INTEGRATED ANNUAL REPORT 2014weighted average number of units in issue (resulting from the buyback...

INTEGRATED ANNUAL REPORT

2014

SYCOM PROPERTY FUND 2014 INTEGRATED ANNUAL REPORT 1

Integrated Annual Report

Contents Pages

Nature of Business, Objectives and Strategy 2

Chairman's Report 3

Management Company's Report 5

Sustainability Report 7

Corporate Governance 11

Board of Directors 16

Annual Financial Statements: Sycom Property Fund 17

Annual Financial Statements: Sycom Property Fund

Managers Limited 75

Approval of the Annual Financial Statements 96

Declaration by Company Secretary 96

Trustee Report 96

Schedule of Properties 97

Administration Inside Back Cover

2 SYCOM PROPERTY FUND 2014 INTEGRATED ANNUAL REPORT

Nature of Business, Objectives and Strategy

NATURE OF BUSINESS

Sycom Property Fund (‘The Fund’ or ‘Sycom’) is a closed-

end Collective Investment Scheme in Property (‘CISP’) that

was established in 1986. It is governed by the Collective

Investment Schemes Control Act of 2002 (‘CISCA’) and

is listed on the JSE Securities Exchange (‘JSE’). The net

income of the Fund is distributed in full every six months to

participatory interest (or ‘unit’) holders in Sycom.

Sycom is registered as a Real Estate Investment Trust (‘REIT’)

with the JSE. Its REIT status came into effect in the 2013/2014

financial year, with the result that the nature of distributions

changed to taxable dividends in respect of all net income

earned from 1 April 2013. In terms of the REIT legislation,

the net income of the Fund is subject to taxation, however

a deduction may be claimed for all qualifying distributions

to unitholders. Sycom’s REIT status does not affect the

treatment of distributions and unitholders will continue to pay

tax on the distribution received according to their individual

tax status.

Sycom invests directly in investment property, although

CISCA does permit indirect investment through the ownership

of interests in other property-owning businesses, including

securities in listed property funds.

OBJECTIVES AND STRATEGY

Sycom’s objectives are to provide consistent real growth in

distributions per unit to unitholders, and to maximise the total

return on investment on a sustainable basis. This purpose is

accomplished through the Fund’s strategy of:

• Investing in a small number of large, high quality assets

situated in South Africa’s major urban centres, with

approximately equal weighting in the office and retail

segments, and:

¡ as regards offices, investing in well-located A-grade

buildings and office parks in high-quality office nodes;

¡ as regards retail, investing in dominant regional

shopping centres, located in dense urban catchment

areas, offering tenants the opportunity to participate in

strong trading densities with good growth prospects.

• Actively managing the Fund’s assets to ensure they

remain relevant to the markets they serve, and meet the

changing needs of the tenant market by extending and

developing these assets where opportunities arise.

• Growing the Fund’s investment portfolio by increasing

its stake in co-owned properties, and by acquiring

new office and retail properties that meet the Fund’s

investment criteria.

• Employing a conservative capital structure, with moderate

use of debt.

Sycom’s strategy is constantly reviewed and debated

by the board in the light of changing opportunities in the

marketplace.


Chairman’s Report

PERFORMANCE

Sycom Property Fund’s distributable earnings for the year

ended 31 March 2014 amounted to R438.6m, compared

with R435.1m for the prior year. Allowing for a reduction in the

weighted average number of units in issue (resulting from the

buyback of units from Hyprop, to which I referred last year),

this marginal increase in profits improved slightly on a per

unit basis. This enabled the fund to increase distributions

by 4.7% for the year, to 183.28c per unit. This is only slightly

better than performance at the half year mark, of 4.4%, and

only marginally lower than had been anticipated for the

full year.

CHANGES IN OWNERSHIP

On 27 March, just before our year-end, Acucap Properties

Limited announced an offer to Sycom unitholders, to

exchange every 100 Sycom units for 58 Acucap units. At that

stage, Acucap already held over 33% of the Sycom units,

as well as having 100% control of Sycom Property Fund

Managers Limited, thus managing the Sycom portfolio. This

was the logical outcome of a close relationship which has

been in place for many years and which appears to have

been anticipated in the marketplace.

As a Collective Investment Scheme, there was no obligation

on the Sycom board to respond to the offer, as would have

applied had Sycom been a company. However, the board

considered it desirable to express a view to unitholders

rather than leaving them in the dark. To that end, three of

the independent directors (Pat Flanagan, Brian Stocks and

myself) acted as an independent board, engaging Bowman

Gilfillan to act as attorneys, and Rand Merchant Bank (RMB)

as advisors to express an opinion as to the fairness and

reasonableness of the Acucap offer. The RMB opinion was

set out in a subsequent Circular to unitholders, expressing

the view that the offer was indeed fair and reasonable.

Early in April, Growthpoint Properties Limited, the largest

property entity listed on the Johannesburg Stock Exchange,

entered the market and acquired a 31.5% stake in Sycom,

issuing Growthpoint shares in exchange in a ratio of 1.102

Growthpoint shares for every Sycom unit. At the same time,

Growthpoint acquired a 34.9% holding in Acucap, making

it the largest single shareholder in Acucap. While this

interrupted the Acucap/Sycom merger process, Growthpoint

has been supportive of the process. In consequence, the

vast majority of Sycom unitholders have accepted the

Acucap offer (and now hold tradeable Sycom Receipts,

pending their conversion to Acucap shares). Excluding the

Growthpoint holding, at the time of writing, just over 6 million

Sycom units remain traded, approximately 3% of the total

– ie units that have not accepted the Acucap offer or been

acquired directly by Growthpoint. The remaining 73.7% of

units are held by Acucap (with Growthpoint holding 23.0%).

PORTFOLIO

Last year I reported on the transaction with Hyprop, in terms

of which Sycom acquired the 50% interest in Somerset Mall

which it did not already own, and then sold the entire holding

to Hyprop at a price of R2.3bn, in consideration for which

Hyprop tendered almost all the Sycom units which it held and

which were subsequently cancelled. This was concluded on

1 October last year.

On 21 October last year, Sycom and Acucap announced the

acquisition of the Greenacres Shopping Centre, the largest

mall in Port Elizabeth, for a consideration of R1.016bn,

Sycom’s share of this being 50%. This promising purchase

was acquired on an initial yield of 7.7% and presents a

significant opportunity for expansion and upgrade. As

previously announced, Sycom is also proceeding with an

expansion of Vaal Mall (77.86% owned), which serves the

Vereeniging/Vanderbijlpark/Sasolburg area and which will

entail an investment of approximately R344m on our part.

During the past year, Sycom also entered into agreements to

dispose of three other properties. We were a minority (16%)

holder in Southgate Mall and Value Mart and took advantage

of an opportunity to exit at a price of R249m. Furthermore,

an agreement was entered into to sell the Discovery Building

in Sandton for R414m, a decision based on having a single

tenant and a relatively short remaining duration of the lease.

In the office segment, this disposal will be partly replaced by

a building in the Cape Town CBD, Roggebaai Place, close to

the Convention Centre. This is currently under construction

and nearly complete, and has a two-year rental underpin

from the developer.

GOVERNANCE

During the year, Sycom has continued to be served by the

same board. The Audit and Risk Committee has been ably

chaired by Brian Stocks, and Sello Moloko has provided

leadership for the Social and Ethics Committee. As an entity

which is managed by a third party and has no employees,

our governance requirements are relatively modest, but we

have sought to adhere to best practice without indulging in

activities which are non-essential and would entail expense

that would not be warranted. Thus, in view of the pending

merger and the considerably reduced number of unitholders,

our annual integrated report has been scaled down in terms

of overall appearance, while retaining at least the same level

of disclosure as in the past.


Chairman’s Report(continued)

FUTURE

The future of Sycom as an entity is now quite clearly in the

hands of Acucap as the major unitholder. It remains to be

seen how Growthpoint as the dominant holder of Acucap will

proceed to deal with the combined Acucap/Sycom. In the

meantime, the Sycom board continues to function as normal,

until such time as it may become redundant. However we

foresee the end of Sycom, as one of the first listed property

entities. This journey has been long and fruitful and I have no

doubt that the future of unitholders in the hands of Acucap

and Growthpoint will be equally, if not more, rewarding.

THANKS

I wish to express my thanks to my colleagues on the board

for their support during the year, and particularly to Brian

Stocks and Pat Flanagan for many hours spent dealing

with the transactions to which I have referred. Most notably,

we, and Sycom unitholders owe a deep gratitude and

appreciation to Paul Theodosiou, as chief executive, and

to his team – and not least to Baden Marlow, as financial

director who retires post year-end; his command of the

finances and figures will remain legendary and he will be

ably succeeded by Craig Kotze. Paul’s experience, skill and

wisdom has been an enormous resource to Sycom – through

a year which has had much potential for turmoil, given the

ownership changes, Paul has kept a firm hand on operations

and has always acted impeccably and in the best interests of

unitholders. It has been a pleasure to have worked with such

an outstanding group of people.

Geoff Everingham

Chairman

12 June 2014


Management Company’s Report

1. REVIEW OF RESULTS AND OPERATIONS

The board of Sycom Property Fund Managers Limited is

pleased to report a distribution of 95.16 cents per unit (cpu)

for the six months ended 31 March 2014. Together with the

interim distribution of 88.12 cpu, this gives unitholders an

annual distribution of 183.28 cpu, an increase of 4.7% over

the 2013 financial year.

2. CORPORATE ACTION

Merger with Acucap Properties Limited (“Acucap”)

On 31 March 2014, Acucap launched a general offer to

holders of Sycom units to swap these for shares in Acucap

on a ratio of 0.58 Acucap shares for every Sycom unit held.

The offer closed on 16 May 2014, and the acceptance

rate was approximately 95%, excluding the effects of the

Growthpoint position referred to below. The board considers

this a successful and highly satisfactory outcome.

Acquisition by Growthpoint Properties Limited

(“Growthpoint”)

Between 10 and 11 April 2014, Growthpoint acquired

approximately 31% of the issued units in Sycom, settling the

purchase consideration by issuing 1.102 Growthpoint shares

for every Sycom unit acquired. Although publicly supportive

of the merger between Acucap and Sycom, for regulatory

reasons, Growthpoint could not swap all of its Sycom units for

Acucap units under the terms of the offer referred to above,

and is accordingly left holding approximately 23% of Sycom’s

issued units. Growthpoint has also acquired a material

interest in Acucap.

3. PORTFOLIO INVESTMENT ACTIVITY

Vaal Mall

The expansion is set to commence in September 2014,

following delays in obtaining necessary approvals, some

of which may affect the final sizing of the project. The

delays are not expected to impact the forecast return on

the development.

Paarl Mall

A 2 850m2 expansion of Paarl Mall has been approved,

driven largely by a 1 900m2 expansion of Woolworths.

The total capital commitment is in the order of R68m with

an anticipated first year return of 8%.

Greenacres

Phase 1 of the redevelopment of Greenacres has been

approved and is expected to commence in August 2014.

This phase comprises the construction of 3 340m2 of retail

area in a new link mall on the southern side of Greenacres,

which will join the current Woolworths with the Shoprite Hyper

entrance. The total capital commitment for this phase is in

the order of R86m (Sycom share R43m) with an anticipated

first year return of 13.9%. Once completed, this phase will

reflect the modern and contemporary standard to which the

rest of the mall will be upgraded when the second and third

phases are completed. The total capital commitment for the

Greenacres project, including all non-income producing

refurbishment work and mall revitalisation, is in the order of

R280m (Sycom share R140m) with an anticipated yield of

7.5%, and is expected to be complete by March 2017.

Roggebaai Place

This building is nearing completion, and Sycom expects to

take transfer from the developer before the end of August.

There has been a steady flow of good quality leasing

enquiries, although the full rental for the first two years after

transfer is covered by a cash underpin from the developer.

4. LEASE EXPIRIES

The lease expiry profile by rental income is reflected in the

table below. The lease with Deloitte at The Woodlands has

been extended to 31 March 2020.

Total Retail Offices

March 2015 17.5% 8.5% 9.0%

March 2016 15.9% 12.6% 3.3%

March 2017 27.2% 12.1% 15.1%

March 2018 7.2% 3.4% 3.8%

March 2019 12.1% 3.2% 8.9%

thereafter 20.1% 1.7% 18.4%

100.0% 41.5% 58.5%


Management Company’s Report(continued)

5. BORROWINGS

Sycom has an approved total facility of R2.9 billion. Sycom’s gearing level is presently 33.9%. Taking into account the swaps

contracted as per the table below, Sycom’s hedged position at year-end was 18% and it will rise to 72% of current borrowings

by the time all contracted forward starting swaps become effective.

Interest rate hedging

Start date Maturity date Fixed rate

Notional

amount

Effective

rate

Fair value at

31 March 2014

Fair value at

31 March 2013

R’000 R’000 R’000

31 March 2014 31 March 2017 5.790% 200 000 7.290% 8 128 –

17 March 2014 17 March 2017 5.785% 200 000 7.285% 7 990 –

9 April 2014 9 April 2018 6.095% 100 000 7.595% 5 259 –

30 September 2014 29 September 2017 6.045% 200 000 7.545% 8 852 –

30 September 2014 30 September 2016 7.180% 500 000 8.680% – –

31 March 2015 29 March 2018 6.305% 300 000 7.805% 13 402 –

30 September 2015 28 September 2018 7.650% 300 000 9.150% 5 067 –

31 March 2016 31 March 2020 8.150% 100 000 9.650% 1 601 –

31 March 2016 31 March 2021 8.340% 100 000 9.840% 1 598 –

Total 2 000 000

6. VACANCIES AND BAD DEBTS

The table below provides details of Sycom’s vacancies at

March 2012, 2013 and 2014, expressed by gross lettable

area. The increase in Retail vacancies is largely attributed

to planned vacancies at Vaal Mall to accommodate the

expansion. The increase in Office vacancies is largely

as a result of an individual tenant failure at Harrowdene

Office Park.

March

2014

March

2013

March

2012

Retail vacancy 3.0% 1.6% 2.4%

Office vacancy 4.4% 2.7% 3.9%

Total vacancy 3.8% 2.2% 3.1%

The impairment provision at 31 March 2014 amounted to

R2.7m compared to R1.28m at 31 March 2013. Bad debts

written off decreased to R0.7m in the current year from the

R1.25m written off in the 2013 year.

7. EVENTS AFTER THE REPORTING DATE

Subsequent to the financial year end, Baden Marlow made

a decision to retire from his position as financial director of

Sycom Property Fund Managers Limited with effect from

20 June 2014. He will however remain on the Board as a

non-executive director.

The board is pleased to announce the appointment of

Baden's successor, Craig Kotze, as financial director of

Sycom Property Fund Managers Limited from the later of

21 June 2014 and one business day following the date of

receipt of approval of the Financial Services Board's approval

of his appointment.

Other than the Corporate Action detailed above there have

been no further significant events after the reporting date.

8. PROSPECTS

Sycom unitholders exchanging their Sycom units for Acucap

units are referred to the offer document, dated 31 March 2014

and available on the fund’s website (www.sycom.co.za), and

the joint announcement released by Acucap and Sycom on

SENS on 27 March 2014, for the forecast financial information

on Sycom and Acucap, post the Acucap Sycom merger

(“Forecast Financial Information”). The Forecast Financial

Information was, at the time, reviewed by KPMG Inc.

The board expects Sycom’s distribution growth to be in line

with the Forecast Financial Information for the year-ending

31 March 2015, that is, between 6% and 7%. This guidance

has not been reviewed or reported on by Sycom’s auditors.


Sustainability Report

The aggregate performance of the individual assets owned

by Sycom has enabled the Fund to provide investors with

real growth in distributions, measured cumulatively since the

Fund’s inception. The performance of Sycom’s portfolio over

time, and its ability to continue providing sustainable income

growth, is dependent on:

• Location – the Fund has restricted its investments to

selected commercial nodes in South Africa’s major

metropolitan areas, where there is good access to dense

residential catchment areas from which its tenants and

customers are drawn, and where there is a higher degree

of assurance as to municipal service delivery.

• Relevance to users – the Fund invests in assets that are

designed to be useful and appropriate to the needs of the

markets they serve.

• Condition and fitness for use – the Fund’s properties

are well-maintained, in terms of facilities management

programmes. They are also re-capitalised by way of

upgrades and refurbishments as the need arises to

ensure they remain fit for their intended purpose and

responsive to changing patterns of usage. This also

ensures that the Fund’s properties are able to compete

with other assets that operate in the same markets.

Furthermore, as new technologies become available,

properties are upgraded to improve their efficiency and

minimise environmental impact.

• Ability to grow rental income – this is particularly relevant

to the retail portfolio, where rentals depend on the

underlying trading densities of the retailers in Sycom’s

shopping centres. The Fund actively seeks ways of

improving trading conditions for tenants, including:

¡ improvements to customer access, parking and

egress

¡ improving tenant mix by replacing non-performing

brands with stronger retail offerings

¡ ensuring optimal location of tenants relative to their

segmental peers

¡ integrating promotional activities with tenant marketing

initiatives

¡ upgrading mall spaces and finishes, improving

shop fronts and lighting, and improving vertical

transportation where these need renewal

¡ containment of operating costs – service contracts

are centrally negotiated/tendered across a large

portfolio to ensure efficient cost structures. Initiatives

to measure and reduce electricity consumption are in

place, and the Fund works with tenants to assist them

with their own in-store energy efficiency programmes.

The Fund also ensures that it recovers operating costs

from tenants in accordance with lease contracts.

• Acquisitions and disposals – the Fund continues to seek

out and assess opportunities to acquire new office and

retail properties that meet its investment criteria and have

demonstrable growth prospects. At the same time, assets

that may no longer meet the Fund’s investment objectives

in terms of relative size, location or ability to generate

sustainable rental growth are sold through carefully

managed disposal programmes.

• Continuous operation – all of Sycom’s regional malls have

been fitted with stand-by generators capable of running

the malls during power failures. This will ensure that

retailers at Sycom’s malls can trade without interruption

and it will mitigate any threat to sustainability should

power failures become frequent or prolonged.

• Environmental footprint – this is referred to in more detail

on page 8 of the integrated annual report.

STAKEHOLDER ENGAGEMENT

Sycom’s main stakeholders are:

Unitholders

The fact that Sycom’s net income is distributed to unitholders

every six months means that equity investors play an

important role in the on-going re-capitalisation of the

business, to fund acquisitions, developments, refurbishments

and other capital projects. The Fund’s management team

meets with unitholders regularly, and results are presented

to unitholders every six months, reflecting the performance

of the property portfolio and the Fund. Unitholders and their

representatives are hosted on visits to the Fund’s properties

from time to time, and they are encouraged to make their

own independent visits in order to assess the performance

and sustainability of the portfolio. The Fund’s integrated

annual report is also an important means of communicating

all aspects of its operations, strategy and prospects to

unitholders, who will rely on this composite understanding

of the Fund and its property portfolio when providing future

equity capital.

Tenants

The primary interface between the Fund and its tenants is

through their daily use and occupation of leased premises

within the Fund’s portfolio and most of the interactions

between tenants and the Fund’s asset management team

take place at the tenant’s premises. These premises and the

properties within which they are located are central to the

conduct of its business.

Customers of tenants

The main point of contact between Sycom and customers/

clients of the Fund’s tenants is also at the property level,


Sustainability Report(continued)

where such users experience each property’s visual and

tangible qualities. Its suitability and appropriateness to their

use will determine future patterns of usage, and therefore the

sustainability of each property in the portfolio, and the Fund

as a whole.

Banks and debt capital markets

Like unitholders, banks and the debt capital markets play an

important role in providing the Fund with on-going access to

capital in order to sustain the growth of its property portfolio.

Their lending is typically based not only on an assessment of

the valuation of the Fund’s assets, but also on management’s

track record and its ability to generate sustainable and

growing revenue streams from the property portfolio.

Reliance is placed on independent property valuations as the

Fund negotiates loans and other forms of debt capital, and

also negotiates the roll-over of existing facilities.

Local authorities

Property rates are one of the principal sources of revenue

for local authorities. Sustainable growth in net rental

income generally leads to steadily increasing valuations

over time, a higher rates base, and improved revenues to

local authorities, from which services and amenities can

be improved and extended, feeding back into enhanced

sustainability for the Fund’s properties. Local authorities

also supply electricity and water, as well as systems to

manage storm water run-off, sewerage disposal and refuse

removal. All of these services and interactions are expressed

through the property portfolio, and influence the long-term

performance and sustainability of each property within its

respective local authority area.

Environmental agencies

Typically, their interest arises from any changes, additions or

extensions to any of the Fund’s assets where such changes

could have an effect on the natural environment within which

they operate. In particular, activities that affect water courses

are carefully evaluated. Once again, the Fund’s interaction

with this stakeholder group centres on its property portfolio

and the physical environment within which it operates.

Professional consultants

The Fund engages professional consultants, such as

architects, engineers and quantity surveyors, to provide

professional advice relating to the development, extension or

refurbishment of its properties, and hence their interface with

the Fund is principally at this level. Other professionals such

as lawyers and auditors interact with the Fund at a corporate

level, and the Fund engages with them by way of formal

appointments to carry out specified and agreed work relating

to the Fund.

Property service providers

Providers of property services interact with the Fund mainly

at a direct property level, where their services are rendered.

Prices are negotiated or tendered based on the nature and

extent of these services, and this is a function of the physical

attributes of the properties in Sycom’s portfolio, such as their

size, location, number of entrances, parking configuration,

internal specifications, landscaping and tenant mix.

Nearby property owners

Lastly, the Fund’s properties also play a role in sustaining

the nodes in which they are located, and this forms a

common interest with property owners in the same locations.

Sustainability of individual properties is integrally linked to the

sustainability of the wider areas within which they operate,

and where matters arise that could affect such locations, the

Fund engages with other interested and affected property

owners to find mutually beneficial outcomes.

MANAGEMENT OF THE FUND AND BB-BEE

As a CISP, Sycom is required to have an external manager

that acts in terms of the CISCA and Sycom’s Trust Deed.

Its manager is Sycom Property Fund Managers Limited

(‘SPFM’). SPFM has no employees, and is wholly owned by

Acucap Properties Limited (‘Acucap’), a listed REIT, to whom

the board has delegated Sycom’s management functions.

Acucap has experienced internal asset management and

property administration teams that are responsible for

managing the Sycom portfolio. There has been negligible

turnover in senior asset management and administration

staff, and employees are incentivised through a unit purchase

scheme in Acucap that provides strong alignment to the

interests of unitholders in both Funds.

Acucap is a level 6 contributor in terms of the DTI Codes

of Good Practice, and through SPFM, Sycom benefits from

this recognition at a procurement level. Sycom’s board is

committed to the values inherent in broad based BEE, and

will be exploring opportunities for the Fund to participate

in ownership, enterprise development and socio-economic

development initiatives of its own.

ENVIRONMENTAL FOOTPRINT

Total electricity consumed in the 12 months ended 31 March

2014, measured in kilowatt hours per square metre of gross

lettable area, was 342 kWh/m2 for retail space and 185 kWh/m2

for office space, compared with 346 kWh/m2 for retail space

and 185 kWh/m2 for office space in the previous comparable

12 month period. This reflects less electricity used in Sycom’s

retail portfolio which is a pleasing return on efforts by both

Sycom and its tenants to contain consumption.


