30 April 2018 62 600 62 600 62 600 62 600

Facility J R36 million 31 May 2019 36 000 36 000 36 000 36 000

Facility K R600.58 million 30 September 2018 512 046 583 008 512 046 583 008

Facility L R100 million 30 September 2015 – 100 – 100

Facility M R44.7 million 31 May 2020 41 310 4 661 41 310 4 661

Facility N R41 million 31 October 2018 41 000 41 000 41 000 41 000

Facility O R17 million 31 March 2019 17 000 17 000 17 000 17 000

Facility P R14.5 million 30 June 2019 14 500 14 500 14 500 14 500

FacilityQ R17.6 million 31 January 2019 17 600 12 984 17 600 12 984

Facility R R79.6 million 31 January 2019 79 600 65 612 79 600 65 612

Facility S R11.1 million Refer to point 16 below 10 397 11 119 – –

Facility T R24.4 million 25 May 2020 24 400 – 24 400 –

Facility U R100 million 24 June 2020 100 000 – 100 000 –

FacilityV R23 million 24 January 2018 23 000 – 23 000 –

Facility W R28 million 24 January 2018 28 000 – 28 000 –

Facility X R65 million 24 October 2019 65 000 – 65 000 –

Total borrowings 1 803 207 1 582 775 1 792 810 1 571 656

Add: Accrued interest 3 223 2 250 3 204 2 234

Sub-total 1 806 430 1 585 025 1 796 014 1 573 890

Less: Current portion of borrowings (30 981) (2 970) (29 934) (2 234)

Netdebt-raisingfeeoffset (4 088) (5 776) (4 088) (5 776)

Total Nedbank non-current borrowings 1 771 361 1 576 279 1 761 992 1 565 880

Nedbank loan termsThe loans bear interest at rates linked to prime, ranging between prime and prime less 1.35% (2014: ranges between prime and prime less 1.35%).

Security1. FacilitiesAtoRandTtoXaresecuredbyacessionofallrights,titleandinterestaslessorinandtoalltheleaseagreements(includingleasepayments);

cessionoftheinsurancepoliciesoverthepropertiesandthecessionnotedagainstthepolicies;andcessionoftheinsuranceproceeds.

2. In2014facilitiesDandFtoRweresecuredbyacessionandpledgeofacashdepositofR15.836million;acessionandpledgebyWithmoreInvestments 3ProprietaryLimitedof51millionshares;andacessionandpledgebytheIngenuityEmployeeShareTrustof17millionshares,heldintheCompany.

3. FacilityAissecuredbyamortgagebondforR30millionoverErf 205,Cape TownwithacarryingvalueofR54million(2014: R49.6million);acessionbythe Company (the borrower) of all rights, title and interest in and to the lease agreement entered into between the borrower and Health and Racquet Club PropertyParticipationLimitedandVirginSouthAfrica1993ProprietaryLimitedinrespectofErven205and211,Cape Town;andacessionbytheborrowerof all rights, title and interest in and to the lease agreement entered into between the Municipality of the City of Cape Town and the borrower in respect of Erf 211, Cape Town.


2015 49

12. BORROwINGS (continued)

4. Facility B is secured by a mortgage bond for R13.4 million over Erf 57393, Cape Town at Claremont with a carrying value of R20.9 million (2014: R18.5 million).

5. FacilityCissecuredbyamortgagebondforR25millionoverErf 38063,TygerValleywithacarryingvalueofR35.4million(2014: R39.7million);acessionbythe Company (the borrower) of all rights, title and interest in and to the lease agreement entered into between the borrower and Health and Racquet Club PropertyParticipationLimitedandVirginSouthAfrica1993ProprietaryLimitedinrespectofErven205and211,Cape Town;andacessionbytheborrowerof all rights, title and interest in and to the lease agreement entered into between the Municipality of the City of Cape Town and the borrower in respect of Erf 211, Cape Town.

6. Facilities D, F, G, H and I are secured by mortgage bonds over the following properties with a carrying value of R1 656.5 million (2014: R1 528.4 million): Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 34,Roggebaai;Erf 9420,Cape Town;acessionbytheCompany(the borrower) of all rights, title and interest in and to the lease agreement entered into between the borrower and Health and Racquet Club Property ParticipationLimitedandVirginSouthAfrica1993ProprietaryLimitedinrespectofErven205and211,Cape Town;andacessionbytheborrowerofallrights, title and interest in and to the lease agreement entered into between the Municipality of the City of Cape Town and the borrower in respect of Erf 211, Cape Town.

7. FacilityEissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR1276.5million(2014: R1182.4million):Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;acessionbytheCompany(theborrower)ofallrights,titleandinterestinandtotheleaseagreemententeredintobetweentheborrowerandHealthandRacquetClubPropertyParticipationLimitedandVirginSouthAfrica1993ProprietaryLimitedinrespectofErven205and211,Cape Town;andacessionbytheborrowerofallrights,titleandinterestinandtotheleaseagreemententeredintobetweenthe Municipality of the City of Cape Town and the borrower in respect of Erf 211, Cape Town.

8. FacilityJissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2703.5million(2014: R2666.7million):Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 142633,Cape Town;One-halfshareinErf 11518,Constantia;Erf 6569,Montague Gardens;One-half share in Erf 12770, Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional title unit consisting of Section 6 in theSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven 170930and55499,Cape Town;Erf 31,Roggebaai;Erf 162,Roggebaai;Erf 127260,Cape Town;andErf 58055,Cape Town.

9. Facilities K and L are secured by mortgage bonds over the following properties with a carrying value of R2 357.4 million (2014: R2 478.5 million): Erf 205, Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-halfshare in Erf 12770, Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional titleunit consistingof Section6 in the SectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;andErven170930and55499,Cape Town. Facility L was settled during the year.

10. FacilityMissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2730.9million(2014: R2666.7million):Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-half share in Erf 12770, Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional title unit consisting of Section 6 in theSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499,Cape Town;Erf 162,Roggebaai;Erf 58055,Cape Town;Erf 142633,Cape Town;Erven884to892andErf 9983,Cape Town;andErf 127260,Cape Town.

11. FacilityNissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2463.4million(2014: R2550.5million):Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-half share in Erf 12770, Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional title unit consisting of Section 6 in theSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499,Cape Town;andErf 162,Roggebaai.

12. FacilityOissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2638.4million(2014: R2581.7million):Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-half share in Erf 12770, Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional title unit consisting of Section 6 in theSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499,Cape Town;Erf 162,Roggebaai;Erf 58055,Cape Town;andErf 127260,Cape Town.

13. Facility P is secured by mortgage bonds over the following properties with a carrying value of R2 730.9 million (2014: R2 753.7 million): Erf 205, Roggebaai; Erf 250, Roggebaai; Erven 30 and 145, Roggebaai; One-half share in Consolidated Erf 173153, Cape Town; Erf 38746, Bellville; Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 142633,Cape Town;Erven884to892and9983,Cape Town;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-halfshareinErf 12770,Constantia;Erf 6563,MontagueGardens;Erf 6497,Montague Gardens;SectionaltitleunitconsistingofSection6intheSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“Crystal Towers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499,Cape Town;Erf 162,Roggebaai;Erf 58055,Cape Town;andErf 127260,Cape Town.


50

14. FacilitiesQandRaresecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2463.4million(2014: R2552.5million):Erf 205,Roggebaai; Erf 250, Roggebaai; Erven 30 and 145, Roggebaai; One-half share in Consolidated Erf 173153, Cape Town; Erf 38746, Bellville; Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,Montague Gardens;One-half share inErf 12770,Constantia; Erf 6563,MontagueGardens; Erf 6497,MontagueGardens; Sectional titleunit consistingofSection6intheSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven 170930and55499,Cape Town;andErf 162,Roggebaai.

15. Facilities K, L and N are secured by entire right, title and interest in and to the notarial deed of lease entered into between Passenger Rail Agency of South Africa and Insight Property Developers (Palmyra Road) Proprietary Limited (“Insight”) in respect of the immovable property described as 67% share in the CompanyinrespectofErf 172014,Cape Town;andalimiteddeedofsuretyshipinfavourofNedbankwherebyInsightbindsitselfjointlyandseverallyasco-principaldebtorwiththeCompanylimitedtoR26.8million(2014: R26.8million)oftheCompany’sindebtednesstoNedbank.Facility Lwassettledduringthe year.

16. Facility S is secured by first general covering bond by Insight for R40 million over their entire right, title and interest in and to the notarial deed of lease entered into between Passenger Rail Agency of South Africa and Insight in respect of the investment property owned by Insight with a carrying amount of R80million(2014: R76million);acessionoftherightsinandproceedsofanyshort-terminsurancepolicytakenoutoverthepropertyandlimiteddeedofsuretyship by N Thornton. The loan is repayable in monthly instalments of R158 027 (2014: R156 648) and will be fully paid up by 28 February 2023.

17. FacilityTissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2856.6million:Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;Erf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-halfshareinErf 12770,Constantia;Erf 6563,MontagueGardens;Erf 6497,MontagueGardens;SectionaltitleunitconsistingofSection6 intheSectionalTitleScheme“Intaba”andSection 2 intheSectionalTitleScheme“CrystalTowers”; Erf 34,Roggebaai; Erf 9420,Cape Town;Erven170930and55499,Cape Town;Erf 162,Roggebaai; Erf 58055,Cape Town;Erf 127260,Cape Town;Erf 142633,Cape Town;Erven884to892and9983,Cape Town;Portion1ofErf 963,Morningside,Extension35;andErf 4164, Pinelands.

18. FacilitiesU,VandWaresecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2807.6million:Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;Erf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-halfshareinErf 12770,Constantia;Erf 6563,MontagueGardens;Erf 6497,MontagueGardens;SectionaltitleunitconsistingofSection6intheSectionalTitleScheme“Intaba”andSection 2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499,Cape Town;Erf 162,Roggebaai;Erf 58055,Cape Town;Erf 127260,Cape Town;Erf 142633,Cape Town;Erven884to892and9983,Cape Town;andErf 4164,Pinelands.

19. FacilityXissecuredbymortgagebondsoverthefollowingpropertieswithacarryingvalueofR2607.4million:Erf 205,Roggebaai;Erf 250,Roggebaai;Erven 30and145,Roggebaai;One-halfshareinConsolidatedErf 173153,Cape Town;Erf 38746,Bellville;Erf 32140,Bellville;Erf 4769,George;Erf 38063,Bellville;Erf 57393,Cape TownatClaremont;Erf 31,Roggebaai;One-halfshareinErf 11518,Constantia;Erf 6569,MontagueGardens;One-halfshareinErf 12770,Constantia;Erf 6563,MontagueGardens;Erf 6497,MontagueGardens;SectionaltitleunitconsistingofSection6intheSectionalTitleScheme“Intaba”andSection2intheSectionalTitleScheme“CrystalTowers”;Erf 34,Roggebaai;Erf 9420,Cape Town;Erven170930and55499;Cape Town;Erf 162,Roggebaai;andErf 127260,Cape Town.

