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Summarised audited consolidated annual financial statements for the year ended 28 February 2019
FREEDOM PROPERTY FUND LIMITED
Incorporated in the Republic of South Africa
Registration number: 2012/129186/06
Share code: FDP
ISIN: ZAE000185260
(“Freedom” or “the Company” or “the Group”)
SUMMARISED AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2019
The board of directors of the Company (“the Board”) is pleased to present the audited annual financial results
for the year ended 28 February 2019.
The audited financial results of the Group for the year ended 28 February 2019, as compared to the year
ended 28 February 2018 (“Comparative Period”), are set out below:
• Revenue decreased by 7.48% from R24.38 million to R24.40 million;
• Losses per share (“LPS”) increased from 0.41 cents to LPS of 1.07 cents;
• Headline losses per share (“HLPS”) increased from 1.38 cents to HLPS of 1.76 cents;
• Net asset value per share decreased from 9.20 cents per share to 7.85 cents per share.
No dividends were declared or paid during the period under review or during the Comparative Period.
Auditors: Unqualified audit opinion
The summarised consolidated results of the Group for the year ended 28 February 2019 have not been audited
by the Group’s auditors, Moore Cape Town Inc. (the “Independent Auditor”). However, the annual
consolidated financial statements of the Group for the year ended 28 February 2019 have been audited by the
Independent Auditor. An extract from the unmodified audit report (inclusive of the communication of key
audit matters) contained within the audited annual consolidated financial statements of the Group for the
year ended 28 February 2019 reads as follows:
“Opinion
In our opinion, the consolidated and separate Financial Statements present fairly, in all material respects, the
consolidated and separate financial position of Freedom Property Fund Limited as at 28 February 2019, and its
consolidated and separate financial performance and its consolidated and separate cash flows for the year
then ended in accordance with the International Financial Reporting Standards and the requirements of the
Companies Act of South Africa.
The Impact of the Material Uncertainty related to COVID-19 on Freedom Property Fund Limited’s Ability to
Continue as a Going Concern
We draw attention to note 40 in the financial statements, which indicates that the group incurred a net loss of
R10,751,000 during the year ended 28 February 2019 and as of that date the group’s current liabilities
exceeded its current assets by R88,938,000. As stated in note 40, COVID-19 affects the group and this may
result in certain material uncertainties for the future financial position, performance and cashflows of the
group.
We reassessed our risk assessment on going concern and took into account the additional considerations of the
impact of the COVID-19 pandemic on the Group when assessing the going concern conclusion. Management’s
cashflow forecast was challenged by evaluating the reliability of the underlying data generated to prepare the
forecast and determining whether there is adequate support for the assumptions underlying the forecast. The
group experienced a decrease in rental recoveries from May 2020 and management expects this trend to
continue until December 2020. Management further expects an increase in vacancies due to tenants’ inability
to meet rental obligations. The current economic conditions as a result of the pandemic is also expected to
impact the group’s strategy of disposing of non-core assets. The directors have concluded that there are
material uncertainties that give rise to significant doubt over the Group’s ability to continue as a going concern.
We further assessed the appropriateness of the disclosures in the financial statements concerning the impact of
COVID-19 on the Group’s ability to continue as a going concern.
These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the
group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the consolidated and separate financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated and separate financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter
described in The impact of the material uncertainty related to COVID-19 on Freedom Property Fund Limited’s
ability to continue as a going concern section, we have determined the matters described below to be the key
audit matters to be communicated in our report.
Key Audit Matter How our audit addressed the key audit matter
Valuation of Investment Properties (consolidated)
The Group holds commercial and residential investment properties, We have considered whether the valuation methods applied by the
along with vacant land, to the value of R273,664 million at year- directors and external valuators in the valuation of the investment
end, including the straight-lining accrual and non-current assets properties, were in line with the criteria prescribed by IFRS. Further
held for sale. The movement in these properties’ fair value for the consideration was given as to whether the method used is appropriate to
year amounts to R6,2 million. those particular properties subject to the valuation, by benchmarking it
against valuation methods applied to similar listed property portfolios.
Investment property is measured at their fair values based on
valuations obtained from external valuators and the directors. The In assessing the expertise of the external valuers, we have verified their
location, zoning, size, exposure, capitalisation rates and occupancy registration with the South African Council for the Properties Valuers
rates are some of the crucial variables which were considered and Profession. The considerations surrounding the independence and
applied in the valuation of investment properties. objectivity of the external valuers were based on the review of the terms of
engagement and receipt of a representation from the external valuators’
For commercial properties the directors and external valuators management as to the fee arrangements between the valuers and the
have used 3 methods namely, the Net Income Capitalisation group. We found no evidence to suggest that the objectivity of the valuers
Method, the Discounted Cash Flow Method and the Comparable in their performance of the valuations was compromised.
Sales Method in determining the fair value.
A meeting was held between ourselves and the independent valuators
For residential investment properties the directors and external discussing the valuations and the key assumptions used therein. We
valuators have used the Comparable Sales Method (2018: Net inspected the valuation reports for all properties valued externally and
Income Capitalisation Method) in the valuation of the properties. tested data inputs in the directors’ valuations.
For vacant land the directors and external valuators have used the We assessed the accuracy, reliability and completeness of data inputs
Comparable Sales Method in the valuation of the properties. which was used in the valuation underpinning the relevant investment
property.
We consider the valuation of investment properties a matter of
most significance to the current year’s audit due to the significance We reviewed the appropriateness of supporting documentation and
of the estimates and judgements involved and the inherent performed a sensitivity analysis on the significant assumptions made to
sensitivity of data whereby a percentage difference in individual evaluate the extent of the impact on the value calculated, should the
yields could result in a material misstatement. assumptions change by a small percentage.
We further assessed the appropriateness of the disclosures in the financial
statements concerning the key assumptions to which the valuations are
sensitive to.
Report on Other Legal and Regulatory Requirements
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report
that Moore Cape Town Inc. has been the auditor of Freedom Property Fund Limited for 4 years.
In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we
report that we have identified reportable irregularities in terms of the Auditing Profession Act. These matters
have been reported to the Independent Regulatory Board for Auditors. The matters pertaining to the reportable
irregularities have been described in note 39 to the consolidated and separate financial statements.”
This short-form announcement is the responsibility of the Board, is only a summary of the summarised
audited consolidated annual financial results for the year ended 28 February 2019 (“Full Announcement”) and
therefore does not contain full or complete details as per the Full Announcement.
The Full Announcement may be downloaded from either
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/FDP/Feb2019.pdf or may also be requested from the
Company by contacting info@freedomprop.co.za during ordinary business hours, for a period of 30 calendar
days following the date of this announcement.
Furthermore, the detailed audited consolidated annual financial statements for the year ended 28 February
2019, inclusive of the Independent Auditor’s report, are available on the Company’s website:
http://www.freedomprop.co.za/financials.
Any investment decisions by shareholders should be based on consideration of the Full Announcement
contained within the link set out above.
Paarl
31 August 2020
Sponsor: Questco Corporate Advisory Proprietary Limited
Date: 31-08-2020 12:27:00
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