A substantial part of Sycom’s sustainability strategy is to

minimise electricity consumption through the adoption of

appropriate green technologies, and by encouraging tenants

to do the same. This metric will be measured annually to

gauge the fund’s success in achieving its objective.

Water used at all Sycom’s retail properties, measured in

kilolitres per square metre of gross lettable area, was

0.99 kL/m2, as against 1.1 kL/m2 in the prior comparative

period, a small decrease of 10%.

Sycom’s properties also have a number of other

environmental impacts. They generate significant volumes

of storm water run-off, and on-going maintenance is carried

out to ensure that all such water is properly channelled into

municipal storm water management systems. Large amounts

of refuse are generated at Sycom’s properties, particularly at

its shopping malls, where provision is made to separate out

glass, plastic and paper for re-cycling purposes.

Lastly, the Fund pays specific attention to landscaping at

its properties, firstly to improve their aesthetic appeal and

soften their impact on the built environment, and secondly

to enhance sustainability through the use of indigenous and

water-wise plants as far as possible.

SUSTAINABILITY MEASUREMENT

KEY PERFORMANCE INDICATORS

People Property Corporate Environment

Electrical usageBoard evaluationVacancy rateStaff retention by

manager:

Corporate

Asset management

Senior administration

Maintenance and re-capitalisation spend

Tenant retention

Staff health and safety

Physical safeguarding

Insurance cover

OHS Act compliance

Water usageCorporate governance

compliance

Financing and interest rate hedging

BB-BEE participation

Recycling

Regulatory compliance

Implementation of green

building principles

Consistent real growth In distributions and maximising

sustainable total returns

Tenant diversification


Sustainability Report(continued)

Key Performance Indicator 2014 2013

Unitholder returns

Distribution growth 4,7% 5.02%

Total return (13.4%) 20.60%

Consumer Price Index 6% 5.90%

People

Health and safety incidents reported – –

Property

Vacancy 3,8% 2.2%

Maintenance and recapitalisation spend as a % of asset value 0,78% 0.94%

Tenant diversification: number of tenants 478 613

Comprehensive insurance Yes Yes

OHS Act non-compliance incidents – –

Corporate and financial

Board evaluation Yes Yes

Corporate governance compliance Yes Yes

Interest rate hedging %* 18% 53%

Environment

Electricity usage 246.4 kWh/m2 252.5 kWh/m2

Water usage 0.99 kL/m2 1.1 kL/m2

Recycling Yes Yes

* This will rise to 72% of current borrowings by the time all contracted forward starting swaps become effective


Corporate Governance

GOVERNANCE

The Fund is a Collective Investment Scheme in Property and is managed by Sycom Property Fund Managers Limited (‘SPFM’) in terms of the Collective Investments Schemes Control Act, 2002. The Board of Directors of SPFM provides the leadership and governance framework within which the Fund operates to achieve its objectives through the principled and ethical implementation of its strategy, supporting a fair and just environment in which the interests of all stakeholders are recognised and protected. The board endorses the guidelines of the Code of Corporate Practice and Conduct as contained in the King III Report on Corporate Governance in South Africa in all material respects, and recognises the need to conduct business ethically, whilst building a sustainable business that is sensitive to both the short-term and the long-term impact of its activities on the economy, society and the environment. Sycom is compliant with King III unless otherwise stated in this Integrated Annual Report.

SPFM has a majority of non-executive directors, with the board of directors for the year ended 31 March 2014 comprising three executive directors and five independent non-executive directors. Although neither the Fund nor SPFM employs any staff, and all management and administrative functions are contracted out to third parties, the board plays an active role in ensuring that service providers are properly staffed with people of appropriate skills and who are properly incentivised, and that such service providers meet the Fund’s performance expectations. Consequently the Fund itself has no worker participation or affirmative action programmes. The board is conscious of the need to uphold and support applicable legislation. To this end, the board ensures that all occupational health and safety provisions are enforced at the buildings in the portfolio, environmental impact studies are undertaken where required and the provisions of the National Heritage Resources Act are complied with before embarking on any new property development.

The nominations policy of the board of directors formalises the process for appointments to the Sycom board. In line with the recommendations of the King Code of Corporate Practices and Conduct, director appointments are formal and transparent and a matter for the board of directors as a whole. Directors are appointed to hold office for an unspecified period and at each financial year-end one third is requested to retire by rotation and may offer themselves for re-election. The Chairman and Chief Executive Officer (CEO) are appointed to hold office for renewable periods not exceeding five and three years respectively. There is a clear division of responsibility at board level and the role of Chairman and CEO are separate. A formal board evaluation process is undertaken in alternate years, in terms of which each board member is subject to a detailed peer review, with the results independently collated by KPMG and reported to the Chairman of the board, who then meets with each board member individually to discuss the results of the evaluation. This ensures that the effectiveness of the board and the contribution made by each board member is subject to on-going review and assessment.

The board of directors has considered and is satisfied that the company secretary has the appropriate competence, qualifications and experience and that an arm's length relationship is maintained between the board of directors and the company secretary, who is not also a director.

Audit and Risk Committee

The audit and risk committee consists of three independent

non-executive directors, all of whom are financially literate.

Formal terms of reference have been established and

during the year it conducted its affairs in compliance with

its constitution. The mandate of the committee provides the

board with assurance regarding reliability of information used

by the directors in their assessment of the Fund’s financial

position and risk management. The audit committee is also

responsible for the appointment of the Fund’s auditors, the

financial statements and the evaluation of the effectiveness

of systems of internal control and corporate governance.

The external auditors, who attend the audit committee

meetings, are responsible for reporting on whether the

financial statements are fairly presented in conformity with

International Financial Reporting Standards (‘IFRS’). The

audit committee monitors the independence of the external

auditors and it pre-approves contracts for non-audit services

to be rendered by the external auditor.

In compliance with section 13.46 (h) of the JSE Listings

Requirements, the committee has adopted and implemented

an appropriate risk management policy, which policy is in

accordance with industry practice and specifically prohibits

the Fund from entering into derivative transactions that are

not in the normal course of its business. The committee

has monitored compliance with the aforementioned policy

throughout the 2014 financial year and the Fund has, in

all material respects, complied with this policy during the

financial year.

Investment Committee

The management company has established an investment

committee to recommend and advise the board on

acquisitions, sales and new development proposals. The

committee meets as often as is required.

INTERNAL CONTROLS AND COMBINED ASSURANCE

Acucap Properties Limited, acting through its subsidiary

Acucap Management Services (‘AMS’) has been appointed

by SPFM to administer and manage the property portfolio.

AMS is responsible for the maintenance of adequate

accounting records, internal control systems and for

safeguarding the assets of the Fund and SPFM. It is subject

to an annual independent audit by KPMG, including a

review of its own internal control and accounting systems.

Sycom’s cash distributive structure means that there is a

low probability of cash misappropriation going undetected

for more than one distribution cycle, and the Fund carries

insurance for such loss equivalent to a full six months of

distribution. The Fund’s physical assets are, by their nature,

not susceptible to fraud and misappropriation. Controls

around the completeness of revenue from the Fund’s

properties are enhanced by annual external valuations that

reconcile gross lettable areas to lease details. The board is

therefore satisfied that there is sufficient confidence as to

combined assurance to obviate the need for, and cost of,

a separate internal audit function.


Corporate Governance(continued)

ATTENDANCE

During the year under review, four board meetings, three audit committee meetings and two social and ethics committee

meetings were held, and the attendance at these meetings is set out in the table below:

Director Board

Audit

and Risk

Committee

Social

and Ethics

Committee

Meetings

attended

Meetings

eligible

%

attendance

Number of meetings 4 3 2 9

Non-executive

GK Everingham (Chairman) 4 2 6 6 100%

MS Moloko (Deputy chairman) 4 2 2 8 9 89%

BM Stocks (Audit committee chairman) 3 3 6 7 86%

JPD Flanagan (Investment committee

chairman) 4 4 4 100%

FM Berkeley 4 3 7 7 100%

Executive

GR Jones 4 4 4 100%

CB Marlow 4 4 4 100%

PA Theodosiou 4 2 6 6 100%

Overall attendance 31 8 6 45 47 96%

Maximum attendance 32 9 6 47

% attendance 97% 89% 100%

RISK MANAGEMENT

Key to Sycom’s sustainability is an effective understanding and management of risk factors that could affect the Fund’s

performance, and its ability to meet its primary objective of delivering sustainable real growth in distributions per unit. The

major risk factors and the Fund’s response are tabulated below:

Risk factors affecting sustainability

Risk category Risk identification Response

Skills retention by manager

Reduced asset management and administrative capacity, operational instability, poor service delivery, risk to tenant retention, and risk to accuracy of financial reporting.

Ensuring that the manager’s remuneration policies attract and retain suitable staff, that staff are appropriately trained and developed, and that staff are properly incentivised.

Destruction of assets

Buildings destroyed or rendered untenantable due to fire, structural failure or force majeure.

Placing adequate insurance cover, including cover for loss of rental income, and ensuring cover is placed through reputable channels, with sound re-insurance.

Major tenant insolvency

Significant irrecoverable rental, large vacancy, potential reletting risk due to size and location of vacancies left behind

Implementing appropriate tenant selection criteria, and ensuring that all properties retain a generic appeal to a wide range of similar tenants so that vacancies arising out of tenant insolvency can be easily re-let.

Lease expiry risk The Fund is exposed to individual large lease expiries which, if not successfully concluded, could materially affect financial results.

Remaining closely engaged with tenants throughout their tenure, developing an awareness of their needs, and ensuring their premises remain fit for purpose throughout their occupancy. The natural growth of the fund also dilutes the level of expiry risk associated with individual tenants.

Uncontrolled increase in administered prices

Reduced net property income as tenants compensate for higher operating costs in their businesses with a lower receptiveness to rental increases.

Planning and implementing methods to measure and reduce consumption of utilities, engaging actively with valuers and local authorities to contest excessive rates increases, ensuring trading platforms deliver sufficient top-line growth for tenants to be able to absorb increasing costs of occupancy.

Deterioration of municipal administration and service delivery

Incorrect utility billings, delays in plan approvals for development and extension of assets, and delays in property transfers for acquisitions and disposals.

Privatising meter reading and utility recovery, and working more closely with professional consultants to optimise local authority approval processes.

Interest rates movements

Volatility in distributions An appropriate portion of all facilities to be hedged through swap mechanisms for varying periods.


Risk category Risk identification Response

Adverse changes in nodal characteristics

Key nodes where the fund’s assets are located become degraded or new nodes develop in competition to existing localities.

Refresh, recapitalise and redevelop assets to counter adverse changes and compete with newer offerings, or consider disposing of properties where long-term growth prospects are impaired.

Maintenance of buildings

Properties in the portfolio are not adequately maintained, diminishing their fitness for use, reducing rent-earning capacity and threatening tenant retention.

Adhering to a preventative maintenance programme, and periodically recapitalising properties where more fundamental improvement is called for.

Information Technology

Failure of the management company’s IT system and loss of records, which could undermine the completeness and accuracy of rent receipts, creditor payments and general accounting functions.

The management company has an IT policy in terms of which a dual server runs off-site, with daily back-up. Buildings where IT infrastructure operates are fully Occupational Health and Safety (OHS) Act compliant and operating environments are appropriately controlled to ensure safety and continuity of operation.

Risk factors affecting sustainability (continued)

King III compliance checklist

P – Compliant U – Under review X – Non-compliant

P – Partially compliant N/A = Not applicable

CHAPTER 1: ETHICAL LEADERSHIP AND CORPORATE CITIZENSHIP

1.1 The board should provide effective leadership based

on an ethical foundation (also see 2.3). P

1.2 The board should ensure that the Fund and SPFM

are and are seen to be responsible corporate citizens

(also see 2.4). P

1.3 The board should ensure that the Fund’s and SPFM’s

ethics are managed effectively (also see 2.5). P

CHAPTER 2: BOARDS AND DIRECTORS

2.1 The board should act as the focal point for and

custodian of corporate governance. P

2.2 The board should appreciate that strategy, risk,

performance and sustainability are inseparable. P

2.3 The board should provide effective leadership based

on an ethical foundation. P

2.4 The board should ensure that the Fund and SPFM are

and are seen to be responsible corporate citizens. P

2.5 The board should ensure that the Fund’s and SPFM’s

ethics are managed effectively. P


have an effective and independent audit committee

(also see 3.1). P

2.7 The board should be responsible for the governance

of risk codes and standards (also see 4.1). P

2.8 The board should be responsible for information

technology (IT) governance (also see 5.1). P


comply with applicable laws and consider adherence

to non-binding rules, codes and standards (also

see 6.1). P

2.10 The board should ensure that there is an effective risk-

based internal audit (also see 7.1). N/A: The board

is satisfied that there is sufficient confidence as to

combined assurance to obviate the need for, and cost

of, a separate internal audit function.

2.11 The board should appreciate that stakeholders’

perceptions affect the Fund’s reputation. P

2.12 The board should ensure the integrity of the integrated

report (also see 9.1). P

2.13 The board should report on the effectiveness of the

Fund’s system of internal controls. P

2.14 The board and its directors should act in the best

interests of the Fund. P

2.15 The board should consider business rescue

proceedings or other turnaround mechanisms as soon

as the Fund and SPFM are financially distressed as

defined in the Companies Act. P

2.16 The board should elect a chairman of the board who

is an independent non-executive director. The CEO

of the Fund and SPFM should not also fulfil the role of

chairman of the board. P

2.17 The board should appoint the CEO and establish a

framework for the delegation of authority. P

2.18 The board should comprise a balance of power, with

a majority of non-executive directors. The majority of

nonexecutive directors should be independent. P

2.19 Directors should be appointed through a formal

process. P

2.20 The induction, and ongoing training and development,

of directors should be conducted through formal

processes. P


Corporate Governance(continued)

2.21 The board should be assisted by a competent, suitably

qualified and experienced company secretary. P

2.22 The evaluation of the board, its committees and the

individual directors should be performed every year.

P: Formal evaluations are undertaken in alternate

years.

2.23 The board should delegate certain functions to well

structured committees but without abdicating its own

responsibilities. P

2.24 A governance framework should be agreed between

the group and its subsidiary boards. N/A: There are no

executive subsidiary boards.

2.25 SPFM should remunerate directors and executives

fairly and responsibly. P

2.26 SPFM should disclose the remuneration of each

individual director and certain senior executives. N/A:

No executive staff are employed by the Fund or SPFM.

2.27 Unitholders should approve the Fund’s and SPFM’s

remuneration policy. N/A: The Executives and staff

are all employed by the Acucap Properties Limited

Group (“Acucap”) and governed by Acucap’s

remuneration policy.

CHAPTER 3: AUDIT COMMITTEE


have an effective and independent audit committee. P

3.2 Audit committee members should be suitably skilled and

experienced independent non-executive directors. P

3.3 The audit committee should be chaired by an

independent non-executive director. P

3.4 The audit committee should oversee integrated

reporting. P

3.5 The audit committee should ensure that a combined

assurance model is applied to provide a coordinated

approach to all assurance activities. U: The combined

assurance model is being considered.

3.6 The audit committee should satisfy itself of the

expertise, resources and experience of the Fund’s and

SPFM’s finance function. P

3.7 The audit committee should be responsible for

overseeing of internal audit. N/A, see 2.10.

3.8 The audit committee should be an integral component

of the risk management process. P

3.9 The audit committee is responsible for recommending

the appointment of the external auditor and

overseeing the external audit process. P

3.10 The audit committee should report to the board and

unitholders on how it has discharged its duties. P

CHAPTER 4: THE GOVERNANCE OF RISK

4.1 The board should be responsible for the governance

of risk. P

4.2 The board should determine the levels of risk

tolerance. P

4.3 The risk committee or audit committee should assist

the board in carrying out its risk responsibilities. P

4.4 The board should delegate to management the

responsibility to design, implement and monitor the

risk management plan.P

4.5 The board should ensure that risk assessments are

performed on a continual basis. P

4.6 The board should ensure that frameworks and

methodologies are implemented to increase the

probability of anticipating unpredictable risks. P

4.7 The board should ensure that management considers

and implements appropriate risk responses. P

4.8 The board should ensure continual risk monitoring by

management. P

4.9 The board should receive assurance regarding the

effectiveness of the risk management process. P

4.10 The board should ensure that there are processes in

place enabling complete, timely, relevant, accurate

and accessible risk disclosure to stakeholders. P

CHAPTER 5: THE GOVERNANCE OF INFORMATION TECHNOLOGY

5.1 The board should be responsible for information

technology (IT) governance. P

5.2 IT should be aligned with the performance and

sustainability objectives of the Fund and SPFM. P

5.3 The board should delegate to management

the responsibility for the implementation of an

IT governance framework. P

5.4 The board should monitor and evaluate significant

IT investments and expenditure. P

5.5 IT should form an integral part of the Fund’s risk

management. P

5.6 The board should ensure that information assets are

managed effectively. P

5.7 A risk committee and audit committee should assist

the board in carrying out its IT responsibilities. P


CHAPTER 6: COMPLIANCE WITH LAWS, RULES, CODES AND STANDARDS


comply with applicable laws and consider adherence

to nonbinding rules, codes and standards. P

6.2 The board and each individual director should have a

working understanding of the effect of the applicable

laws, rules, codes and standards on the Fund, SPFM

and their businesses. P

6.3 Compliance risk should form an integral part of the

Fund’s and SPFM’s risk management process. P

6.4 The board should delegate to management the

implementation of an effective compliance framework

and processes. P

CHAPTER 7: INTERNAL AUDIT

7.1 The board should ensure that there is an effective risk

based internal audit. N/A: see 2.10

7.2 Internal audit should follow a risk based approach to

its plan. N/A: see 2.10

7.3 Internal audit should provide a written assessment of

the effectiveness of the Fund’s system of control and

risk management. N/A: see 2.10

7.4 The audit committee should be responsible for

overseeing internal audit. N/A: see 2.10

7.5 Internal audit should be strategically positioned to

achieve its objectives. N/A: see 2.10

CHAPTER 8: GOVERNING STAKEHOLDER RELATIONSHIPS

8.1 The board should appreciate that stakeholders’

perceptions affect the Fund’s and SPFM’s

reputation. P

8.2 The board should delegate to management to

proactively deal with stakeholder relationships. P

8.3 The board should strive to achieve the appropriate

balance between its various stakeholder groupings, in

the best interests of the Fund. P

8.4 The Fund and SPFM should ensure the equitable

treatment of unitholders. P

8.5 Transparent and effective communication with

stakeholders is essential for building and maintaining

their trust and confidence. P

8.6 The board should ensure that disputes are resolved as

effectively, efficiently and expeditiously as possible. P

CHAPTER 9: INTEGRATED REPORTING AND DISCLOSURE

9.1 The board should ensure the integrity of the Fund’s

integrated report. P

9.2 Sustainability reporting and disclosure should be

integrated with the Fund’s financial reporting. P

9.3 Sustainability reporting and disclosure should be

independently assured. N/A: Sycom’s systems and

information not considered by the board to be mature

enough to support independent assurance.


Board of Directors

GEOFF EVERINGHAM

(Independent non-executive Chairman)

Geoff is Emeritus Professor of accounting at the University

of Cape Town and is a well-known author on accounting and

corporate governance matters. He has served as a director

of the Victoria and Alfred Waterfront Company, and on the

board of Transnet, as well as the Independent Regulatory

Board for Auditors, the Accounting Practices Committee of

the South African Institute of Chartered Accountants, and on

the JSE’s GAAP Monitoring Panel.

PAUL THEODOSIOU

(Chief Executive Officer)

Paul is a Chartered Accountant and a former partner of

KPMG. He moved into commerce in 1990 focusing on retail

and commercial property development. Paul formed his

own property investment company in 1995, building a close

relationship with NIB Property Finance (NIB), and in 2001

he partnered NIB in the promotion and subsequent listing of

Acucap where he is the managing director. Paul has been the

Chief Executive Officer of SPFM since October 2008.

BADEN MARLOW

(Non-independent non-executive Director)

Baden is a Chartered Accountant and was the Chief Financial

Officer of Acucap from March 2002 and the Financial Director

of SPFM from October 2009 until he resigned as financial

director at the end of July 2014. He spent eight years as

Chief Financial Officer of a diversified retail and property

business before joining Acucap and SPFM.

FRANK BERKELEY

(Independent non-executive Director)

Frank is the Managing Executive of Nedbank Corporate

Property Finance. A Chartered Accountant, Frank is also

a director of Acucap Properties Limited. Frank has been

a member of Sycom’s Board since 1999.

GAVIN JONES

(Executive Director)

A town planner, Gavin joined the development arm of Colliers

in 1996, before spending five years with Woolworths as a

senior real estate manager. Gavin heads the retail asset

management team of Acucap Properties Limited and SPFM.

SELLO MOLOKO

(Independent non-executive Deputy Chairman)

Sello has been in financial services for more than 20 years.

He has a wealth of actuarial consulting experience and

asset management experience. He is the former deputy

CEO of Brait Asset Managers and former CEO of Old Mutual

Asset Managers. Sello left the corporate world to pursue his

own business interests and formed Thesele Group, where

he is Executive Chairman. Sello is currently the Chairman

of Sibanye Gold, the Chairman of Alexander Forbes and

serves as a director of Acucap Properties Limited, SPFM and

General Reinsurance Africa.

BRIAN STOCKS


Brian was joint managing director of Stock and Stocks

Construction and Property Group for five years, and

thereafter was Executive Chairman of Southern Sun

Timesharing for 11 years, a period during which he played

a leading role in establishing the timeshare industry in

South Africa. From 1993 to 2007, he also served as a

non-executive director of the Airports Company of

South Africa, chairing both the audit and commercial

committees. From 1997 to date he has been Executive

Chairman of Sun International Vacation Club.

PAT FLANAGAN


Pat has been in the property industry for the past forty

years. He founded RMS Syfrets in 1979 which later became

Colliers International and he is presently a co-owner of

the Flanagan & Gerard Group. He is recognised as one

of South Africa’s foremost retail developers, and some of

the major shopping malls completed by his development

business include Paarl Mall, Vaal Mall, Highveld Mall, New

Redruth Village and The Mall of the North. Pat has served

on the Board of Directors of Sycom since 1999.


ANNUAL FINANCIAL STATEMENTS

SYCOM PROPERTY FUND


Annual Financial StatementsSycom Property Fund

Contents Pages

Audit and Risk Committee Report 19

Management Company’s Responsibility Statement 20

Independent Auditor’s Report 21

Statements of Financial Position 22

Statements of Profit or Loss and Other Comprehensive

Income 23

Statements of Changes in Unitholders’ Funds 24

Statements of Cash Flows 26

Notes to the financial statements 27

Unaudited supplementary schedules 71 – 74


The Sycom Audit and Risk Committee (“the Committee”) is

a formal committee of the board of Sycom Property Fund’s

management company, Sycom Property Fund Managers

Limited (“the company”), and operates within written

terms of reference. The Committee has an independent

role with accountability to both the board and unitholders.