20. Intheprioryear,FacilitiesJ,K,L,M,N,O,P,QandRweresecuredbyErf 6952,MontagueGardenswithacarryingamountofR205.0million.These facilitiesare no longer secured by this property as the Standard Bank loans are now secured by it .

Financial covenantsThe following financial covenants apply to each of the above loans in 2015:

The interest cover ratio shall not drop below 1.3 times for the financial year ending 2015, 1.4 times for the financial year ending 2016 and 1.5 times for the remainingperiod.Interest-bearingdebtasapercentageofthevalueoftotalassetsshallnotexceed70%forthefinancialyearending2015,65%forthefinancialyear ending 2016 and 60% for the remaining period.

The following financial covenants applied to each of the above loans in 2014:

The interest cover ratio shall not drop below 1.2 times for the financial years ending 2013 and 2014, 1.4 times for the financial years ending 2015 and 2016, and 1.5timesfortheremainingperiod.Interest-bearingdebtasapercentageofthevalueofthetotalassetsshallnotexceed65%forthefinancialyearending2013,71% for the financial year ending 2014 and 60% for the remaining period.


2015 51

12. BORROwINGS (continued)Group Company

Facility Facility expiry date2015

R’0002014

R’0002015

R’0002014

R’00012.2 Standard Bank

Facility A R138.1 million 31 December 2018 138 100 – 138 100 –Facility B R91 million 31 March 2019 41 020 – 41 020 –Total borrowings 179 120 – 179 120 –Add: Accrued interest 255 – 255 –Sub-total 179 375 – 179 375 –Less: Current portion of borrowings (255) – (255) –

Netdebt-raisingfeeoffset (532) – (532) –Total Standard Bank non-current borrowings 178 588 – 178 588 –

Standard Bank loan termsThe loans bear interest at prime less 1.37%.

FacilityAissecuredbyamortgagebondforR190millionoverErf 6952,MontagueGardensandErf 7054,MontagueGardenswithacarryingvalueofR264.1 million;cession of all rights in and to all income generated from Erf 6952, Montague Gardens and Erf 7054, Montague Gardens, where “all income” shall include, without limitation,theamountgeneratedbythesaleofErf 6952,MontagueGardensandErf 7054,MontagueGardensoranypartthereofafterdeductionofvalue-addedtax,agents’commissionandtransferfees,rentalorinterestincomeorincomefromanyothercontract;cessionoftheinsurancepoliciesoverthepropertiesandthecessionnotedagainstthepolicies;andcessionoftheinsuranceproceeds.

Property covenantsThe interest cover ratio shall not drop below 1.3 times between 12 December 2014 and 11 December 2017, 1.4 times between 12 December 2017 and 11 December 2018,and1.5timesfortheremainingperiod.Interest-bearingdebtasapercentageofthevalueofthetotalassetsshallnotexceed71%between12 December 2014 and 11 December 2015, 75% between 12 December 2015 and 11 December 2016, 73% between 12 December 2016 and 11 December 2017, 70% between 12 December 2017 and 11 December 2018, and 67% for the remaining period.

FacilityBissecuredbyamortgagebondforR98millionoverErf 6952,MontagueGardensandErf 7054,MontagueGardenswithacarryingvalueofR264.1 million;cession of all rights in and to all income generated from Erf 6952, Montague Gardens and Erf 7054, Montague Gardens, where “all income” shall include, without limitation,theamountgeneratedbythesaleofErf 6952,MontagueGardensandErf 7054,MontagueGardensoranypartthereofafterdeductionofvalue-addedTax,agents’commissionandtransferfees,rentalorinterestincomeorincomefromanyothercontract;cessionoftheinsurancepoliciesoverthepropertiesandthecessionnotedagainstthepolicies;andcessionoftheinsuranceproceeds.

Property covenantsThe interest cover ratio shall not drop below 1.3 times between 25 March 2015 and 24 March 2018, 1.4 times between 25 March 2018 and 24 March 2019, and,1.5 timesfortheremainingperiod.Interest-bearingdebtasapercentageofthevalueofthetotalassetsshallnotexceed93%between25March2015and 24 March 2016, 75% between 25 March 2016 and 24 March 2017, 73% between 25 March 2017 and 24 March 2018, 70% between 25 March 2018 and 24 March 2019, and 67% for the remaining period.

Financial statement covenantsThe following financial covenants apply to each of the above loans:

Theinterestcoverratioshallnotdropbelow1.4timesandinterest-bearingdebtasapercentageofthevalueoftotalassetsshallnotexceed65%.

Group Company2015

R’0002014

R’0002015

R’0002014

R’00012.3 Other borrowings

Redefine Properties Limited 10 000 – 10 000 –Add: Accrued interest 81 – 81 –Sub-total 10 081 – 10 081 –Less: Current portion (81) – (81) –Total Other non-current borrowings 10 000 – 10 000 –

The loan is unsecured, bears interest at prime and is repayable on 17 January 2017.

Total borrowingsTotal current portion of borrowings 31 317 2 970 30 270 2 234Totalnon-currentportionofborrowings 1 959 949 1 576 279 1 950 580 1 565 880Total borrowings 1 991 266 1 579 249 1 980 850 1 568 114

The layout of this note has been changed from the prior year annual financial statements to improve overall presentation and disclosure. Accrued interest has been included as a separate line item to the note instead of being included within each facility line item to which the accrued interest relates.


52

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

13. FINANCE LEASE LIABILITYTotal minimum lease payments 98 743 98 997 – –

Less: Deferred finance charges (94 674) (95 257) – –

Finance lease liability 4 069 3 740 – –

Analysis of total minimum lease payments at balance sheet date:

Within one year 278 254 – –

Less: Deferred finance charges (634) (583) – –

Net present value (356) (329) – –

Between one and five years 1 404 1 282 – –


Net present value (1 733) (1 606) – –

Later than five years 97 061 97 461 – –


Net present value 6 158 5 674 – –

Lease payments represent rentals payable by the group for the rental of the land on which the building (Palmyra Junction) is erected. The lease has been negotiated for a period of 45 years, with an option to extend after the current term which commenced in October 2009. No contingent rent is payable.

14. dEFERREd TAXBalance at the beginning of the year 99 789 54 608 95 232 54 608

Movement in profit and loss

– timing differences 55 922 40 500 54 973 35 480

– deferred tax asset on assessed loss 1 325 4 278 867 4 741

Movement in other comprehensive income – 403 – 403

Balance at the end of the year 157 036 99 789 151 072 95 232

Comprising

Straight-liningofleaseadjustmenttoinvestmentproperties 30 012 22 706 29 889 22 568

Fair value adjustment to investment properties 103 374 65 770 99 804 63 360

Deferred tax on assessed loss (4 502) (5 832) (4 502) (5 369)

Accelerated tax allowances 30 615 18 849 28 395 16 677

Other temporary differences (2 463) (1 704) (2 514) (2 004)

157 036 99 789 151 072 95 232

Deferred tax has been calculated at 18.67% on the revaluation of investment properties and investment properties under development. Deferred tax is provided at 28% on depreciable investment properties leased under a finance lease.

The Company has recognised a deferred tax asset in respect of estimated tax losses as it expects to earn taxable profits in the future.

In a subsidiary of the Company a deferred tax asset amounting to R130 468 (2014: R186 700) in respect of estimated tax losses has not been recognised as it is not sufficiently probable that the related tax benefit will be realised.


2015 53

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

15. TRAdE ANd OTHER PAYABLESTrade payables 13 031 8 454 12 301 7 366

Tenant deposits 9 054 7 699 8 442 7 123

VAT 2 501 1 672 2 368 1 519

Other payables 1 877 1 276 5 364 4 958

26 463 19 101 28 475 20 966

16. PROFIT BEFORE FAIR VALUE AdJUSTMENTSProfit before fair value adjustments is arrived at after taking into account:

Directors’ emoluments 6 011 5 404 6 011 5 404

Share-basedpayment (962) 3 460 (962) 3 460

Total salaries to employees 3 058 1 990 3 058 1 990

Amortisation of letting commission and tenant installations 5 688 4 587 5 538 4 575

Impairment of trade and other receivables 22 87 22 87

Operating lease charges 349 285 347 285

Direct operating expenses arising from investment and development property that generated rental income during the year 68 847 57 397 65 673 53 886

Direct operating expenses arising from investment and development property that did not generate rental income during the year 250 841 250 841

Depreciation 238 196 116 87

Gain on bargain purchase – (360) – –

Net (gains) and losses on financial instruments comprise

Loans receivable – interest received – – 2 193 1 111

Trade and other receivables – bad debts written off net of interest received on overdue accounts 22 87 22 –

Cash and cash equivalents – net interest received (996) (683) (996) (693)

Financial liabilities – interest paid 139 949 107 936 139 020 106 347

Interest rate swap liability – interest paid – 1 453 – 1 453

17. INTEREST RECEIVEdLoans receivable – – 2 193 1 935

Cash and cash equivalents 1 007 1 092 1 007 1 000

Other interest 1 210 211 1 134 211

South African Revenue Service 37 – 37 –

2 254 1 303 4 371 3 146


54

Group Company2015

R’0002014

R’0002015

R’0002014

R’000

18. INTEREST PAIdBank overdraft 11 23 11 12

Financial liabilities 146 659 112 005 145 730 110 963

Interest rate swap liability – 1 453 – 1 453

Other 584 536 – –

Total 147 254 114 017 145 741 112 428

Less: Interest capitalised (6 710) (2 778) (6 710) (2 778)

140 544 111 239 139 031 109 650

Interest was capitalised at rates linked to prime.

19. TAXATIONSouth African normal tax

Income tax – current 308 – – –

prior-yearoverprovision (160) – (160) –

Deferred tax 57 247 44 777 55 840 40 221

Total taxation expense 57 395 44 777 55 680 40 221

% % % %

Reconciliation of tax rate

Effective tax rate 21.48 24.63 21.37 23.48

Deferred tax on fair value adjustments to investment properties 6.82 4.99 6.99 5.30

Prior-yearoverprovision 0.06 – 0.06 –

Other 0.05 0.09 – –

Non-deductibleexpenses (0.41) (1.71) (0.42) (0.78)

Standard tax rate 28.00 28.00 28.00 28.00

No provision has been made for 2015 taxation as the Company has an estimated assessed loss of R16.08 million (2014: R19.17 million) to carry forward to the 2016 financial year.

