iFOUR PROPERTIES LIMITED - ShareData · 1 2004 2003 R’000 R’000 Revenue and other income 229 441 139 861 Investors distributable earnings 87 036 44 818 Earnings on linked units

iFOUR PROPERTIES LIMITEDANNUAL REPORT 2004

iFOUR

iFOUR PROPERTIES LIMITED ■ annual report 2004

contents

1 ▪ Key financial and non-financial highlights

2 ▪ Directors’ review

9 ▪ Investors distributable earnings

10 ▪ Directorate and administration

13 ▪ Statement of corporate governance

16 ▪ Responsibility for and approval of annual financial statements

16 ▪ Declaration by the company secretary

17 ▪ Report of the independent auditors

18 ▪ Directors’ statutory report

22 ▪ Income statements

23 ▪ Balance sheets

24 ▪ Cash flow statements

25 ▪ Statement of changes in equity

26 ▪ Summary of accounting policies

28 ▪ Notes to the annual financial statements

46 ▪ Property portfolio schedule

50 ▪ Notice of annual general meeting of shareholders

54 ▪ Notice of general meeting of debenture holders

55 ▪ Form of proxy for iFour shareholders

57 ▪ Form of proxy for iFour debenture holders

59 ▪ Shareholder information

1

2004 2003 R’000 R’000

Revenue and other income 229 441 139 861

Investors distributable earnings 87 036 44 818

Earnings on linked units 83 792 70 516

Net profit on disposal of investment property — 7 224

Investment properties 1 721 574 716 370

Total assets 1 780 634 772 165

Linked unitholders’ interest 726 754 304 759

Net borrowings 889 776 394 431

Weighted average units in issue 111 387 953 58 275 179

Earnings per linked unit (cents) 75,23 121,01

Investors distributable earnings per weighted average linked unit (cents) 78,14 76,91

Distribution per linked unit (cents) 78,00 75,00

JSE STATISTICS

Highest unit price traded (cents) 670 530

Lowest unit price traded (cents) 520 390

Closing unit price (cents) 615 530

Volume of units traded 30 621 320 32 875 536

% of units traded to average units in issue 27,5 56,4

RETURNS TO UNITHOLDERS

Opening unit price (cents) 530 500

Income return (cents) 78 75

Capital return (cents) 85 30

Total return (cents) 163 105

Total return for the year (%) 31 21

LINKED UNITHOLDERS’ INFORMATION

Share capital and reserves 93 125 48 717

Debenture capital 633 629 256 042

Linked unitholders’ interest 726 754 304 759

Net asset value per linked unit (cents) 507 523

(Loss)/earnings for the period (4 528) 26 810

Interest distributions 88 320 43 706

Total earnings 83 792 70 516

key financial and non-financial highlights

DISTRIBUTIONS

78 cents4% above original forecast

OCCUPANCIESIncreased to

96%

GROWTHProperties up by

140%

ANNUALISEDReturn of

26,8%


directors’ review

OVERVIEW We are pleased to report that the

company has exceeded the commitments made in the

prospectus at the listing in June 2002. The property

portfolio has grown in excess of R1 billion to R1, 7 billion

at 30 June 2004 and the annualised return to unitholders

since listing is 26,8%, which is well in excess of the

13,6% targeted in the prospectus. This was in part

achieved by utilising Pangbourne’s financial resources

which is one of the significant synergistic benefits

obtained from having Pangbourne as a major stakeholder

of the company.

iFour management retains direct responsibility for asset

management, which determines the strategic

development, growth and quality of the property

portfolio of the company.

In line with its commitment to continuously reduce

costs, the company is in the final stages of securitising

its mortgage debt. Not only will this reduce the cost of

borrowings, it will also reduce reliance on traditional

mortgage financing.

PROPERTY MARKET Conditions in the

commercial property market improved during the year.

The reduction in interest rates, continued increase in

business confidence and growth prospects for the South

African economy, were the main factors contributing to

this improvement. As a consequence, rentals have

shown an upward trend and demand for space has

firmed in most sectors of the market.

RESULTS Management has delivered on

distributions to unitholders which were increased from

75 cents per unit to 78 cents per unit. The increase in

the size of the portfolio was achieved without

diluting distributable earnings and in a competitive

market evidenced by a number of new listings and a

vibrant acquisition climate.

iFour complies with South African statements of

Generally Accepted Accounting Practices and other

statutory requirements. However, as South African

property loan stock companies do not have an

international counterpart this distorts the analysis and

interpretation of the accounts. Accordingly on page 9

we have prepared a statement of distributable earnings

and a reconciliation thereof to net profit for the year.

Statistics are given per linked unit rather than

per share.

MANAGEMENT The company continued its

strategy of outsourcing its property, financial and

administration management. In September 2003,

Pangbourne Properties Limited acquired these service

contracts from JHI Limited. iFour’s management has a

close relationship with its major service provider which

ensures a high standard of service. As at 30 June 2004

Pangbourne held 48,5% of the linked units in the

company. The benefits of having a service provider

who has a vested interest in the company by owning a

significant part of the equity, has been evident.

The company continues its strategy of investing in “A” grade properties to underpin sustainable growth in distributions

3

"Investment in GROWTH nodes in which there is a continuousdemand for space ensures high occupancy levels”

Automark Toyota dealership at Longmeadow (at Modderfontein turnoff – N3)


OVERVIEW OF THE PROPERTY PORTFOLIO

Asset Management Pangbourne is committed to

assisting iFour in its stated objective of growing the size

of the portfolio without sacrificing quality or diluting

returns to existing linked unitholders.

In September 2003 linked unitholders approved the

acquisition of 53 mainly “A” grade properties,

predominantly in the industrial sector, costing

R740,8 million. This was facilitated by Pangbourne

who accepted linked units to the value of R250 million

in settlement of the sale of their

24 properties. Consequently iFour’s

cash resources could be used

to purchase the remaining

29 properties from other vendors.

In addition, Pangbourne established

Sipan 1 (Pty) Limited (“Sipan”), a

special purpose vehicle to acquire

properties utilising its significant

financial resources, predominantly

cash, which placed it at a

competitive advantage. Sipan

acquired 8 “A” grade properties of

which 5 properties are in retail

centres. These properties which

met iFour’s investment criteria were

acquired by the company when

linked unitholders approved the

Sipan acquisition in June 2004.

This initiative has enabled iFour to

maintain a prudent gearing level of

52% while eliminating a time

consuming capital raising exercise

as well as the risk of dilutionary

effects of new linked units.

An additional 5 properties, costing

R82 million in total, were acquired

directly in the market during the

year under review.

Portfolio Analysis At year end

iFour owned 108 (2003: 47)

properties to the value of R1,7 billion

(2003: R0,7 billion).

Since that date a further six properties to the value of R144,9 million have been transferred to iFour.

The portfolio spread by value reflects the company’s strategy of increasing its weighting in the industrial and retail sectors, which are expected to show good growth. This has reduced the company’s investment percentage of the portfolio value in the office sector from 50% last year to 37% currently. In addition, “Other” is 3% of the portfolio and consisting mainly of the Midrand Protea Hotel on the Ben Schoeman Highway.

Retail properties have demonstrated strong growth on the back of retail sales volume increases. In this sector, iFour has focused its investments mainly on community and local neighbourhood shopping centres which dominate their catchment areas. The company has succeeded in ensuring that the level of national tenants in its retail centres does not fall below 50%. Further analysis of the retail investment shows:

● community shopping centres, 39%

● motor retail centres, and 28%

● neighbourhood shopping centres 33%

The company has identified that the industrial sector is undergoing rental growth off a low base. There is strong demand for industrial space in all prime industrial areas.

The acquisitions during the year have taken place to take advantage of the growth in this sector with the company focusing on modern warehouse and hi-technology industrial facilities. Details of industrial sector analysis are:● warehousing, 47%● hi-technology industrial, 32%● mini and midi units, and 12%● high and low grade

industrial 9%

directors’ review (continued)

5

“Properties with freeway exposure and good ACCESSIBILITY offer additional benefi ts to tenants”

Namitech – Galaxy Avenue Linbro Business Park (at Marlboro Turnoff N3)


The office sector, mainly in the northern suburbs of

Johannesburg, has continued to labour under the

weight of speculative development that is slowly

working its way out of the system. In the light of this,

iFour has reduced its investment in this sector. The

analysis of office shows:

● low rise buildings, and 60%

● office parks 40%

The geographical spread by area remains predominantly

Gauteng based with investments in KwaZulu-Natal

increasing during the year. The

investment in two retail community

centres which dominate their

catchment area account for the

investment in Mpumalanga.

The lease expiry profile based on

rental income remains in line with

the company’s strategy of keeping

expiries at not greater than 20% in

each year.

Property Portfolio Valuation In

terms of the company’s accounting

policies one third of the property

portfolio was valued by an external

registered valuer and the balance

by the directors of the company at

30 June 2004. (Details are included in

Note 7 to the Financial Statements).

Increases in the market values of

the retail properties were offset by

write downs in the value of certain

office component of the portfolio. In

addition, as the bulk of the portfolio

was acquired during the year under

review little growth was shown on

these properties. The net valuation

surplus for the year was R683 000.

BORROWINGS At 30 June

2004 total interest bearing debt,

excluding debentures, amounted

to R890.6 million (2003: R395.5

million), which represents a loan-to-

value ratio of 52%.

This is in line with company policy of maintaining a loan-

to-value ratio which does not exceed 55%.

In accordance with company policy to reduce the

exposure to interest rate increases, the company has

hedged R740 million of its interest bearing debt

(excluding debentures) as follows:

● R320 million at a fixed interest rate of 12.48% NACQ

to 10 June 2008, and

● R420 million at a fixed interest rate of 10.80% NACQ

to 3 October 2005.