The Committee’s responsibilities include the statutory duties

prescribed by the Companies Act of South Africa, activities

recommended by King III and the responsibilities assigned

by the board. The Committee meets at least three times

per year.

The Committee currently comprises three independent

non-executive directors who are all suitably skilled directors.

The Committee members are Brian Stocks (Chairman),

Sello Moloko and Frank Berkeley. Abridged curriculum

vitae of the committee members appear on page 16 of the

Integrated Annual Report.

The Committee and external professionals review the

on-going effectiveness of the internal financial and operating

controls and frameworks on behalf of the board of directors.

The external auditors report to the Committee who review

the external audit findings. The Committee monitors the

independence of the external auditors and is of the view that

the external auditors are independent of the company and of

Sycom Property Fund. The Committee is responsible for the

appointment of the external auditors. The Committee

pre-approves contracts for non-audit services to be rendered

by the external auditor in terms of a board approved policy.

The minutes of Committee meetings are open for inspection

by members of the board of directors. There is close

communication between the board of directors, the

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 the inadequacy of the

internal control environment.

Sycom Property Fund is managed by Acucap Properties

Limited (Acucap), the 100% shareholder of the company,

which is the manager in terms of the Trust Deed. Acucap has

a small management team and a flat organisational structure,

which does not support a separate internal audit function.

The Committee has assessed and noted that the financial

director has the appropriate expertise and experience

required for the position. Everyone in the company and/

or entities affiliated with the company has access to the

Chairman, the Deputy Chairman and the Chairman of the

Audit Committee, and external contact to the aforementioned

is available via the Company Secretary.

The Committee has evaluated the consolidated and separate

annual financial statements of Sycom Property Fund and

Sycom Property Fund Managers Limited for the year-ended

31 March 2014 and based on the information provided to

the Committee, considers that they comply, in all material

respects, with the requirements of the Companies Act of

South Africa (to the extent required), and International

Financial Reporting Standards. The Committee concurs with

the board of directors and management that the adoption of

the going concern premise in the preparation of the financial

statements is appropriate. The Committee has therefore,

at their meeting held on 2 June 2014, recommended the

adoption of the consolidated and separate annual financial

statements by the board of directors.

BM Stocks

Audit and Risk Committee Chairman

12 June 2014

ANNUAL FINANCIAL STATEMENTS: SYCOM PROPERTY FUND

Audit and Risk Committee Reportfor the year ended 31 March 2014


Management Company’s Responsibility Statementfor the year ended 31 March 2014

The management company is responsible for the preparation

and fair presentation of the consolidated and separate annual

financial statements of Sycom Property Fund, comprising

the statements of financial position at 31 March 2014, and

the statements of profit or loss and other comprehensive

income, changes in unitholders’ funds and cash flows for the

year then ended, and the notes to the financial statements

which include a summary of significant accounting policies

and other explanatory notes, in accordance with International

Financial Reporting Standards and the requirements of the

Collective Investment Schemes Control Act, 2002.

The management company is also responsible for such

internal control as is determined necessary to enable

the preparation of financial statements that are free from

material misstatement, whether due to fraud or error, and for

maintaining adequate accounting records and an effective

system of risk management, as well as the preparation of

the supplementary schedules included in these financial

statements.

The management company has made an assessment of

the ability of Sycom Property Fund and its subsidiaries to

continue as going concerns and has no reason to believe

that the businesses will not be going concerns in the year

ahead.

The auditor is responsible for reporting on whether the

consolidated and separate financial statements are fairly

presented in accordance with the applicable financial

reporting framework.


APPROVAL OF THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS

The consolidated and separate annual financial statements of Sycom Property Fund, as identified in the first paragraph, were

approved by the management company on 12 June 2014 and signed by

GK Everingham PA Theodosiou

Chairman Chief Executive Officer

Sycom Property Fund Managers Limited Sycom Property Fund Managers Limited

Secretary

The Management Company’s Secretary is

HH-O Steyn CA(SA)

Business address: Suite A11, Westlake Square

Westlake Drive, Westlake

Postal address: PO Box 31079, Tokai, 7966


Independent Auditor’s Reportto the Unitholders of Sycom Property Fund

We have audited the group financial statements and the

financial statements of Sycom Property Fund, which comprise

the statements of financial position at 31 March 2014, and the

statements of profit or loss and other comprehensive income,

changes in unitholders’ funds and cash flows for the year

then ended, and the notes to the financial statements, which

include a summary of significant accounting policies and

other explanatory notes, as set out on pages 22 to 70.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The management company is responsible for the preparation

and fair presentation of these financial statements

in accordance with International Financial Reporting

Standards and the requirements of the Collective Investment

Schemes Control Act, 2002, and for such internal control

as the directors determine is neccessary to enable the

preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in

accordance with International Standards on Auditing. Those

standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the

auditor’s judgement, including the assessment of the risks

of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments,

the auditor considers internal control relevant to the entity’s

preparation and fair presentation of the financial statements

in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of

accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained

is sufficient and appropriate to provide a basis for our

audit opinion.

OPINION

In our opinion, these financial statements present fairly, in all

material respects, the consolidated and separate financial

position of Sycom Property Fund at 31 March 2014, 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 Collective Investment

Schemes Control Act, 2002.

KPMG Inc.

PJ Conradie

Chartered Accountant (SA)

Registered Auditor

Director

12 June 2014

1 Mediterranean Street

Foreshore

Cape Town


Statements of Financial Positionas at 31 March 2014

Group 2014 Group 2013 Fund 2014 Fund 2013

Note R’000 R’000 R’000 R’000

Assets

Property assets 8 196 492 8 378 608 8 021 492 8 208 608

Investment properties and related receivables 8 7 528 383 8 378 608 7 353 383 8 208 608

Investment properties 7 307 028 8 120 486 7 138 594 7 957 273

Non-current straight-lining lease receivable 182 052 232 662 175 913 226 505

Current straight-lining lease receivable 39 303 25 460 38 876 24 830

Investment properties held for sale and related receivables 9 668 109 – 668 109 –

Investment properties held for sale 659 244 – 659 300 –

Straight-lining lease receivable 8 865 – 8 809 –

Other non-current assets 461 121 310 722 639 291 487 560

Listed investment 10 409 224 310 722 409 224 310 722

Derivative financial instruments 18 51 897 – 51 897 –

Investments in subsidiaries 11 – – 631 631

Loans to subsidiary 11 – – 177 539 176 207

Current assets 393 807 298 019 390 431 294 869

Loans to subsidiary 11 – – 1 582 2 096

Rental and other receivables 13 80 185 82 894 77 165 79 780

Cash and cash equivalents 14 303 304 206 745 301 366 204 613

Dividends receivable 10 318 8 380 10 318 8 380

Total assets 9 051 420 8 987 349 9 051 214 8 991 037

Unitholders’ funds and liabilities

Unitholders’ funds 5 776 880 6 707 343 5 779 966 6 714 166

Unitholders’ capital 15 1 947 048 2 579 048 1 947 048 2 579 048

Non-distributable reserve 3 829 832 4 128 295 3 832 918 4 135 118

Non-current liabilities 2 903 795 1 933 545 2 903 795 1 933 545

Borrowings 16 2 903 795 1 900 808 2 903 795 1 900 808

Derivative financial instruments 18 – 32 737 – 32 737

Current liabilities 370 745 346 461 367 453 343 326

Trade and other payables 17 125 652 111 409 122 350 108 264

Derivative financial instruments 18 54 643 9 820 54 643 9 820

Unitholders for distribution 190 450 225 232 190 450 225 232

Loan from subsidiary 11 – – 10 10

Total equity and liabilities 9 051 420 8 987 349 9 051 214 8 991 037



Statements of Profit or Loss and Other Comprehensive Income for the year ended 31 March 2014

Group 2014

Group 2013

Fund 2014

Fund 2013

Note R’000 R’000 R’000 R’000

Revenue 685 699 651 352 669 086 643 400

Contractual rental revenue and recoveries 701 389 621 425 684 073 604 430

Straight-lining of rental revenue adjustment 8 (15 690) 29 927 (14 987) 38 970

Direct property operating expenses (133 589) (109 791) (127 751) (102 910)

Loss on disposal of investment property (19 431) – (19 431) –

Selling costs on investment properties held for sale (553) – (553) –

Net rental and related revenue 532 126 541 561 521 351 540 490

Investment income 19 973 15 961 31 510 26 152

Dividend from listed investment 10 19 973 15 961 19 973 15 961

Income from subsidiary company 11 – – 11 537 10 191

Fair value changes on investment property and listed investment 517 922 721 507 513 482 718 773

Fair value gain on investment properties 8 436 400 719 667 431 960 716 933

Fair value gain on listed investment 10 81 522 1 840 81 522 1 840

Administrative expenses (42 131) (38 429) (42 131) (38 429)

Profit before net finance costs 1 027 890 1 240 600 1 024 212 1 246 986

Net finance costs (128 610) (60 227) (128 669) (60 304)

Interest income 4 43 561 37 500 43 502 37 423

Interest expense 4 (160 085) (91 537) (160 085) (91 537)

Net change in fair value of derivative financial instruments at fair value through profit and loss 4 (12 086) (6 190) (12 086) (6 190)

Profit before taxation 5 899 280 1 180 373 895 543 1 186 682

Taxation 6 (556) (96) (556) –

Profit for the year 898 724 1 180 277 894 987 1 186 682

Other comprehensive income for the year

Net change in fair value of cash flow hedges* 51 897 – 51 897 –

Other comprehensive income for the year 51 897 – 51 897 –

Total comprehensive income for the year 950 621 1 180 277 946 884 1 186 682

Basic and diluted earnings per unit (cents)** 7 378.36 474.76

* The fair value movement on the cash flow hedges may be reclassified to profit and loss

** The fund has no dilutionary instruments in place


Statements of Changes in Unitholders’ Fundsfor the year ended 31 March 2014

Capital

Non- distributable

reserve*Retained earnings Total

GROUP R’000 R’000 R’000 R’000

Balance at 31 March 2012 2 579 048 3 383 147 – 5 962 195

Transactions with owners, recorded directly in equity – – – –

Total comprehensive income for the year – – 1 180 277 1 180 277

Transfer to non-distributable reserve – 745 148 (745 148) –

Unitholders distribution – – (435 129) (435 129)

Balance at 31 March 2013 2 579 048 4 128 295 – 6 707 343

Transactions with owners, recorded directly in equity

Issue of 33 027 523 units in May 2013 ** 849 468 – 9 492 858 960

Proceeds 900 000 – – 900 000

Capitalised unit issue costs (11 117) – – (11 117)

Prepaid distribution to 31 March 2013 (29 923) – 29 923 –

Payment of prepaid distribution in July 2013 – – (29 923) (29 923)

Prepaid distribution 2014 period (9 492) – 9 492 –

Buyback of 81.5 million units in October 2013 *** (1 481 468) (819 966) – (2 301 434)

Reduction in equity as a result of buyback (1 480 034) (819 966) – (2 300 000)

Incremental costs attributable to buyback of unitholder capital (1 434) – – (1 434)

Total comprehensive income for the year

Profit for the year – – 898 724 898 724

Other comprehensive income for the year – 51 897 – 51 897

Net change in fair value of cash flow hedge recogniseddirectly in other comprehensive income – 51 897 – 51 897

Total comprehensive income for the year – 51 897 898 724 950 621

Transfer to non-distributable reserve – 469 606 (469 606) –


Balance at 31 March 2014 1 947 048 3 829 832 – 5 776 880

* The non-distributable reserve is comprised, inter alia, of the fair value and straight-lining of leases adjustment reserve on the investment

properties and fair value reserves on the listed investment, interest rate swaps and cross currency swap.

** Sycom undertook a fully underwritten renounceable Rights Offer in May 2013 whereby R900 000 002 was raised by way of the issue of

33 027 523 new Sycom units to qualifying unitholders at a subscription price of 2725 cents (R27.25) per Rights Offer unit.

*** The Hyprop transaction was successfully concluded in October 2013, in terms of which Somerset Mall was transferred to Hyprop in

exchange for the tendering of 81.5 million units in Sycom. These units have been cancelled and their listing terminated. Also refer to note 8.



Statements of Changes in Unitholders’ Fundsfor the year ended 31 March 2014

Capital

Non- distributable

reserve*Retained earnings Total

FUND R’000 R’000 R’000 R’000

Balance at 31 March 2012 2 579 048 3 383 565 – 5 962 613

Transactions with owners, recorded directly in equity – – – –

Total comprehensive income for the year – – 1 186 682 1 186 682

Transfer to non–distributable reserve – 751 553 (751 553) –


Balance at 31 March 2013 2 579 048 4 135 118 – 6 714 166

Transactions with owners, recorded directly in equity

Issue of 33 027 523 units in May 2013 ** 849 468 – 9 492 858 960

Proceeds 900 000 – – 900 000

Capitalised unit issue costs (11 117) – – (11 117)

Prepaid distribution to 31 March 2013 (29 923) – 29 923 –

Payment of prepaid distribution in July 2013 – – (29 923) (29 923)

Prepaid distribution 2014 period (9 492) – 9 492 –

Buyback of 81.5 million units in October 2013 *** (1 481 468) (819 966) – (2 301 434)

Reduction in equity as a result of buyback (1 480 034) (819 966) – (2 300 000)

Incremental costs attributable to buyback of unitholder

capital (1 434) – – (1 434)


Profit for the period – – 894 987 894 987

Other comprehensive income for the year – 51 897 – 51 897

Net change in fair value of cash flow hedge recognised

directly in other comprehensive income – 51 897 – 51 897

Total comprehensive income for the year – 51 897 894 987 946 884

Transfer to non–distributable reserve – 465 869 (465 869) –


Balance at 31 March 2014 1 947 048 3 832 918 – 5 779 966

* The non–distributable reserve is comprised, inter alia, of the fair value and straight–lining of leases adjustment reserve on the investment

properties and fair value reserves on the listed investment, interest rate swaps and cross currency swap.

** Sycom undertook a fully underwritten renounceable Rights Offer in May 2013 whereby R900 000 002 was raised by way of the issue of

33 027 523 new Sycom units to qualifying unitholders at a subscription price of 2725 cents (R27.25) per Rights Offer unit.

*** The Hyprop transaction was successfully concluded in October 2013, in terms of which Somerset Mall was transferred to Hyprop in

exchange for the tendering of 81.5 million units in Sycom. These units have been cancelled and their listing terminated. Also refer to note 8.


Statements of Cash Flowsfor the year ended 31 March 2014

Group 2014

Group 2013

Fund 2014

Fund 2013

Note R’000 R’000 R’000 R’000

Cash utilised in operating activities

Cash generated from operations 20.1 532 933 296 620 532 741 296 964

Dividend received 20.2 833 7 654 833 7 654

Distributions paid 20.3 (503 315) (422 730) (503 315) (422 730)

Interest paid 20.4 (151 928) (82 399) (151 928) (82 399)

Interest received 20.5 42 236 36 825 42 177 36 748

Taxation paid (556) – (556) –

Net cash utilised in operating activities (79 797) (164 030) (80 048) (163 763)

Cash utilised in investing activities

Subsequent expenditure on investment properties (23 801) (34 339) (22 538) (31 030)

Subsequent expenditure on investment properties held for sale (7 918) – (7 918) –

Acquisition of investment properties (1 679 596) (1 479 522) (1 679 596) (1 479 522)

Selling costs on disposal of investment properties ** (3 403) – (3 403) –

Subscription to Rights Issue – (64 967) – (64 967)

Increase in loans to subsidiary – – (818) (3 949)

Net cash outflow from investing activities (1 714 718) (1 578 828) (1 714 273) (1 579 468)

Cash flows from financing activities

Gross proceeds from the issue of units in May 2013 900 000 – 900 000 –

Unit issue costs (11 117) – (11 117) –

Share buyback costs (1 434) – (1 434) –

Borrowings raised 1 002 987 1 067 342 1 002 987 1 067 342

Net cash inflow from financing activities 1 890 436 1 067 342 1 890 436 1 067 342

Net increase/(decrease) in cash and cash equivalents 95 921 (675 516) 96 115 (675 889)

Cash and cash equivalents at beginning of year 206 745 882 055 204 613 880 296

Effect of exchange rate fluctuations on cash held* 638 206 638 206

Cash and cash equivalents at end of year 14 303 304 206 745 301 366 204 613

* Relates to cash held in Nedbank London account, refer note 14.

** Somerset Mall was sold to Hyprop on 1 October 2013. No cash proceeds were received on the disposal as Hyprop settled the purchase

price through the tender of 81.5 million units held in Sycom. These units have been cancelled and their listing terminated.



Notes to the financial statementsfor the year ended 31 March 2014

1 GENERAL INFORMATION

Sycom Property Fund is a Collective Investment Scheme in Property domiciled in South Africa. The addresses of

its registered office and principal place of business are disclosed in the Management Company’s responsibility

statement.

Sycom Property Fund converted to a Real Estate Investment Trust (“REIT”) on 1 April 2013.

The group consists of Sycom Property Fund (“Sycom” or “the fund”) and its subsidiary companies. The only active

subsidiary company of the fund is Tyger Hills Office Park Proprietary Limited. All references to “the group” refer to

both the fund and its subsidiary companies.

2 ADOPTION OF NEW AND REVISED STANDARDS

The relevant Standards that are not yet effective for March 2014 year-ends are identified in the table below, together with the effective dates:

StandardEffective

date*

Applicable to Sycom Property

FundExpected

impact?

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1-Jan-14 yes not material

IFRS 9 (amendments) Financial Instrumentsto be

decided yes not material

* Effective date is for periods beginning on or after the stated date, unless otherwise indicated.

All Standards and Interpretations will be adopted at their effective date.

Standards and Interpretations that are not applicable to the business of Sycom and will have no impact on future financial

statements are not included in the list above.

3 ACCOUNTING POLICIES

3.1 Basis of preparation

The consolidated and separate 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 and Financial Pronouncements as issued by the Financial Reporting Standards Council, the requirements

of the Collective Investment Schemes Control Act of 2002 and the JSE Limited Listing Requirements.

3.2 Basis of measurement

The financial statements have been prepared on a going concern basis, applying a historical cost convention, except for the revaluation of investment property, investment property held for sale, derivative financial instruments, cash flow hedges and financial assets classified at fair value through profit and loss which are measured at fair value. Fair value adjustments (where applicable) do not affect the calculation of distributable earnings but do affect the net asset value per unit to the extent that fair value adjustments are made to the carrying values of assets and liabilities. The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated (refer note 27). Comparative figures are regrouped or restated where necessary in accordance with current year classification.

Functional and presentation currency

The functional currency of the fund is South African Rands, which has been used for the preparation of the financial statements, rounded to the nearest thousand.


Notes to the financial statementsfor the year ended 31 March 2014 (continued)

3 ACCOUNTING POLICIES (continued)

3.2 Basis of measurement (continued)

Use of estimates and judgements

The preparation of consolidated and separate financial statements in conformity with IFRS requires management

to make judgements, estimates and assumptions that affect the application of accounting policies and reported

amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on

historical experience and various other factors that are believed to be reasonable under the circumstances, the

results of which form the basis of making judgements about carrying values of assets and liabilities that are not

readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if the revision affects only that period, or the period of the

revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have a significant effect on the financial statements

and estimates with a significant risk of material adjustment in the next year are discussed in note 26.

3.3 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the fund and its subsidiary companies.

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 financial statements from the date

on which control commences until the date on which control ceases. All group companies have a 31 March year-end.

Consolidated financial statements are prepared using uniform accounting policies for all like transactions.

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group

transactions, are eliminated.

3.4 Joint operations

Jointly held investment properties are classified as joint operations and are accounted for in the group financial

statements on a line-by-line basis, applying the group’s percentage ownership share to the underlying assets,

liabilities, income and expenditure.

3.5 Property assets

Investment propertiesProperty that is held for long-term rental yields, or for capital appreciation, or both, is classified as investment

property. Investment property also includes property that is being constructed or developed for future use as

investment property as well as leasehold investment property.

Investment property is initially measured at cost on acquisition, which comprises the purchase price and directly

attributable expenditure. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is

probable that future economic benefits associated with the expenditure will flow to the group and the cost of the item

can be measured reliably. All other subsequent expenditure is expensed in the period in which it is incurred.

Subsequent to initial recognition investment property is measured at fair value. Fair values are determined annually

on the active market value basis, using the capitalisation of net income method. Valuations are performed, as at the

financial position date, by professional valuers who hold recognised and relevant professional qualifications and have

recent experience in the location and category of the investment property being valued. These valuations form the

basis for the carrying value in the financial statements. The fair value of investment property does not reflect future

capital expenditure that will improve or enhance the property and does not reflect the related future benefits from this

expenditure other than those a rational market participant would take into account when determining the value of the

property. Gains or losses arising from changes in fair value are included in profit or loss for the period in which they

arise and are then transferred to the non-distributable reserve as they are not available for distribution.




3.5 Property assets (continued)

Investment properties (continued)

The carrying value of investment properties includes receivables relating to the straight-lining of leases, both current

and non-current. Gains or losses arising from changes in the straight-lining receivables are included in profit or loss

for the period in which they arise.

On disposal of investment properties, the difference between the net disposal proceeds and the fair value at the date

of the last reporting period (plus any subsequent capital expenditure post the reporting date) is charged or credited

to profit or loss. The net gain or loss on the sale of investment properties is transferred to the non distributable reserve

for realised capital profits/losses and is not available for distribution.

Leased assets held under long-term leasehold are capitalised as investment property.

Investment property under development

Property that is being constructed or developed for future use as investment property is classified as investment

property under development and is measured at fair value. All costs 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, an impairment

loss is recognised.

Investment property held for sale

Immediately before classification as held for sale, the measurement of the investment property is brought up to date

in accordance with the applicable IFRS. On classification as held for sale, the investment property is recognised at

fair value. Also refer note 3.21.

3.6 Impairment

Financial assets

A financial asset not measured at fair value through profit or loss 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 impact on the estimated future cash flow of that

asset, and these can be reliably estimated.

Objective evidence of impairment includes:

– default or delinquency by a debtor;

– indications that a debtor will enter bankruptcy;

– adverse changes in the payment status of borrowers;

– observable data indicating that there is a measurable decrease in expected cash flows from a group of assets

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. An allowance account is used to reduce the carrying amount of tenant receivables impaired by

credit losses.

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.

All impairment losses 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.




3.6 Impairment (continued)

Non-financial assets

The carrying amount of the group’s non-financial assets, other than investment property, investment property held for sale or under development, and deferred tax assets, 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.

The recoverable amount of an asset or cash-generating unit is 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 values using a pre-tax discount 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 that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of the other assets or groups of assets (the “cash generating unit”).

An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.

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 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.

3.7 Financial instruments

A financial instrument is recognised when the group becomes a party to the contractual provisions of the instrument.

3.7.1 Non-derivative financial instruments

3.7.1.1 Financial assets

Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-

to-maturity financial assets and available-for-sale financial assets, as appropriate. The group determines the

classification of its financial assets at initial recognition. When financial assets are recognised initially, they are

measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable

transactions costs.

Financial assets are derecognised only when the contractual rights to the cash flows from the financial asset expire or

the group transfers substantially all risks and rewards of ownership.