No provision has been made for 2015 taxation in the subsidiary of the Company, Wespin, as it has an assessed loss of R1 149 725 (2014: R683 766) to carry forward to the 2016 financial year.


2015 55

Group

`2015

Cents2014Cents

20. BASIC ANd dILUTEd EARNINGS PER SHARE20.1 Basic and diluted earnings per share 18.4 12.0

The calculation of earnings per share is based on earnings attributable to equity holders of the parent of R208.02 million (2014: R132.02 million) and a weighted average number of 1 130 183 741 (2014: 1 101 828 192) shares (net of treasury shares) in issue during the year.

20.2 Headline earnings and diluted headline earnings per share 4.7 4.2The calculation of headline earnings per share is based on a weighted average number of 1 130 183 741 (2014: 1 101 828 192) shares (net of treasury shares) in issue during the year.

Group 2015 Group 2014GrossR’000

Net of taxR’000

GrossR’000

Net of taxR’000

Headline earnings are calculated as follows:Profit attributable to ordinary equity holders of the parent – 208 028 – 132 024Fair value adjustments to investment properties (192 890) (155 286) (105 407) (84 863)Gain on bargain purchase – – (361) (361)Headline earnings 52 742 46 800

Group Company2015

R’0002014

R’0002015

R’0002014

R’00021. NOTES TO THE STATEMENTS OF CASH FLOwS

21.1 Cash generated from operationsProfit before taxation 267 206 181 826 260 573 171 289Adjusted for:Bad debts written off 22 87 22 87Bonus accrual 770 583 770 583Interest received (2 254) (1 303) (4 371) (3 146)Interest paid 140 544 111 239 139 031 109 650Depreciation 238 196 116 87Amortisation of tenant installations 4 947 4 099 4 853 4 128Amortisation of letting commission 741 488 686 447Cash-settledshare-basedpayment (962) 3 460 (962) 3 460Straight-liningofoperatingleases (26 100) (39 264) (26 147) (39 177)Net increase in fair value of investment properties (192 890) (105 407) (188 747) (96 521)Othernon-cashitems 55 (360) – –

192 317 155 644 185 824 150 887Increase in trade and other receivables (1 218) (6 616) (979) (6 204)Increase in trade and other payables 8 135 9 494 8 345 13 107

199 234 158 522 193 190 157 790

21.2 Interest receivedAmount outstanding at the beginning of the year – 4 932 – 4 932Interest income per profit and loss 2 254 1 303 4 371 3 146Termination of agreement – (4 932) – (4 932)

2 254 1 303 4 371 3 146

21.3 Interest paidAmount outstanding at the beginning of the year 2 233 5 910 2 233 5 910Interest paid per profit and loss 140 544 111 239 139 031 109 650Interest on finance lease (583) (536) – –Amortisation of service fees (2 668) (1 851) (2 668) (1 851)Amount outstanding at the end of the year (3 559) (2 233) (3 459) (2 233)

135 967 112 529 135 137 111 476

21.4 Taxation paidAmount refundable at the beginning of the year (1 105) (1 105) (1 105) (1 105)Taxation expense per profit and loss 148 – (160) –Amount(outstanding)/refundableattheendoftheyear (308) 1 105 – 1 105Tax refunded (1 265) – (1 265) –


56

22. BUSINESS COMBINATIONS In the prior year, on 1 September 2013, the Company acquired 67% of the issued share capital of Insight Property Developers (Palmyra Road) Proprietary Limited (“Insight”). Insight owns a shopping centre known as Palmyra Junction situated in Palmyra Road, Claremont with a GLA of 2 868 square metres. The purchase price was settled in cash. There were no business combinations during the current year.

Purchase consideration and fair value of assets acquired: 1 September

2013

Investment property 69 236

Trade and other receivables 887

Cash and cash equivalents 758

Financial liabilities (34 107)

Finance lease (3 430)

Trade and other payables (1 882)

Fair value of assets acquired 31 462

Non-controllinginterest (10 383)

Ingenuity Property Investments Limited share 21 079

Total purchase consideration (20 719)

Gain on bargain purchase – included in net operating expenses 360

2015R’000

2014R’000

Cost of shares – 20 719

Loan acquired – 22 961

Purchase consideration settled in cash – 43 680

Less: Cash on hand at acquisition – (758)

Net cash outflow – 42 922

The beginning of the annual reporting period is the same date as the acquisition date, 1 September 2013.

Non-controllinginterestsweremeasuredatthegroup’sproportionateshareofthefairvalueoftheassetsacquired.

There was no contingent consideration.

The fair value of trade and other receivables was R887 178 and includes trade receivables of R279 819. No trade receivables were impaired or past due. The fair value of trade and other receivables represents gross contractual cash flows, all of which is expected to be received.

The investment property was revalued at acquisition by an external, independent valuation company, Mills Fitchet Magnus Penny Proprietary Limited, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. Fair values are determined as the price that would be received to sell assets in orderly transactions between market participants at the measurement date.

The capitalisation of net income method was used. Refer to note 2 describing the valuation techniques and significant unobservable inputs.

Non-controllinginterestwasmeasuredusingtheproportionateshareoftheacquiredentity’snetidentifiableassets.At acquisition,non-controllinginterestwasidentifiedastheremaining33%inInsight.

A gain on bargain purchase arose as a result of accounting adjustments made to assets and liabilities in the financial statements of the subsidiary subsequent to the negotiation of the purchase consideration.

Acquisition-relatedcostsofR288337wereincurredonthetransaction.

Revenue since acquisition – 9 191

After-taxprofitsinceacquisition – 6 314

INGENUITY


2015 57

23. RELATEd PARTIES23.1 Identity of related parties

Ingenuity Employee Share Trust – controlled trustWithmoreInvestments3ProprietaryLimited–wholly-ownedsubsidiaryInsight Property Developers (Palmyra Road) Proprietary Limited – subsidiaryWespin42ProprietaryLimited–wholly-ownedsubsidiaryTokaionMainJointVenture–jointoperationTheModernJointVenture–jointoperationcancelledinJanuary2015Directors as listed in the directors’ reportFabian Architects – Mr DB Fabian (director of Ingenuity) is a partner in Fabian Architects

Group Company2015

R’0002014

R’0002015

R’0002014

R’00023.2 Material related party balances

Loan advanced and shares issued to controlled trust – – 8 500 8 500Loan advanced to subsidiaries – – 67 240 52 388Amounts included in trade and other payables – subsidiaries – – (3 547) (3 734)

Amountsincludedintradeandotherpayablesareinterest-freeandaredue within one year.

23.3 Material related party transactionsProfessional fees capitalised to the cost of investment properties – Fabian Architects 1 331 3 569 1 331 3 569

23.4 Director's remunerationRemuneration paid to executive directors was as follows:

Group and Company2015R’000

2014R’000

Short-termbenefitsBasic

salary Bonus TotalBasic

salary BonusDevelopment

incentive* TotalJ Bielich 1 188 120 1 308 1 100 92 644 1 836AA Maresky 2 160 500 2 660 2 000 400 1 074 3 474M Wagenheim 1 188 150 1 338 1 100 92 430 1 622

4 536 770 5 306 4 200 584 2 148 6 932

* Capitalised

Group and Company2015

R’0002014

R’000The following charges were expensed in profit and loss during the year under review in terms of IFRS 2: Share-basedPayments(refertonote26):J Bielich (371) 814 AA Maresky (188) 1 832 M Wagenheim (403) 814

(962) 3 460

Feespaidtonon-executivedirectorswereasfollows:RCSquire-Howe 230 205AJ Branch 70 60LH Cohen 80 70DB Fabian 95 85RS Schur 230 200

705 620

The directors do not have any service contracts with the group.Mrs J Solms was appointed as a director on 28 August 2015 therefore no director’s emoluments were earned during the year.

23.5 Directors’ shareholdingsDirectors’ interests are as listed in the directors’ report.


58

24. RISk MANAGEMENT24.1 Credit risk

Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure and are classified as loans and receivables and are carried at amortised cost.

The maximum exposure to credit risk at the reporting date was:

Group Company 2015

R’0002014

R’0002015

R’0002014

R’000Loans receivable – – 75 740 60 889Trade and other receivables 9 817 10 458 8 409 9 201Cash and cash equivalents 28 809 34 636 28 500 33 930

38 626 45 094 112 649 104 020

None of the trade and other receivables is past due or impaired.

24.2 Liquidity riskCash flows from surplus funds and rent received are monitored on a monthly basis to ensure that cash resources are adequate to meet funding requirements.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Financial liabilities at amortised cost

Carryingamount

R’000

Contractualcash flows

R’000

withinone year

R’000

Two to five years

R’000

Over five years

R’0002015GroupFinancial liabilities 1 991 266 2 459 652 193 336 2 261 732 4 584Trade and other payables 23 962 23 962 23 962 – –Finance lease 4 069 98 743 278 1 404 97 061

2 019 297 2 582 357 217 576 2 263 136 101 645

CompanyFinancial liabilities 1 980 850 2 445 567 191 421 2 254 146 –Trade and other payables 26 107 26 107 26 107 – –

2 006 957 2 471 674 217 528 2 254 146 –

2014GroupFinancial liabilities 1 579 249 2 151 753 127 917 2 017 412 6 424Trade and other payables 17 429 17 429 17 429 – –Finance lease 3 740 98 997 254 1 282 97 461

1 600 418 2 268 179 145 600 2 018 694 103 885

CompanyFinancial liabilities 1 568 114 2 136 400 126 507 2 009 893 –Trade and other payables 19 447 19 447 19 447 – –

1 587 561 2 155 847 145 954 2 009 893 –

Non-derivativefinancialliabilitiesareclassifiedasfinancialliabilitiesandcarriedatamortisedcost.


2015 59

24. RISk MANAGEMENT (continued)

24.3 Market risk24.3.1 Interest rate risk

The group adopts a policy of managing its exposure to movements in interest rates on borrowings. Interest rate swaps are entered into to achieve an appropriate mix of fixed and floating rate exposure. Interest rate swaps matured during the prior year and management is currently in the process of comparing quotes prior to concluding any new agreement on interest rate swaps. The interest rate swaps qualified for special hedge accounting and the group thus classified them as cash flow hedges and stated them at fair value based on broker quotes. The total cash payments relating to interest rate swaps for the year amounted to Rnil (2014: R1.453 million).