S E C U R I T I S AT I O N T h e

company is currently in the process

of establishing a commercial

mortgage backed securitisation

programme scheduled to take

place in the last quarter of 2004

when the company will issue

approximately R800 million of

securitised debt. The debt has

been rated by Moody’s Investor

Services Inc and approximately

65% of the debt has been rated

“AAA”. The two key benefits of

implementing this structure are:

● providing the company with

access to new sources of debt

financing, and

● reducing the future cost of debt.

CORPORATE

GOVERNANCE iFour complies

with the requirements of the King II

report on corporate governance,

as indicated more fully on pages

13 to 15 and remains committed to

fulfilling its role as a good corporate

citizen. The directors recognise the

need to conduct the affairs of the

company with integrity and

accountability in accordance with

generally accepted corporate

practices.

Government has defined BEE as “an

integrated and coherent socio-


7

"A prime determinant in retention of tenants is SECURITY. 52% of the properties in the portfolio are located in secure parks”

Sunnyrock – mini unit development (at Edenvale Road turnoff N12)


economic process that directly contributes to the

economic transformation of South Africa”. Pangbourne,

iFour’s administrator and major service provider, has

established a Transformation Committee. The iFour board

has identified with the process and retains responsibility

for the implementation of transformation within iFour.

In the absence of a Property Charter, iFour is establishing

its criteria for a BEE scorecard, with the Department of

Trade and Industry’s scorecard being used as a guideline.

STRATEGY The company’s primary strategy

remains to ensure that a sustainable growth in

distributions is delivered to linked unitholders. This will

be achieved by ensuring properties

are properly maintained, vacancies

are kept to a minimum, and renewals

and new lettings are at market rates.

We will continue to invest in those

sectors and locations which will

provide long-term real growth in

both rental and asset value. The

quality of the portfolio will be

predominantly “A” grade buildings.

Gearing of the portfolio will be

maintained at levels below 55% of

income producing assets and

exposure to interest rate fluctuations

will be reduced by hedging a major

portion of the total borrowing.

PROSPECTS Property is linked inextricably with the

financial health of the nation. Business confidence is at a

high. Inflation is currently within target and interest rates

have stabilised for the moment. The political environment

is stable. The high value of the Rand against the major

currencies is having some negative effects on export

oriented industries while they adjust and adapt. Overall

the economy remains strong and any growth should

impact favourably on all aspects of our business.

Although management will continue to take advantage

of any strategic opportunities, the emphasis is now on

extracting value from the portfolio and maintaining

sustainable growth in distributions.

Management are confident that iFour will achieve a

distribution of 82 cents per linked unit for 2005 as

projected in the Sipan circular to linked unitholders

dated 9 June 2004.

DIRECTORATE We are pleased to welcome John

Gibbon to the board. As a retired partner of

PricewaterhouseCoopers he brings with him

considerable financial and business expertise. John has

accepted the position of Chairman of the Audit and Risk

Management Committee. Peter Moses, the former

chairman of the Committee, remains a member where we

will continue to benefit from his experience and expertise.

The appointment of John Gibbon ensures a majority of

independent non-executive directors on the board.

Messrs L I Weil, J P G de Rauville

and S H Mia resigned from the

board during the year.

Following the announcement on

20 July 2004, we are pleased to

welcome James Nunes as the new

Managing Director. James brings a

wealth of experience to the position,

thirteen years of which have been

in the property industry. He was

part of the team that managed the

listing and subsequent growth of

the company.

Anthony Diepenbroek, the former

chief executive officer, was

responsible, with James Nunes, for

bringing iFour to the market and for growing the company

to its present size. He has moved to Pangbourne as a

member of their executive team. He will remain on our

board as a non-executive director so his skills and

knowledge will remain available to us. On behalf of the

company we would like to express our appreciation for

the contribution he has made.

A J W L Richards

Chairman

J L NunesManaging Director


investors distributable earningsfor the year ended 30 June

GROUP

Investors distributable earnings per linked unit 2004 2003

Weighted average number of linked units in issue (units) 111 387 953 58 275 179 Investors distributable earnings per linked unit (cents) 78,14 76,91 Distribution to unitholders (cents) 78,00 75,00

GROUP

2004 2003 R’000 R’000

Revenue and other income 229 441 139 861

Gross rentals received 221 580 139 347 Other income 7 861 514

Net property portfolio costs (58 163) (34 212) Administrative costs (excluding non-cash items*) (6 208) (5 281) Interest received 2 893 2 028 Interest paid (80 927) (57 578)

Investors distributable earnings 87 036 44 818

reconciliation to (loss)/profit for the year GROUP

2004 2003 R’000 R’000

Investors distributable earnings 87 036 44 818Net revaluation of investment properties 683 24 205Net profi t on disposal of investment property — 7 224Movement of fair value in interest rate swaps (8 438) —Amortisation of listing, debenture and mortgage expenses* (1 226) (1 017)

Profi t before taxation and distribution to unitholders 78 055 75 230Debenture interest distributed to unitholders (88 320) (43 706)

(Loss)/profi t before taxation (10 265) 31 524Taxation 5 737 (4 714)

Net (loss)/profi t for the year (4 528) 26 810

Compliance with South African Statements of GAAP, which are in the process of being harmonised with International Financial Reporting Standards, and their application on the property loan stock structure, which is unique to South Africa, has made it difficult for users to interpret these financial statements. This investor information insertion is aimed at disclosing to the users the basis on which the distribution per weighted average number of linked units in issue, was calculated.

A reconciliation has been included to illustrate the accounting adjustments which were not taken into account in calculating the distribution.

9


directorate and administration

managing directorJ L NUNES (55) BCompt, CA(SA)

James Nunes has 31 years financial experience, and has 13

years experience in property development as well as property

and asset management industry. Prior to joining iFour, he was the

financial director of iProp Holdings Limited (iProp).

Together with Anthony Diepenbroek, they conceptualised, formed

and listed iFour Properties utilising the core portfolio of iProp

together with properties acquired in the market and thereby

releasing value for iProp unitholders.

independent directorsDR C P DE LEEUW (68) BSc (QS), DSc (QS), DSc (honoris causa)

Corne de Leeuw is a registered quantity surveyor and a

registered valuer. He founded the C P de Leeuw Group of

quantity surveyors and valuers, which, at his retirement from this

group in March 2001, ranked amongst the largest in the world.

He served on a number of property companies, notably Richway

Retail Properties (Pty) Limited, Urban Property Consultants (Pty)

Limited, C P de Leeuw Properties (Pty) Limited and Sanlam

Properties. His specialist fields of expertise are building and

property economics, contractual aspects of building development

and property valuation.

Corne is the current president of the Africa Association of

Quantity Surveyors, a Fellow of the Royal Institute of Chartered

Surveyors and a past president of SAPOA.

J B GIBBON (63) CA(SA)

John Gibbon retired as a partner of PricewaterhouseCoopers in

2001 having been with the practice since 1964. He is a past

president of Rotary, was extensively involved in Upliftment Trusts

and is currently on the Council of the University of Port Elizabeth,

where he chairs the finance committee. While in Port Elizabeth,

John played a major role in the rescue of the private bus service

and its development into a very successful community owned

business. John is a non-executive director of Hudaco Industries

Limited and Pangbourne Properties Limited and he is also

chairman of Hudaco’s and Pangbourne Properties audit

committees.

R C JOHNSON (53) (Diploma in town and regional planning)

Robert Johnson has 33 years experience in the South African

commercial property industry, having served as an executive

director of Sage Properties Limited and, since 1980, as an

executive director of Intraprop, the developer of Illovo Boulevard.

He is also a director of Kagiso Property Holdings and has

experience in the management of listed property entities, direct

property management and property development.

E P M MOSES (70)

Peter Moses commenced his career as an accountant and later

managing director of Harding & Parker. In 1981 he joined the

property division of Barlow Rand Limited. In 1988 he was

appointed to the board of Barlow Rand Properties as marketing

director and in 1992 he was appointed as managing director. The

following year Peter was appointed to the board of RMP

Properties. Peter retired in 1996, but continued to share his

extensive experience in all facets of investment and marketing of

property as a consultant to and non-executive director of

companies. He is also a trustee of the African Game Bird

Research and Education and Development Trust.

U J VAN DER WALT (54) BEcon (Hons)

Banus van der Walt has 28 years property experience with the

Sanlam group. From 1994 to 2001, Banus was the managing

director of Gensec Properties Limited. With effect from the

commencement of 2002, he was appointed managing director of

Sanlam Property Asset Management (Pty) Limited. Banus is a

member of the executive committee of Sanlam Investment

Management (Pty) Limited and a past president of the South

African Property Owners Association (SAPOA).

PROFILES OF DIRECTORS

1.

2.

3.

6.

5.

4.

11

non-executive directorsA M A CAMPBELL (57) BBAdmin (USA)

Athol Campbell is chief executive officer of Pangbourne Properties Limited and

has served on that board since its listing in 1987. He served as executive chairman

of the Robinson Group Holdings Limited, proprietors of the Natal Mercury, and as

a non-executive director of the Sage Trust Company Limited. Mr Campbell was a

founding member of Rand Natal Trust Limited.

J A A DIEPENBROEK (47) NDT(Civil), BSc Eng (Civil), MBA

Anthony Diepenbroek has 24 years experience in real estate construction,

management, land and property development as well as property management.

He was the managing director of iProp Holdings Limited to 2002 and the chief

executive officer of iFour Properties Limited from 2002 to 2004. Anthony is a past

president of SAPOA that represents the interests of commercial property in

South Africa.

Together with James Nunes, they conceptualised, formed and listed iFour

Properties utilising the core portfolio of iProp together with properties acquired in

the market and thereby releasing value for iProp unitholders.

A J W L RICHARDS (62) BA (Dublin) (chairman)

Tony Richards was joint managing director of Pangbourne Properties Limited from

1996 to 1999 and continues to serve on that board as an executive director. Mr

Richards is also a partner in Change Partners (executive coaching) and managing

director of Paforma Property Finance (Pty) Limited. Previously he was an executive

director of Hunts Leuchers & Hepburn Limited until 1984, thereafter a member of

the Industrial Investment Company Limited board to 1990, as well as serving on

the board of Robinson Group Holdings Limited board from 1991 to 1998.

audit and risk management committee

J B Gibbon (chairman)

E P M Moses

A J W L Richards

remuneration committeeA J W L Richards (chairman)

A M A Campbell

U J van der Walt

6 8 3 9

1 4 5 27

7.

