Note 16

		Acucap Rm	Sycom Rm	SESCF Rm	Total Rm
16.	LISTED INVESTMENTS
	Opening balance	3 256	1 201	–	4 457
	Acquisition through business combinations	–	–	378	378
	Swap offer	415	(415)	–	–
	Acquired during the year	–	30	4	34
	Fair value adjustment	902	241	(2)	1 141
		4 573	1 057	380	6 010
	Disposed of during the year as a result of step up acquisition	(4 573)	(1 057)	–	(5 630)
	Fair value at 30 June 2015	–	–	380	380
	Opening balance	–	–	–	–
	Acquired during the year	2 906	1 597	–	4 503
	Swap offer	428	(428)	–	–
	Fair value adjustment	(78)	32	–	(46)
	Fair value at 30 June 2014	3 256	1 201	–	4 457

Acucap and Sycom

In 2014 Growthpoint concluded agreements with various institutional unitholders of Acucap Properties Ltd (Acucap) and Sycom Property Fund (Sycom) to acquire 64 million Acucap linked units at a switch ratio of 1.97 Growthpoint ordinary shares for each Acucap linked unit, and 63 million Sycom participatory units at a switch ratio of 1.102 Growthpoint ordinary shares for each Sycom participatory unit acquired. This represented a 34.9% interest in Acucap and 23.2% interest in Sycom. These investments provided Growthpoint with indirect exposure to Acucap and Sycom’s combined R18,4 billion retail and office portfolios.

For the year ended, 30 June 2015, Growthpoint received distributions amounting to R345 million (FY14: R165 million) from these listed investments, which have been included in distributable earnings.

On 1 April 2015, the Group’s equity interest in Acucap and Sycom increased to 100% and 99% respectively and both became subsidiaries from that date (note 41.4).

Stenham European Shopping Centre Fund (SESCF)

Growthpoint acquired a 22.9% shareholding in the SESCF, a company listed on the Channel Island Stock Exchange as a closed fund, as part of this Acucap business combination (note 41.4). The SESCF owns one of Europe’s largest shopping malls, Nova Eventis. This 96 000m² regional shopping mall is located near Leipzig airport in Germany. The majority of the tenants are fashion oriented stores such as Zara, SinnLeffers, Peak & Cloppenburg, Esprit, MEXX and C&A.

In terms of the indicators stipulated in IAS 28 Investment in associates, Growthpoint does not have significant influence over this investment and consequently this investment has been accounted for as at fair value through profit or loss investment. The Group’s investment in SESCF is purely passive in nature and the Group takes no part in the active management or decision making related to the fund. The Group has no involvement at a board/executive level.

16.1

Measurement of fair value

While SESCF is a listed investment, there is an absence of observable trading prices for its shares. As a result, the fair value of the investment, both on acquisition date and at 30 June 2015, has been determined on the net asset value of SESCF. 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 R2 million. The fair value measurement has been categorised as a level 3 fair value based on the inputs to the valuation technique used (note 45.2).

The significant underlying asset per the statement of financial position of SESCF is the investment property which is valued using a discounted cash flow model. Growthpoint’s valuation in SESCF is based on the net asset value per share of the investment translated at the period end ruling exchange rate. The investment property has been valued at 31 March 2015 by JLL, who are independent and qualified in accordance with the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors (RICS). The valuation was prepared in accordance with the RICS Valuation.

16.1.1

Fair value hierarchy

The following table shows the valuation techniques used in measuring the fair value of investment property, as well as the significant unobservable inputs used:

Valuation techniques	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.	The estimated fair value would increase/(decrease) if: – increases/(decreases) in the stabilised net operating income; – (decreases)/increases in the yield used to calculate the Terminal Value Indication; and – (decreases)/increases in the discount rate used to calculate the Gross Capital Value.