Subsequenttotheyear-endtwofive-yearinterestrateswapsamountingtoR500millionatanaverageallinrateof9.68%wereenteredinto.

As the group is exposed to changes in interest rates any change in interest rates would affect group interest paid before tax by R18.61 million (2014: R11.744million)andCompanyinterestpaidbeforetaxbyR18.73millionperannum(2014: R11.813million)foreachincrease/decreaseof 100 basis points. The analysis has been prepared on the assumption that all other variables remain constant and is prepared on the same basis as that of the prior year.

Cash flow sensitivity analysis for variable rate instrumentsAnincreaseof100basispointsininterestratesatthereportingdatewouldhave(decreased)/increasedequityandprofitorlossbeforetaxbytheamounts shown above.

The group’s exposure to interest rate risk and the effective interest rates on financial instruments by category at the reporting date are as follows:

Interest rate

Carrying value

2015

R’0002014

R’000

Group

Assets

Loans and receivables

Trade and other receivables Interest free 9 817 10 458

Cash and cash equivalents Variablerate 28 809 34 636

38 626 45 094

Company

Assets

Loans and receivables

Loans receivable Prime rate 22 134 24 896

Loans receivable Interest free 53 606 35 993

Trade and other receivables Interest free 8 409 9 199

Cash and cash equivalents Variablerate 28 500 33 930

112 649 104 018


60

Carrying value

Interest rate

2015R’000

2014 R’000

24. RISk MANAGEMENT (continued)

24.3 Market risk (continued)24.3.1 Interest rate risk (continued)

Group

Liabilities

Financial liabilities Variablerate 1 991 266 1 579 249

Trade and other payables Interest free 23 962 17 429

Finance lease Variablerate 4 069 3 740

2 019 297 1 600 418

Company

Liabilities

Financial liabilities Variablerate 1 980 850 1 568 114

Trade and other payables Interest free 26 107 19 447

2 006 957 1 587 561

24.4 Capital riskThe group considers its capital to consist of total equity attributable to equity holders of the parent and financial liabilities.

During the year under review the group complied with all the loan covenants as set out in note 12.

There were no changes in the group’s approach to capital maintenance during the year.

Group

Total equity attributable to equity holders of the parent 1 222 109 1 060 437

Total borrowings 1 991 266 1 579 249

3 213 375 2 639 686

Company

Total equity attributable to equity holders of the parent 1 267 373 1 091 468

Total borrowings 1 980 850 1 568 114

3 248 223 2 659 582

INGENUITY


2015 61

25. SEGMENTAL INFORMATIONWhile investment properties are managed on an individual basis, the group comprises the following main reportable industry recognised operating segments:

OfficesR’000

RetailR’000

Special(Gym)

R’000Parking

R’000

Light industrial

R’000OtherR’000

Unseg-mental

R’000

Straight-liningR’000

TotalR’000

2015 Additionstonon-currentassets 124 092 39 177 778 66 453 8 254 58 291 65 045 – 362 090Total assets 1 787 736 618 332 168 131 395 690 66 074 10 254 391 101 – 3 437 318Revenue 163 653 57 125 14 073 30 714 5 521 778 – 26 100 297 964Profit/(loss)beforefairvalue adjustment 119 553 40 270 12 095 23 464 4 607 633 (14 116) 26 100 212 606Fair value adjustment 109 320 8 123 11 371 54 293 7 783 2 000 – – 192 890Profit/(loss)beforeinterest and taxation 228 873 48 393 23 466 77 757 12 390 2 633 (14 116) 26 100 405 496Interest received – – – – – – 2 254 – 2 254Interest paid – – – – – – (140 544) – (140 544)Profit/(loss)beforetaxation 228 873 48 393 23 466 77 757 12 390 2 633 (152 406) 26 100 267 206

2014Additionstonon-currentassets 580 875 298 009 105 241 150 663 – – 84 361 – 1 219 149

Total assets 1 554 324 571 032 155 982 274 944 – – 238 410 – 2 794 692

Revenue 133 417 51 129 12 578 22 210 – – 2 618 39 264 261 216

Profit/(loss)beforefairvalue adjustment 95 780 36 241 11 255 16 934 – – (13 119) 39 264 186 355

Fair value adjustment 67 655 35 409 6 991 10 142 – – (14 790) – 105 407

Profit/(loss)beforeinterestand taxation 163 435 71 650 18 246 27 076 – – (27 909) 39 264 291 762

Interest received – – – – – – 1 303 – 1 303

Interest paid – – – – – – (111 239) – (111 239)

Profit/(loss)beforetaxation 163 435 71 650 18 246 27 076 – – (137 845) 39 264 181 826

Light industrial is a new segment and comprises industrial space in a property which was acquired in 2015, being 64 White Road, Tokai.

The Company has a tenant which directly or indirectly through its subsidiaries contributes more than 10% to the Company’s total revenue. R27.9 million (2014: R26.4 million) is included in office segment revenue and R5.6 million (2014: R4.8 million) is included in parking revenue.

26. SHARE-BASEd PAYMENTOn 8 October 2007 the group established a share trust that entitles key management personnel and senior employees to become beneficiaries of the trust on acceptanceofaparticipationnotice.ThetrustisempoweredtoacquiresharesintheCompanyand/orotherassetsfortheindirectbenefitofthebeneficiaries. On 3 March 2008 the trust acquired 17 000 000 shares in the Company and offered participation notices to certain employees which were duly accepted.

The terms and conditions of the participation notices are as follows:

Grant date Number of units Vestingconditions Contractual life of noticeYear ended 31 August 2008 5 666 667 Continued employment Three years to February 2011

5 666 667 Continued employment Four years to February 20125 666 666 Continued employment Five years to February 2013


62

26. SHARE-BASEd PAYMENT (continued)

Group and Company2015 2014

Number of units per directorJ Bielich 4 000 000 4 000 000AA Maresky 9 000 000 9 000 000M Wagenheim 4 000 000 4 000 000

2015R’000

2014R’000

Liability per directorJ Bielich 2 141 2 329AA Maresky 4 684 5 239M Wagenheim 2 110 2 329Total 8 935 9 897

The exercise price of the units is R0.50.

The fair value of services received in return for the units granted is measured by reference to the value of the units granted. The estimate of the fair value of the services received is measured based on the Black-Schöles formula.The contractual life of the grant (three to five years) is used as an input into this model.

Fair value of units and assumptionsFair value at measurement dateShare price (R) 0.90 0.85Exercise price (R) 0.50 0.50Expected volatility (%) 43.7 94.2Expected dividends (cents) 2 2Risk-freeinterestrate (%) 8.35 8.57Fair value (R) 8 934 704 9 897 018Intrinsic value (R) 6 800 000 5 950 000

Units are granted under a service condition. ThefairvalueoftheshareappreciationrightsatgrantdateisdeterminedbasedontheBlack-Schölesformula.Thefairvalue of the share option liability is measured at each reporting date and at settlement date.

Group and Company 2015

R’m2014

R’m

27 CAPITAL COMMITMENTS AUTHORISEdAuthorised and contracted for 51.5 36.3

AuthorisedandcontractedforcommitmentsamounttoR51.5million(2014: R36.3million)atyear-end.ThecommitmentscomprisecostsforthecompletionoftheAurecon2developmentandthePVSolarplant,bothofwhichwillbefinancedfromexistingcashresourcesandfinancefacilities.

GuaranteestothevalueofR1.075million(2014: R1.075million)weresuppliedbyAbsaBankLimitedtotheCityofCape Town;andaguaranteetothevalueofR5 million (2014: R5 million) was supplied by Absa Bank Limited to the Department of Transport and Public Works.

28 EVENTS AFTER THE REPORTING PERIOdRefer to the events after the reporting period and dividends to shareholders notes in the directors’ report.

INGENUITY


2015 63

GATEwAY, CENTURY CITY

64

Size of holdingNumber of

shareholders

Numberof shares

owned

% of totalissuedshares

50 000 001 and over 6 751 375 931 62.01

10 000 001– 50 000 000 12 289 872 910 23.92

5 000 001 – 10 000 000 9 67 200 319 5.55

1 000 001 – 5 000 000 30 69 613 629 5.75

100 001 – 1 000 000 75 26 967 159 2.23

10 001 – 100 000 118 5 963 619 0.49

5 001 – 10 000 37 322 001 0.03

2 501 – 5 000 22 82 723 0.01

1 – 2 500 406 71 252 0.01

Total 715 1 211 469 543 100.00

Shareholders owning 5% or more of the share capital of the Company

The Century City Property Investment Trust# 200 000 000 16.5

Jacana Assets Limited 187 725 000 15.5

Pruta Securities (Jersey) Limited 165 260 596 13.6

Bynm Standard Bank Jersey Limited 71 200 000 5.9

Withmore Investments 3 Proprietary Limited 72 160 335 6.0

Total 696 345 931 57.5

Shareholders Shares held

Public/non-public shareholders Number % Number %

Non-public

Directors# 9 1.3 169 692 096 14.1

Employee share trust 1 0.1 17 000 000 1.4

Subsidiary holdings 1 0.1 72 160 335 6.0

Non-public

Shareholders owning 10% or more# 3 0.4 482 985 596 39.8

Public shareholders 701 98.1 469 631 516 38.7

Total 715 100.00 1 211 469 543 100.00# Shareholders owning 10% or more are shown net of indirect shareholdings by directors.

ANALysIs OF SHAREHOLdERS at year-end

INGENUITY


2015 65

PROPERTy PORTFOLIO SCHEdULE

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66

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etail

s.