8.

9.


directorate and administration (continued)

ADMINISTRATION

iFour Properties LimitedRegistration number 2001/016118/06Share code: IFR ISIN code: ZAE000039236

Registered address2nd Floor, Pangbourne House382 Jan Smuts AvenueCraighall 2196PO Box 1352Parklands 2121

Company secretaryJ J Groenewald CA(SA)2nd Floor, Pangbourne House382 Jan Smuts AvenueCraighall 2196PO Box 1352Parklands 2121

ADVISORS AND CONSULTANTS

Corporate BankersAbsa Bank LimitedStandard Bank of South Africa LimitedNedbank Limited

SponsorsPricewaterhouseCoopers Inc2 Eglin RoadPrivate Bag X36Sunninghill 2157

AuditorsPricewaterhouseCoopers Inc2 Eglin RoadPrivate Bag X36Sunninghill 2157

Transfer SecretariesComputershare Investor Services 2004 (Pty) Limited70 Marshall StreetJohannesburg 2000PO Box 61051, Marshalltown 2107

Corporate law advisors and consultantsEdward Nathan & Friedland (Pty) Ltd150 West StreetSandton 2196PO Box 783347Sandton 2196

Prinsloo, Tindle and Andropoulos Inc1st Floor25 Sturdee AvenueRosebank 2196PO Box 2589Saxonwold 2132

13

statement of corporate governance

iFour endorses the principals as embodied in the King II report on Corporate Governance. In doing so, the directors recognise the need to conduct the enterprise with integrity and in accordance with generally acceptable corporate practices. This includes timely, relevant and meaningful reporting to its linked unitholders and other stakeholders providing a proper and objective perspective of the company.

The directors have, accordingly, established mechanisms and policies appropriate to the company’s business in keeping with its commitment to best practices in corporate governance in order to ensure compliance with the King Code. The Board is satisfied that the provisions of the King II report have been complied with for the reporting period.

Board of directors

The board of directors consists of a non-executive chairman, whose role is independent from the managing director, seven non-executive directors of whom five are independent and one executive director.

The ultimate control of the business of the group rests with the board of directors who are accountable to the unitholders. The board meets at least four times a year and is responsible for the strategic direction of the group.

The board has established an audit and risk management committee and a remuneration committee to give detailed attention to certain of its responsibilities and which operate within defined written terms of reference.

All directors have access to the advice and services of the company secretary and with prior agreement of the chairman, are entitled to seek independent professional advice at the company’s cost.

The audit and risk management committee

The committee consists of two independent directors. It meets not less than twice a year. The auditors have free access to the chairman of the committee, the chairman of the board and the managing director. The committee has terms of reference, which has been approved by the board. The committee and executive directors ensure that adequate and appropriate financial and operating controls are in place, that significant business, financial and other risks have been identified and are being suitably managed, that satisfactory standards of governance reporting and compliance are in operation, and that the group’s financial statements and disclosures are in accordance with South African Generally Accepted Accounting Practices. There was a disaster recovery plan in place throughout the year. The external auditors are appointed each year based on the recommendation of the committee.

Internal control

The board of directors is responsible for the monitoring of the group’s system of internal financial and operation controls. These controls are designed to provide reasonable, but not absolute, assurance against material misstatement or loss.

Director Board

Audit and RiskManagementCommittee

RemunerationCommittee

A B A B A BC P de Leeuw 5 4A M A Campbell 5 5 2 2J P de Rauville (resigned 18 November 2004) 2 2 1 1J A A Diepenbroek 5 5J B Gibbon (appointed 15 December 2003) 2 2 1 1R C Johnson 5 5S H Mia (resigned 18 November 2004) 2 0E P M Moses 5 5 2 2J L Nunes 5 5A J W L Richards 4 4U J van der Walt 5 4 2 2L I Weil (resigned 18 November 2004) 2 1 1 1

Column A = number of meetings held Column B = number of meetings attended

Details of director’s attendance at meetings are set out below:


statement of corporate governance (continued)

Risk management

The board is responsible for ensuring that appropriate

risk management processes are in place and that such

processes are managed on a day to day basis by

management. A systematic, documented assessment

of the processes and outcomes surrounding key risks

is undertaken annually.

This risk assessment addresses the company’s

exposure to:

● physical and operational risks;

● human resource risks;

● technology risks;

● business continuity and disaster recovery;

● credit and market risks; and

● compliance risks

For effectiveness, the risk management process relies

on regular review, communication, judgement and the

knowledge of the management and service providers

closest to those issues to achieve a risk management

process embedded in day-to-day activities.

The board uses generally recognised risk management

and internal control systems and frameworks to maintain

a sound system of risk management and internal

control to provide reasonable assurance of achieving

organisational objectives with respect to:

● effectiveness and efficiency of operations;

● safeguarding the company’s assets (including

information);

● compliance with applicable laws, regulations and

supervisory requirements;

● supporting business sustainability under normal as

well as adverse operating conditions;

● reliability of reporting; and

● behaving responsibly towards all stakeholders.

The risk management and internal control systems

have been in place throughout the year.

Management reporting

The group has comprehensive management reporting

disciplines in place, managed by the managing director

and management, which include the preparation of

annual budgets and three year profit and cash flow

forecasts. Individual and consolidated budgets are

reviewed by the Audit Committee and approved by the

board. Monthly results are reviewed against budgets

and prior years. Earnings and cash flow forecasts are

regularly updated and are reviewed and approved by

the board.

Internal audit

Internal audit is managed by assessing the effectiveness

of the outsourced internal audit function of the

management company. The scope of the work

undertaken, the results of the internal audit and the

corrective action taken are made to the audit committee

at each meeting. The management company’s internal

audit plan is presented to the audit committee annually.

The chairman of the audit committee has unrestricted

access to the head of internal audit.

The object of these procedures is to assist management

and the directors in the effective discharge of their

duties. The scope of the internal audit function is to

review the reliability and integrity of financial and

operating information, the systems of internal control,

the means of safeguarding assets, the effective

management of the group’s resources, and the effective

conduct of its operations. The internal audit function

was implemented in the latter part of the reporting

period.

Remuneration committee

The board has established a remuneration committee

comprising of an independent and a non-executive

director.

15

This committee meets at least once a year. It is

responsible for reviewing the compensation arrangements

for the managing director, other senior managers and

the non-executive directors. This committee also reviews

retirement benefits, management incentive scheme and

the general remuneration policy of the group. The

remuneration paid to the executive and non-executive

directors is disclosed in note 22.4 to the annual financial

statements.

The Committee and management are of the opinion that

the Company retains key individuals for the longer-term.

Long-term incentives are designed to ensure alignment

of the long-term objectives with those of unitholders.

Safety, health and environment

Management is responsible for developing framework

policies, guidelines and compliance regarding safety,

health and the environment and ensuring that the

external property managers are implementing these

effectively.

Dealings in securities

The company has a practice of prohibiting dealing in its

linked units by directors and officers for a designated

period preceding the announcement of its financial

results or in any other period considered sensitive, and

complies with the listing requirements of the JSE

Securities Exchange South Africa in this regard.

Black Economic Empowerment (“BEE”)

iFour recognises the need to ensure broader participation

of previously disadvantaged individuals in the formal

economy in order to achieve sustainable development

and prosperity, both at the corporate level and in the

national interest. To this end, iFour is working closely with

its associate, Pangbourne, and is currently exploring

opportunities to further BEE in the property industry.

Corporate social investment

As responsible corporate citizens, the directors

recognise the need for, and responsibility of, re-

investing in the community to contribute to the growth

and well-being of that community.

Management is in the process of assessing how

available resources can be utilised more effectively for

the benefit of communities served by iFour.

Code of ethics

All directors, officers and employees are required to

maintain the highest ethical standards in ensuring that

the group’s business practices are conducted in a

manner which is beyond reproach. iFour has a code of

ethics which has been adopted by the board.

iFour is committed to complying with legislation,

regulation and best practice, where appropriate, in all

jurisdictions in which it has a presence.


responsibility for and approval of the annual financial statements

The company’s directors are responsible for the

preparation of the annual financial statements of the

company and group annual financial statements

set out on pages 18 to 45. These financial statements

have been prepared using appropriate accounting

policies, supported by reasonable and prudent judgement

and estimates in conformity, in all material respects, with

South African Statements of Generally Accepted

Accounting Practice. They also take into account the

nature of the business, good corporate governance and

the requirements of the South African Companies Act.

The board and management set standards and

management implements systems of internal control,

accounting and information systems aimed at providing

reasonable assurance that assets are safeguarded and

the risk of error, fraud or loss are reduced in a cost-

effective manner. The risks relating to specific events

and projects that could have an impact on the business

during the year were identified, prioritised and managed

with input from management.

The directors and the Audit Committee are satisfied

that management has maintained reliable accounting

records and an effective system of internal controls.

The financial statements have been prepared from

these records on the basis of the consistent use of

appropriate accounting policies and fairly present the

state of affairs of the company and the group. Nothing

has come to the attention of the directors to indicate that

there has been any material breakdown in the functioning

of these controls and systems during the year.

The directors are of the opinion that the group is

financially sound and operates as a going concern. The

financial statements have been prepared on this basis.

No event, material to the understanding of this report,

has occurred between the financial year end and the

date of this report.

The directors of the company accept responsibility for

these annual financial statements, which were approved

on 24 August 2004 and are signed on their behalf by:

A J W L Richards

Chairman

J L Nunes

Managing Director

25 August 2004

DECLARATION BY THE COMPANY SECRETARY IN RESPECT OF SECTION 268(g) OF THE COMPANIES

ACT, 1973

I declare that, to the best of my knowledge, the company has lodged with the Registrar all such returns as are required

of a public company in terms of the Companies Act, 1973 and that all such returns are true, correct and up to date.