The group’s financial assets consist of loans and receivables, derivatives and financial assets at fair value through

profit or loss.

Loans and receivables

Trade and other receivables

Financial assets recognised in the statement of financial position as trade and other receivables (including the

dividend receivable) as well as loans receivable are classified as loans and receivables. They are recognised initially

at fair value and subsequently measured at amortised cost, using the effective interest method less an allowance

for impairment.

Cash and cash equivalents

Cash and cash equivalents are also classified as loans and receivables. They are subsequently measured at amortised cost. Cash and cash equivalents include cash on hand, deposits held on call with banks and other short-term highly liquid investments.




3.7 Financial instruments (continued)

3.7.1 Non-derivative financial instruments (continued)

3.7.1.1 Financial assets (continued)

Financial assets at fair value through profit and loss

Financial assets are classified as at fair value through profit or loss where the financial asset is either held for trading

or it is designated as at fair value through profit or loss upon initial recognition.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling in the near future; or

• it is a part of an identified portfolio of financial instruments that the group manages together and has a recent

actual pattern of short-term profit-making; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at fair value through profit or loss

upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would

otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and

its performance is evaluated on a fair value basis in accordance with the group’s risk management or investment

strategy; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments:

Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at fair

value through profit or loss.

Upon initial recognition attributable transaction costs are recognised in profit or loss when incurred. Financial assets

at fair value through profit and loss are measured at fair value, with any resultant gain or loss recognised in profit

or loss.

3.7.1. 2 Financial liabilities

All loans and borrowings and trade and other payables are classified as other financial liabilities. Initial recognition is at fair value less directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. A financial liability is derecognised when the contractual obligation under the liability is discharged, cancelled or expires.

3.7. 2 Derivative financial instruments

The group utilises derivative financial instruments to hedge its exposure to interest rate and foreign currency risks.

The group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do

not qualify for hedge accounting are accounted for as trading instruments. In the group, derivative financial assets

and financial liabilities comprise interest rate swaps and cross currency swaps.

Derivative financial instruments are recognised initially at fair value. Attributable transaction costs are recognised

in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value. The gain or

loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for

hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged.

Cash flow hedges

Changes in the fair value of the derivative hedging instruments designated as a cash flow hedge are recognised

directly in other comprehensive income and presented in equity to the extent that the hedge is effective. To the extent

that the hedge is ineffective, changes in fair value are recognised in profit or loss.




3.7 Financial Instruments (continued)

3.7. 2 Derivative financial instruments (continued)

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or

exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised

in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the

amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases

the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects profit

or loss.

The fair value of interest rate swaps is the estimated amount that the group would receive or pay to terminate

the swap at the reporting date, taking into account current interest rates and the current creditworthiness of the

swap counterparties.

3.7. 3 Offset

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position

when the group has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net

basis, or to realise the asset and settle the liability simultaneously.

3.8 Unitholders’ capital

Units issued are classified as capital of the group. Incremental costs directly attributable to the issue of units are

recognised as a deduction from capital.

3.9 Non-distributable reserve

All unrealised surpluses/deficits arising on fair value measurements of investment properties, listed investments,

interest rate swaps and cross currency swaps are transferred to the non-distributable reserve and are not available

for distribution. Similarly, all realised surpluses/deficits arising on the disposal of investment properties are transferred

to a non-distributable reserve for realised capital profits and are not available for distribution.

3.10 Revenue

Rental revenue and recoveries

Rental income from investment properties is recognised in profit or loss on a straight-line basis over the period of

the term of the lease. This income source comprises rental income and operating lease recoveries from investment

properties (other than certain utility recoveries allocated to property operating expenses, refer note 3.12).

3.11 Dividend income

Dividend income from the listed investment is recognised when the shareholder’s right to receive payment has been

established.

3.12 Property operating expenses

Property operating expenses include all expenses directly incurred in the daily operations of the investment property.

This includes property management fees, cleaning and security costs, repairs and maintenance, letting commission

costs, rates charges, as well as other utility costs incurred, net of certain utility recoveries from tenants.




3.13 Net financing costs

Net financing costs comprise interest expense on borrowings, interest income on funds invested and gains and

losses on hedging instruments that are recognised in profit or loss. Interest income is recognised in profit or loss as it

accrues, using the effective interest method.

3.14 Borrowing costs

Borrowing costs are capitalised to the extent that they are directly attributable to the acquisition, construction or

production of a qualifying asset. Capitalisation of borrowing costs commences when the activities necessary to

prepare the asset for its intended use are in progress and expenditures and borrowing costs are being incurred.

Capitalisation of borrowing costs continues until the assets are substantially ready for their intended use. The

capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes or,

with regard to that part of development cost financed out of general funds, the weighted average cost of borrowings.

3.15 Leases

The group is party to numerous contracts as the lessor of property. All leases are operating leases, where the

significant risks and rewards of ownership remain with the group and the properties leased out are included in

investment property in the statement of financial position. Refer note 3.10 for the recognition of rental income.

3.16 Foreign currencies

In preparing the financial statements, transactions in currencies other than the functional currency of the group are

recognised at the rates of exchange prevailing at the dates of the transactions. At each reporting date, monetary

items denominated in foreign currencies are translated at the rates prevailing at the reporting date. Non-monetary

items measured at fair value that are denominated in foreign currencies are translated at the rates prevailing at the

date when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign

currency are not translated.

Exchange differences pertaining to the above are recognised within administrative expenses in profit or loss in the

period in which they arise.

3.17 Tenant procurement costs

Tenant installation costs and letting commissions are written off over the period of the applicable lease on a straight-

line basis. The deferred portion of tenant installations and letting commissions is included in receivables.




3.18 Taxation

The tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit and loss except to

the extent it relates to a business combination, or items recognised directly in equity or other comprehensive income.

Current tax comprises tax payable calculated on the basis of the expected taxable income for the period, 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 provided based on temporary differences. Temporary differences are differences between the

carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. The amount of deferred

tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and

liabilities using tax rates enacted or substantively enacted at the reporting date.

The following temporary differences are not provided for: the initial recognition of goodwill, the initial recognition of

assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable

profit, and differences relating to investments in subsidiaries to the extent that the parent is able to control the timing of

the reversal of the temporary difference and to the extent that they probably will not reverse in the foreseeable future.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against

which any associated unused tax losses and deductible temporary differences can be utilised. Deferred tax assets

are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax assets

and liabilities are only offset if certain criteria are met.

Refer note 6 for detail regarding the introduction of the new REIT regime.

3.19 Earnings per unit

The calculation of basic earnings per unit is calculated by dividing the profit attributable to unitholders by the

weighted average number of units in issue during the year. Headline earnings per unit is calculated by dividing the

headline earnings attributable to unitholders by the weighted average number of units in issue during the year. There

are no dilutionary instruments in issue.

3.20 Investments in subsidiaries

Investments in subsidiaries are recognised at cost less impairment losses in the separate financial statements of

the fund.

3.21 Assets held for sale

Non-current assets are classified as held for sale if it is highly probable that they will be recovered primarily through

sale rather than through continuing use. Such assets are generally measured at the lower of their carrying amount

and fair value less costs to sell, other than investment properties which continue to be measured at fair value.




3.22 Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decison-maker. The chief operating decision-maker is the person that allocates resources to and assesses the

performance of the operating segments of an entity. The group has determined that its chief operating decision

maker is the chief executive officer of it’s management company.

Segmental information is based on the nature of business activities for which the properties are used. The group

earns revenue in the form of rentals from the tenants of its investment properties. While investment properties

are managed on an individual basis, the group comprises the following main reportable industry recognised

operating segments:

• retail segment comprised of shopping centres, and

• offices segment comprised of office parks and office buildings

Segment results include revenue and expenses directly attributable to a segment and the portion of enterprise

revenue and expenses that can be allocated on a reasonable basis to a segment, whether from external transactions

or from transactions with other segments. Segment assets and liabilities comprise those assets and liabilities that are

directly attributable to the segment or can be allocated to the segment on a reasonable basis.



Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

4 NET FINANCE COSTS

Interest income 43 561 37 500 43 502 37 423

Interest from tenants and favourable bank balances 37 999 31 860 37 940 31 783

Interest on cross currency swap 5 562 5 640 5 562 5 640

Interest expense (160 085) (91 537) (160 085) (91 537)

Interest on borrowings and interest rate swaps (160 350) (88 814) (160 350) (88 814)

Less: amounts capitalised to investment property 1 887 1 481 1 887 1 481

Occupational interest – (2 648) – (2 648)

Interest on cross currency swap (1 622) (1 556) (1 622) (1 556)

Net change in fair value of derivative financialinstruments at fair value through profit and loss (12 086) (6 190) (12 086) (6 190)

(128 610) (60 227) (128 669) (60 304)

5 PROFIT BEFORE TAXATION

Profit before taxation for the year is arrived at after taking into account the following items:

Income from subsidiary – – 11 537 10 191

Fair value gain on investment properties 436 400 719 667 431 960 716 933

Net change in fair value of listed investment 81 522 1 840 81 522 1 840

Impairment loss relating to tenants and related receivables (2 154) (1 285) (2 146) (1 172)

¡ (Increase)/decrease in the impairment allowance (1 425) (38) (1 538) 75

¡ Bad debts written off (729) (1 247) (608) (1 247)

Property legal fees (net of recoveries) (359) (314) (359) (309)

Trustee fees (328) (300) (328) (300)

Foreign exchange gain 416 669 416 669

Amortisation of tenant installation cost and letting commission (13 955) (13 976) (12 792) (12 884)

Group andFund2014

Group2013

R’000 R’000

6 TAXATION

South African normal taxation

– Deferred capital gains taxation: – 96

– Current year movement – 96

– Secondary tax on companies* 556 –

Tax rate reconciliation % %

Standard tax rate 28.00 –

Prior year underprovision 0.06 –

Exempt items – 0.01

Qualifying distribution deduction (28.00) –

Effective tax rate 0.06 0.01

* The STC was paid in respect of the resolution of historic STC payable by Sycom Properties Proprietary Limited, a dormant

subsidiary of the fund.



6 TAXATION (continued)

Income tax and capital gains tax:

Fund and subsidiaries

The fund converted to a Real Estate Investment Trust (REIT) on 1 April 2013. In terms of the Income Tax Act

(“the Act”), the fund, as a Collective Investment Scheme in Property, is included within the definition of a company for

tax purposes. This means that the fund and its wholly-owned subsidiary, Tyger Hills Office Park Proprietary Limited,

which is a controlled company for the purposes of the REIT legislation, are both taxed as companies in terms of the

Act. There is therefore no difference in future tax treatment between the fund and its subsidiary.

Deferred tax

To the extent to which management believes the recovery of assets and liabilities will lead to taxable profit, and

intends to pay a qualifying distribution, no deferred tax is provided (in substance exempt). To the extent to which

management believes the recovery of assets or liabilities will not be taken into account for future qualifying

distributions, deferred tax is provided. Deferred tax on investment property is provided presuming the manner of

recovery is sale.

REIT tax status

Capital gains implications for REITS

In terms of the REIT legislation, any capital gains/losses determined in respect of the sale by a REIT or controlled

company of (1) investment property, (2) a share in a REIT or (3) a share in a controlled company, will be disregarded

for capital gains tax purposes. The capital gains/losses will vest in the unitholders hands upon sale of the units.

REIT distributions

In the determination of taxable income, a REIT or a controlled company may deduct from its gross income any

qualifying distribution declared or incurred during its year of assessment. In the current year all taxable income has

been declared as a qualifying distribution with the result that there is no current tax. Unitholders will be taxed on

distributions received according to their own tax status.



7 EARNINGS, HEADLINE EARNINGS AND DISTRIBUTION PER UNIT

The calculation of basic earnings per unit is based on a weighted average of 237 531 400 units (2013:

248 604 141 units) in issue during the year and a profit of R898 724 000 (2013: R1 180 277 000).

The calculation of headline earnings per unit is based on a weighted average of 237 531 400 units (2013:

248 604 141 units) in issue during the year and headline earnings of R482 311 000 (2013: R460 706 000).

Group 2014

Gross

Group 2014

Net of Tax

Group 2013

Gross

Group 2013

Net of Tax

Note R’000 R’000 R’000 R’000

Reconciliation of earnings to headline

earnings and distributable earnings:

Profit for the period 898 724 1 180 277

Fair value adjustment to investment properties 8 (436 400) (436 400) (719 667) (719 571)

Loss on disposal of investment property 19 431 19 431 – –

Secondary tax on companies 556 –

Headline earnings 482 311 460 706

Selling costs on investment properties held for sale 553 –

Straight-lining rental income accrual 8 15 690 (29 927)

Unrealised deficit on derivative financial instruments 12 086 6 190

Fair value adjustment to listed investment (81 522) (1 840)

Prepaid distribution 9 492

Distributable earnings 438 610 435 129

cents cents

Basic earnings per unit 378.36 474.76

Headline earnings per unit 203.05 185.32

Distribution per unit 183.28 175.03

Interim distribution 57/55 88.12 84.43

Final distribution 58/56 95.16 90.60

units units

Number of units in issue (’000) 200 132 248 604

Weighted number of units (’000) 237 531 248 604



Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

8 INVESTMENT PROPERTIES AND RELATED RECEIVABLES

Historical cost * 4 380 538 4 508 508 4 202 452 4 331 685

Accumulated fair value adjustment 2 926 490 3 611 978 2 936 142 3 625 588

Amount per statement of financial position 7 307 028 8 120 486 7 138 594 7 957 273

Non-current straight-lining lease receivable 182 052 232 662 175 913 226 505

Current straight-lining lease receivable 39 303 25 460 38 876 24 830

Carrying value at end of year 7 528 383 8 378 608 7 353 383 8 208 608

Movement in investment properties and related receivables

Balance as at beginning of the year 8 378 608 6 114 228 8 208 608 5 941 228

Subsequent expenditure ** 33 606 35 264 32 343 31 955

Direct acquisitions of investment properties *** 1 679 596 1 479 522 1 679 596 1 479 522

Disposal of investment property **** (2 303 816) – (2 303 278) –

Straight-lining adjustment disposed of **** (12 212) – (12 750) –

Unrealised surplus on revaluation of investment properties 420 710 749 594 416 973 755 903

(Decrease)/increase in straight-lining receivable (15 690) 29 927 (14 987) 38 970

Fair value gain on investment properties 436 400 719 667 431 960 716 933

Transferred to investment properties held for sale (668 109) – (668 109) –

Carrying value at end of year 7 528 383 8 378 608 7 353 383 8 208 608

* Includes interest capitalised of R27 306 879 (2013: R25 419 889).

** Includes interest capitalised of R1 886 990 (2013: R1 480 534).

*** On 1 October 2013, Sycom acquired the remaining 50% undivided share in Somerset Mall from AECI Pension Fund.

On 31 March 2014, Sycom acquired a 50% undivided share in Greenacres Shopping Centre from Liberty Group Limited.

**** Immediately following the acquisition of the remaining 50% share in Somerset Mall on 1 October 2013, Sycom sold its 100%

share in Somerset Mall to Hyprop Investments Limited in exchange for the cancellation of 81.5 million units held by Hyprop

in Sycom.

Investment properties comprise a number of commercial and retail properties that are leased to third party lessees as operating leases. Typically commercial leases are entered into for periods ranging between 3 to 5 years. Retail leases with national tenants are typically 5 years (often with two x 5 year options) and leases with anchor tenants are usually for 10 year periods with several options. There are no contingent leases in place. A register of investment properties is available for inspection at the group’s registered office. Partially held investment properties are reflected at the proportionate ownership percentage of fair value.



8 INVESTMENT PROPERTIES AND RELATED RECEIVABLES (continued)

Measurement of fair value on investment properties

Fair value hierarchy

Investment properties were independently valued at 31 March 2014 on the open market value basis by Quadrant

Properties Proprietary Limited, who are independent and are members of the South African Institute of Valuers.

The property valuations determine the current market value for the properties as may be achieved on the market

after due consideration of all market forces. The property and its value forming attributes are benchmarked against

the current market and fair consideration is then made in order to indicate what value the property may realise in the

broader investment or end user market based on the principle of willing buyer and willing seller. The valuers use the

capitalisation of net income method to perform the valuations. The independent valuers provide the fair value of the

group’s investment property bi-annually for financial reporting purposes.

The fair value measurement for investment property of R7 528 383 000 (2013: R8 378 608 000) has been categorised

as a level 3 fair value based on the inputs to the valuation technique used. Refer note 26 for detail on the fair value

hierarchy.

Level 3 fair value

A reconciliation of the opening balances to the closing balances for the level 3 valuations is disclosed above.



8 INVESTMENT PROPERTIES AND RELATED RECEIVABLES (continued)

Valuation technique and significant unobservable inputs

The following table shows the valuation technique used in measuring the fair value of investment property, as well as

the significant unobservable inputs used.

Valuation technique Significant unobservable inputs

Inter-relationship between key

unobservable inputs and fair value

measurements

The fair value is calculated by

capitalising the forecast property

net income into perpetuity and then

making specific adjustments to the

valuation. The capitalisation of net

income valuation 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.

(a) Net income – the net income for

the forthcoming financial year

is estimated using current lease

information, escalations and

forecast property expenditure.

(b) Capitalisation rate – the

determination of the capitalisation

rate takes into account: (1) the

prime base capitalisation rate

indicator (the R186), (2) the

JSE Real Estate Dividend Yield

indication, (3) lease consideration

factors such as: tenant credibility,

duration of leases, rent to market

relationship, escalation and

vacancies, (4) the nature of the

building (generic building which

can be relet easily vs a purpose

built building), (5) the locality

– potential for appreciation vs

depreciation of the property and

(6) market related expenses

(whether these are higher or lower

than market).

(c) Sale adjustment considerations

– specific adjustments are made

to the valuation (when relevant

only) to account for current

vacancies, required estimated

tenant installation/fit out costs

to achieve tenancy, agents

commission costs to achieve

tenancy, provision for repairs and

maintenance required as per the

property’s current state of repair,

adjustments for technical/legal

aspects requiring expenditure

and a provision for upgrade/

refurbishment required.

(a) Financial information used to

calculate forecast net income

eg: relating to tenancies, rentals

and future operating expenditure.

(b) Capitalisation rate – The

percentage range of capitalisation

rates used in the valuations is as

follows:

Office properties – between 8%

and 9%

Retail properties – between 7%

and 7.75%

(c) The specific adjustments to the

valuations based on forecast

financial information as estimated

by the valuer eg: estimated

tenant installation/fit out costs,

estimated agents commission

costs, estimated repairs and

maintenance, estimated cost of

technical/legal aspects requiring

expenditure and estimated cost of

upgrades/refurbishments.

The fair value would increase/

(decrease) based on (1) increases/

(decreases) in the forecast property

net income, (2) decreases/

(increases) in the capitalisation

rate (3) values as ascribed to sale

adjustment considerations.



Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

9 INVESTMENT PROPERTIES HELD FOR SALE AND RELATED RECEIVABLES

Fair value 659 244 – 659 300 –

Straight-lining lease receivable 8 865 – 8 809 –

Carrying value at end of year 668 109 – 668 109 –

The following investment properties have been classified as held for sale at 31 March 2014:

Discovery building (100% owned):

An agreement has been entered into with Redefine Properties and an associate of Zenprop (acting jointly) to dispose

of the Discovery building for a sales price of R413.9 million. The transaction will be effective on transfer date. The gain

on the remeasurement of the property to fair value at the reporting date amounted to R5.3 million and is disclosed

within the fair value gain on investment properties caption on the statement of profit or loss and other comprehensive

income. The Discovery building is an Offices asset for the purposes of the segmental reporting per note 21.

Southgate Mall and Southgate Value Market (16.61% and 16.01% owned):

An agreement has been entered into with Pareto to dispose of Sycom’s 16.61% interest in Southgate Mall and

its 16.01% interest in Southgate Value Market for a combined sale price of R249.3 million plus purchase price

adjustments until transfer date of R4.9 million (as per the agreement of sale). The transaction will be effective on

transfer date. The gain on the remeasurement of the properties to fair value at the reporting date amounted to

R15.1 million and is disclosed within the fair value gain on investment properties caption on the statement of profit or

loss and other comprehensive income. The Southgate properties are Retail assets for the purposes of the segmental

reporting per note 21.

The fair value measurement for the investment property held for sale was determined as the market value arrived

at between a willing buyer and willing seller and was not determined based on a valuation. The fair value has been

categorised as a Level 3 fair value. Refer note 26 for detail on the fair value hierarchy.

Valuation technique and significant unobservable inputs


Inter-relationship between key unobservable inputs and fairvalue measurements

The fair values are determined

with reference to the signed sales

agreements. The sales prices per

the agreements were reached as the

price agreed upon between a willing

buyer and willing seller.

All the sales price considerations

evaluated by the buyer and seller and

used in determining the selling price

would be unobservable inputs. This

would include, inter alia, assumptions

relating to future net cash flows from

the property, the current state of

repair of the property and potential

future capital upgrades required.

Not applicable as there is an agreed

price per a signed sales agreement.



Group and Fund

2014 2013

R’000 R’000

10 LISTED INVESTMENT

Stenham European Shopping Centre Fund

Original shareholding

Cost 258 311 258 311

Cumulative fair value adjustment (198 674) (209 520)

Exchange rate fluctuation 23 057 11 839

Underlying net asset value (221 731) (221 359)

Fair value at end of the year 59 637 48 791

Rights issue September 2010

Cost 91 557 91 557

Cumulative fair value adjustment 72 748 42 865


Underlying net asset value 860 1 884


Rights issue July 2012

Cost 64 967 64 967



Underlying net asset value 39 666 40 551


Scrip Issue October 2012

Cost 7 158 7 158


Exchange rate fluctuation 3 016 398

Underlying net asset value 3 742 3 829


Scrip Issue April 2013

Cost 7 506 –

Cumulative fair value adjustment 6 435 –

Exchange rate fluctuation 1 767 –

Underlying net asset value 4 668 –

Fair value at end of the year 13 941 –

Scrip Issue October 2013

Cost 9 474 –

Cumulative fair value adjustment 6 012 –

Exchange rate fluctuation 813 –

Underlying net asset value 5 199 –

Fair value at end of the year 15 486 –


Exchange rate – Rands per Euro 14.55 11.83



10 LISTED INVESTMENT (continued)

During June 2007, the fund acquired 27 318.073 shares (22.5% shareholding) in Stenham European Shopping Centre

Fund IC (SESCF), a company listed on the Channel Island Stock Exchange as a closed fund.

Summary of further shares purchased:

In September 2010 SESCF undertook a rights issue and the fund acquired an additional 75 266.6595 shares at

a Rand value of R91.56 million. In July 2012 SESCF undertook a further rights issue and the fund acquired an

additional 65 020.6313 shares at a Rand value of R64.97 million. In October 2012 the fund opted to receive part of

the September 2012 dividend in the form of scrip, resulting in an additional 6 374.4037 shares at a Rand value of

R7.16 million. In April 2013 the fund opted to receive part of the March 2013 dividend in the form of scrip, resulting

in an additional 6 386.1883 shares at a Rand value of R7.51 million. In October 2013 the fund opted to receive the

entire September 2013 dividend in the form of scrip, resulting in an additional 7 093.793 shares at a Rand value of

R9.47 million. The fund has also elected to receive part of the March 2014 dividend in the form of scrip, however the

allocation of the scrip only occurred post 31 March 2014.