INGENUITY


2015 67

dEVELOPMENT PORTFOLIO

Property name Location SectorSite area (m²)

Available bulk (m²)

Purchase price at cost R‘000

CapitalisedcostR‘000

Effective date of acquisition

Market value as at 31 August 2015R’000

Land for future development

The Modern Erf 173153 situated Cnr Bree, Long and Mechau Streets, Cape Town

Offices/Retail 3 037 26 775 R91 663 R102 241 1-Oct-07 R87 450

Erf 38746 TygerValley

Erf 38746 situated Tyger Waterfront,Velodrome,TygerValley

Offices 7 916 11 082 R25 000 R32 631 11-Jan-08 R25 000

117 Strand Street Erf 142633, situated at 109 –117StrandStreet,Cape Town;and Erven 884 to 892 and 9983 Cape Town, situated at 102 – 105 Strand Street, Cape Town, bounded by Castle, Rose and Strand Streets

Offices/Retail/Residential

3 390 24 705 R86 000 R92 513 27-May-14and11-Jun-2014

R92 513

Property under development

Aurecon 2 Erf 7054, 1 Century City Drive, Century City

Offices 3 365 R11 985 R42 123 10-Mar-15 R42 123

PROPERTy PORTFOLIO INFORMATION at 31 August 2015

GEOGRAPHIC PROFILE Rentable area and revenueWestern Cape 99%Gauteng 1%

SECTORAL PROFILERentable areaOffices 66%Retail 22%Light industrial 7%Gym 5%RevenueOffices 58%Retail 20%Light industrial 3%Gym 5%Parking 14%

PROPERTy PORTFOLIO SCHEdULE

68

PROPERTy PORTFOLIO INFORMATION at 31 August 2015 (continued)

TENANT PROFILE % of areaNumber

of tenantsNumberof leases

Largelistedcompanies,SAGovernmentandparastatals,andlargemulti-nationalcompanies 60 41 41

Other listed companies, franchises of listed companies and other large companies 18 26 26

Other 22 107 107

100 174 174

VACANCY PROFILE BY SECTOR BY RENTABLE AREA Rentable area%

Offices 2.72

Light industrial 0.58

Retail 0.04

3.34

LEASE EXPIRY PROFILE BY SECTOR BY REVENUE2016

%2017

%2018

%2019

%2020

%>2020

%

Offices 66 36 76 37 40 64

Other – – – 1 – –

Light industrial – – – 15 – –

Retail 17 50 9 17 24 21

Gym – – – 20 24 –

Parking 17 14 15 10 12 15

LEASE EXPIRY PROFILE BY SECTOR BY RENTABLE AREA2016

%2017

%2018

%2019

%2020

%>2020

%

Offices 89 46 91 41 32 73

Other – – – – – –

Light industrial – – – 32 – 1

Retail 11 54 9 14 38 26

Gym – – – 13 30 –

wEIGHTEd AVERAGE RENTAL PER SQUARE METRE PER SECTOR BY RENTABLE AREAOffices R118Retail R115Gym R133Industrial R50Parking R750 per bay

wEIGHTEd AVERAGE ESCALATION % PROFILE BY SECTOR BY RENTABLE AREAOffices 7.4%Retail 8.0%Gym 7.5%Industrial 6.2%Parking 6.9%Total weighted average 7.3%

AVERAGE ANNUALISEd PROPERTY PORTFOLIO YIELd – 7%


2015 69

19 LOUIS GRAdNER

70

NOTICE OF AGM

NOTICE TO SHAREHOLdERSANNUAL GENERAL MEETING (“AGM”)1. Notice of meeting Notice is hereby given to shareholders that the AGM of Ingenuity Property

Investments Limited will be held at the Company’s registered office, Suite 102, First Floor, Intaba, 25 Protea Road, Claremont, Cape Town on Friday, 22 January 2016 at 09h00 for the purpose of conducting the following items of business:

• to deal with such business as may lawfully be dealt with at the AGM; and

• consider and, if deemed fit, pass, with or without modification, the ordinary and special resolutions of shareholders set out hereunder in the manner required by the Companies Act No. 71 of 2008, as amended (“Act”), as read with the Listings Requirements of the JSE Limited (“JSE Listings Requirements”) on which the Company’s securities are listed, which meeting is to be participated in and voted at by shareholders registered in the Company’s securities register as shareholders as at the record date of Friday, 15 January 2016.

Kindly note that meeting participants (including proxies) will be required to provide reasonably satisfactory identification before being entitled to attend, participate and vote at the AGM. Forms of identification include valid identity documents, driver’s licences and passports.

Please note that if you are the owner of dematerialised shares (i.e. have replaced the paper share certificates representing the shares with electronic records of ownership under the JSE electronic settlement system held through a Central Securities Depository Participant (“CSDP”) or broker (or their nominee)) and are not registered as an “own name” dematerialised shareholder, then you are not a registered shareholder of the Company. Accordingly, in these circumstances, subject to the mandate between yourself and your CSDP or broker, as the case may be:

• if you wish to attend the AGM, you must contact your CSDP or broker, as the case may be, and obtain the relevant letter of representation from it;alternatively

• if you are unable to attend the AGM, but wish to be represented at the meeting, you must contact your CSDP or broker, as the case may be, andfurnishitwithyourvotinginstructionsinrespectoftheAGMand/or request it to appoint a proxy. You must not complete the attached form of proxy. The instructions must be provided in accordance with the mandate between yourself and your CSDP or broker, as the case may be, within the time period required by your CSDP or broker, as the case may be. CSDPs, brokers or their nominees, as the case may be, recorded in the Company’s sub-register as holders of dematerialised

shares held on behalf of an investor/beneficial owner should,whenauthorised in terms of their mandate or instructed to do so by the person on behalf of whom they hold dematerialised shares, vote by either appointing a duly authorised representative to attend and vote at the AGM or by completing the attached form of proxy in accordance with the instructions thereon and returning it to the transfer secretaries, Computershare Investor Services Proprietary Limited, as contemplated below.

The quorum requirement for the ordinary and special resolutions set out below is sufficient persons being present to exercise, in aggregate, at least 25% of all voting rights that are entitled to be exercised on the resolutions, provided that at least three shareholders of the Company are present at the annual general meeting. The percentage of voting rights required to pass the ordinary resolutions is more than 50% of the voting rights exercised, and the percentage of voting rights required to pass the special resolutions is at least 75% of the voting rights exercised thereon.

1.1 Record dates, voting and proxies Please note the following important dates with regard to the AGM:

Record date for the purposes of receiving this notice Friday, 20 November 2015

Distribution of the annual report Friday, 27 November 2015

Last date to trade in order to be eligible to participate in and vote at the AGM

Friday, 8 January 2016

Record date to be eligible to participate in and vote at the AGM Friday, 15 January 2016

Last day to lodge proxy forms for the AGM (by 09h00) Wednesday, 20 January 2016

AGM to be held at 09h00 on Friday, 22 January 2016

Results of AGM published on SENS on Friday, 22 January 2016

In order to reflect the views of shareholders more accurately, all resolutions and substantive decisions at the AGM will be put to vote on a poll, rather than being determined on a show of hands. A vote on poll takes into account the number of shares held by each shareholder, which the board believes to be a more democratic procedure.

A shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak and vote in his/herstead.

1.2 Electronic participation The Company intends to offer shareholders reasonable access to

attend the AGM through electronic conference call facilities, in accordance with the provisions of the Act. Shareholders wishing to participate electronically in the AGM are required to deliver written notice to the Company at Suite 102, First Floor, Intaba, 25 Protea Road, Claremont, Cape Town, 7708, or e-mailed [email protected] (marked for the attention of the company secretary) by no later than 09h00 on Wednesday, 13 January 2016 that they wish to participate in the AGM via electronic communication (“the Electronic Notice”). In order for the Electronic Notice to be valid it must contain: (a) if the shareholder

(incorporated in the Republic of South Africa) Registrationnumber:2000/018084/06Share code: ING ISIN: ZAE000127411(The “Company”)


2015 71

is an individual,acertifiedcopyofhis/heridentitydocumentand/orpassport; (b) if the shareholder isnotan individual, a certifiedcopy of a resolution by the relevant entity and a certified copy of theidentitydocumentsand/orpassportsofthepersonswhopassedthe relevant resolution, which resolution must set out who from the relevant entity is authorised to represent the relevant entity at the AGMviaelectroniccommunication;and/or(c)avalide-mailaddressand/or facsimile number (“the contact address/number”). Votingonshareswillnotbepossibleviaelectroniccommunicationand accordingly shareholders participating electronically and wishing to vote their shares at the AGM will need to be represented at the AGM, either in person, by proxy or by letter of representation. The Company shall use its reasonable endeavours on or before 12h00 on Monday, 18 January 2016 to notify each shareholder, whohasdeliveredavalidElectronicNotice,at itscontactaddress/number, of the relevant details through which the shareholder can participate in the AGM via electronic communication.

1.3 Annual financial statements, Audit and Risk Committee report, Social and Ethics Committee report and directors’ report

A copy of the consolidated annual financial statements of the Company and its subsidiaries (as approved by the board of directors of the Company), incorporating the external auditor’s, the Audit and Risk Committee, the Social and Ethics Committee and directors’ reports for the year ended 31 August 2015, are delivered herewith.

The following proposed resolutions for adoption will be considered by the shareholders at the AGM and, if deemed fit, passed with or without modification:

2. Proposed Ordinary Resolution Number 1 Re-appointmentofAuditor “Resolved that Mazars be re-appointed as the independent registered

auditor of the Company (for the year ending 31 August 2016), with Ms Y Ferreira as the designated partner of Mazars who will undertake the audit for the ensuing year.”

Motivation/Explanation Ordinary resolution number 1 proposes the re-appointment of Mazars

as the Company’s auditor until the conclusion of the next annual general meeting of the Company.

The Audit and Risk Committee has considered the independence of the auditor, Mazars, in accordance with section 94(8) of the Companies Act. In assessing the independence of the auditor the Audit and Risk Committee has satisfied itself that:

• The auditor does not receive direct or indirect remuneration fromthe Company except for as auditor or rendering other services to the Company, to the extent permitted by the Act.

• Theauditor’sindependencehasnotbeenprejudiced. • Theauditorhascompliedwiththecriteriarelatingtoindependenceor

conflict of interest as prescribed by the Independent Regulatory Board for Auditors established by the Auditing Profession Act.

Accordingly, the Company’s Audit and Risk Committee was satisfied that Mazars is independent as contemplated by the South African independence laws and the rules of the International Federation of Accountants (“IFAC”) andnominatedthere-appointmentofMazarsasregisteredauditorforthefinancial year ending 31 August 2016.

Furthermore, the Company’s Audit and Risk Committee has, in terms of paragraph 3.86 of the JSE Listings Requirements, considered and satisfied itself that Mazars are accredited to appear on the JSE list of accredited auditors, in compliance with section 22 of the JSE Listings Requirements.

3. Proposed Ordinary Resolution Number 2 Re-electionofMrLHCohenasadirectorandmemberofthe

Remuneration Committee, Nominations Committee, and Investments and Acquisitions Committee

“Resolved that Mr LH Cohen, being a non-executive director who isrequired to retire by rotation as a director of the Company at this AGM and whoiseligibleandavailableforre-election, isherebyre-appointedwithimmediate effect.”

A brief curriculum vitae in respect of Mr LH Cohen is set out on page 13 of the integrated annual report of which this notice forms part.