J J Groenewald

Company Secretary

25 August 2004

declaration by the company secretary

17

report of the independent auditors

TO THE SHAREHOLDERS OF iFOUR PROPERTIES

LIMITED

We have audited the annual financial statements and

group annual financial statements of iFour Properties

Limited set out on pages 18 to 45 for the year ended

30 June 2004. These annual financial statements are

the responsibility of the company’s directors. Our

responsibility is to express an opinion on these annual

financial statements based on our audit.

Scope

We conducted our audit in accordance with the

Statements of South African Auditing Standards. Those

standards require that we plan and perform the audit to

obtain reasonable assurance that the annual financial

statements are free of material misstatements. An audit

includes:

● examining on a test basis, evidence supporting the

amounts and disclosures in the annual financial

statements,

● assessing the accounting principles used and

significant estimates made by management, and

● evaluating the overall annual financial statement

presentation.

We believe that our audit provides a reasonable basis

for our opinion.

Audit opinion

In our opinion, these annual financial statements fairly

present, in all material respects, the financial position of

the company and the group at 30 June 2004, and the

results of their operations and cash flows for the year

then ended in accordance with South African Statements

on Generally Accepted Accounting Practice and in the

manner required by the Companies Act in South

Africa.

PricewaterhouseCoopers Inc

Chartered Accountants (SA)Registered Accountants and Auditors

Johannesburg

25 August 2004


directors’ statutory report

The directors have pleasure in submitting their second

annual report, which forms part of the audited annual

financial statements of the group, for the year ended

30 June 2004.

NATURE OF BUSINESS

iFour is a property investment company, holding its

directly owned properties in four wholly owned

subsidiary companies. The group derives its income

from rentals received from its investment in a diversified,

“A” grade property portfolio situated mainly in Gauteng,

KwaZulu-Natal and the Western Cape.

OPERATING AND FINANCIAL REVIEW

The company concluded the acquisition of 53 properties

for R740,8 million reported in the 2003 directors’ report

and acquired a further 8 properties for R236 million to

bring the total investment properties under management

to R1 722 million. The additional purchases were

funded by the issue of 82 707 802 new linked units and

R560 million borrowings from available facilities.

The group declared total distributions for the year of

78 cents, which is ahead of the forecast of 75 cents

circulated to all unitholders on 29 August 2003.

The financial position and results of the company

are fully dealt with in the financial statements on pages

18 to 45.

Key statistics relating to the financial results for the year

are set out below:

2004 2003 R’000 R’000

Total assets 1 780 634 772 165

Interest-bearing borrowings 890 586 395 511

Share capital and reserves 93 125 48 717

Debenture capital 633 629 256 042

Revenue 221 580 139 347

Earnings before finance costs and taxation 164 527 130 780

Net financing costs (78 034) (55 550)

Debenture interest (88 320) (43 706)

Distribution per linked unit (cents) 78 75

SUBSIDIARY COMPANIES

Details of the wholly owned companies are:

2004

Issued

share Indebt- Shares

capital edness at cost

R R’000 R’000

iFour Properties SA

(Proprietary) Limited 1 319 369 —

iFour Properties Two


iFour Properties Three


Sipan 1


iFour Executive

Unit Purchase Trust (7 500) —

2003

Issued

Share Indebt- Shares

Capital edness at cost

R R’000 R’000

iFour Properties SA


iFour Properties Two


The interest of the company in the aggregate profits

and losses after taxation of its subsidiary companies for

the year was Rnil (2003: R27,7 million) and R4,4 million

(2003: R nil) respectively.

SPECIAL RESOLUTIONS

Special resolutions, passed at the annual general

meeting of iFour members on 16 October 2003, were

as follows :

1. Resolved that subject to the provisions of the

Companies Act, 1973, and the Listing Requirements

of the JSE Securities Exchange South Africa (“the

JSE”), the company be authorised, up to and

including the date of the following annual general

meeting, to approve the purchase of its own shares

19

(linked to a debenture) by the company (or any

subsidiary of the company) provided that:

● the general authority shall not extend beyond 15

(fifteen) months from the date of the passing of

the resolution;

● the general authority to the repurchase by the

company (or the purchase by the subsidiary)

shall not exceed that percentage of the company’s

issued share capital permitted from time to time

by the JSE for repurchase (currently 20%);

● the repurchase by the company (or the purchase

by the subsidiary) shall not be made at a price

more than that permitted pursuant to the Listing

Requirements of the JSE;

● the repurchase will not take place within the

restricted periods provided by the Listing

Requirements of the JSE from time to time.

2. Resolved, insofar as it may be necessary to do so,

that –

2.1 pursuant to Article 39, the company ratifies the

acquisition by its wholly owned subsidiary,

iFour Properties Two (Proprietary) Limited

(“iFour Two”) from Clidet 433 (Proprietary)

Limited (“Clidet”) of –

2.1.1 the right granted by the company to

iProp Holdings Limited (“iProp”) to be

issued 300 000 fully paid shares (linked

by a debenture), at an issue price of

R5,00 per share (linked to a debenture),

on 15 March 2004, in discharge of the

balance of the promoter’s fee payable to

iProp in respect of the listing of the

company, which right has been ceded

to iProp to Clidet; and

2.1.2 the right granted by the company to

Lerix Investments (Proprietary) Limited

(“Lerix”) to be issued 6 000 000 fully

paid shares (linked to a debenture), at

an issue price of R5,00 per share (linked

to a debenture), on 15 March 2004, in

discharge of the balance of the purchase

consideration payable to Lerix for the

sale of properties to the company, as

detailed in the company’s prospectus

dated 9 May 2002, which right has been

ceded by Lerix to Clidet;

upon the terms and conditions set out in

the agreement concluded between the

company, iFour Two and Clidet dated

4 August 2003, a copy of which was

tabled at the meeting and initialled by

the chairperson for identification; and

2.2 the company may, should the directors deem

it fit, acquire from iFour Two and cancel –

2.2.1 the rights referred to in paragraphs 2.1.1

and 2.1.2; or

2.2.2 if the shares (linked to a debenture)

which are to be issued in terms of the

rights referred to in paragraphs 2.1.1

and 2.1.2 have been issued, such shares

(linked to a debenture)

at a price equal to the total consideration (after

any adjustments thereof) payable by iFour Two

to Clidet.


ADMINISTRATION AND MANAGEMENT

The company employs personnel directly to perform

the asset management function for the group and to

monitor and control the outsourced functions.

MANAGEMENT BY THIRD PARTIES

Pangbourne Properties Limited has been appointed as

lead property managers from 20 September 2003. In

addition, they carry out the financial and general

administration management and secretarial functions

of the group.

There are agreements in place with Gensec Property

Services Limited, McCormick Property Development

cc and Hermans & Roman Property Solutions

(Pty) Limited to manage properties on behalf of

the group.

DIRECTORATE AND SECRETARY

Details of the directors and secretary are reflected on

pages 10 to 12.

Messrs L I Weil, S H Mia and J P G de Rauville did not

stand for re-election at the annual general meeting and

Mr J B Gibbon was appointed to the board on

15 December 2003.

In terms of Article 15.1 of the company’s articles of

association, Messrs R C Johnson, E P M Moses and

U J van der Walt retire at the next annual general meeting

but, being eligible, offer themselves for re-election.

In terms of Article 13.2 of the company’s articles of

association, Mr J B Gibbon retires at the next annual

general meeting but, being eligible, offers himself for

re-election.

DISTRIBUTIONS

The following distributions were declared during the period under review:

Distribution Distribution Distribution

number 3 number 4 number 5

Declaration date 29 August 2003 16 February 2004 28 June 2004

Last date to trade cum distribution 12 September 2003 12 March 2004 23 August 2004

Record date 19 September 2003 19 March 2004 27 August 2004

Payment date 22 September 2003 23 March 2004 30 August 2004

Debenture interest cents per unit 16,64 20,36 41,00

directors’ statutory report (continued)

DIRECTORS’ INTERESTS

At 30 June 2004, the directors’ direct and indirect beneficial interests in the combined units of the company were as follows:

Direct Indirect

Non- Non-

Director Beneficial beneficial Beneficial beneficial Total

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003

J A A Diepenbroek 1 150 000 52 302 — — — 1 386 — — 1 150 000 53 688

J L Nunes 725 000 42 838 — — — 30 098 — — 725 000 72 936

E P M Moses 4 746 14 746 — — — — — — 4 746 14 746

R C Johnson — — — — 3 310 000 9 790 000 — — 3 310 000 9 970 000

Total 1 879 746 109 886 — — 3 310 000 9 821 484 — — 5 189 746 10 111 370

21

No director of iFour has any non-beneficial holdings in

iFour’s issued units.

No director of iFour has any interest in any transaction

which is, or was, of an unusual nature, or contained

unusual conditions, or which was material to iFour and

which was effected during the current financial year, or

which was effected during any earlier financial year

and which remains in any respect outstanding or

unperformed.

SHAREHOLDERS’ INFORMATION

Details of major shareholders and shareholders’ spread

appears on page 59.

THE IFOUR EXECUTIVE UNIT PURCHASE TRUST

(“the trust”)

The trust issued 1 875 000 units to employees during

the period under review. At 30 June 2004, the trust held

no unreserved units.

Loans to the trust participants and details of the iFour

Executive Unit Purchase scheme are disclosed in note

9 of the annual financial statements.

POST-BALANCE SHEET EVENT

The company announced on SENS on Monday,

19 July 2004 that Mr J L Nunes had succeeded

Mr J A A Dipenbroek as managing director. Mr

Diepenbroek has moved to Pangbourne Properties

Limited but remains a director.