Following the above rights issues and scrip issues, the fund’s shareholding in SESCF is 22.90% at 31 March 2014

(2013: 22.89%). The investment is not considered to be an associate as the fund does not have the ability to exercise

significant influence as defined in IAS28.

Both the original shareholding and the shareholdings acquired in terms of the rights issues and scrip dividend issues

have been revalued based on the net asset value of SESCF at 31 March 2014. The net asset value of SESCF includes

an independent revaluation of the underlying investment property, which is the significant asset per the statement of

financial position. The fair value movement for the year, which comprises the revaluation based on the change in the

underlying value of the investment, as well as the exchange rate movement, amounted to R81 522 000

(2013: R1 840 000). The fair value measurement has been categorised as a level 3 fair value based on the inputs to

the valuation technique used. Refer note 22.6 and note 26.

Group and Fund

2014 2013

R’000 R’000

Summarised financial information of SESCF is set out below:

Total assets 4 308 518 3 441 998

Total liabilities (2 521 515) (2 084 541)

Net assets 1 787 003 1 357 457

Group/Fund share of net assets 409 224 310 722

Total revenue 285 914 228 867

Total profit 133 240 106 473

Group/Fund share of profits 30 512 24 372

Dividend earned 19 973 15 961



Issued share capital

2014

Issued share capital

2013

Percentageholding

2014

Percentageholding

2013

R R % %

11 INVESTMENTS IN SUBSIDIARIES

11.1 Fund interest in subsidiaries

Subsidiaries

ACTIVE

Tyger Hills Office Park Proprietary Limited 100 100 100% 100%

NON-TRADING

Centre South Proprietary Limited 1 1 100% 100%

Fairy Glen Proprietary Limited 1 1 100% 100%

Fourways Crossing Retail Centre

Proprietary Limited 10 000 10 000 100% 100%

Sycom Properties Proprietary Limited 1 1 100% 100%

Investment Amount owing by/(to):

2014 2013 2014 2013

R’000 R’000 R’000 R’000

11.2 Direct investment in subsidiaries

Tyger Hills Office Park Proprietary Limited 621 621 179 121 178 303

Non-current loan: 177 539 176 207

Capital loan A 175 075 170 006

Capital loan B 2 464 6 201

Current loan 1 582 2 096

Centre South Proprietary Limited * – – – –

Fairy Glen Proprietary Limited * – – – –

Fourways Crossing Retail Centre Proprietary

Limited 10 10 (10) (10)

Sycom Properties Proprietary Limited * – – – –

631 631 179 111 178 293

* Represent nominal amounts under R1 000.

The capital loans to Tyger Hills Office Park are unsecured and bear interest at a variable rate.

The interest is payable six monthly in arrears whereas the capital has no fixed terms of repayment. The current loan

represents the outstanding interest at the financial year-end. As it controls Tyger Hills Office Park, the fund has an

unconditional right to defer settlement of the capital loan 12 months after the reporting period and settlement has

been deferred. The capital loan B has b]een subordinated in favour of other creditors of Tyger Hills Office Park until

such time as its assets, fairly valued, exceed the liabilities.

Interest earned amounted to R11 536 739 for the year under review (2013: R10 190 844).

There are no other restrictions on Sycom’s ability to access use of assets and settlement of liabilities of the group.



Fund 2014

Fund 2013

Fund 2014

Fund 2013

% % R’000 R’000

12 JOINT OPERATIONS

The fund directly owns a share in the following investment properties:

Investment Property Principal place of businessPercentage ownership

in propertyFair value of

investment property

Vaal Mall Vaal Mall, Vanderbjilpark 77.86% 77.86% 1 012 803 970 136

Fourways Crossing Fourways Crossing Mall,

Fourways 50.00% 50.00% 496 500 451 500

N1 City Mall N1 City Mall, Goodwood 42.00% 42.00% 619 080 572 880

Southgate Mall Southgate Mall, Mondeor 16.61% 16.61% 232 642 201 620

Southgate Value Market Southgate Value Market,

Mondeor 16.01% 16.01% 21 567 28 972

The fund has ownership interests in the above jointly held investment properties. The fund does not participate in any

other joint arrangements.

The ownership interests are held by the co-owners directly in each investment property and are not structured

through separate vehicles.

The co-owners have rights to the assets and obligations for the liabilities relating to the arrangements. Accordingly,

the fund has classified its interest in the co-owned investment properties as joint operations.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

13 RENTAL AND OTHER RECEIVABLES

Rental receivable 7 742 5 221 7 741 4 792

Impairment allowance (2 705) (1 280) (2 705) (1 167)

5 037 3 941 5 036 3 625

Tenant procurement cost 35 748 39 204 33 783 37 327

Local interest receivable from Nedbank 2 000 675 2 000 675

Municipal recoveries from tenants 18 434 21 418 17 721 20 514

Rates clearance prepayments 2 313 1 740 2 313 1 740

Accrual cross currency swap 849 799 849 799

Other* 15 804 15 117 15 463 15 100

80 185 82 894 77 165 79 780

* Includes, inter alia, turnover rental receivable.

14 CASH AND CASH EQUIVALENTS

Deposits in local bank accounts 43 897 40 679 41 959 38 547

Deposits in foreign bank account* 2 572 2 663 2 572 2 663

Deposits in access facility** 256 835 163 403 256 835 163 403

303 304 206 745 301 366 204 613

* Cash balance held in Nedbank London bank account to facilitate the Euro interest payments that fall due on a quarterly basis

under the cross currency swap arrangement. Refer note 16.2.

** This balance includes funds remaining from the Rights Offer undertaken in May 2013. Refer note 15.



Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

15 UNITHOLDERS’ CAPITAL

Issued units

200 131 664 (2013: 248 604 141) 1 947 048 2 579 048 1 947 048 2 579 048

Group and Fund

2014 2013

R’000 R’000

Units Units

Movement in issued units during the year:

Issued units as at beginning of the year 248 604 141 248 604 141

Issue of 33 027 523 units in May 2013 33 027 523 –

Cancellation of 81 500 000 units in October 2013 (81 500 000) –

200 131 664 248 604 141

The capital of the fund is governed by the Trust Deed which can be viewed upon request at the registered office.

In May 2013, 33 027 523 units were issued by way of a Rights Offer to Sycom unitholders. On 1 October 2013,

81 500 000 units owned by Hyprop were cancelled (and their listing terminated) as consideration from Hyprop for

the acquisition of 100% of Somerset Mall.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

16 BORROWINGS

16.1 Total borrowings 2 903 795 1 900 808 2 903 795 1 900 808

Non-current borrowings 2 903 795 1 900 808 2 903 795 1 900 808

Nedbank facilities consist of the following:

Expiry of interest rate

Interest rate%

Nedbank facility A 950 000 940 000 950 000 940 000

– Variable portion Nov-14 prime less 2.5 550 000 640 000 550 000 640 000

– Swap C (Nedbank)* Mar-14 10.22 (S) – 200 000 – 200 000

– Swap D (Nedbank) Apr-14 9.93 (S) 100 000 100 000 100 000 100 000

– Swap H (Nedbank) Mar-17 5.785 (S) 200 000 – 200 000 –

– Swap I (Nedbank) Apr-18 6.095 (S) 100 000 – 100 000 –

* Swap C expired during the year.

Facility A bears interest at the prime overdraft rate as applicable in South Africa less 2.5%. The interest is

payable monthly in arrears and the capital is repayable in full on expiry. The expiry date has been extended from

1 December 2014 for two years to 1 December 2016. The interest rate during the extended period will be prime

less 1.75%. The total facility is R950 000 000.



Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

16 BORROWINGS (continued)

16.1 Total borrowings (continued)

Expiry of interest rate

Interest rate%

Nedbank facility B 701 995 459 383 701 995 459 383

– Variable portion Dec-16 prime less 1.7 1 995 459 383 1 995 459 383

– Swap E (Nedbank) Mar-17 5.79 (S) 200 000 – 200 000 –

– Swap F (Nedbank) Sep-17 6.045 (S) 200 000 – 200 000 –

– Swap G (Nedbank) Mar-18 6.305 (S) 300 000 – 300 000 –

Facility B bears interest at the prime overdraft rate as applicable in South Africa less 1.7%. The interest is payable

monthly, with a final repayment of the capital together with any outstanding amounts on 1 December 2016. The total

facility is R701 995 000.

Nedbank facility C 501 425 501 425 501 425 501 425

– Variable portion Jan-18 prime less 1.8 1 425 501 425 1 425 501 425

– Swap J (Nedbank) Sep-18 7.65 (S) 300 000 – 300 000 –

– Swap K (Nedbank) Mar-20 8.15 (S) 100 000 – 100 000 –

– Swap L (Nedbank) Mar-21 8.34 (S) 100 000 – 100 000 –

Facility C bears interest at the prime overdraft rate as applicable in South Africa less 1.8%. The interest is payable

monthly and the capital is payable in full on 2 January 2018. The total facility is R501 425 000.

Nedbank facility D 150 375 – 150 375 –

– Variable portion prime less 1.9 150 375 – 150 375 –

Facility D bears interest at the prime overdraft rate as applicable in South Africa less 1.9%. The interest is payable monthly and the capital is payable in full on 3 April 2017. The total facility is R150 375 000.

(S) = Swap rate, refer note 22.2.1 for the effective interest rates.

(Nedbank) = The interest rate on the facility has been hedged through Nedbank Limited.

A portion of the above facilities are economically hedged via interest rate swap agreements exchanging the variable

interest rate for a fixed-rate interest.




16.1 Total borrowings (continued)

Facilities A, B, C and D are secured as follows:

Security:

Facilities A, B, C and D are secured by mortgage bonds over the following properties with a carrying value of

R4.388 billion (2013 R4.153 billion):

• Portion 11 of Erf 5, Sandown (Advocates Chambers)

• Portion 1 of Erf 5209 Bryanston Extension 64 Township (Georgian Crescent)

• Erf 606 Sandown Extension 47 Township (Discovery Building)

• Erf 165412 Cape Town (ENS Building)

• Erf 1818 and 1819 Bedfordview Extension 351 Township (Riverwoods Office Park)

• Erf 827 Woodmead Extension 12 Township, Erf 828 Woodmead Extension 25 Township, Erf 832 Woodmead

Extension 20 Township and remaining extent of Portion 14 of Farm 37 Bergvallei and Portions 2 and 4 of Erf 8

Woodlands (Harrowdene Office Park)

• Erven 1 and 2 The Woodlands Township (Woodlands Office Park)

Covenants:

• At all times, total debt shall not exceed 50% of total assets

• Interest cover is to remain at a level of at least 2 times

No covenants were breached during the year.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

Rand Merchant Bank facilities consist of the following:

Rand Merchant Bank Facility A 600 000 – 600 000 –

– Variable portion 3 month JIBAR plus 1.5% 600 000 – 600 000 –

Facility A bears interest at a base rate of 3-month Jibar plus a margin of 1.5%. The interest is payable quarterly and the capital is payable in full on 3 October 2016. The total facility is R600 000 000.

Security:

Facility A is secured by mortgage bonds over the following properties with a carrying value of R1.746 billion:

• A 77.86% undivided share in and to portion 219 of the farm Vanderbiijl Park No.550 (Vaal Mall)

• Erf 2859, Erf 28621, Erf 12211, Erf 12212, Erf 12213, Erf 12214, Erf 12215, Erf 12216, Erf 12217 and remainder

Erf 9271 Paarl, (Paarl Mall)

Covenants:

• A maximum gearing ratio of 55% for the fund and 40% for the secured portfolio

• Interest cover is to remain at a level of at least 2 times for the fund and the secured portfolio

• A minimum net asset value of R3 billion.

The fair value of the facilities with Nedbank and Rand Merchant Bank approximated their carrying value at the date of

the statement of financial position. The fair values of the interest rate swaps are disclosed in note 18 and note 22.6.




16.2 Cross currency swap facilities

During the 2011 financial year a cross currency swap arrangement was entered into with Nedbank exchanging

principal and interest payments on a portion of the ZAR loan facility with Nedbank for Euro principal and interest

payments. The cross currency swap is accounted for as a derivative financial instrument and the fair value is

disclosed as per note 18 and note 22.6.

MaturityNotional principal

Floating rate

Rate at year-end

R’000 % %

Group and Fund 2014

Cross currency swap loan receivable 7 Nov 2014 91 690 ZAR prime

-2.5 6.50

Cross currency swap loan payable (translated)* 7 Nov 2014 (145 500)euribor +

0.95 1.26

Group and Fund 2013

Cross currency swap loan receivable 7 Nov 2014 91 690 ZAR prime

-2.5 6.00

Cross currency swap loan payable (translated)* 7 Nov 2014 (118 300)euribor

+0.95 1.16

* Euro denominated loan payable under Cross Currency Swap: EUR 10 million (2013: EUR 10 million) and exchange rate at

31.03.2014: R14.55 (2013: R11.83).

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

17 TRADE AND OTHER PAYABLES

Trade and other payables 51 346 57 535 50 079 56 207

Accrual for capital expenditure 9 782 3 121 9 782 3 121

Prepaid rentals 16 924 12 088 16 545 11 647

Tenant deposits 26 937 28 046 25 281 26 670

Interest payable to Nedbank* 20 663 10 619 20 663 10 619

125 652 111 409 122 350 108 264

* The March 2014 interest payable on the Nedbank loans and the quarterly interest due on the Rand Merchant Bank loan was paid

on 1 April 2014.



NoteEffective

date Maturity dateNotionalprincipal

Fair value ofswap assets/

(liabilities)

18 DERIVATIVE FINANCIAL INSTRUMENTS

Interest rate and cross currency swaps

2014 Group and Fund

Cross currency swap loan receivable 16 20-Jan-11 7-Nov-14 91 690 –

Cross currency swap loan payable (translated)* 16 20-Jan-11 7-Nov-14 (145 500) (53 484)

Interest rate swap D 16 9-Apr-08 9-Apr-14 (100 000) (1 159)

Interest rate swap E 16 31-Mar-14 31-Mar-17 (200 000) 8 128

Interest rate swap F 16 30-Sep-14 29-Sep-17 (200 000) 8 852

Interest rate swap G 16 31-Mar-15 29-Mar-18 (300 000) 13 402

Interest rate swap H 16 17-Mar-14 17-Mar-17 (200 000) 7 990

Interest rate swap I 16 9-Apr-14 9-Apr-18 (100 000) 5 259

Interest rate swap J 16 30-Sep-15 28-Sep-18 (300 000) 5 067

Interest rate swap K 16 31-Mar-16 31-Mar-20 (100 000) 1 601

Interest rate swap L 16 31-Mar-16 31-Mar-21 (100 000) 1 598

(1 653 810) (2 746)

Interest rate and cross currency swaps

2013 Group and Fund

Cross currency swap loan receivable 16 20-Jan-11 7-Nov-14 91 690 –

Cross currency swap loan payable (translated)* 16 20-Jan-11 7-Nov-14 (118 300) (26 928)

Interest rate swap C 16 17-Mar-08 17-Mar-14 (200 000) (9 820)

Interest rate swap D 16 09-Apr-08 09-Apr-14 (100 000) (5 809)

(326 610) (42 557)

* Euro denominated loan payable under Cross Currency Swap: EUR 10 million (2013: EUR 10 million) and exchange rate at

31.03.2014: R14.55 (2013: R11.83).

Interest rate swaps

Borrowings issued at variable rates expose the group to cash flow interest rate risk. All of the above interest rate

swaps have been entered into in order to hedge floating interest rate exposure and thereby achieve an appropriate

mix of fixed and floating interest rates. Interest rate swap liabilities arise from the fair value movements between the

fixed rate Sycom pays and 3-month JIBAR Sycom receives. Interest rate swaps C and D have not been designated

as hedging instruments and are therefore accounted for as derivative financial instruments with fair value gains/losses

recognised in profit and loss. Interest rate swaps E to L have been designated as hedging instruments and have

been classified as cash flow hedges, with fair value gains/losses recognised directly in other comprehensive income

to the extent the hedges are effective. To the extent the hedges are ineffective, changes in fair value are recognised

in profit or loss. The ineffective portion recognised in profit or loss during the financial year amounted to zero. The

interest rate swaps are stated at fair value at the reporting date and fair values are determined using Level 2 valuation

techniques (refer note 22.6). The fair value gains recognised in profit or loss on the revaluation of the derivative

interest rate swaps amounted to R14 470 223 and the fair value gains recognised in other comprehensive income on

the revaluation of the cash flow hedges amounted to R51 897 117. The interest cash flows under all of the interest rate

swaps are payable/receivable quarterly and affect profit and loss quarterly on payment/receipt thereof.



18 DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Cross currency swaps

The investment in Stenham (refer note 10) exposes the group to currency risk. During the 2011 financial period, in

order to achieve an appropriate level of exposure to currency risk, the group entered into a cross currency swap

arrangement with Nedbank Limited. The cross currency swap has not been designated as a hedging instrument and

is therefore accounted for as a derivative financial instrument with fair values gains/losses going through profit and

loss. The fair value of the cross-currency swaps was determined using Level 2 valuation techniques (refer note 22.6)

and was based on the projected present value of net future cash payments and receipts, which fluctuate based on

changes in market interest rates and the Euro/Rand exchange rate. The fair value loss recognised in profit or loss on

the revaluation of the cross currency swap amounted to R26 556 709. The cash flows under the cross currency swap

are payable/receivable quarterly and affect profit and loss quarterly on payment/receipt thereof.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

19 DEFERRED TAXATION

Balance at beginning of the year – (96) – –

Current year movement – 96 – –

Balance at end of the year – – – –

The deferred capital gains tax previously arose on the revaluation of the investment property held in Tyger Hills

Office Park, a wholly owned subsidiary company of the fund and a controlled company for taxation purposes. As

the fund converted to a Real Estate Investment Trust (“REIT”) effective 1 April 2013 and Tyger Hills Office Park is a

controlled company of the fund, any capital gains/losses determined in respect of the sale of the investment property

in Tyger Hills Office Park will be disregarded for capital gains tax purposes. As there are no future capital gains

tax consequences associated with the sale of the investment property in Tyger Hills Office Park, the balance of the

deferred capital gains taxation was reversed in the previous financial year.

All other investment property is held directly in the fund, which has never been liable for capital gains tax – this

treatment of capital gains is in line with the new REIT regime as detailed in note 6.



Group 2014

Group 2013

Fund 2014

Fund 2013

Notes R’000 R’000 R’000 R’000

20 NOTES TO THE STATEMENTS OF CASH FLOWS

20.1 Cash generated from operations

Profit before taxation 899 280 1 180 373 895 543 1 186 682

Adjusted for:

Interest income (43 561) (37 500) (43 502) (37 423)

Interest expense 160 085 91 537 160 085 91 537

Foreign exchange gain (416) (669) (416) (669)

Dividend income (19 973) (15 961) (19 973) (15 961)

Straight-lining of operating leases 15 690 (29 927) 14 987 (38 970)

Fair value gain on investment properties (436 400) (719 667) (431 960) (716 933)

Fair value deficit on interest rate and cross currency swaps 12 086 6 190 12 086 6 190

Fair value gain on listed investment (81 522) (1 840) (81 522) (1 840)

Loss on disposal of investment property 19 431 – 19 431 –

Operating profit before working capital changes 524 700 472 536 524 759 472 613

Change in working capital 8 233 (175 916) 7 982 (175 649)

Decrease/(increase) in receivables (excluding interest accruals) 4 034 (17 658) 3 940 (17 109)

Increase/(decrease) in payables (excluding interest accruals) 4 199 (158 258) 4 042 (158 540)

532 933 296 620 532 741 296 964

20.2 Dividend received

Amount receivable at beginning of the year 8 380 6 768 8 380 6 768

Dividend income from listed investment 10 19 973 15 961 19 973 15 961

Dividend income allocated to Scrip shares 10 (16 980) (7 158) (16 980) (7 158)

Foreign exchange (loss)/gain (222) 463 (222) 463

Amount receivable at end of the year (10 318) (8 380) (10 318) (8 380)

833 7 654 833 7 654

20.3 Distributions paid

Amount payable at beginning of the year (225 232) (212 833) (225 232) (212 833)

Charged to the current year distribution (438 610) (435 129) (438 610) (435 129)

Prepaid distribution on May 2013 Rights Offer relating to March 2013 financial period (29 923) – (29 923) –

Amount payable at end of the year 190 450 225 232 190 450 225 232

(503 315) (422 730) (503 315) (422 730)



Group 2014

Group 2013

Fund 2014

Fund 2013

Notes R’000 R’000 R’000 R’000

20 NOTES TO THE STATEMENTS OF CASH FLOWS (continued)

20.4 Interest paid

Interest payable at beginning of year (10 619) – (10 619) –

Interest charge per statement of comprehensive income (160 085) (91 537) (160 085) (91 537)

Add: interest capitalised (1 887) (1 481) (1 887) (1 481)

Less: interest payable at year end 17 20 663 10 619 20 663 10 619

(151 928) (82 399) (151 928) (82 399)

20.5 Interest received

Interest receivable at beginning of year 675 – 675 –

Interest income per statement of comprehensive income 43 561 37 500 43 502 37 423

Less: interest receivable at year end 13 (2 000) (675) (2 000) (675)

42 236 36 825 42 177 36 748

21 GROUP SEGMENTAL INFORMATION

Segmental information is based on the nature of business activities for which the properties are used. While

investment properties are managed on an individual basis, the group comprises the following main reportable

industry recognised operating segments:

R’000 R’000 R’000

Retail Offices Total

Group: year ended 31 March 2014

Segmental earnings:

Segmental rental revenue and recoveries 297 783 403 606 701 389

Straight-line rental income accrual 888 (16 578) (15 690)

Dividend income 19 973 – 19 973

Total revenue 318 644 387 028 705 672

Operating expenditure (56 350) (77 239) (133 589)

Loss on disposal of investment property (19 431) – (19 431)

Selling costs on investment properties held for sale (362) (191) (553)

Net finance cost 2 461 1 683 4 144

Segmental net operating income 244 962 311 281 556 243

Fair value adjustments 274 155 243 767 517 922

South Africa 192 633 243 767 436 400

International 81 522 – 81 522

Segmental earnings 519 117 555 048 1 074 165



21 GROUP SEGMENTAL INFORMATION (continued)

Reconciliation of segmental results to profit for the year in the statement of profit or loss and comprehensive income:

R’000 R’000 R’000

Allocated Unallocated Total

Rental revenue and recoveries 701 389 – 701 389

Straight-line rental income accrual (15 690) – (15 690)


Total revenue 705 672 – 705 672


Loss on disposal of investment property (19 431) – (19 431)

Selling costs on investment properties held for sale (553) – (553)

Net finance cost 4 144 (120 668) (116 524)

Net operating income 556 243 (162 799) 393 444

Fair value gain on investment properties 436 400 – 436 400

Fair value gain on listed investment 81 522 – 81 522

Fair value adjustment on interest rate and cross currency swaps – (12 086) (12 086)

Profit before income tax 1 074 165 (174 885) 899 280

Taxation – (556) (556)