4. Proposed Ordinary Resolution Number 3 Re-electionofMrRCSquire-Howeasadirectorandchairmanoftheboard

and member of the Audit and Risk Committee, Remuneration Committee Nominations Committee, and Investments and Acquisitions Committee.

“ResolvedthatMrRCSquire-Howe,beinganindependentnon-executivedirector, who is required to retire by rotation as a director of the Company atthisAGMandwhoiseligibleandavailableforre-election,isherebyre-appointed with immediate effect.”

A brief curriculum vitae in respect of Mr RC Squire-Howe is set out onpage 12 of the integrated annual report of which this notice forms part.

Motivation/ExplanationforOrdinaryResolutionsNumbers2and3 In accordance with clause 21.3 of the Company’s memorandum of

incorporation("MOI"),one-thirdofthenon-executivedirectorsarerequiredtoretireateachannualgeneralmeetingandmayofferthemselvesforre-election. In accordance with the relevant provision, it has been determined thatMessrsLHCohenandRCSquire-Howeareduetoretirefromtheboard.

The board of directors has reviewed the composition of the board against requirements and has recommended the re-election of the directors.The boardisoftheviewthatthere-electionofthedirectorswouldenablethe Company to maintain the required skills and experience relevant to the Company and comply with corporate governance requirements. The board of directors has conducted an assessment of the performance of each of the retiring directors and is satisfied that the directors have the necessary skills and experience required to continue to perform effectivelyintheirrolesasnon-executivedirectors.Accordingly,theboardrecommends to shareholders the re-election of the retiring directorsreferred to in ordinary resolutions numbers 2 and 3.

5. Proposed Ordinary Resolution Number 4 Appointment of Mr RS Schur as chairman and member of the Audit and

Risk Committee “ResolvedthatMrRSSchur,beinganindependentnon-executivedirector

of the Company, be elected as chairman and member of the Audit and Risk Committee with immediate effect in terms of section 94(2) of the Act.”

A brief curriculum vitae in respect of Mr RS Schur is set out on page 13 of the integrated annual report of which this notice forms part.

6. Proposed Ordinary Resolution Number 5 AppointmentofMrRCSquire-HoweasmemberoftheAuditandRisk

Committee “Subject to the passing of Ordinary Resolution Number 3, resolved that

MrRCSquire-Howe,beingan independentnon-executivedirectoroftheCompany, be elected as member of the Audit and Risk Committee with immediate effect in terms of section 94(2) of the Act.”

A brief curriculum vitae in respect of Mr RC Squire-Howe is set out onpage 12 of the integrated annual report of which this notice forms part.

NOTICE OF AGM >> CONTINUED

72

7. Proposed Ordinary Resolution Number 6 Appointment of Mr DB Fabian as member of the Audit and Risk Committee “ResolvedthatMrDBFabian,beinganindependentnon-executivedirector

of the Company, be elected as member of the Audit and Risk Committee with immediate effect in terms of section 94(2) of the Act.”

A brief curriculum vitae in respect of Mr DB Fabian is set out on page 13 of the integrated annual report of which this notice forms part.

Motivation/ExplanationforOrdinaryResolutionsNumbers4to6 In terms of section 94(2) of the Act the audit committee is a committee

elected by the shareholders at each annual general meeting. Chapter 3 of the King Report on Governance for South Africa 2009 ("King III") requires the shareholders of a public company to elect the members of an audit committee at each annual general meeting. The directors should therefore present shareholders with suitable candidates for election as members of the committee.

Atleastone-thirdofthemembersoftheauditcommitteemusthavetherelevant qualifications and experience. The curricula vitaes of the proposed members of the Audit and Risk Committee reflect that the proposed members have the relevant qualifications and experience to be appointed as members to the audit committee.

At a meeting of the board of directors held on 3 November 2015 the board satisfied itself that the independent, non-executive directors offeringthemselves for election as members of the Company are independent, non-executive directors as contemplated in the Act and in King III;are suitably qualified and experienced to act as members of the Audit and Risk Committee of the Company; understand financial reporting,internal financial controls, the external audit process, risk management, sustainability issues and thegovernanceprocesses in the Company; andhave an understanding of International Financial Reporting Standards and other regulations applicable to the Company.

8. Proposed Ordinary Resolution Number 7 Endorsement of Remuneration Policy “To endorse, through a non-binding advisory vote, the Company’s

remuneration policy (excluding the remuneration of the non-executivedirectors and the members of board committees for their services as directors and members of committees), as contained in the corporate governance report set out on pages 18 to 20 of the integrated annual report of which this notice forms part.”

Motivation/Explanation The reason for and effect of Proposed Ordinary Resolution Number 7 is

to endorse the Company’s remuneration policy through a non-bindingadvisory vote.

9. Proposed Ordinary Resolution Number 8 General authority over unissued shares reserved for the purpose of the

Ingenuity Employee Share Trust “Resolved that the unissued shares in the capital of the Company reserved

for the purpose of the Ingenuity Employee Share Trust (“the Trust”), being the equivalent of 225 293 909 shares, continue to be placed under the control of the directors who shall be authorised to allot and issue these shares in terms of the Trust at such time and on such terms as they may determine.”

Motivation/Explanation The reason for and effect of Proposed Ordinary Resolution Number 8 is to

place the unissued shares in the capital of the Company reserved for the purpose of the Trust under the control of the directors, to allow the directors to allot and issue these shares in terms of the Trust at such time and on such terms as they may determine.

10. Proposed Ordinary Resolution Number 9 General authority to issue shares for cash “Resolved that, subject to not less than 75% (seventy-five per cent) of

the votes of those shareholders of the Company present in person or by proxy and entitled to vote at the AGM at which this ordinary resolution is considered, being cast in favour of this ordinary resolution, the directors of the Company be and are hereby authorised by way of a general authority, to allot and issue a maximum of 15% of the authorised shares for cash as they in their discretion deem fit, subject to the Act, the MOI of the Company, the JSE Listings Requirements and the following limitations, namely that:

• ThegeneralauthorityshallbevaliduntilthedateofthenextAGMofthe Company, provided that it shall not extend beyond 15 months from the date of this resolution.

• Theshareswhicharethesubjectofthisgeneralauthoritymustbeofaclass already in issue, or where this is not the case, must be limited to such securities or rights that are convertible into a class already in issue.

• Apaidpressannouncementgivingfulldetails, includingthenumberof shares issued, the average discount to the weighted average traded price of the shares over the 30 days prior to the date that the price of the issue was determined or agreed by the directors and the intended use of the funds raised, will be published after any issue representing, on a cumulative basis within any one financial year, 5% or more of the number of shares in issue prior to such issue.

• Issues in terms of this general authority will not in the aggregateexceed 15% of the Company’s issued share capital excluding treasury shares (such 15% being an equivalent of 168 346 381 shares at the date of this notice) in any one financial year. For purposes of determining the number of shares that may be issued, this number shall be based on the number of shares in issue at the date of the AGM, less any shares issued in terms of this authority by the Company during the current financial year and less any options/convertible securities that areconvertible into shares during the current financial year.

• Intheeventofasub-divisionorconsolidationofissuedsharesduringthe period of this general authority, this general authority must be adjusted accordingly to represent the same allocation ratio.

• Indeterminingthepriceatwhichan issueofshareswillbemade interms of this general authority, the maximum discount permitted will be 10% of the weighted average traded price of the shares in question, as determined over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the Company.

• Any such issuewill only bemade to public shareholders as definedin paragraphs 4.25 to 4.27 of the JSE Listings Requirements and not to related parties as defined in paragraph 10.1 of the JSE Listings Requirements.”


to grant the Company the general authority to issue shares for cash, in accordance with the provisions of the JSE Listings Requirements.

The board requires the flexibility to enter into transactions for the benefit of the Company and the shareholders as a general body, which transactions may entail elements of allotments and issues of shares in the capital of the Company for cash. The exercise of the powers to be granted to the board, as contemplated in this ordinary resolution, shall always be subject to compliance with the other requirements of the Act and the provisions of the JSE Listings Requirements.


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11. Proposed Ordinary Resolution Number 10 General authority over unissued shares “Resolved that, subject to a majority of the votes cast by all shareholders

present, or represented by proxy and entitled to vote at the AGM at which this ordinary resolution is considered, after providing for the unissued shares in the capital of the Company reserved for the purpose of the Ingenuity Employee Share Trust, the balance of the authorised but unissued shares in the capital of the Company shall be placed under the control of the directors who shall be authorised to allot and issue these shares at such time and on such terms as they in their discretion deem fit, for such monetary or other consideration (whether payable in cash or otherwise) and to such person or persons as they in their discretion deem fit, subject to the provisions of the Act, the MOI of the Company and the JSE Listings Requirements.”


to place the balance of the unissued authorised shares in the capital of the Company, after providing for the unissued shares in the capital of the Company reserved for the purpose of the Trust, under the control of the directors. Any issue would be subject to the other requirements of the Act, the Company’s MOI and the JSE Listings Requirements. Such authority shall endure until the next annual general meeting of the Company (at which time this authority shall lapse, unless it is renewed at the aforementioned annual general meeting), provided that it shall not extend beyond 15 (fifteen) months from the date on which this ordinary resolution is adopted.

The board requires the flexibility to enter into transactions for the benefit of the Company and the shareholders as a general body, which transactions may entail elements of allotments and issues of shares in the capital of the Company. The exercise of the powers to be granted to the board, as contemplated in this ordinary resolution, shall always be subject to compliance with the other requirements of the Act and the provisions of the JSE Listings Requirements.

12. Proposed Ordinary Resolution Number 11 Authority to issue shares to enable shareholders to reinvest cash

distributions “Resolved that, subject to a majority of the votes cast by all shareholders

present or represented by proxy and entitled to vote at the AGM at which this ordinary resolution is considered, the directors are authorised to issue to each shareholder who elects to reinvest their cash distribution by subscribing for shares in the Company (“the Reinvestment Option”) such number of shares as are equivalent in value to the distributions reinvested by such shareholder, on such terms as they in their discretion deem fit, subject to the provisions of the Act, the MOI of the Company and the JSE Listings Requirements.”

Motivation/Explanation The reason for and effect of Proposed Ordinary Resolution Number 11 is to

allow shareholders to elect the Reinvestment Option should the Company elect, upon declaration by the Company of a cash distribution in respect of its shares, to afford all shareholders the option of reinvesting their cash distribution by subscribing for shares in the Company.