Unitholders are referred to the circular dated 9 June

2004 for full details of the Sipan acquisition. Three

properties totalling R153,6 million were transferred

before 30 June 2004. The remaining five properties, to

the value of R124,69 million, will be transferred during

the early part of the new financial year. A further

property with a purchase consideration of R20,3 million

has been acquired which will be funded from current

facilities.


income statementsfor the year ended 30 June

GROUP COMPANY

2004 2003 2004 2003

Notes R’000 R’000 R’000 R’000

Revenue 1 221 580 139 347 12 254 5 465

Other income 7 861 514 7 761 514

Net property portfolio costs (58 163) (34 212) — —

Administrative costs (7 434) (6 298) (6 826) (5 167)

Profi t from operations 2 163 844 99 351 13 189 812

Net revaluation of investment properties 683 24 205 — —

Net profi t on disposal of investment property — 7 224 — —

Earnings before fi nancing costs and taxation 164 527 130 780 13 189 812

Interest received 3 2 893 2 028 77 391 41 991

Interest paid 3 (80 927) (57 578) (297) (2)

Movement of fair value in interest rate swaps 16 (8 438) — — —

Debenture interest distributed to unitholders 6 (88 320) (43 706) (88 320) (43 706)

(Loss)/earnings before taxation (10 265) 31 524 1 963 (905)

Taxation 4 5 737 (4 714) 43 —

Net (loss)/earnings for the year (4 528) 26 810 2 006 (905)

(Loss)/earnings per share (cents) 5 (4,07) 46,00

Diluted (loss)/earnings per share (cents) 5 (4,06) 41,13

Headline (loss)/earnings per share (cents) 5 (3,49) 1,91

Diluted headline (loss)/earnings per share (cents) 5 (3,48) 1,71

23

balance sheets as at 30 June

GROUP COMPANY

2004 2003 2004 2003

Notes R’000 R’000 R’000 R’000

ASSETS

Non-current assets 1 735 400 716 379 759 418 330 343

Investment properties 7 1 721 574 716 370 — —

Equipment, furniture and fi ttings 8 104 9 104 9

Loans to share trust participants 9 11 592 — 11 592 —

Investments in subsidiary companies 10 — — 747 656 330 334

Deferred taxation 11 2 130 — 66 —

Current assets 45 234 55 786 2 077 3 855

Accounts receivable 12 24 563 12 418 2 009 1 546

Bank balances and cash 20 671 43 368 68 2 309

Total assets 1 780 634 772 165 761 495 334 198

EQUITY AND LIABILITIES

Share capital and reserves 93 125 48 717 71 944 21 002

Share capital and premium 13 70 843 21 907 70 843 21 907

Retained earnings/(loss) 22 282 26 810 1 101 (905)

Non-current liabilities 1 418 542 649 682 633 629 256 042

Debenture capital 14 633 629 256 042 633 629 256 042

Interest-bearing borrowings 15 776 475 390 010 — —

Fair value of interest rate swaps 16 8 438 — — —

Deferred taxation 11 — 3 630 — —

Current liabilities 268 967 73 766 55 922 57 154

Trade and other payables 17.1 44 174 12 706 1 255 1 599

Accounts payable for acquisitions 20.2 56 742 — — —

Amounts due to vendors 17.2 1 100 33 000 1 100 33 000

Current portion of interest-bearing borrowings 113 301 4 421 — —

Taxation 106 1 084 23 —

Unitholders for distribution 53 544 22 555 53 544 22 555

Total equity and liabilities 1 780 634 772 165 761 495 334 198

Net asset value per share (cents) 65 84

Net asset value per linked unit (cents) 507* 523

* The reduction in net asset value per linked unit is due to the movement in the fair value of interest rate swaps and linked unit issue costs of R17,1 million.


cash flow statements for the year ended 30 June

Cash fl ows from operating activities

Cash generated from operations 20.1 180 002 137 832 13 355 34 365

Interest received 2 893 2 028 77 391 41 991

Interest paid (80 927) (57 578) (297) (2)

Taxation paid (1 000) — — —

Distributions to unitholders (57 331) (21 151) (57 331) (21 151)

Net cash infl ow from operating activities 43 637 61 131 33 118 55 203

Cash fl ows from investing activities

Additions to investment properties (614 378) (729 783) — (9)

Additions to equipment, furniture and fi ttings (112) — (112) —

Net proceeds from the sale of investment

property — 44 831 — —

Investment in, and loans to subsidiaries — — (83 521) (330 334)

Increase in loans to share trust participants (342) — (342) —

Net cash outfl ow from investing activities (614 832) (684 952) (83 975) (330 343)

Cash fl ows from fi nancing activities

Issue of linked units, net of transaction costs 80 516 277 449 80 516 277 449

Decrease in amounts due to vendors (27 092) — (31 900) —

Long-term borrowings raised 627 826 429 038 — —

Long-term borrowings repaid (132 752) (39 298) — —

Net cash infl ow from fi nancing activities 548 498 667 189 48 616 277 449

Net (decrease)/increase in cash and

cash equivalents (22 697) 43 368 (2 241) 2 309

Cash and cash equivalents

at the beginning of the year 43 368 — 2 309 —

Cash and cash equivalents

at the end of the year 20.3 20 671 43 368 68 2 309

GROUP COMPANY

2004 2003 2004 2003

Notes R’000 R’000 R’000 R’000

25

statement of changes in equity for the year ended 30 June

Share Share Retained

Number capital premium earnings Total

of shares R’000 R’000 R’000 R’000

GROUP

Units issued 58 275 179 58 23 252 — 23 310

Share issue costs — — (1 403) — (1 403)

Profi t for the period after

distributions and taxation — — — 26 810 26 810

Balance at 30 June 2003 58 275 179 58 21 849 26 810 48 717

Units issued 78 882 802 79 46 443 — 46 522


Issue of treasury units 6 300 000 6 4 341 — 4 347

Loss for the year after

distributions and taxation — — — (4 528) (4 528)

Balance at 30 June 2004 143 457 981 143 70 700 22 282 93 125

COMPANY

Units issued 58 275 179 58 23 252 — 23 310


Loss for the period after

distributions and taxation — — — (905) (905)

Balance at 30 June 2003 58 275 179 58 21 849 (905) 21 002

Units issued 78 882 802 79 46 443 — 46 522


Issue of treasury units 6 300 000 6 4 341 — 4 347

Profi t for the year after

distributions and taxation — — — 2 006 2 006

Balance at 30 June 2004 143 457 981 143 70 700 1 101 71 944

26 iFOUR PROPERTIES LIMITED ■ annual report 2004

PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The annual fi nancial statements are presented in South African Rands, the currency in which the group’s transactions are denominated.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The annual fi nancial statements and group annual fi nancial statements have, except for the revaluation of fi xed properties to fair value, been prepared on the historical cost basis.

The fi nancial statements have been prepared in accordance with South African Generally Accepted Accounting Practices (GAAP) and are consistent with the previous period. The principal accounting policies adopted are set out below.

Consolidation

The group annual fi nancial statements include the fi nancial statements of the company, its subsidiaries and the iFour Executive Unit Purchase Trust. The operating results of the subsidiaries are included from the effective dates of acquisition up to the effective dates of disposal. All inter-company balances and transactions are eliminated.

Investment properties

Investment properties are intially recorded at cost and subsequently stated at their fair value. Investment properties are held by the group for rental producing purposes and vacant land for development. These properties are valued every year by the directors. External valuations are obtained on a rotational basis, ensuring that every property is valued once every three years, by a member of the Institute of Valuers, on an open market basis. Any gain or loss arising on the fair value adjustment to the investment properties is included in the net profi t or loss for the period in which it arises.

Depreciation is not provided on investment properties. Expenditure incurred to install new tenants which is capitalised, is depreciated over the initial period of the lease.

The costs of repairs and maintenance to investment properties are charged against income, whereas expenditure that enhances the value of the property is capitalised.

Equipment, furniture and fi ttings

Equipment, furniture and fi ttings is stated at cost less accumulated depreciation.

Equipment, furniture and fi ttings is depreciated over the estimated useful life of the assets on a straight line basis. The principal rates used for this purpose are:

Computer equipment 33,3% straight lineFurniture and fi ttings 10,0% straight line

Leased assets

Leases of equipment, furniture and fi ttings where the group assumes substantially all the benefi ts and risks of ownership are classifi ed as fi nance leases.

Assets leased in terms of fi nance lease agreements are capitalised at amounts equal at the inception of the lease to the fair value of the leased property, or, if lower, at the present value of the minimum lease payments and are depreciated in accordance with the policies applicable to equivalent items of equipment, furniture and fi ttings.

The corresponding rental obligations, net of fi nance charges, are included in interest bearing borrowings. Lease fi nance charges are amortised over the duration of the leases by using a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases under which the risks and benefi ts of ownership are effectively retained by the lessor are classifi ed as operating leases. Obligations incurred under operating leases are charged to the income statement in equal instalments over the period of the lease.

Retirement benefi t costs

Payments to defi ned contribution plans are charged as an expense as they fall due.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the costs of those assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specifi c borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised.

All other borrowing costs are expensed in the period in which they are incurred.

Goodwill

Goodwill arising on consolidation and acquisitions represents the excess of the group’s interest in the fair value of the identifi able net assets of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is capitalised and amortised on a straight-line basis over its useful economic life, a period generally not exceeding 20 years.

Negative goodwill, which represents the excess of the group’s interest in the fair value of the identifi able assets and liabilities acquired over the cost of acquisition, is eliminated proportionately against the fair values of the non-monetary assets acquired. Any amount in excess of the fair values of non-monetary assets acquired is treated as negative goodwill and recognised as income on a systematic basis.

Taxation

The charge for current tax is based on the results for the year as adjusted for items which are non-assessable or disallowed. Taxation is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences, unless the deferred tax liability arises from:

summary of accounting policies for the year ended 30 June 2004

27

– goodwill for which amortisation is not deductible for tax purposes, or

– the initial recognition of an asset or liability in a transaction which:

– is not a business combination, and

– at the time of the transaction, affects neither accounting profi t nor taxable profi t, or

– revaluations of investment properties to the extent that taxation is not payable on the sale of the investment property.

Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profi t will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from

– negative goodwill, or

– from the initial recognition of an asset or liability in a transaction which:

– is not a business combination, and

– at the time of the transaction, affects neither accounting profi t nor taxable profi t, or

– revaluations of investment properties to the extent that tax is not claimable on the sale of the investment properties.

Investments

Investments are stated at the lower of cost or written-down value. Investments are written down in cases where there has been a permanent decline in value. Any impairment or recovery of impairment is recognised in the income statement in the period in which the diminution or recovery occurs.

Listed securities are restated to fair value annually. Fair values are based on market value at year-end and any surplus or defi cit is charged against income.

Distributions from listed securities are recognised when the right to receive income has been established. Profi ts or losses arising from the sale of investments are charged against income for the period in which they occur.

Linked unit issue costs

Linked unit issue costs are expenses of, or the commission paid, or discount allowed on, the creation or issue of any linked units of the company.

Linked unit issue costs are allocated between the share and debenture components. Issue costs relating to the shares are allocated to share premium in the period in which the cost is incurred. The portion relating to debentures are allocated to deferred debenture expenses and amortised over 25 years from the date of allotment.

Revenue

Revenue represents gross rentals, recognised on an accrual basis, and fees received from management transactions, net of value added taxation.

The company’s revenue also includes fees earned from subsidiaries.

Financial instruments

The groups principal fi nancial assets are bank balances and cash, including deposits on call and short term investments in money market instruments, short-term loans and trade receivables.

Cash and cash equivalents consist of cash resources, which comprise cash on hand, balances with bankers and investments in short-term money market instruments.

Trade receivables are carried at anticipated realisable value. An estimate is made for the provision of impairment of debt based on a review of all outstanding amounts at the year-end. Bad debts are written off during the year in which they are identifi ed.

Financial liabilities and equity instruments are classifi ed according to the substance of the contractual arrangements entered into. Interest rate swap agreements are caried at their fair value. Signifi cant fi nancial liabilities include fi nance lease obligations, interest-bearing bank loans and overdrafts, trade and other payables. The accounting policy for fi nance lease obligations is outlined above.

Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade and other payables are stated at their nominal value.

Segmental reporting

The group earns revenue in the form of property rentals. On a primary basis the group is organised into 3 major operating segments:

– Industrial,

– Offi ce, and

– Retail

On a secondary basis, the geographical location of the properties have been identifi ed.

Segment results include revenue and expenses that are directly attributable to a segment and the relevant portion of the groups revenue and expenses that can be allocated on a reasonable basis to that segment.

Segment assets and liabilities comprise those operating assets and liabilities that are directly attributable to the segment or can be allocated to a segment on a reasonable basis. Segment assets are reported after deducting related allowances that are reported as direct offsets in the groups balance sheet. Segment assets and liabilities do not include deferred income taxes.

Comparative fi gures

Where necessary, comparative fi gures have been adjusted to conform to changes in presentation in the current year. The comparitive fi gures relate to an 18 month period. The Company traded for 12 of the 18 months. As a result of the increase in the growth of the portfolio, the prior period is non-comparable to the current year.


notes to the annual financial statements for the year ended 30 June

1. REVENUE

Revenue from:

– Rentals 221 580 139 347 — —

– Fees — — 12 254 5 465

221 580 139 347 12 254 5 465

2. PROFIT FROM OPERATIONS

Profi t from operations is arrived at after takinginto account the following:

Auditors’ remuneration

– Audit fees 375 289 140 130

– Other services 700 — — —

Depreciation

– Equipment 16 1 16 1

– Furniture and fi ttings 1 — 1 —

Amortisation of listing, debenture and mortgage expenses 1 226 1 017 956 769

Tenant installation and commission amortised 1 184 161 — —

Operating lease payments – premises 304 151 304 151

– land leases 2 255 2 182 — —

Staff costs 669 418 669 418

Included in staff costs are:

Defi ned contribution plan expenses 69 201 69 201

Number of employees 5 4 5 4

3. INTEREST

Interest received

On call accounts 2 026 1 558 — —

Other 525 470 6 —

From subsidiaries — — 77 043 41 991

Executive Unit Purchase Trust 342 — 342 —

Total Interest received 2 893 2 028 77 391 41 991

Interest paid

Finance leases 7 422 8 483 — —

Mortgage loans 72 662 48 837 — —

Other 843 258 297 2

Total Interest paid 80 927 57 578 297 2

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

29

4. TAXATION

South African normal taxation (23) — (23) —

Deferred taxation – current year 1 831 (3 630) 36 —

Prior year adjustments 2 729 — 272 —

Capital gains taxation — (1 084) — —

Assessable loss – current year 1 200 — (242) —

Taxation credit/(expense) per the income statements 5 737 (4 714) 43 —

Taxation rate reconciliation

The taxation on the profi t before taxation differs from the theoretical amount that would arise using the South African taxation rate as follows:

% % % %

Statutory taxation rate 30 30 30 —

Exempt income (19) — 67 —

Disallowed expenditure 4 — (15) —

Prior year adjustments (27) — 14 —

Permanent differences 5 (30) — —

Capital gains taxation 7 15 (34) —

Property revaluation at 15% 4 — — —

Effective taxation rate 4 15 62 —

(Loss)/profi t before taxation (10 265) 31 524 1 963 (905)

Statutory taxation rate at 30% 3 080 (9 457) (589) —

Exempt income 1 981 — 1 322 —

Disallowed expenditure (384) — (296) —


Permanent differences (553) 9 457 (5) —

Capital gains taxation (661) (4 714) (661) —

Property revaluation at 15% (455) — — —

Taxation credit/(expense) per the income statements 5 737 (4 714) 43 —

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000


5. (LOSS)/EARNINGS PER SHARE

(Loss)/earnings per share is calculated on the weighted average number of shares ranking for distribution being 111 387 953 (2003: 58 275 179) and net (loss)/earnings after tax of (R4,5 million) (2003: R26,8 million).

Headline (loss)/earnings per share have been based on the weighted average number of shares in issue during the year being 111 387 953 (2003: 58 275 179).

The diluted headline (loss)/earnings per share is calculated on the diluted weighted average number of shares in issue of 111 565 147 (2003: 64 875 179). (Refer note 13.2).

Year ended 30 June 2004

Reconciliation between (loss)/earnings and headline (loss)/earnings:

(Loss)/earnings Net (loss)/ before taxation Taxation earnings R’000 R’000 R’000

(Loss)/earnings for the year (10 265) 5 737 (4 528)

Adjustments:

Net revaluation of investment properties (683) 102 (581)

Amortisation of listing, debenture and mortgage expenses 1 226 — 1 226

Headline (loss)/earnings (9 722) 5 839 (3 883)


Reconciliation between earnings and headline earnings:

Earnings Net before taxation Taxation earnings R’000 R’000 R’000

Earnings for the period 31 524 (4 714) 26 810

Adjustments:

Revaluation of investment properties (24 205) 3 630 (20 575)

Net profi t on disposal of investment property (7 224) 1 084 (6 140)

Amortisation of listing, debenture and mortgage expenses 1 017 — 1 017

Headline earnings 1 112 — 1 112


31

6. DISTRIBUTIONS TO UNITHOLDERS

Analysis of distribution to unitholders is as follows:

– Debenture interest – special interim distribution 9 697 — 9 697 —

– Debenture interest – interim distribution 25 275 21 151 25 275 21 151

– Debenture interest – fi nal distribution 53 348 22 555 53 348 22 555

Net distribution 88 320 43 706 88 320 43 706

Distributions per linked unit are as follows:

cents cents cents cents

– Debenture interest – special interim distribution 16,64 — 16,64 —

– Debenture interest – interim distribution 20,36 36,29 20,36 36,29

– Debenture interest – fi nal distribution 41,00 38,71 41,00 38,71

78,00 75,00 78,00 75,00

The fi nal distribution declared is net of distributions receivable of R5,47 million which is recoverable from unitholders who did not rank for distribution for the period from 1 January 2004 to 30 June 2004.

7. INVESTMENT PROPERTIES

Opening balance 716 370 — — —

Additions 1 004 521 729 773 — —

Revalution adjustments 683 24 205 — —

Disposals — (37 608) — —

Closing carrying balance 1 721 574 716 370 — —

Details of the investment properties are recorded in a register which may be inspected by unitholders or their authorised agents at the company’s registered offi ce. Please refer to pages 46 to 49 where details of investment properties are listed.

Investment properties are held as security for mortgage loans. The value of encumbered investment properties is set out in note 15.

The directors value the properties annually on an open market basis, using a risk adjusted discounted cash fl ow method. Independent valuations are obtained on a rotational basis, ensuring that every property is valued once every three years. Independant valuations are performed on an open market value basis.

The independant valuations were obtained from a duly authorised valuer in terms of section 19 of the Property Valuer’s Profession Act 47 of 2000.

The recent valuations were done by JHI Real Estate Limited: Marijke Serfontein MIV(SA) – 17 years experience.

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000


8. EQUIPMENT, FURNITURE AND FITTINGS


GROUP

Opening net book value 9 — 9

Additions 66 46 112

Depreciation (16) (1) (17)

Closing net carrying amount 59 45 104

Cost 75 46 121

Accumulated depreciation (16) (1) (17)

Net book value 59 45 104

COMPANY

Opening net book value 9 — 9

Additions 66 46 112

Depreciation (16) (1) (17)

Closing net carrying amount 59 45 104

Cost 75 46 121

Accumulated depreciation (16) (1) (17)

Net book value 59 45 104

Period ended 30 June 2003

GROUP

Opening net book value — — —

Additions 10 — 10

Depreciation (1) — (1)

Closing net carrying amount 9 — 9

Cost 10 — 10

Accumulated depreciation (1) — (1)

Net book value 9 — 9

COMPANY

Opening net book value — — —

Additions 10 — 10

Depreciation (1) — (1)

Closing net carrying amount 9 — 9

Cost 10 — 10

Accumulated depreciation (1) — (1)

Net book value 9 — 9

Furniture

Equipment and fittings Total


33

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

9. LOANS TO SHARE TRUST PARTICIPANTS

Loans advanced during the year 11 250 — 11 250 —

Interest raised 342 — 342 —

At year end 11 592 — 11 592 —

J A A Diepenbroek 7 110 — 7 110 —

J L Nunes 4 482 — 4 482 —

At year end 11 592 — 11 592 —

The loans to the share trust participants arise as a result of the implementation of the iFour Executive Unit Purchase Scheme. In terms of the iFour Executive Unit Purchase Scheme, the trustees of the scheme may from time to time offer units to participating scheme members. In terms of the trust deed the offer price of these units is deemed to be the ruling market price on the date of the offer. If such units are accepted by the participating member, the units are issued to the member, a loan equal to the number of units multiplied by the offer price is opened, and the units are pledged back to the trust as security for the loan.