Profit for the year 1 074 165 (175 441) 898 724

Group: year ended 31 March 2014 Retail Offices Total

Segmental assets, liabilities and reserves

Segmental assets

Property assets 3 633 092 4 563 400 8 196 492

Listed investment 409 224 – 409 224

Current assets 49 834 76 975 126 809

4 092 150 4 640 375 8 732 525

Segmental liabilities

Current liabilities (37 592) (55 454) (93 046)

Net segmental assets 4 054 558 4 584 921 8 639 479

Reconciliation of segmental results to statement of financial position:


Assets

Property assets 8 196 492 – 8 196 492


Derivative financial instruments – 51 897 51 897

Current Assets 126 809 266 998 393 807

Total assets 8 732 525 318 895 9 051 420

Liabilities

Borrowings – (2 903 795) (2 903 795)

Derivative financial instruments – (54 643) (54 643)

Unitholders for distribution – (190 450) (190 450)

Trade and other payables (93 046) (32 606) (125 652)

Total liabilities (93 046) (3 181 494) (3 274 540)

Net assets 8 639 479 (2 862 599) 5 776 880




R’000 R’000 R’000



Segmental earnings

Segmental rental revenue and recoveries 343 670 277 755 621 425

Straight-line rental income accrual 6 605 23 322 29 927


Total revenue 366 236 301 077 667 313


Net finance cost 2 025 1 024 3 049

Segmental net operating income 313 070 247 501 560 571

Fair value adjustments 597 613 123 894 721 507

South Africa 595 773 123 894 719 667

International 1 840 – 1 840

Taxation – (96) (96)

Segmental earnings 910 683 371 299 1 281 982

Reconciliation of segmental results to profit for the year in the statement of profit or loss and comprehensive income:


Rental revenue and recoveries 621 425 – 621 425

Straight-line rental income accrual 29 927 – 29 927


Total revenue 667 313 – 667 313


Net finance cost 3 049 (57 086) (54 037)

Net operating income 560 571 (95 515) 465 056

Fair value gain on investment properties 719 667 – 719 667

Fair value gain on listed investment 1 840 – 1 840

Fair value adjustment on interest rate and cross currency swaps – (6 190) (6 190)

Profit before income tax 1 282 078 (101 705) 1 180 373

Taxation (96) – (96)

Profit for the year 1 281 982 (101 705) 1 180 277



Segmental assets, liabilities and reserves

Segmental assets

Property assets 4 055 608 4 323 000 8 378 608


Current assets 56 607 69 528 126 135

4 422 937 4 392 528 8 815 465

Segmental liabilities

Current liabilities (34 855) (42 133) (76 988)

Net segmental assets 4 388 082 4 350 395 8 738 477




Reconciliation of segmental results to statement of financial position:

R’000 R’000 R’000


Assets

Property assets 8 378 608 – 8 378 608


Current assets 126 135 171 884 298 019

Total assets 8 815 465 171 884 8 987 349

Liabilities

Borrowings – (1 900 808) (1 900 808)

Derivative financial instruments (42 557) (42 557)

Unitholders for distribution – (225 232) (225 232)

Trade and other payables (76 988) (34 421) (111 409)

Total liabilities (76 988) (2 203 018) (2 280 006)

Net assets 8 738 477 (2 031 134) 6 707 343

22

22.1

FINANCIAL INSTRUMENTS

Financial Risk Management

Financial risk factors

The risk management function within the group is carried out in respect of financial risks. Financial risks are risks

arising from financial instruments to which the group is exposed during or at the end of the reporting period. Financial

risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The primary objective of the financial management function is to establish risk limits, and then ensure that exposure

stays within these limits.

This note presents information about the group’s exposure to each of the above risks, as well as the group’s

objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included

throughout these financial statements.

The group’s risk management policies are established to identify and analyse the risks faced by the group, to set

appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and

procedures are reviewed regularly to reflect changes in market conditions and the group’s activities. Risk exposure

and management policies and procedures are consistent with those of the prior year.

Exposure to market, credit and liquidity risk arises in the normal course of business. Derivative financial instruments

are used as and when required to hedge exposure to fluctuations in interest rates and exchange rates.

All explanatory references in this note to the group relate to both the group and the fund.

22.2 Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the

group’s income or the fair 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 returns.



22 FINANCIAL INSTRUMENTS (continued)

22.2 Market risk (continued)

22.2.1 Interest rate risk

The group’s interest rate risk principally arises from long-term borrowings (refer note 16). Borrowings issued at

variable rates expose the group to cash flow interest rate risk. Interest rate swaps have been entered into to achieve

an appropriate mix of fixed and floating rate exposure. Under interest rate swap contracts, the group agrees to

exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal

amounts. Such agreements enable the group to mitigate the cash flow exposure on the issued variable debt. The

group does not have borrowings at fixed rates and therefore has no significant exposure to fair value interest rate risk.

Trade and other receivables and trade and other payables are interest free and with a term of less than one year, so it

is assumed that there is no interest rate risk associated with these financial assets and financial liabilities.

At the end of the reporting period the interest rate profile of the group’s interest-bearing financial instruments was as

follows:

NoteEffective

interest rateCarrying amount

Group 2014 R’000


Local bank accounts 14 3.25% 43 897

Foreign bank account 14 0.00% 2 572

Access facility 14 6.50% 256 835

Borrowings

Nedbank facility A

– Variable portion 16 6.50% 550 000

– Swap D (Nedbank) 16 10.81% 100 000

– Swap H (Nedbank) 16 7.29% 200 000

– Swap I (Nedbank) 16 7.60% 100 000

Nedbank facility B


– Swap E (Nedbank) 16 7.29% 200 000

– Swap F (Nedbank) 16 7.55% 200 000

– Swap G (Nedbank) 16 7.81% 300 000

Nedbank facility C


– Swap J (Nedbank) 16 9.15% 300 000

– Swap K (Nedbank) 16 9.65% 100 000

– Swap L (Nedbank) 16 9.84% 100 000

Nedbank facility D


Rand Merchant Bank Facility A






22.2.1 Interest rate risk (continued)

NoteEffective

interest rateCarrying amount

Group 2013 R’000


Local bank accounts 14 3.00% 40 679

Foreign bank account 14 0.00% 2 663

Access facility 14 6.00% 163 403

Borrowings

Nedbank facility A


– Swap C (Nedbank) 16 11.10% 200 000

– Swap D (Nedbank) 16 10.81% 100 000

Nedbank facility B


Nedbank facility C


Interest rate swaps have been entered into to ensure the group achieves an appropriate mix of fixed and floating rate exposure. The interest rate sensitivity analysis has been determined based on the exposure to the local Nedbank and Rand Merchant Bank interest-bearing financial liabilities balances outstanding at the reporting date and is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. The analysis only accounts for interest rate swaps that were effective during the year of assessment or at the reporting date. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates.

If interest rates had been 1% higher/lower and all other variables were held constant, the group’s profit for the year-ended 31 March 2014 would have decreased/increased by R24 million (2013: R16 million). The effect of an increase/decrease in interest rates will have no impact on equity as the group distributes its earnings in full. The analysis has been prepared on the assumption that all other variables remain constant.

22.2.2 Price risk

The group is exposed to equity price risk as a consequence of its investment in Stenham European Shopping Centre Fund which is measured at fair value (refer note 22.6).

Price risk sensitivity analysis

The price risk sensitivity analysis has been determined based on the fund’s shareholding and the EUR fair value of the investment at 31 March 2014 and assumes a fixed exchange rate in order to isolate price sensitivity. If the price per share of the investment were to increase/decrease by 1% and all other variables held constant, the group’s profit for the year-ended 31 March 2014 would have decreased/increased by R4 091 582 (translated at the closing exchange rate of R14.55) and closing equity would have increased/decreased by the same amount. As this surplus/deficit movement arises on a fair value measurement, it would be transferred from retained earnings to the non-distributable reserve and consequently would have no impact on distributable earnings. Other than the investment in Stenham European Shopping Centre Fund, the fund does not hold any equity securities or commodities.

22.2.3 Foreign exchange risk

The group’s exposure to exchange rate fluctuations arises through the investment in its foreign asset, Stenham European Shopping Centre Fund (refer note 10). During the 2011 financial period, in order to achieve an appropriate level of exposure to foreign currency risk, the group entered into a cross currency swap arrangement with Nedbank Limited (refer note 16). The cross currency swap has a maturity date of 7 November 2014. The cross currency swap financial instrument was revalued to fair value at year-end using Level 2 valuation techniques (refer note 22.6). The group holds funds in an offshore bank account with Nedbank London which are used to facilitate the EUR interest payments under the cross currency swap.





22.2.3 Foreign exchange risk (continued)

The exposure to foreign currency risk at 31 March 2014 and 31 March 2013 is based on the year-end values of the

following EUR denominated assets and liabilities:

2014 2014 2013 2013

Group and Fund EUR’000 R’000 EUR’000 R’000

Dividend receivable 709 10 318 708 8 380

Listed investment 28 125 409 224 26 266 310 722

Cross currency swap loan payable (10 000) (145 500) (10 000) (118 300)

Cash and cash equivalents 177 2 572 225 2 663

The following EUR/ZAR exchange rates applied during the year: Reporting date spot rate

2014 2013

EUR 1 14.55 11.83

Currency risk sensitivity analysis

The sensitivity analysis has been determined based on exposure to fluctuations in the Euro:Rand exchange rate at

the reporting date.

A 5% weakening/(strengthening) of the Rand against the Euro against the net foreign currency exposure as at

31 March 2014 (assuming all other variables were held constant) would result in an increase/(decrease) in the

group’s profit or loss of R13 830 711 (2013: R10 173 247) and an increase/(decrease) in closing equity of

R13 186 199 (2013: R9 621 112). The effect of exchange rate fluctuations on the listed investment and the cross

currency swap loan payable affect profit or loss, however as these surplus/deficit movements arise on fair value

measurements, they are all transferred from retained earnings to the non-distributable reserve and are not distributed-

consequently there is no impact on group distributable earnings. The effect of the 5% exchange rate fluctuation on

distributable earnings would therefore only be R644 513 (2013: R552 135).

22.3 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to

discharge an obligation. The group has no significant concentrations of credit risk. Credit risk arises from cash and

cash equivalents held at banks, trade receivables (including rental receivables from lessees), the dividend receivable

and loan receivables. Credit risk is managed on a group basis. The group structures the levels of credit risk it

accepts by monitoring its exposure to a single counterparty, or groups of counterparties, and to geographical and

industry segments.


Trade and other receivables relate mainly to tenants and deposits with municipalities.

Exposure to credit risk is influenced mainly by the individual characteristics of each tenant. The group’s widespread

tenant base reduces credit risk. The group also has policies in place to ensure that rental contracts are entered into

only with lessees with an appropriate credit history. 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.

Investments, cash and cash equivalents

Exposure to credit risk is limited by only placing funds with reputable financial institutions for investing and cash

handling purposes.




22.3 Credit risk (continued)

Loans to subsidiary

The loan to the group’s wholly owned subsidiary Tyger Hills Office Park is not considered a credit risk due to the

quality of the underlying assets in the subsidiary.

22.3.1 Credit exposure

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit

risk at the reporting date was:

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

Non-derivative financial assets

Trade and other receivables 42 124 40 354 41 069 39 117

Tenant and related receivables 5 037 3 941 5 036 3 625

Other receivables 37 087 36 413 36 033 35 492

Dividends receivable 10 318 8 380 10 318 8 380

Cash and cash equivalents 303 304 206 745 301 366 204 613

Loan to subsidiary – – 179 121 178 303

Derivative financial assets

Interest rate swaps 51 897 – 51 897 –

The directors are of the opinion that, apart from tenant and related receivables, these financial assets have a low

credit risk.

Deposits refundable to tenants may be withheld by the group in part or in whole if receivables due from the tenant are

not settled in cash or in case of other breaches of contract.

22.3.2 Impairment losses

The ageing of tenant and related receivables at the reporting date was:

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

Current 3 524 2 741 3 523 2 466

Past due 30 – 60 days 937 1 007 937 975

Past due 60 – 90 days 593 540 593 538

Past due 90 – 120 days 295 162 295 162

Past due >120 days 2 393 771 2 393 651

7 742 5 221 7 741 4 792

The movement in the allowance for impairment in respect of tenant and related receivables during the year was as follows:

Balance at the beginning of the year (1 280) (1 242) (1 167) (1 242)

Impairment loss (raised)/reversed (1 425) (38) (1 538) 75

Balance at the end of the year (2 705) (1 280) (2 705) (1 167)





22.3.2 Impairment losses (continued)

Impairment losses are recognised on a regular basis after comprehensively assessing the individual circumstances

and credit risk of the tenant. Once the group is satisfied that no recovery of the amount owing is possible the amount

is considered irrecoverable and, net of deposits held, is written off directly against the financial asset.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

Ageing of the impaired related receivables 2 705 1 280 2 705 1 167

1 – 60 days 329 468 329 463

60 – 90 days 189 239 189 237

90+ days 2 187 573 2 187 467

Management have assessed the quality of debtors neither past due nor impaired as low risk:

• The group’s credit policy includes background checks on tenants and the holding of rental deposits, when

assessed neccessary.

• Furthermore, blue chip anchor tenants represent a significant portion of the balance outstanding.

22.4 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

reputational damage.

The group monitors cash flow requirements taking account of rentals receivable on a monthly basis. 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 extreme circumstances that cannot reasonably be

predicted, such as natural disasters. In addition the group has negotiated certain lines of credit with financial

institutions, refer note 16.

The following table details the group’s contractual maturity for its financial liabilities, including interest payable

on borrowings. The table has been drawn up based on the contractual, undiscounted cash flows of the financial

liabilities based on the earliest date the group can be required to pay. Undiscounted cash flows in respect of non-

derivative financial liability balances due within 12 months generally equal their carrying amounts in the statement of

financial position as the effect of discounting is not significant.




22.4 Liquidity risk (continued)

The maturity analysis of financial instruments at 31 March 2014 and 31 March 2013 is as follows:

Carryingvalue

1 – 12 months 1 – 5 years

More than 5 years

Group 2014 R’000 R’000 R’000 R’000

Non-derivative financial liabilities

Trade and other payables 105 039 105 039 – –

Unitholders distribution 190 450 190 450 – –

Borrowings 2 903 795 202 320 3 284 886 –

Derivative financial liabilities

Interest rate swaps 1 159 1 159 – –

Cross currency swaps 53 484 53 484 – –

Group 2013




Borrowings 1 900 808 121 234 2 147 692 –


Interest rate swaps 15 629 9 820 5 809 –

Cross currency swaps 26 928 – 26 928 –

Carryingvalue

1 – 12 months 1 – 5 years

More than 5 years

Fund 2014 R’000 R’000 R’000 R’000




Borrowings 2 903 795 202 320 3 284 886 –


Interest rate swaps 1 159 1 159 – –

Cross currency swaps 53 484 53 484 – –

Fund 2013




Borrowings 1 900 808 121 234 2 147 692 –


Interest rate swaps 15 629 9 820 5 809 –

Cross currency swaps 26 928 – 26 928 –




22.5 Capital risk management

The group’s objective when managing capital is to safeguard its ability to continue as a going concern in order to

provide returns for unitholders and to maintain an optimal capital structure. The group’s policy is to maintain a strong

capital base so as to maintain investor, creditor and market confidence and to sustain the future development of

the business.

The capital structure is governed by the Trust Deed and the Collective Investment Schemes Control Act. The allowed

borrowing capacity is 60% (2013: 30%) of the value of the underlying assets comprising the portfolio, determined on

the last published valuation in the most recent audited financial statements. As at 31 March 2014 the group is within

the allowed borrowing capacity.

Group and Fund: 2014 2013

R’000 R’000

Underlying assets 8 605 716 8 689 330

Borrowings 2 903 795 1 900 808

Utilised capacity 33.7% 21.9%

22.6 Fair value of financial instruments

The fair values of all financial instruments with the exception of interest rate swaps, cross currency swaps and the

investment in Stenham are substantially the same as the carrying amounts reflected on the statement of financial

position. The group measures fair values using the hierarchy as per note 26 that reflects the significance of the inputs

used in making the measurements.

As the group does not hold financial instruments that are traded in active markets, fair values are not based

on quoted market prices or dealer price quotations. As such, the group determines fair values using valuation

techniques. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the

financial instrument at the reporting date, that would have been determined by market participants acting at arm’s

length. The group uses widely recognised valuation models and techniques for determining the fair value of common

and more simple financial instruments, like the interest rate and currency swaps that use only observable market

data and require little management judgement and estimation. Availability of observable market prices and model

inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with

determination of fair values. The interest rate swaps and cross currency swap are valued using the mark to market

valuations, excluding transactions costs, as determined by Nedbank. The investment in Stenham European Shopping

Centre Fund is an investment in a closed fund without an actively traded price. The significant underlying asset per

the statement of financial position of Stenham is the investment property balance, which is valued using a discounted

cash flow model. Sycom’s valuation in Stenham is based on the net asset value per share of the investment translated

at the period end ruling exchange rate.




22.6 Fair value of financial instruments (continued)

The table below analyses financial instruments carried at fair value, by valuation method:

Group and Fund Note Level 1 Level 2 Level 3 Total

2014

Financial assets

Listed investment 10 – – 409 224 409 224

Interest rate swaps – 51 897 – 51 897

Financial liabilities

Cross currency and interest rate swaps 18 – (54 643) – (54 643)

2013

Financial assets

Listed investment 10 – – 310 722 310 722

Financial liabilities

Cross currency and interest rate swaps 18 – (42 557) – (42 557)

A reconciliation of the opening balances to the closing balances for the level 3 valuations is disclosed as follows:

2014 2013

Group and Fund: R’000 R’000

Balance as at beginning of year 310 722 236 756

Rights issue shares acquired – 64 967

Scrip shares acquired 16 980 7 158

Revaluation of investment 81 522 1 841


Underlying net asset value 7 499 (45 392)

Carrying value at end of year 409 224 310 722

Level 2 fair values – Interest rate swaps and cross currency swaps

The following table shows the valuation techniques used in measuring level 2 fair values:

Type Valuation techniqueSignificant unobservable inputs

Inter-relationship between key unobservable inputs and fair value measurements

Interest rate

swaps

Fair valued monthly by Nedbank

Capital using mark to market mid

market values. This involves, inter alia,

discounting the future cash flows using

the curves at the reporting date and

the credit risk inherent in the contract

Not applicable –

observable inputs are

used in the valuation

Not applicable

Cross currency

swaps

Fair valued bi-annually by Nedbank

Capital using mark to market valuation

methodology. This involves, inter alia,

calculating the present value of the

future CCS cash flows.

Not applicable –

observable inputs

are used in the valuation

Not applicable




22.6 Fair value of financial instruments (continued)

Level 3 fair value – Investment in Stenham European Shopping Centre Fund

The significant underlying asset per the statement of financial position of Stenham is the investment property balance.

The investment property has been valued at 31 March 2014 by Jones Lang LaSalle, who are independent and

qualified in accordance with the Appraisal and Valuation Manual published by the Royal Institute of Chartered

Surveyors (RICS). The valuation was prepared in accordance with the RICS Valuation – Professional Standards

published by the Royal Institute of Chartered Surveyors as well as the International Valuation Standards (IVS) on the

basis of Market Value.


Inter-relationship between key unobservable inputs and fair value measurements

The Market Value of the property has

been assessed using the Discounted

Cash Flow (DCF) calculation method.

The valuation takes into account the

agreed rent for the signed leases, the

market rent for currently vacant space

and estimated rents for re-letting of

the space after lease term expiry. In

all instances, the valuers calculated

the DCF for a 10-year period and

assumed a capitalised value based

on a stabilised rental income of

the properties thereafter. After the

DCF-period of 10 years, the valuers

calculate a stabilised rental income.

The capitalised value takes this

stabilised rental income and subtracts

the stabilised expenses, resulting

in the Stabilised Net Operating

Income. This result is capitalised into

perpetuity applying an equivalent

(growth implicit) yield and produces

the Terminal Value Indication. The

resulting value is then discounted

to the valuation date using the

discount rate from term years 1 – 10.

Discounting the remaining Cash Flows

for years 1 – 10 and the Terminal Value

for year 11 to the valuation date (i.e.

the Net Present Value) produces the

Gross Capital Value. After deductions

for Purchaser’s Costs, the Market

Value is obtained.

(a) Financial information used to

calculate rental growth forecasts

(b) Net initial yield (6.43%)

(c) Discount rate (6.9%)

(d) Terminal capitalisation

rate (6.55%)

(e) Non-recoverable expenses

(f) Market lease assumptions for

contract expiry/vacant space

The fair value would increase/

(decrease) based on:

(1) increases/(decreases) in the

stabilised net operating income

(2) (decreases)/increases in the yield

used to calculate the Terminal

Value Indication

(3) (decreases)/increases in the

discount rate used to calculate

the Gross Capital Value.



23 RELATED PARTIES

Parties are considered to be related if one party has the ability to control the other party or exercise significant

influence over the other party in making financial or operational decisions. The units of the fund are widely held.

During the financial year, Sycom Property Fund became an associate of Acucap Properties Limited.

Identity of the related parties with whom material transactions have occurred

Entity Relationship

Sycom Property Fund Managers Limited The management company of Sycom Property Fund

Tyger Hills Office Park Proprietary Limited The entity is a wholly owned subsidiary of Sycom Property Fund

Centre South Proprietary Limited (dormant) The entity is a wholly owned subsidiary of Sycom Property Fund

Fairy Glen Proprietary Limited (dormant) The entity is a wholly owned subsidiary of Sycom Property Fund

Fourways Crossing Retail Centre Proprietary Limited (dormant)

The entity is a wholly owned subsidiary of Sycom Property Fund

Sycom Properties Proprietary Limited (dormant) The entity is a wholly owned subsidiary of Sycom Property Fund

Acucap Properties Limited Sycom Property Fund is an associate of Acucap Properties Limited

Acucap Management Services Proprietary Limited The entity is a wholly owned subsidiary of Acucap Properties Limited

Somerset Mall Property Management Company Proprietary Limited

Sycom Property Fund Managers Limited jointly controlled the entity until 1 October 2013

FC Property Management Company Proprietary Limited

Sycom Property Fund Managers Limited jointly controls the entity.

Woodlands Office Park Property Management Company Proprietary Limited (dormant)

Sycom Property Fund Managers Limited controls the entity.

Material related party transactions 2014 2013

Group and Fund R’000 R’000

Asset Management Fees paid to Sycom Property Fund Managers Limited in terms of the Trust Deed:

Service charge 39 067 37 178

Initial charge on new units issued 9 000 –

Property Management fees

Acucap Management Services Proprietary Limited 18 102 13 000

Sycom Property Fund Managers Limited* 1 032 2 161

Somerset Mall Property Management Company Proprietary Limited 967 1 878

FC Property Management Company Proprietary Limited 1 594 1 490

Woodlands Office Park Property Management Company Proprietary Limited – 906

Letting Commissions fees

Acucap Properties Limited 1 128 2 680

Acucap Management Services Proprietary Limited 6 437 11 466

Asset acquisition fees


* Fee includes property management fee paid directly to Sycom Property Fund Managers Limited as well as the Fund’s percentage

share of property management fees paid during the year to Sycom Property Fund Managers Limited by Fourways Crossing Retail

Centre and Somerset Mall.