13. Proposed Special Resolution Number 1 Remunerationpayabletonon-executivedirectors “Resolved in terms of section 66(9) of the Act that the annual

remunerationofthenon-executivedirectors forthetwelvemonthsfrom1 September 2015 to 31 August 2016 be approved as follows:

Board Chairman of the board R220 000 Director R75 000

Audit and Risk Committee Chairman R165 000 Member R22 000

Investments and Acquisition Committee Member R22 000

Remuneration and Nominations Committees Member R5 500

Social and Ethics Committee Member R5 500.”

Reason for and the effect of Special Resolution Number 1 The reason for and the effect of Special Resolution Number 1 is to grant the

Companytheauthoritytopayremunerationtoitsnon-executivedirectorsfor their services as directors for the year ended 31 August 2016.

14. Proposed Special Resolution Number 2 General approval to repurchase shares “Resolved that the Company and/or any subsidiary of the Company be

and are hereby authorised by way of a general approval to acquire the issued shares of the Company, upon such terms and conditions and in such amounts as the directors of the Company may from time to time determine, but subject to the MOI of the Company, the provisions of the Act and the JSE Listings Requirements, and provided that:

• the repurchase of sharesmay only be effected on the openmarketthrough the order book operated by the JSE trading system and done without any prior understanding or arrangement between the Companyandthecounterparty,orothermannerapprovedbytheJSE;

• the Company (or any subsidiary) is authorised to do so in terms ofits MOI;

• this general authority shall be valid until the Company’s next AGM,provided that it shall not extend beyond 15 (fifteen) months from the dateofpassingofthisspecialresolution;

• atanypointintimetheCompanywillonlyappointoneagenttoeffectanyrepurchase(s)ontheCompany’sbehalf;

• inanyonefinancialyear thegeneralauthority to repurchasewillbelimited to a maximum of 20% of the Company’s issued share capital of thatclassatthetimeauthorityisgrantedinthatfinancialyear;

• repurchasesmaynotbemadeatapricegreaterthan10%abovetheweighted average of the market value for the securities for the 5 (five) business days immediately preceding the date on which the repurchase iseffected;

• the Company makes an announcement in terms of paragraph 11.27 of the JSE Listings Requirements when it has cumulatively repurchased more than 3% of the initial number of the relevant class of securities, and for each 3% in aggregate of the initial number of that class acquiredthereafter;

• repurchases may not be made during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements, unless a repurchase programme (where the dates and quantities of shares to be purchased during the prohibited period are fixed) is in place and full details thereof have been submitted to the JSE prior to the commencement of theprohibitedperiod;


74

• theCompanyandthegroupareinapositiontorepaytheirdebtintheordinary course of business for the 12 (twelve) month period after the dateofthenoticeoftheAGM;

• the assets of the Company and the group, being fairly valued inaccordance with the accounting policies used in the latest annual financial statements are, after the repurchase, in excess of the liabilities of the Company and the group for the 12 (twelve) month period after thedateofnoticeoftheAGM;

• theordinarycapitaland reservesof theCompanyand thegroupareadequate for the 12 (twelve) month period after the date of the notice oftheAGM;

• theavailableworkingcapitalisadequatetocontinuetheoperationsofthe Company and the group for a period of 12 (twelve) months after thedateofthenoticeoftheAGM;and

• priortoenteringthemarkettorepurchasetheCompany’ssecuritiesaboard resolution to authorise the repurchase will have been passed in accordance with the requirements of section 46 of the Act, and stating that the board has acknowledged that it has applied the solvency and liquidity test as set out in section 4 of the Act and has reasonably concluded that the Company will satisfy the solvency and liquidity test immediately after completing the proposed repurchase.”

Reason for and effect of Special Resolution Number 2 The Company’s MOI contains a provision allowing the Company or

any subsidiary of the Company to repurchase securities issued by the Company subject to the approval of the members in terms of the MOI, the requirements of the Act and the JSE Listings Requirements. This special resolutionwillauthorisetheCompanyand/oritssubsidiariesbywayofageneral authority from shareholders to repurchase ordinary shares issued by the Company.

The directors of the Company have no specific intention to give effect to the resolution, but will continually review the Company’s position, having regard to prevailing circumstances and market conditions, in considering whether to repurchase its own shares.

Once adopted, this special resolution will permit the Company or any of its subsidiaries, to repurchase such ordinary shares in terms of the Act, its MOI and the JSE Listings Requirements.

Disclosures in terms of paragraph 11.26 of the JSE Listings Requirements The JSE Listings Requirements require the following disclosures in respect

of Special Resolution Number 2, some of which are disclosed in this integrated annual report of which this notice forms part:

• majorshareholdersoftheCompany page65

• sharecapitaloftheCompany page47

Material changes Other than the facts and developments reported on in the integrated

annual report, there have been no material changes in the affairs or financial position of the Company since the date of signature of the audit report and the date of this notice.

Responsibility statement The directors, whose names are given on pages 12 and 13 of the integrated

annual report in which this notice was included, collectively and individually accept full responsibility for the accuracy of the information given in this notice 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 integrated annual report and notice contains all information required by law and the JSE Listings Requirements.

15. Proposed Special Resolution Number 3 Conversion of share capital from par value shares to no par value shares "Resolved that the shares in the Company (comprising the authorised and

issued shares) be converted from shares with a par value of R0.01 (one cent) each into shares of no par value on the basis that each existing share of R0.01 (one cent) be converted into one share with no par value such that, save as to the nominal value, the no par value shares shall have the same rights and rank pari passu in all respects with the par value shares."

Reason for and effect of Special Resolution Number 3 The reason for Special Resolution Number 3 is that the Act limits the

Company’s ability to restructure its par value share capital. In order to meet the requirements of the Act that the Company's shares do not have a nominal or par value, the Company's shares must be converted from shares with a nominal value of R0.01 (one cent) each into shares of no par value in compliance with the requirements of the Act.

The effect of Special Resolution Number 3 is that the Company's share capital will be converted from 2 000 000 000 (two billion) authorised ordinary shares of R0.01 (one cent) each into 2 000 000 000 (two billion) authorised ordinary shares of no par value.

The Regulations to the Act require that, when the Company converts its shares into no par value shares, the board of directors shall prepare a report in respect of the proposed conversion which, inter alia, evaluates whether there are any material adverse effects of the conversion on the shareholders of the Company. The report of the board of directors of the Company for this purpose is included as Annexure 1 to this notice.

16. Proposed Special Resolution Number 4 Increase in authorised share capital “Resolved that the number of authorised shares of the Company be

increased from 2 000 000 000 (two billion) ordinary shares to 6 000 000 000 (six billion) ordinary shares by the creation of 4 000 000 000 (four billion) ordinary shares of no par value, which shares shall carry the same rights, and rank pari passu in all respects with, the existing ordinary shares."

Reason for and effect of Special Resolution Number 4 Special Resolution Number 4 is to authorise and implement the increase of

the authorised ordinary share capital of the Company.

17. Proposed Special Resolution Number 5 Amendment to the MOI “Resolved that the shareholders hereby approve the amendment of

clause 7.1 of the MOI by the deletion of the words “2 000 000 000 (two billion) ordinary Shares with a par value of R0.01 (one cent)” and the insertion of the words “6 000 000 000 (six billion) ordinary Shares with no par value and the deletion of clause 7.5 in its entirety”.

Reason for and effect of Special Resolution Number 5 Special Resolution Number 5 is to authorise the Company to amend the

MOI as contemplated in Special Resolutions Numbers 3 and 4 above.

The MOI will be available for inspection during normal business hours at the registered office of the Company from the date of this notice, up to an including the date of the AGM.


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18. Proposed Special Resolution Number 6 Authority to issue shares to directors who elect to reinvest their cash

distributions “Resolved that the directors are authorised to issue to each shareholder,

including persons contemplated in section 41(1) of the Act (which includes present or future directors or officers of the Company and persons related or interrelated to the Company or its directors and officers, who elect to reinvest their cash distribution under the Reinvestment Option), such number of shares as are equivalent in value to the distributions reinvested by such shareholder, on such terms as they in their discretion deem fit, subject to the provisions of the Act, the MOI of the Company and the JSE Listings Requirements.”

Reason for and effect of Proposed Special Resolution Number 6 The reason for and effect of Proposed Special Resolution Number 6 is to

comply with the provisions of the Act which requires an issue of shares to present or future directors or officers of the Company or their related persons to be approved by special resolution. To the extent that the Company elects to offer shareholders the Reinvestment Option upon declaration by the Company of a cash distribution in respect of its shares, and such shareholders are persons contemplated in section 41 of the Act, the directors will be authorised to issue shares to shareholders who are also persons as contemplated in section 41 of the Act.

19. Transaction of general business To transact such other general business as may be dealt with at the AGM.

By order of the board

M wAGENHEIMCompany Secretary


Registered officeSuite 102, First Floor, Intaba25 Protea RoadClaremont, 7708

Transfer secretariesComputershare Investor Services Proprietary Limited70 Marshall StreetJohannesburg, 2001


76

Ingenuity Property Investments Limited (Incorporated in the Republic of South Africa) Registration number: 2000/018084/06

REPORT PREPAREd BY THE BOARd OF dIRECTORS IN RELATION TO THE CONVERSION OF THE ORdINARY PAR VALUE SHARES TO SHARES HAVING NO PAR VALUE IN TERMS OF REGULATION 31(7) ANd 31(8) OF THE COMPANIES REGULATIONS, 2011 1. Introduction 1.1 The Companies Act limits the Company’s ability to authorise and issue further par value shares. In order to conform the Company’s share capital to the

requirements of the Companies Act such that the Company’s shares do not have a nominal or par value and increase the authorised share capital, the board of directors of the Company recommends that the Existing Ordinary Shares be converted to shares having no par value pursuant to the provisions of Regulation 31.

1.2 This Report sets out the various requirements of Regulation 31 as more fully discussed under paragraphs 3 and 4 required for the approval by special resolution by holders of Existing Ordinary Shares, being the shareholders of the Company, to effect the Conversion in order to allow for the increase in the authorised share capital of the Company.

2. Definitions 2.1 “Commission”meanstheCompaniesandIntellectualPropertyCommission;

2.2 “Company” means Ingenuity Property Investments Limited, a public company incorporated in the Republic of South Africa, with Registration Number 2000/018084/06,havingitsordinaryshareslistedonthesecuritiesexchangeoftheJSELimited;

2.3 “Companies Act”meanstheCompaniesAct71of2008,asamended;

2.4 “Conversion” means the proposed conversion of the Existing Ordinary Shares to shares having no nominal or par value without detracting from any of the rightscurrentlyassociatedwiththeExistingOrdinaryShares;

2.5 “Existing Ordinary Shares” means the ordinary shares in the Company with a par value of R0.01 (one cent), authorised and in issue as at the date of this Report;

2.6 “Memorandum of Incorporation” meansthememorandumofincorporationoftheCompany;

2.7 “Regulations” means the regulations promulgated under the Companies Act and “Regulation”shallbeconstruedaccordingly;

2.8 “Report”meansthisreportpreparedbytheboardofdirectorsoftheCompanyintermsofRegulation31(7);

2.9 “SARS”meanstheSouthAfricanRevenueService;and

2.10 “Securities” means any shares, debentures or other instruments, irrespective of their form or title, issued or authorised to be issued by the Company.