Loans to share trust participants from the company attract interest at 11,33% which is the weighted average cost of capital of the company since the trusts formation. Loans to the trust from external sources, currently attract interest at prime less 1,5%.

One third of the number of units acquired by a member may be sold after two years have elapsed from the offer date. A further one-third after three years have so elapsed, and the fi nal third after the fourth year.

THE iFOUR EXECUTIVE UNIT PURCHASE TRUST 2004

Units

Opening balance 1 875 000

Units of participants joining the scheme (1 875 000)

Closing balance 0

There are no unreserved units remaining in the trust at 30 June.

10. INVESTMENTS IN SUBSIDIARY COMPANIES

In wholly owned subsidiary companies:

– Shares at cost (Directors’ valuation – R4) — — — —

– Amounts owing by subsidiaries — — 747 656 330 334

— — 747 656 330 334

There are no fi xed terms of repayment and interest is charged at rates between 13,88% (2003: 13,4%) and 14,6% (2003: 14,3%).

The Company’s wholly owned subsidiaries at 30 June 2004 are:

iFour Properties SA (Pty) Ltd, incorporated in the Republic of South Africa

iFour Properties Two (Pty) Ltd, incorporated in the Republic of South Africa

iFour Properties Three (Pty) Ltd, incorporated in the Republic of South Africa

Sipan 1 (Pty) Ltd, incorporated in the Republic of South Africa



GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

11. DEFERRED TAXATION

The movement on the net deferred taxation account is as follows:

At the beginning of the year (3 630) — — —

Current year charge 1 831 (3 630) 36 —


Assessable losses 1 200 — (242) —

Net deferred tax asset/(liability) 2 130 (3 630) 66 —

The major categories of deferred taxation at 30 June are as follows:

Prepaid expenses (658) — — —

Capital gains tax on revaluation of investment properties (3 403) (3 630) — —

Finance lease liability (2 049) — — —

Wear and tear allowances (393) — — —

Fair value of interest rate swaps 2 531 — — —

Provisions 651 — 66 —

Receipts in advance 919 — — —

Assessable losses 4 532 — — —

Net deferred tax asset/(liability) 2 130 (3 630) 66 —

12. ACCOUNTS RECEIVABLE

Trade receivables 4 772 3 054 — —

Provision for impairment of debt (2 602) (470) — —

Trade receivables net of provision 2 170 2 584 — —

Tenant installation and letting commission, net of amortisation 2 621 816 — —

Prepayments and deposits 1 815 6 392 228 —

Value-added tax 254 963 254 617

Sundry debtors 9 810 1 663 1 527 929

Sundry debtors – acquisition costs 7 893 — — —

24 563 12 418 2 009 1 546

35

13. SHARE CAPITAL AND PREMIUM

13.1 Authorised

500 000 000 ordinary shares of 0,1 cent each 500 500 500 500

500 500 500 500

Issued

143 457 981 (2003: 58 275 179) ordinary shares of 0,1 cent each 143 58 143 58

Share premium 70 700 21 849 70 700 21 849

Opening balance 21 849 — 21 849 —

Arising on issues during the year 46 443 23 252 46 443 23 252

Share issue costs written off (1 933) (1 403) (1 933) (1 403)

Issue of treasury units 4 341 — 4 341 —

70 843 21 907 70 843 21 907

Each share is linked with one variable rate debenture to form one linked unit. The unissued ordinary shares of the company are under the unrestricted control of the directors until the forthcoming annual general meeting. Further details are refl ected in the statutory directors’ report.

13.2 Deferred linked units

177 194 linked units will be issued to Alex Red Property Holdings (Pty) Limited as part settlement of the purchase consideration for a property acquired. These linked units will be allotted and issued to the seller as fully paid up at the earlier of 31 August 2004, or the day which is one day after the register of iFour Properties Limited has been closed by the transfer secretaries for fi nal interest distribution for the six month period ended 30 June 2004.

14. DEBENTURE CAPITAL

143 457 981 (2003: 58 275 179) subordinated debentures of 460 cents each 659 907 268 066 659 907 268 066

Deferred debenture expenses (26 278) (12 024) (26 278) (12 024)

Opening balance (12 024) — (12 024) —

Total deferred debenture expenses incurred (15 210) (12 524) (15 210) (12 524)

Amortisation of deferred expenses for the year 956 500 956 500

633 629 256 042 633 629 256 042

In terms of the debenture trust deed, the aggregate interest entitlement of every one debenture linked to each ordinary share in respect of any fi nancial year shall be not less than 99,9% of the net income, after making provisions as the directors deem fi t. The interest is payable twice per year or in appropriate circumstances, additional special interim distributions may be declared. The debentures are redeemable after 25 years from the date of allotment.

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

36 iFOUR PROPERTIES LIMITED ■ annual report 2004


15. INTEREST-BEARING BORROWINGS15.1 Nedcor Investment Bank (“N.I.B.”) 13,5 68 780 73 201 — —The N.I.B. fi nance structure is secured by investment properties to the value of R114 million.The fi nance lease facility is amortised annually to 30 September 2009.

15.2 Nedbank Corporate 10,0 1 905 — — —The mortgage bond is secured by aninvestment property to the value of R9 million.

15.3 Standard Bank 12,48 320 000 322 310 — —The Standard Bank facility consists of R107 million maturing on 30 April 2005 and R246 million maturing on 30 April 2007. An amount of R33 million is an access bond facility and bears interest at the prime overdraft rate less 1,5%. The facility is available for future use. The Standard Bank facility of R353 million is secured by investment properties to the value of R635 million.Borrowings to the value of R320 millionhave been hedged at an interest rate of 12,48%NACQ to 10 June 2008. The fair value of this loan at 30 June 2004 is R328 million.

15.3.1 Standard Bank mortgage bond expenses

Deferred mortgage expenses (810) (1 080) — —

Total mortgage expenses incurred (1 350) (1 350) — — Mortgage expenses amortised to date 540 270 — — 15.4 Absa Bank 10,75 499 901 — — —The Absa long-term loan facilities are as follows:15.4.1 iFour Executive Unit Purchase Trust –

R7,5 million maturing on 30 June 200715.4.2 iFour Properties SA (Pty) Limited –

R350 million maturing on 31 March 200815.4.3 Sipan I (Pty) Limited –

R160 million maturing on 31 March 200815.4.4 iFour Properties Three (Pty) Limited –

R489 million maturing on 30 September 2013

Borrowings to the value of R420 million have beenhedged at 10,80% NACQ to 3 October 2005.The interest rate applicable to the remainder of the utilised facility is fl oating at prime less 1%.The Absa bank facility is secured by investment properties to the value of R964 million.

889 776 394 431 — —Less: Portion payable within 12 months (113 301) (4 421) — —

Net long-term borrowings 776 475 390 010 — —

The company has a general overdraft facility of R17,5 million at Absa which bears interest at prime.

Average GROUP COMPANY

interest 2004 2003 2004 2003

rate (%) R’000 R’000 R’000 R’000

37

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

16. FAIR VALUE OF INTEREST RATE SWAPS

Movement of fair value in interest rate swaps 8 438 — — —

Closing balance 8 438 — — —

The hedging instrument arises as a result of management’s action to remove the uncertainty of interest rate fl uctuations and to provide a guaranteed cost of borrowings against the yields of portfolios acquired. The implementation of AC 133 requires the fair valuing of interest rate contracts.

Details of the hedging instruments are disclosed in note 15.

17. ACCOUNTS PAYABLE AND ACCRUALS

17.1 Trade and other payables

Trade payables and accruals 6 902 10 265 449 1 599

Tenant deposits 6 927 2 441 — —

Interest payable 13 558 — — —

Sundry payables 16 787 — 806 —

44 174 12 706 1 255 1 599

17.2 Amounts due to vendors (Note 13.2) 1 100 33 000 1 100 33 000

18. BORROWING POWERS

The directors’ borrowing powers are limited to 55% of the market value of its investment property portfolio plus R30 million excluding the Nedcor fi nance structure and properties.


Lease Finance Capital

commitments cost value

R’000 R’000 R’000


19. COMMITMENTS

19.1 Finance lease commitments

Year ended 30 June 2004:

Current 13 276 6 975 6 301

2 to 5 years 80 003 17 524 62 479

93 279 24 499 68 780

Year ended 30 June 2003:

Current 12 272 7 851 4 421

2 to 5 years 71 026 12 571 58 455

> 5 years 10 602 277 10 325

93 900 20 699 73 201

The lease payments will be funded from the proceeds of rental income from the properties which form part of this facility.

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

19.2 Operating lease commitments

Current 3 587 2 407 132 —

2 to 5 years 17 700 12 387 145 —

> 5 years 849 389 524 997 — —

870 676 539 791 277 —

The land leases above will be funded from the proceeds of rental income from the properties which form part of the lease agreements.

The above commitment excludes any option periods. The land leases run for periods in excess of 20 years and the company has the option to renew.

Leases escalate between 8 and 11%.

19.3 Capital commitments

The attention of users of the fi nancial statements are drawn to the circular dated 9 June 2004 where the group announced the purchase of Sipan 1 (Pty) Limited. Five properties with a cost of R124,69 million are still to be transferred. This will be funded from the group’s resources and through an issue of linked units to Pangbourne Properties Limited.