23 RELATED PARTIES (continued)

Material related party transactions (continued) 2014 2013

R’000 R’000

Fund

Interest income earned from subsidiaries

Tyger Hills Office Park Proprietary Limited 11 537* 10 191

* Refer note 11.

24 OPERATING LEASE RECEIVABLES

At the reporting date the Group and Fund had contracted with tenants for the following future minimum lease payments under operating leases.

Group 2014

Group 2013

Fund 2014

Fund 2013

R’000 R’000 R’000 R’000

Less than one year 589 140 643 278 573 334 629 366

Between one and five years 1 135 695 1 561 160 1 112 388 1 538 633

More than five years 298 886 344 586 298 784 344 438

2 023 721 2 549 024 1 984 506 2 512 437

25 CONTINGENCIES AND CAPITAL COMMITMENTS

Commitments in respect of capital expenditure to be incurred in the ensuing year:

Contracted* 285 000 288 306 285 000 287 016

Authorised but not contracted for 432 591 1 246 827 432 591 1 246 087

* Contracted capital committments include capital expenditure relating to Sycom’s purchase of the completed development at

Roggebaai Place from Braamcor (R285 000 000).

26

26.1

USE OF ESTIMATES AND JUDGEMENTS

The management company discusses the development, selection and disclosure of the group’s critical accounting

policies and estimates and the application of these policies and estimates with its Audit Committee.

Judgements

Information about judgements made in applying accounting policies that have an effect on the amounts recognised in

the financial statements are included in the following notes:

Note 12 – judgement is used to determine the classification of joint arrangements;

Note 22.3.2 – in determining the allowance for impairment of tenant arrears, judgement is used to determine the

recoverability of tenant arrears based on security held, historic experience with similar tenants, the period the amount

is overdue and knowledge of the tenants’ circumstances.



26 USE OF ESTIMATES AND JUDGEMENTS (continued)

26. 2 Assumptions and estimation uncertainties

Measurement of fair values

A number of the group’s accounting policies and disclosures require the measurement of fair values, for both financial

and non-financial assets and liabilities. When measuring the fair value of an asset or liability, the group uses market

observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on

the inputs used in the valuation techniques as follows:

• Level 1: Quoted prices (unadjusted) in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (i.e: as prices) or indirectly (i.e: derived

from prices). This category includes instruments valued using: quoted market prices in active markets for similar

instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or

other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments

where the valuation technique includes inputs not based on observable data and the unobservable inputs have a

significant effect on the instrument’s valuation. This category also includes instruments that are valued based on

quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to

reflect differences between the instruments.

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the

fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value

hierarchy as the lowest level input that is significant to the entire measurement.

The group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during

which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

Note 8 – Investment properties and related receivables;

Note 9 – Investment properties held for sale and related receivables;

Note 22 – Financial instruments.

27 CHANGE IN ACCOUNTING POLICY

27. 1 Accounting policy for disposal of investment property

The group has changed its accounting policy regarding the disposal of investment properties. Previously the

accounting policy stated that immediately before the sale, the carrying value of the investment property was adjusted

to the transaction price (as the most recent evidence of fair value) and the resulting gain or loss was recorded in profit

or loss (as a fair value change). The new accounting policy does not require the fair value to be updated immediately

prior to the sale but rather considers the carrying amount at the date of the last published statement of financial

position (plus subsequent capital expenditure post that date) as the fair value. A gain or loss on disposal is then

calculated based on the difference between the proceeds and this carrying value.

The change in accounting policy has no impact on the results as reported in the previous financial period as no

disposals of investment property took place during this period.




27 CHANGE IN ACCOUNTING POLICY (continued)

27. 2 New standards that became effective in the current year

The group has adopted the following new standards and amendments to standards, with an initial application date of

1 April 2013:

IFRS 10 – Consolidated financial statements

As a result of IFRS 10 (2011), the group has changed its accounting policy for determining whether it has control over

and subsequently consolidates investees. IFRS 10 introduces a new control model that focuses on whether the group

has power over an investee, exposure or rights to variable returns from its involvement with the investee and ability

to use its power to affect those returns. There was no change to any previous control conclusions for the group’s

investees (the only active investee being Tyger Hills Office Park) as a result of the change to the new control model

and therefore no changes in accounting. There has therefore been no impact on the recognised assets, liabilities and

comprehensive income of the group.

IFRS 11 – Joint Arrangements

As a result of IFRS 11, the group has changed its accounting policy for its interests in joint arrangements. Under

IFRS 11, the group is required to classify its interests in joint arrangements as either joint operations or joint ventures.

When making this assessment, the group considered the structure of the arrangements, the contractual terms of the

arrangements and any other facts and circumstances. Previously, the structure of the arrangement was the sole focus

of classification. Notwithstanding the above, there has been no change in the group’s accounting for its interests

in joint arrangements and jointly held investment properties continue to be accounted for in the group financial

statements on a line-by-line basis, applying the group’s percentage ownership share to the underlying assets,

liabilities, income and expenditure. There has therefore been no impact on the recognised assets, liabilities and

comprehensive income of the group.

IFRS 12 – Disclosure of Interests in Other Entities

As a result of IFRS 12, the group has expanded its disclosures about its interests in subsidiaries.

IFRS 13 – Fair Value Measurement

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value

measurements when such disclosures are required or permitted by other IFRSs. It unifies the definition of fair value

as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date. It replaces and expands the disclosure requirements about fair

value measurements in other IFRSs, including IFRS 7. As a result, the group has included additional disclosures

in this regard. In accordance with the transitional provisions of IFRS 13, the group has applied the new fair value

measurement guidance prospectively. Notwithstanding the above, the change had no significant impact on the

measurement of the group’s assets and liabilities.

28 EVENTS AFTER REPORTING DATE

Corporate activity

Acucap Properties Limited

On 26 March 2014, Acucap Properties Limited (“Acucap”) announced that it was extending an offer (“the Offer”) to all

holders of Sycom Units (“Sycom Unitholders”), other than Acucap and its wholly-owned subsidiary, Sycom Property

Fund Managers Limited, to acquire all their Sycom Units in exchange for Acucap securities in the ratio of 58 Acucap

securities for every 100 Sycom Units held on the closing date of the Offer, on certain terms and conditions. The Offer

was approved by Acucap linked unitholders on 5 May 2014 and became unconditional

on that date. Unitholders holding 79 798 674 units accepted the Offer increasing Acucap’s holding to 73.3%

(effective date 7 July 2014).

Growthpoint Properties Limited

As at the date of this report, Growthpoint Properties Limited holds a 23% stake in Sycom Property Fund.

29 APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements were approved by the Board of Directors of the Management Company and authorised for issue on 12 June 2014.


Unaudited supplementary schedulesProperty Portfolio information at 31 March 2014

1 GEOGRAPHICAL PROFILE – RENTABLE AREA

Gauteng 68.3%

Western Cape 26.0%

Eastern Cape 5.7%

2 GEOGRAPHICAL PROFILE – REVENUE

Gauteng 68.1%

Western Cape 25.4%

Eastern Cape 6.5%

3 SECTORAL PROFILE – RENTABLE AREA

Retail 40.9%

Offices 59.1%

4 SECTORAL PROFILE – REVENUE

Retail 41.5%

Offices 58.5%

5 TENANT PROFILE%

of revenueNumber of

tenantsNumber of

leases

Large listed companies, SA Government and parastatals and large multi-national companies

67.4% 118 305

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

13.6% 49 112

Other 19.0% 311 400

6 VACANCY PROFILE BY SECTOR BY RENTABLE AREA

Retail 1.2%

Offices 2.6%

Let 96.2%

7 LEASE EXPIRY PROFILE BY REVENUE BY SECTOR Total Retail Offices

Mar-15 17.5% 8.5% 9.0%

Mar-16 15.9% 12.6% 3.3%

Mar-17 27.2% 12.1% 15.1%

Mar-18 7.2% 3.4% 3.8%

Mar-19 12.1% 3.2% 8.9%

thereafter 20.1% 1.7% 18.4%

100.0% 41.5% 58.5%


Unaudited supplementary schedulesProperty portfolio information at 31 March 2014 (continued)

8 LEASE EXPIRY PROFILE BY AREA BY SECTOR Total Retail Offices

vacancy 3.9% 1.3% 2.6%

Mar-15 14.7% 5.4% 9.3%

Mar-16 17.2% 13.7% 3.5%

Mar-17 27.0% 11.4% 15.6%

Mar-18 6.7% 2.6% 4.1%

Mar-19 11.6% 2.5% 9.1%

thereafter 18.9% 4.0% 14.9%

9 WEIGHTED AVERAGE RENTAL PER SQUARE METRE BY RENTABLE AREA PER SECTOR

Retail R149.28

Offices R150.46

10 WEIGHTED AVERAGE ESCALATION PROFILE BY SECTOR BY RENTABLE AREA

Retail 7.9%

Offices 8.2%

Total 8.1%

11 AVERAGE ANNUALISED PROPERTY PORTFOLIO YIELD

Offices 7.6%

Retail 7.0%

Valuation at 31 March 2014

(Sycom ownership)

Sycom share of the

RentableArea

Weighted average

rental per m2 (including

parking rental) Description

2014 2014

(R’000) m² R/m2

Retail 3 378 883 145 169 149.28

Fourways Crossing Retail Centre 496 500 23 644 141.70 William Nicol Highway, Fourways

N1 City Mall 619 080 26 726 137.94 Louwtjie Rothman Street, Goodwood

Paarl Mall 733 000 36 250 140.80 Cecile Road, Paarl

Vaal Mall 1 012 803 38 337 158.05 Vanderbijlpark

Greenacres 517 500 20 212 172.45 Mount Road, Port Elizabeth

Office 4 149 500 209 747 150.46

Advocates’ Chambers 126 500 7 143 134.50 Protea Place, Sandton

ENS Building 323 000 18 065 150.45 Foreshore, Cape Town

Georgian Crescent 85 000 6 312 134.61 Georgian Crescent, Bryanston

Harrowdene Office Park 780 000 42 082 141.43 Woodmead, Sandton

Riverwoods Office Park 155 000 10 649 140.09 Civin Drive, Bedfordview

The Woodlands Office Park 2 505 000 114 396 157.76 Woodmead Drive, Woodmead, Sandton

Tyger Hills Office Park 175 000 11 100 135.61 Hendrik Verwoerd Drive, Parow

Total 7 528 383 354 916 149.96



Unaudited supplementary schedulesAnalysis of unitholders

31 March 2014

Number of unit

holdersNumber of

units

% of issued

units

Unitholder spread per JSE Listings Requirements

Public 2 495 132 688 954 66.30%

Non-public 4 67 442 710 33.69%

– Directors 2 464 571 0.23%

– Sycom Property Fund Managers Limited 1 150 000 0.07%

– Unitholders owning more than 10% of issued units 1 66 828 139 33.39%

Total 2 499 200 131 664 100.00%

Unitholders owning 5% or more of the units

Acucap Properties Limited 66 828 139 33.39%

Government Employees Pension Fund 14 275 169 7.13%

81 103 308 40.52%

Interest of directors of Sycom Property Fund Managers Limited in Sycom Property Fund

Direct beneficial interest

FM Berkeley 238 001 0.12%

PA Theodosiou 226 570 0.11%

Directors' interest 464 571 0.23%

Interest of company secretary of Sycom Property Fund Managers Limited

Indirect beneficial interest

HH-O Steyn 16 000 0.01%


Unaudited supplementary schedulesAnalysis of unitholders (continued)

31 March 2013

Number of unit

holdersNumber of

units

% of issued

units

Unitholder spread per JSE Listings Requirements

Public 2 562 115 139 799 46.32%

Non-public 5 133 464 342 53.68%

– Directors 2 410 090 0.16%

– Sycom Property Fund Managers Limited 1 150 000 0.06%

– Unitholders owning more than 10% of issued units 2 132 904 252 53.46%

Total 2 567 248 604 141 100.00%

Unitholders owning 5% or more of the units

Acucap Properties Limited 48 678 564 19.58%

Hyprop Investments Limited 84 225 688 33.88%

132 904 252 53.46%

Interest of directors of Sycom Property Fund Managers Limited in Sycom Property Fund

Direct beneficial interest

FM Berkeley 210 090 0.08%

PA Theodosiou 200 000 0.08%

Directors' interest 410 090 0.16%

Interest of company secretary of Sycom Property Fund Managers Limited

Indirect beneficial interest

H H-O Steyn 12 000 0.00%



ANNUAL FINANCIAL STATEMENTSSYCOM PROPERTY FUND

MANAGERS LIMITED


Annual Financial StatementsSycom Property Fund Managers Limited

Contents Pages

Directors’ Responsibility Statement 77

Audit and Risk Committee Report 78

Director’s Report 79

Independent Auditor’s Report 80

Statement of Financial Position 81

Statement of Comprehensive Income 82

Statement of Changes in Equity 83

Statement of Cash Flows 84

Notes to the financial statements 85


The directors are responsible for the preparation and fair presentation of the annual financial statements of Sycom

Property Fund Managers Limited, comprising the statement of financial position at 31 March 2014, and the statements of

comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial statements

which include a summary of significant accounting policies and other explanatory notes, in accordance with International

Financial Reporting Standards and the requirements of the Companies Act of South Africa. In addition, the directors are

responsible for preparing the directors’ report.

The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation

of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate

accounting records and an effective system of risk management.

The directors have made an assessment of the ability of the company to continue as a going concern and have no reason to

believe that the business will not be a going concern in the year ahead.

The auditor is responsible for reporting on whether the financial statements are fairly presented in accordance with the

applicable financial reporting framework.

APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements of Sycom Property Fund Managers Limited, as identified in the first paragraph, were

approved by the board of directors on 12 June 2014 and signed by

GK Everingham PA Theodosiou

Chairman Chief Executive Officer

Sycom Property Fund Managers Limited Sycom Property Fund Managers Limited

Directors’ Responsibility Statementfor the year ended 31 March 2014

ANNUAL FINANCIAL STATEMENTS: SYCOM PROPERTY FUND MANAGERS LIMITED


Audit and Risk Committee Report

The Sycom Audit and Risk Committee (“the Committee”) is a formal committee of the board of Sycom Property Fund

Managers Limited ("the company") and operates within written terms of reference. The Committee has an independent

role with accountability to both the board and shareholders. The Committee’s responsibilities include the statutory duties

prescribed by the Companies Act of South Africa, activities recommended by King III and the responsibilities assigned by

the board. The Committee meets at least three times per year.

The Committee currently comprises three independent non-executive directors who are all suitably skilled directors.

The Committee members are Brian Stocks (Chairman), Sello Moloko and Frank Berkeley. Abridged curriculum vitae of the

committee members appear on page 16 of the Integrated Annual Report.

The Committee and external professionals review the on-going effectiveness of the internal financial and operating controls

and frameworks on behalf of the board of directors.

The external auditors report to the Committee who review the external audit findings. The Committee monitors the

independence of the external auditors and is of the view that the external auditors are independent of the company.

The Committee nominates the appointment of external auditors to shareholders of the company. The Committee pre-approves

contracts for non-audit services to be rendered by the external auditor.

The minutes of the Committee meetings are open for inspection by members of the board of directors. There is close

communication between the board of directors, the 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 the inadequacy of the internal control environment.

Sycom Property Fund is managed by Acucap Properties Limited, the 100% shareholder of Sycom Property Fund Managers

Limited, the manager in terms of the Trust Deed. Acucap has a small management team and a flat organisational structure,

and this does not support a separate internal audit function. The Committee has assessed and noted that the financial director

has the appropriate expertise and experience required for the position.

The Committee has evaluated the annual financial statements of Sycom Property Fund Managers Limited for the year-

ended 31 March 2014 and based on the information provided considers that they comply, in all material respects, with the

requirements of the Companies Act of South Africa, and International Financial Reporting Standards. The Committee concurs

with the board of directors and management that the adoption of the going-concern premise in the preparation of the financial

statements is appropriate. The Committee has therefore, at their meeting held on 2 June 2014, recommended the adoption of

the annual financial statements by the board of directors.

BM Stocks

Audit and Risk Committee Chairman

12 June 2014



OPERATIONS

The company continues to manage Sycom Property Fund and earns fees for providing this service.

At 31 March 2014 the company held 150 000 Sycom units (2013: 150 000) at a valuation of R3.450 million

(2013: R4.304 million) from which it earns investment income.

EARNINGS

No net income was earned for the year under review (2013: nil) and no dividend was declared out of revenue profits.

CAPITAL COMPLIANCE

The eligible capital of R952 298 exceeds the minimum capital requirement of R802 606 set by the Collective Investment

Schemes Control Act of 2002.

DIRECTORATE

The Board of Directors for the year consisted of the following directors:

GK Everingham*+ (Chairman of the Board of Directors)

MS Moloko*+ (Deputy Chairman of the Board of Directors)

FM Berkeley*+

JPD Flanagan*+

GR Jones

CB Marlow (Financial Director)

BM Stocks*+ (Chairman of the Audit Committee)

PA Theodosiou#

There were no changes to the board of directors during the 2014 financial year. Subsequent to 31 March 2014, CB Marlow

resigned as financial director with effect from 20 June 2014 and will remain on the board as a non-executive director. C Kotze

was appointed as financial director with effect from the later of 21 June 2014 and one business day following receipt of

approval by the Financial Services Board of his appointment.

* Non-Executive + Independent # British

SECRETARY

The Management Company’s Secretary is H H-O Steyn CA (SA)

Business address: Suite A11, Westlake Square, Westlake Drive, Westlake

Postal address: PO Box 31079, Tokai, 7966

Directors’ Report


Independent Auditor’s Reportto the shareholder of Sycom Property Fund Managers Limited

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Sycom Property Fund Managers Limited, which comprise the statements of

financial position at 31 March 2014, and the statements of comprehensive income, changes in equity and cash flows for the

year then ended, and the notes to the financial statements which include a summary of significant accounting policies and

other explanatory notes, as set out on pages 81 to 94.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance

with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such

internal control as the directors determine is neccessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement

of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal

control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

OPINION

In our opinion, these financial statements present fairly, in all material respects, the financial position of Sycom Property Fund

Managers Limited at 31 March 2014, and its financial performance and cash flows for the year then ended in accordance with

International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

OTHER REPORTS REQUIRED BY THE COMPANIES ACT

As part of our audit of the financial statements for the year-ended 31 March 2014, we have read the Directors’ Report and

the Audit and Risk Committee’s Report for the purpose of identifying whether there are material inconsistencies between

these reports and the audited 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 financial

statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

KPMG Inc.

P J Conradie

Chartered Accountant (SA)

Registered Auditor

Director

12 June 2014

1 Mediterranean Street

Foreshore

Cape Town



2014 2013

Note R’000 R’000

Assets

Non-current assets 3 450 4 304

Investment in securities 6 3 450 4 304

Current assets 10 164 12 439

Trade and other receivables 8 9 976 12 350

Cash and cash equivalents 188 89

Total assets 13 614 16 743

Equity and liabilities

Capital and reserves 3 529 4 383

Share capital 9 880 880

Non-distributable reserve 2 649 3 503

Current liabilities

Trade and other payables 11 10 085 12 360

Total equity and liabilities 13 614 16 743

Statement of Financial Positionat 31 March 2014


2014 2013

Note R’000 R’000

Revenue 49 967 40 903

Investment income from listed investment units 268 255

Property management fees 14 1 632 3 470

Asset management fees from Sycom Property Fund 14 39 067 37 178

Initial fees from Sycom Property Fund 14 9 000 –

Administrative expenses 49 967 40 903

Auditor’s remuneration – audit fees 109 70

Directors’ emoluments 4 1 195 911

Management fee 47 927 38 292

Other expenses 736 1 630

Profit before income tax – –

Profit for the year – –


Change in value of listed shares, net of taxation (854) 990

Total comprehensive income for the year (854) 990

Statement of Comprehensive Incomefor the year ended 31 March 2014



Share capital

Non-distributable

reserveRetained earnings Total

R’000 R’000 R’000 R’000

Balance at 31 March 2012 880 2 513 – 3 393


Profit for the year – – – –


Surplus on the revaluation of investment in property fund – 516 516

Deferred capital gains tax on revaluation of listed shares * – 474 474

Total comprehensive income for the year – 990 – 990

Balance at 31 March 2013 880 3 503 – 4 383


Profit for the year – – – –


Deficit on the revaluation of investment in property fund – (854) – (854)

Total comprehensive income for the year – (854) – (854)

Balance at 31 March 2014 880 2 649 – 3 529

* The deferred capital gains tax previously raised on the revaluation of the listed shares was reversed in the year ended 31 March 2013.

Statement of Changes in Equityfor the year ended 31 March 2014


Statement of Cash Flowsfor the year ended 31 March 2014

2014 2013

Note R'000 R'000

Cash flows from operating activities

Cash utilised in operations 12 (268) (255)

Investment income 268 255

Changes in working capital 13 99 29

Net cash inflow in the current year 99 29

Cash and cash equivalents at beginning of the year 89 60

Cash and cash equivalents at end of the year 188 89



Notes to the financial statementsfor the year ended 31 March 2014

1 GENERAL INFORMATION

Sycom Property Fund Managers Limited (“the company”) is a limited company incorporated in South Africa.

2 ADOPTION OF NEW AND REVISED STANDARDS

The relevant Standards that are not yet effective for March 2014 year-ends are identified in the table below, together

with the effective dates:

StandardEffective

Date *

Applicable to Sycom Property

Fund Managers Limited

Expectedimpact?

Amendments to IAS32 Offsetting Financial Assets and Financial Liabilities 01-Jan-14 yes not material

IFRS9 (amendments) Financial Instrumentsto be

decided yes not material

* Effective date is for periods beginning on or after the stated date, unless otherwise indicated.

All Standards and Interpretations will be adopted at their effective date.

Standards and Interpretations that are not applicable to the business of Sycom Property Fund Managers Limited and will have no

impact on future financial statements are not included in the list above.

3 ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are set out below. These

policies have been consistently applied to all years presented, unless otherwise stated.

3.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)

and interpretations, as issued by the International Accounting Standards Board (IASB), the requirements of the

Collective Investment Schemes Control Act of 2002 and the requirements of the South African Companies Act, 2008.

These financial statements were prepared by Melissa Latimer CA(SA), supervised by Baden Marlow CA(SA).

3.2 Basis of measurement

The financial statements have been prepared on a going concern basis, applying a historical cost convention,

except for the revaluation of available for sale financial assets which are measured at fair value. The principal

accounting policies applied in the preparation of the financial statements are set out below. These policies have been

consistently applied to all years presented, unless otherwise stated.

Functional and presentation currency

The functional currency is South African Rands, which has been used for the preparation of the financial statements,

rounded to the nearest thousand.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates

and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities,

income and expenses. The estimates and associated assumptions are based on historical experience and various

other factors that are believed to be reasonable under the circumstances, the results of which form the basis of

making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if the revision affects only that period, or the period of the

revision and future periods if the revision affects both current and future periods.



3. 3 Financial instruments

A financial instrument is recognised when the company becomes a party to the contractual provisions of the

instrument.