3. Special resolutions 3.1 Regulation 31(6) provides that the conversion of shares with a nominal or par value to shares having no nominal or par value will have been adopted only

if it is approved by:

3.1.1 aspecialresolutionadoptedbytheholdersofsharesofeachsuchclassofshares;and

3.1.2 a further special resolution adopted by a meeting of all the Company’s shareholders called for that purpose.

3.2 It is recorded that the holders of the Existing Ordinary Shares are the only shareholders of the Company.

3.3 In order to comply with the provisions of Regulation 31(6) the board of directors of the Company proposes that the holders of Existing Ordinary Shares, being the only shareholders of the Company, resolve that the following special resolution be passed to implement the Conversion:

“Resolved that the shares in the Company (comprising the authorised and issued shares) be converted from shares with a par value of R0.01 (one cent) each into shares of no par value on the basis that each existing share of R0.01 be converted into one share with no par value such that, save as to the nominal value, the no par value shares shall have the same rights and rank pari passu in all respects with the par value shares.”

4. Further information and effect This paragraph 4 sets out the disclosure required to be made to the holders of the Existing Ordinary Shares as contemplated in Regulation 31(7).

4.1 Information that may affect the value of the Securities affected by the Conversion The value of each of the Existing Ordinary Shares will be unaffected by the Conversion as none of the underlying rights of the holders of the Existing

Ordinary Shares will be affected by the Conversion.

ANNEXURE 1


2015 77

4.2 Classes of holders of the Company’s Securities affected by the Conversion 4.2.1 It is recommended that the Conversion be implemented in respect of the Existing Ordinary Shares to provide for greater flexibility of the Company’s

share capital.

4.2.2 The Conversion will affect all registered holders of the Existing Ordinary Shares, being the holders of the entire issued share capital of the Company.

4.3 Material effects that the Conversion will have on the rights of the holders of the Securities affected by the Conversion 4.3.1 The rights of the registered holders of the Existing Ordinary Shares will not be affected by the Conversion.

4.3.2 In particular, but without limitation, none of the followings rights attaching to the Existing Ordinary Shares will be affected by the Conversion:

4.3.2.1 therighttoattend,speak,participateinandvoteatameetingoftheshareholdersoftheCompany;

4.3.2.2 the right to be entered into the Company’sregisterofmembers;

4.3.2.3 therighttoreceivedistributions,ifandwhendeclaredand/ormadebytheCompany;

4.3.2.4 the right to receive the net assets of the Company on its liquidation.

4.4 Material adverse effects of the proposed arrangement against the compensation that any of those persons will receive in terms of the arrangement No compensation will be received by any persons pursuant to the Conversion contemplated herein and there will be no material adverse effects as a result

of the Conversion.

5. General In terms of Regulation 31(8)(b) of the Regulations, a copy of this Report will be filed with the Commission and SARS at the same time that this Report is

published to the shareholders of the Company.

MARk wAGENHEIMFinancial Director


On behalf of the board of directors

Ingenuity Property Investments Limited

Registered officeSuite 102, First Floor, Intaba25 Protea RoadClaremont, 7708

ANNEXURE 1 >> CONTINUED

78

For use only by certificated shareholders and dematerialised shareholders with “own name” registration, at the annual general meeting of shareholders of the Company to be held at Suite 102, First Floor, Intaba, 25 Protea Road, Claremont, Cape Town at 09h00 on Friday, 22 January 2016.

I/We(block letters)_________________________________________________________________________________________

of(address)______________________________________________________________________________________________

telephonenumber_______________________________________cellphonenumber______________________________________

e-mailaddress____________________________________________________________________________________________

beingtheregisteredholder/sof______________________________________________________________ordinarysharesherebyappoint

1.________________________________________________________________________________________or, failinghim/her

2.________________________________________________________________________________________or, failinghim/her

3. the chairman of the annual general meetingasmy/ourproxytovoteforme/usandonmy/ourbehalfattheannualgeneralmeetingoftheCompanytobeheldonFriday,22January2016andatanyadjournmentthereof as follows:

Number of sharesResolution In favour of Against AbstainOrdinary Resolution Number 1 – Re-appointmentofauditorOrdinary Resolution Number 2 – Re-election of Mr LH Cohen as a director andmember of the Remuneration

Committee, Nominations Committee, and Investments and Acquisitions Committee

Ordinary Resolution Number 3 – Re-election of Mr RC Squire-Howe as a director and chairman of the boardand member of the Audit and Risk Committee, Remuneration Committee, Nominations Committee, and Investments and Acquisitions Committee

Ordinary Resolution Number 4 – Appointment of Mr RS Schur as chairman and member of the Audit and Risk Committee

Ordinary Resolution Number 5 – AppointmentofMrRCSquire-HoweasmemberoftheAuditandRiskCommitteeOrdinary Resolution Number 6 – Appointment of Mr DB Fabian as member of the Audit and Risk CommitteeOrdinary Resolution Number 7 – Endorsement of remuneration policyOrdinary Resolution Number 8 – General authority over unissued shares reserved for the purpose of the Ingenuity

Employee Share TrustOrdinary Resolution Number 9 – General authority to issue shares for cashOrdinary Resolution Number 10 – General authority over unissued sharesOrdinary Resolution Number 11 – Authority to issue shares to enable shareholders to reinvest cash distributionsSpecial Resolution Number 1 – Remunerationpayabletonon-executivedirectorsSpecial Resolution Number 2 – General approval to repurchase sharesSpecial Resolution Number 3 – Conversion of share capital from par value shares to no par value sharesSpecial Resolution Number 4 – Increase in authorised share capitalSpecial Resolution Number 5 – Amendment to the MOISpecial Resolution Number 6 – Authority to issue shares to directors who elect to reinvest their cash distributions

Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast.

Unlessotherwiseinstructed,my/ourproxymayvoteashe/shethinksfit.

Signedat(place)______________________________________________on(date)______________________________________

Shareholder’ssignature______________________________________________________________________________________

FORM OF PROXY(Incorporated in the Republic of south Africa)

(Registration number 2000/018084/06)JsE code: ING IsIN: ZAE000127411

(“the Company”)

Registered office and postal address Transfer secretariesSuite 102, First Floor, Intaba Computershare Investor Services Proprietary Limited25 Protea Road PO Box 61051Claremont Marshalltown Cape Town Tel: 021 674 5170 21077708 Fax: 021 674 5135

1. Ashareholderentitledtoattendandvoteattheabove-mentionedmeetingisentitledtoappointaproxytoattend,speakandvoteinhis/herstead.Theproxyneed not be a member of the Company.

2. Ashareholdermayinsertthenameofaproxyorthenamesoftwoalternativeproxiesoftheshareholder’schoiceinthespace/sprovidedwithorwithoutdeleting“the chairman of the annual general meeting”. The person whose name appears first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

3. Ashareholderorhis/herproxyisnotobligedtouseallthevotesexercisablebytheshareholderorhis/herproxy,butthetotalofvotescastandinrespectofwhichanyabstentionisrecordedmaynotexceedthetotalvotesexercisablebytheshareholderorhis/herproxy.

4. Anydeletion,alterationorcorrectiontothisformofproxymustbeinitialledbythesignatory/ies.

5. Documentary evidence establishing the authority of a person signing this form of proxy in the representative capacity must be attached to this form of proxy unless previously recorded by the Company.

6. Forms of proxy must be lodged at or posted to the transfer secretaries or the registered office of the Company:

Transfer secretaries:ComputershareInvestorServicesProprietaryLimited,POBox61051,Marshalltown,2107;or

Registered offices: Suite 102, 1st Floor, Intaba, 25 Protea Road, Claremont, Cape Town, 7708

to be received by not later than 09h00 on wednesday, 20 January 2016.

7. The completion and lodging of this form of proxy by certificated members and dematerialised shareholders with “own name“ registration will not preclude the shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such shareholder wish to do so.

8. Dematerialised shareholders, other than with “own name” registration, must advise their Central Securities Depository Participant (“CSDP”) or broker of their votinginstructionsiftheyareunabletoattendtheannualgeneralmeeting,butwishtoberepresentedthereat.Thisshouldbedonebythecut-offtimestipulated by their CSDP or broker. If, however, such shareholders wish to attend the annual general meeting in person, then they will need to request their CSDP or broker to provide them with the necessary letter of representation in terms of the custody agreement entered into between the dematerialised shareholder and the CSDP or broker.

9. A form of proxy shall be deemed to include the right to demand or join in demanding a poll.

INSTRUCTIONS ANd NOTES TO THE PROxy

INGENUITY PROPERTY INVESTMENTS LIMITEd (Registrationnumber2000/018084/06)JSE COdE INGISIN ZAE000127411COMPANY SECRETARYM WagenheimCONTACT dETAILSTel: 021 674 5170Fax: 021 674 [email protected]

REGISTEREd OFFICESuite 102, 1st Floor, Intaba 25 Protea Road, ClaremontCape Town, 7708

TRANSFER SECRETARIESComputershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg, 2001

AUdITORSMazars

SPONSORNedbank Corporate and Investment Banking

COMMERCIAL BANkERSAbsa Bank Limited and Nedbank Limited

LEVEL OF ASSURANCEThese annual financial statements have been audited in compliance with the applicable requirements of the Companies Act No. 71 of South Africa

SHAREHOLdERS’ DIARyPublicationoffinal2015year-endresults 5November2015

Annual report posted to shareholders 30 November 2015

Annual general meeting 22 January 2016

Interim reporting date 29 February 2016

Publication of interim report 29 April 2016

Financialyear-end:2016 31August2016

Publicationoffinal2016year-endresults 11November2016

CORPORATE INFORMATION

SUITE 102, 1ST FLOOR, INTABA

25 PROTEA ROAD, CLAREMONT, 7708, CAPE TOWN, SOUTH AFRICA

INGENUITYPROPERTY.COM

integrated annual report 2015 - sharedata · 2011 r’000 total contractual rental income 271 864...

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