3.3.1 Financial assets

Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held-

to-maturity financial assets and available-for-sale financial assets, as appropriate. The company determines the

classification of its financial assets at initial recognition. When financial assets are recognised initially, they are

measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable

transactions costs.

Financial assets are derecognised only when the contractual rights to the cash flows from the financial asset expire or

the company transfers substantially all risks and rewards of ownership.

The company’s financial assets consist of loans and receivables and available for sale financial assets.

3.3.1.1 Loans and receivables


Financial assets recognised in the statement of financial position as trade and other receivables are classified as

loans and receivables. They are recognised initially at fair value and subsequently measured at amortised cost less

allowance for impairment.


Cash and cash equivalents are also classified as loans and receivables. They are subsequently measured at

amortised cost. Cash and cash equivalents includes cash on hand, deposits held on call with banks and other

short-term highly liquid investments.

3.3.1.2 Available-for-sale financial assets

The company’s investment in equity securities (of Sycom Property Fund) is classified as an available-for-sale financial

asset. Subsequent to initial recognition the investment is recognised at fair value, which is the closing quoted price

of the traded units as listed by the Johannesburg Securities Exchange Limited ("JSE") at the reporting date. The gain

and loss on the revaluation of the investment is recognised directly in other comprehensive income and presented in

equity. On realisation of the investment, any cumulative gain or loss previously recognised in equity is transferred to

profit or loss.

3.3.2 Financial liabilities

All trade and other payables are classified as other financial liabilities. Initial recognition is at fair value less directly

attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised

cost using the effective interest method. A financial liability is derecognised when the contractual obligation under

the liability is discharged, cancelled or expires. The fair value of a non-interest bearing liability is its discounted

repayment amount. If the due date of the liability is less than one year, discounting is omitted.

3.3.3 Offset

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position

when the company has a legally enforceable right to set off the recognised amounts, and intends to either settle on a

net basis, or to realise the asset and settle the liability simultaneously.





3. 4 Impairment

Financial assets

A financial asset not measured at fair value through profit or loss 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 impact on the estimated future cash flow of that

asset, and these can be reliably estimated.

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. All impairment losses

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.

3. 5 Revenue recognition

Investment income

Investment income comprises distributions received from the investment in Sycom Property Fund and is recognised

when the company’s right to receive payment has been established.

Service and property management fees

Service and property management fee income earned is brought into account in the period to which it relates.

3. 6 Taxation

The taxation expense comprises current and deferred tax. The taxation expense is recognised in profit or loss except

to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised

in other comprehensive income.

Current tax comprises tax payable calculated on the basis of the expected taxable income for the period, using

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 in respect of temporary differences. Temporary differences are differences between the

carrying amount of assets and liabilities for financial reporting purposes and their tax bases. The amount of deferred

tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and

liabilities using tax rates enacted or substantively enacted at the reporting date. The effect on deferred tax of any

changes in tax rates is recognised in profit or loss except to the extent that it relates to deferred tax previously

recognised in other comprehensive income.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against

which the associated unused tax losses and deductible temporary differences can be utilised.

Refer note 5 for detail regarding the introduction of the REIT regime.

3.7 Minimum capital requirements

In terms of the Collective Investment Schemes Control Act, 2002, the company is required to maintain a minimum

capital which is based on a formula. In terms of this formula, the minimum capital for the company is R802 606

(2013: R855 334).


4 FEES FOR SERVICES AS DIRECTORS

2014 2013

R'000 R'000

Independent non-executive

GK Everingham 265 199

FM Berkeley 260 196

JPD Flanagan 200 162

MS Moloko 250 177

BM Stocks 220 177

Total 1 195 911

5 TAXATION

Income Tax

Income tax is calculated at 28% of the taxable income for the year. No provision for normal company taxation has

been made as a result of taxable income in the company amounting to zero (2013: Nil). At the reporting date Sycom

Property Fund Managers Limited had an estimated tax loss of R16 049 (2013: R16 049) available for offset against

future profits.

REIT legislation

The parent company of Sycom Property Fund Managers Limited, Acucap Properties Limited, converted to a Real

Estate Investment Trust (REIT) effective 1 April 2013. As Sycom Property Fund Managers Limited is a wholly-

owned subsidiary of Acucap Properties Limited, it falls into the definition of a controlled company for the purposes

of the REIT legislation. The tax dispensation under the REIT regime will therefore apply to Sycom Property Fund

Managers Limited.

Capital gains implications for a REIT or controlled company

In terms of the REIT legislation, any capital gains/losses determined in respect of the disposal of a share in a REIT by

either a REIT or a controlled company will be exempt from capital gains tax.

Deferred tax in respect of listed investment

Deferred capital gains tax previously arose on the revaluation of the listed investment held in Sycom Property Fund.

As Sycom Property Fund converted to a REIT effective 1 April 2013, this means that capital gains/losses determined

in respect of the disposal by Sycom Property Fund Managers Limited of its investment in Sycom Property Fund, will

be exempt from capital gains taxation. Accordingly, as there are no future capital gains tax consequences associated

with the sale of the units held in Sycom Property Fund, no deferred capital gains tax has been provided for.

6 INVESTMENT IN LISTED SECURITIES

Available-for-sale investments carried at fair value:

Listed: 150 000 (2013: 150 000) units in Sycom Property Fund

Balance at beginning of the year 4 304 3 788

(Deficit)/surplus on revaluation (854) 516

Balance at end of the year 3 450 4 304




7 INTEREST IN SUBSIDIARIES AND JOINT VENTURES

Issued Share Capital

2014

Issued Share

Capital2013

Percentageholding

2014

Percentageholding

2013

R R

Subsidiaries

Non-trading

Woodlands Office Park Property Management Company Proprietary Limited 100 100 100% 100%

Joint Ventures

FC Property Management Company Proprietary Limited 100 100 50% 50%

Somerset Mall Property Management Company Proprietary Limited* – 100 0% 50%

* The company’s interest in the Somerset Mall Management Company Proprietary Limited was sold to Hyprop on 1 October 2013.

The directors have valued these investments at cost at the financial year-end. The cost of the share investments is not

shown in the statement of financial position as they are less than R1 000.

Sycom Property Fund Managers Limited does not consolidate its interest in the Woodlands Office Park Property

Management Company nor does it equity account its interest in the joint venture companies, after the application of

IFRS10:4(a).

2014 2013

R’000 R’000

8 TRADE AND OTHER RECEIVABLES

Service and property management fees receivable 9 919 12 270

Prepayments 57 67

VAT receivable – 13

9 976 12 350

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

The company has no customers as its purpose is to act as the manager of Sycom Property Fund in terms of the Trust

Deed. No provision for impairment losses has been raised at the reporting date as outstanding receivables relate

primarily to the service and management fees due from Sycom Property Fund.

9 SHARE CAPITAL

Authorised

2 000 000 (2013: 2 000 000) Ordinary shares of R1 each 2 000 2 000

Issued

880 000 (2013: 880 000) Ordinary shares of R1 each 880 880


10 DEFERRED TAXATION

The deferred capital gains tax previously arose on the revaluation of the investment held by Sycom Property Fund

Managers Limited in the listed equity securities of Sycom Property Fund (refer notes 5 and 6) and was recognised

directly in other comprehensive income. As Sycom Property Fund was converted to a Real Estate Investment Trust

(REIT) effective 1 April 2013 and Sycom Property Fund Managers Limited is a controlled company for the purposes

of the REIT legislation (refer note 5), this means that capital gains/losses determined in respect of the disposal by

Sycom Property Fund Managers Limited of its investment in Sycom Property Fund, will be exempt from capital gains

tax. Accordingly, as there are no future capital gains tax consequences associated with the sale of the units held in

Sycom Property Fund, the balance of the deferred capital gains tax was reversed in the previous financial period.

The movement for the year in the deferred taxation position was as follows:

2014 2013

R'000 R'000

Balance at beginning of the year – 474

Movement for the year – (474)

Balance at end of the year – –

11 TRADE AND OTHER PAYABLES

Trade and other payables 10 085 12 360

Trade and other payables mainly comprise amounts outstanding in terms of asset management fees due to Acucap

Properties Limited. The directors consider the carrying amount of trade payables to approximate the fair value.

12 CASH UTILISED IN OPERATIONS

Income before taxation – –

Adjusted for:

Investment Income (268) (255)

(268) (255)

13 CHANGES IN WORKING CAPITAL

Decrease/(increase) in receivables 2 374 (9 347)

(Decrease)/increase in payables (2 275) 9 376

99 29




14 RELATED PARTIES TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant

influence over the other party in making financial or operational decisions.

Entity Relationship

Acucap Properties Limited Holds 100% of the issued share capital of Sycom Property Fund Managers Limited.

Sycom Property FundSycom Property Fund Managers Limited is the management company of Sycom Property Fund.

Fourways Crossing Retail Centre

Sycom Property Fund Managers Limited has a 50% equity holding in the management company of Fourways Crossing Retail Centre (2013: 50%). Refer note 7.

Woodlands Office ParkSycom Property Fund Managers Limited has a 100% (2013: 100%) equity holding in the previous management company of the Woodlands Office Park. Refer note 7.

Somerset Mall

Sycom Property Fund Managers Limited had a 50% equity holding in the management company of Somerset Mall until 30 September 2013 (current holding at 31 March 2014 is zero). Somerset Mall is not a related party at 31 March 2014, but was a related party until 30 September 2013. Refer note 7.

Material Related Party Transactions:

Asset management fees earned from Sycom Property Fund in terms of the Trust Deed:

2014 2013

R’000 R’000

Service charge 39 067 37 178

Initial charges 9 000 –

48 067 37 178

Property management fees earned:

Sycom Property Fund 381 943

Fourways Crossing Retail Centre 733 718

Somerset Mall * 518 1 002

Woodlands Office Park – 807

1 632 3 470

Management and initial fees expensed:


47 927 38 292

* Property management fees earned until 30 September 2013, following which Sycom Property Fund Managers Limited’s interest

in the Somerset Mall Management Company Proprietary Limited was disposed of to Hyprop Investments Limited, effective

1 October 2013.


15 FINANCIAL INSTRUMENTS

Financial Risk Management

15.1 Financial risk factors

The risk management function within the company is carried out in respect of financial risks. Financial risks are risks

arising from financial instruments to which the company is exposed during or at the end of the reporting period.

Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and

liquidity risk. These risks all arise in the normal course of business. The primary objective of the financial management

function is to establish risk limits, and then ensure that exposure stays within these limits.

The company’s only financial instruments consist of the fixed investment in Sycom Property Fund’s units, cash

deposits with banks, trade and other receivables and trade and other payables. The fixed investment in Sycom

Property Fund’s units is carried at market value. Cash balances, accounts receivable and accounts payable are

carried at amortised cost which approximates fair value.

15.2 Market risk

Market risk is the risk that changes in market prices will affect the company’s income or the fair 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 returns.

The company is not exposed to market risk arising from interest rate risk (as it has no borrowings) or foreign

exchange risk.

The company is exposed to equity price risk as the fair value of the investment in Sycom Property Fund is determined

based on the market price of the 150 000 units held (refer note 6).

At the end of the reporting period the equity price risk profile of the company was as follows:

2014 2013

R’000 R’000

Investment in securities * 3 450 4 304

* The 150 000 units held were valued based on the closing unit price of R23.00 (2013: R28.69)

Price risk sensitivity analysis:

The sensitivity analysis has been determined based on the company’s exposure to the market price of the units in

Sycom Property Fund at the reporting date.

If the market price of the Sycom Property Fund units had been 5% higher/lower and all other variables were

held constant, the company’s other comprehensive income would have increased/decreased by R172 500

(2013: R215 175). A 5% increase/decrease in the market unit price would have no effect on profit as the fair value

of the investment is revalued through other comprehensive income.

15.3 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to

discharge an obligation. The company’s credit risk arises from cash and cash equivalents held at banks and trade

and other receivables.


This balance primarily relates to the receivable from Sycom Property Fund which is considered to be fully

recoverable. Consequently, no provision for impairment losses has been raised.


Exposure to credit risk is limited by only placing funds with reputable financial institutions for investing and cash

handling purposes.






15.3.1 Credit exposure

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2014 2013

R’000 R’000

Listed investment 3 450 4 304

Trade and other receivables 9 976 12 337

Service and property management fees receivable 9 919 12 270

Other receivables 57 67

Cash and cash equivalents 188 89

15.4 Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The

company’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 reputational damage. The company monitors cash flow requirements on a monthly basis. Typically the

company ensures that it has sufficient cash on demand to meet expected operational expenses.

The company’s liquidity risk arises only as a result of its outstanding financial liability balance at the reporting date,

the balance of which is due within three months:

Trade and other payables 10 059 12 360

15.5 Capital risk management

The capital structure of the entity is governed by the Collective Investment Schemes Control Act, 2002 and is

disclosed in note 3.7.

15.6 Fair value hierarchy

The fair values of all financial instruments with the exception of the investment in Sycom Property Fund are

substantially the same as the carrying amounts reflected on the statement of financial position.

The company measures the fair value of the investment in Sycom Property Fund using the following hierarchy that

reflects the significance of the inputs used in making the measurements:

• Level 1: Quoted prices (unadjusted) in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (ie: as prices) or indirectly (ie: derived

from prices). This category includes instruments valued using: quoted market prices in active markets for similar

instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or

other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments

where the valuation technique includes inputs not based on observable data and the unobservable inputs have a

significant effect on the instrument’s valuation. This category also includes instruments that are valued based on

quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to

reflect differences between the instruments.



15.6 Fair value hierarchy (continued)

Level 1 fair values – investment in Sycom Property Fund

Type Valuation techniqueSignificant

unobservable inputs

Investment in Sycom Property Fund

Valued using the closing quoted price of the traded units in Sycom Property Fund at 31 March 2014 None




APPROVAL OF THE

ANNUAL FINANCIAL STATEMENTS


APPROVAL OF THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2014

SYCOM PROPERTY FUND AND SYCOM PROPERTY FUND MANAGERS LIMITED

The annual financial statements which appear on page 17 to 94 were approved by the Board of Directors on 12 June 2014 and are signed by the undermentioned directors.

GK EveringhamChairmanSycom Property Fund Managers LimitedCape Town12 June 2014

PA TheodosiouChief Executive OfficerSycom Property Fund Managers LimitedCape Town12 June 2014

DECLARATION BY COMPANY SECRETARYfor the year ended 31 March 2014

In my capacity as Company Secretary, I hereby confirm, in terms of the Companies Act, 2008, that for the year ended 31 March 2014, Sycom Property Fund Managers Limited has lodged with the Registrar of Companies 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.

H H-O Steyn CA (SA)Company SecretaryCape Town12 June 2014

TRUSTEE REPORT ON THE SYCOM PROPERTY FUND SCHEMEfor the year ended 31 March 2014

As Trustees to the Sycom Property Fund Scheme (“the Scheme”), we are required in terms of the Collective Investment

Schemes Control Act, 2002 (Act No. 45 of 2002) (“the Act”) to report to unitholders on the administration of the Scheme during

each annual accounting period.

We advise for the period 1 April 2013 to 31 March 2014 we reasonably believe that the Manager has administered the Scheme

in accordance with:

(i) the limitations imposed on the investment and borrowing powers of the Manager by the Act; and

(ii) the provisions of the Act and the relevant deeds.

We confirm that according to the records available to us there were no material instances of compliance contraventions and

therefore no consequent losses incurred by the Portfolio in the year.

Nelia de BeerHead Trustee ServicesRand Merchant BankJohannesburg12 June 2014

Marian RuttersManager Trustee OperationsRand Merchant BankJohannesburg12 June 2014

Approval of the Annual Financial Statements


SCHEDULE OF

PROPERTIES


Schedule of properties

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)

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Valu

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2013 (

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Cu

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013

2014 2013 2014 2013

% % (R’000) % % (R’000) (R’000) (R’000) (R’000) (R’000)

Retail 3 378 883 1 725 375 1 653 508 4 055 608 1 619 339 2 436 269

Fourways Crossing Retail Centre 31/03/2003 50.00 50.00 *1 496 500 7.75% 7.75% 140 896 355 604 451 500 136 906 314 594

N1 City Mall 31/03/2003 42.00 42.00 *1 619 080 7.25% 7.25% 177 594 441 486 572 880 177 120 395 760

Paarl Mall 31/01/2007 100.00 100.00 *1 733 000 7.50% 7.50% 487 633 245 367 693 000 484 422 208 578

Somerset Mall* 31/03/2003 – 50.00 – – – 6.50% – – 1 137 500 329 455 808 045

Southgate Mall** 31/03/2003 16.61 16.61 – – – 7.50% – – 201 620 80 789 120 831

Southgate Value Market** 31/03/2003 16.01 16.01 – – – 8.50% – – 28 972 8 584 20 388

Vaal Mall 31/01/2007 77.86 77.86 *1 1 012 803 7.00% 7.00% 405 519 607 284 970 136 402 063 568 073

Greenacres 31/03/2014 50.00 – *1 517 500 7.50% – 513 733 3 767 – – –

Office 4 149 500 2 655 163 1 494 337 4 323 000 2 889 168 1 433 832

Advocates’ Chambers 31/03/2003 100.00 100.00 *1 126 500 8.25% 8.25% 59 113 67 387 121 000 57 098 63 902

Discovery Building** 31/01/2007 100.00 100.00 – – – 8.00% – – 408 000 246 620 161 380

ENS Building 31/01/2007 100.00 100.00 *1 323 000 8.25% 8.25% 215 489 107 511 306 000 214 637 91 363

Georgian Crescent 31/03/2003 100.00 100.00 *1 85 000 9.00% 9.00% 44 870 40 130 80 000 44 816 35 184

Harrowdene Office Park 01/10/2004 100.00 100.00 *1 780 000 8.00% 8.00% 346 563 433 437 745 000 344 341 400 659

Riverwoods Office Park 31/03/2003 100.00 100.00 *1 155 000 9.00% 9.25% 43 416 111 584 149 000 43 370 105 630

The Woodlands Office Park 01/07/2003 100.00 100.00 *1 2 505 000 8.00% 8.00% 1 767 626 737 374 2 344 000 1 761 463 582 537

Tygerberg Park 31/03/2010 100.00 100.00 *1 175 000 8.50% 8.50% 178 086 (3 086) 170 000 176 823 (6 823)

Total 7 528 383 4 380 538 3 147 845 8 378 608 4 508 507 3 870 101

Investment properties were independently valued at 31 March 2014 on the open market value basis by the following professional valuers who are registered with the South African Institute of Valuers:

*1 P Parfitt of Quadrant Properties Proprietary Limited.

* The investment property was disposed of during the current financial year.

** Signed sale agreements have been entered into to dispose of these properties. The properties are classified and disclosed as held for sale at the financial year-end.


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2014 2014 2013 2013 2014 2013 2014 2013 2014 2013

m2 m2 m2 m2 R R R/m2 R/m2 % %

236 835 145 169 351 104 172 679 23 275 23 486 149.28 145.27 97.0 98.2

47 288 23 644 47 288 23 644 20 999 19 096 141.70 137.30 90.1 93.1 GautengWilliam Nicol Highway, Fourways

63 634 26 726 63 634 26 726 23 164 21 435 137.94 128.80 99.5 99.5Western Cape

Louwtjie Rothman Street, Goodwood

36 250 36 250 36 250 36 250 20 221 19 117 140.80 130.59 100.0 99.8WesternCape Cecile Road, Paarl

– – 66 317 33 159 – 34 305 – 189.41 – 99.4WesternCape

Cnr N2 and R44 Highways, Somerset West

– – 68 923 11 448 – 17 612 – 133.99 – 92.6 GautengRifle Range Road, Mondeor

– – 19 453 3 115 – 9 303 – 68.94 – 96.4 GautengRifle Range Road, Mondeor

49 239 38 337 49 239 38 337 26 418 25 305 158.05 146.28 97.6 99.8 Gauteng Vanderbijlpark

40 424 20 212 – – 25 604 – 172.45 – 95.0 –Eastern Cape

Mount Road, Port Elizabeth

209 747 209 747 232 273 232 273 19 783 18 612 150.46 141.31 95.6 96.9

7 143 7 143 7 143 7 143 17 710 16 940 134.50 130.58 90.9 99.7 Gauteng Protea Place, Sandton

– – 22 526 22 526 – 18 112 – 123.24 – 100.0 Gauteng Fredman Drive, Sandton

18 065 18 065 18 065 18 065 17 880 16 939 150.45 149.86 98.1 98.1WesternCape Foreshore, Cape Town

6 312 6 312 6 312 6 312 13 466 12 674 134.61 126.17 90.0 88.9 GautengGeorgian Crescent, Bryanston

42 082 42 082 42 082 42 082 18 535 17 704 141.43 132.90 91.4 94.6 Gauteng Woodmead, Sandton

10 649 10 649 10 649 10 649 14 555 13 992 140.09 118.84 98.4 98.9 Gauteng Civin Drive, Bedfordview

114 396 114 396 114 396 114 396 21 898 20 490 157.76 151.93 96.6 96.6 GautengWoodmead Drive, Woodmead, Sandton

11 100 11 100 11 100 11 100 15 766 15 315 135.61 124.66 100.0 100.0WesternCape Uys Krige Drive, Parow

446 582 354 916 583 377 404 952 21 212 20 690 149.96 143.02 96.2 97.4


Notes

Sycom Property Fund Managers Limited

Company name Sycom Property Fund Managers Limited

Registration number 1986/002756/06

Company secretary Henry Steyn CA (SA)

Registered address Suite A11, Westlake Square, Westlake Drive, Westlake, Cape Town

PO Box 31079, Tokai, 7966

Auditors KPMG Inc.

MSC House, 1 Mediterranean Street, Foreshore, Cape Town

Commercial Bankers Nedbank Limited – Corporate Division

135 Rivonia Campus, 135 Rivonia Road, Block I, 4th Floor, Sandown, Johannesburg

Sycom Property Fund

Fund name Sycom Property Fund

Manager Sycom Property Fund Managers Limited

JSE code SYC

Website http://www.sycom.co.za

Email [email protected]

ISIN ZAE000019303

Property Managers Acucap Properties Limited

Suite A11, Westlake Square, Westlake Drive, Westlake, Cape Town

Broll Property Group Proprietary Limited

Broll House, 27 Fricker Road, Illovo

Pareto Property Management

C2 Marion Place, 150 Rivonia Road, Morningside

Trustee FirstRand Bank Limited

RMB Custody and Trustee Services division, 1st Floor, No 3 First Place, Bank City

Corner Jeppe and Simmonds Streets, Johannesburg

Auditors KPMG Inc.

MSC House, 1 Mediterranean Street, Foreshore, Cape Town

Bankers Nedbank Limited – Corporate Division

135 Rivonia Campus, 135 Rivonia Road, Block I, 4th Floor, Sandown, Johannesburg

Sponsors Questco Proprietary Limited

2nd Floor, The Pivot, 1 Montecasino Boulevard, Fourways, Johannesburg

Administration for the year ended 31 March 2014

INTEGRATED ANNUAL REPORT 2014

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INTEGRATED ANNUAL REPORT 2014weighted average number of units in issue (resulting from the buyback...

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