The group has signed an agreement for the direct purchase of a property with a cost of R20 million. This will be funded from the group’s resources and facilities.

39

20. NOTES TO THE CASH FLOW STATEMENT

20.1 Reconciliation of profi ts before taxation and distributions to unitholders, to cash generated from operations

(Loss)/profi t before taxation (10 265) 31 524 1 963 (905)

Adjusted for:

Movement of fair value in interest rate swaps 8 438 — — —

Distributions to unitholders 88 320 43 706 88 320 43 706

Depreciation 17 1 17 1

Amortisation of listing, debenture and mortgage expenses 1 226 771 956 500

Interest received (2 893) (2 028) (77 391) (41 991)

Interest paid 80 927 57 578 297 2

Profi t on sale of investment property — (7 224) — —

Profi t on settlement of debt (4 408) — — —

Revaluations of investment properties (683) (24 205) — —

Operating profi t before working capital changes 160 679 100 123 14 162 1 313

Working capital changes:

Increase in accounts receivable (12 145) (12 418) (463) (1 547)

Increase/(decrease) in accounts payable 31 468 50 127 (344) 34 599

Cash generated from operations 180 002 137 832 13 355 34 365

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000



20. NOTES TO THE CASH FLOW STATEMENT (continued)

20.2 Acquisition of subsidiary

On 30 June 2004, the Company acquired 100% of the share capital of Sipan 1 (Pty) Limited by way of an issue of 8,8 million linked units at R5,90 per linked unit and by taking cession of a long-term loan with a value of R64,5 million. The remaining portion of the purchase cost will be settled through the issue of units, on the transfer of the remaining properties. This interest was consolidated in the current year’s fi nancial statements.

Loan ceded from Pangbourne Properties Limited 64 519

Accounts payable for acquisitions 56 742

Linked units issued 51 920

Purchase consideration: 173 181

20.3 Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks, deposits on call and short-term investments in money market instruments.

Cash and cash equivalents included in the cash fl ow statement comprise the following balance:

Cash on hand and balances with banks 20 671 43 368 68 2 309

Cash and cash equivalents at the end of the year 20 671 43 368 68 2 309

20.4 Non cash investing and fi nancing activities

Included in these transactions are acquisitions of investment properties for linked units, settlement of debt for linked units, the acquisition of Sipan 1 (Pty) Limited and loans made to share trust participants by way of an issue of linked units.

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000

41

Corporate

Industrial Offi ce Retail Other unallocated Total

2004 2004 2004 2004 2004 2004

R’000 R’000 R’000 R’000 R’000 R’000

21. SEGMENTAL INFORMATIONAnalysis by property usageRevenueRentals received 65 866 95 453 54 737 5 524 — 221 580

Total revenue 65 866 95 453 54 737 5 524 — 221 580

Profi t from operations 53 172 65 587 39 525 5 146 414 163 844Net revaluation of investment properties (2 281) (10 708) 10 330 3 342 — 683

Earnings before fi nancing costs and taxation 50 891 54 879 49 855 8 488 414 164 527

AssetsInvestment properties 596 991 636 114 435 818 52 651 — 1 721 574Equipment, furniture and fi ttings — — — — 104 104Other assets (unallocated) — — — — 58 956 58 956

Total assets 596 991 636 114 435 818 52 651 59 060 1 780 634

Total liabilities (unallocated) — — — — 1 687 509 1 687 509

Capital expenditure 458 243 287 921 209 047 49 310 112 1 004 633Depreciation — — — — 17 17Amortisation (unallocated) — — — — 1 226 1 226

Geographical segmentsRevenue by geographic locationThe following table shows the distribution of the company’s consolidated revenue by geographical location: 2004 2003

Gauteng 165 590 103 394Western Cape 27 113 24 049 Free State 7 751 7 712 KwaZulu-Natal 15 137 4 192Mpumulanga 5 989 —

Total revenue 221 580 139 347

Analysis of assets by geographical locationThe following table shows the carrying amount of investment propertiesby geographical area in which the assets are located:

Gauteng 1 199 971 536 950 Western Cape 191 711 111 200 Free State 40 250 40 000 KwaZulu-Natal 206 902 28 220Mpumulanga 82 740 —

Investment properties 1 721 574 716 370

Segment revenue and expenses Revenue and expenses that are directly attributable to a segment are allocated to those segments.


21. SEGMENTAL INFORMATION (continued)

Analysis by property usage

Revenue

Rentals received 36 561 79 386 23 400 — 139 347

Total revenue 36 561 79 386 23 400 — 139 347

Profi t/(loss) from operations 29 474 58 789 16 872 (5 784) 99 351

Revaluation of investment properties 20 740 (3 538) 7 003 — 24 205

Profi t on disposal of investment property — 7 224 — — 7 224

Earnings/(loss) before fi nancing

and taxation 50 214 62 475 23 875 (5 784) 130 780

Assets

Investment properties 235 770 366 400 114 200 — 716 370

Equipment — — — 9 9

Other assets (unallocated) — — — 55 786 55 786

Total assets 235 770 366 400 114 200 55 795 772 165

Total liabilities (unallocated) — — — 723 448 723 448

Capital expenditure 235 770 366 400 114 200 9 716 379

Depreciation — — — 1 1

Amortisation (unallocated) — — — 771 771

22. RELATED PARTY TRANSACTIONS

All transactions are concluded on an arms length basis and are market related.

Group

22.1 Paid to Pangbourne Properties Limited

Day-to-day property portfolio, secretarial and fi nancial administration was carried out by Pangbourne Properties Limited

with effect from 20 September 2003. Messrs A M A Campbell and A J W L Richards are executive directors of Pangbourne

Properties Limited. Pangbourne Properties Limited owns 48,47% of iFour Properties Limited.

Corporate

Industrial Offi ce Retail unallocated Total

2003 2003 2003 2003 2003

R’000 R’000 R’000 R’000 R’000


43

GROUP

2004 2003

R’000 R’000

22. RELATED PARTY TRANSACTIONS (continued)

22.1 Paid to Pangbourne Properties Limited (continued)

Property management fees paid 6 262 —

Promoters’ fees 8 695 —

Operating lease premises rental 119 —

Non-executive directors’ fees paid 200 20

Rental guarantee income from purchase of property (200) —

Warehousing fee – Sipan 1 (Pty) Limited 10 200 —

Vendors of investment properties 249 556 —

Acquisition of subsidiary – Sipan 1 (Pty) Limited 173 181 —

Purchase of Property Management Contract (2 967) —

COMPANY

2004 2003

R’000 R’000

22.2 Inter-company fees

In terms of written contracts the company earned the following fees from its subsidiaries:

– Asset management fee of 0,75% (2003: 0,5%) of the value of the investment properties

iFour Properties SA (Proprietary) Limited 4 660 3 044

iFour Properties Two (Proprietary) Limited 811 538

iFour Properties Three (Proprietary) Limited 3 765 —

Sipan 1 (Proprietary) Limited 110 —

– Treasury fee of 0,3% (2003: 0,3%) on the value of the long-term borrowings

iFour Properties SA (Proprietary) Limited 954 967


iFour Properties Three (Proprietary) Limited 632 —


– Cash management/collection fee of 0,5% (2003: 0,5%) on total collections of the subsidiary

iFour Properties SA (Proprietary) Limited 570 615


iFour Properties Three (Proprietary) Limited 434 —




COMPANY

2004 2003

R’000 R’000


22.3 Inter-company interest Interest charged on inter-company accounts: iFour Properties SA (Proprietary) Limited at 14,6% (2003: 13,4%) 34 538 37 596 iFour Properties Two (Proprietary) Limited at 14,32% (2003: 14,32%) 6 532 4 394 iFour Properties Three (Proprietary) Limited at 13,88% 35 338 —Sipan 1 (Proprietary) Limited at 14,2% 635 —

22.4 Directors’ remunerationIndependent non-executive directorsC P de Leeuw 83 27J B Gibbon 55 —R C Johnson 70 37S H Mia — 21E P M Moses 105 44R S Ntuli — 26T T Thahane — 9U J van der Walt 80 29L I Weil 39 31

Non-executive directors*A M A Campbell 80 10J P G de Rauville 25 10A J W L Richards 95 —

632 244

* These non-executive directors are executive directors representing Pangbourne Properties Limited. Directors’ fees are not paid to the individuals but are paid directly to Pangbourne Properties Limited.

Executive directorsFor managerial servicesJ A A DiepenbroekRemuneration 956 731Bonus – allocated to building acquisition costs 231 —Bonus – other 125 —Retirement funding – defi ned contribution 158 172Medical aid 27 24Other allowances 6 181

1 503 1 108

J L Nunes Remuneration 712 629Bonus – allocated to building acquisition costs 186 —Bonus – other 90 —Retirement funding – defi ned contribution 184 191Medical aid 28 25Other allowances 10 52

1 210 897

Please refer to note 9 for details on loans to share trust participants.

Details of directors’ service contractsJ A A Diepenbroek and J L Nunes have entered into six-month service contracts.

45


22.5 Amounts owing at 30 JunePangbourne Properties Limited 55 835 — — —

– Warehousing fee – Sipan 1 (Pty) Ltd 10 200– Property acquisition – Sipan 1 (Pty) Ltd 39 800– Promoters’ fees – Sipan 1 (Pty) Ltd 2 762– Other amounts 3 073

23. FINANCIAL INSTRUMENTS

Exposure to credit and interest rate risk arises in the normal course of the company’s business.

Interest rate risk

The company manages the interest rate risk by fi xing the interest rate for the major portion of its borrowings taking

advantage of interest rate movements. The company removes the uncertainty of interest rate fl uctuations and provides a

guaranteed cost of borrowings against the yields of portfolios acquired. All interest rate swap contracts are fair valued.

Credit risk

A credit policy is in place and the exposure to credit risk is managed on an ongoing basis. The carrying amount of each

fi nancial asset in the balance sheet represents the maximum credit risk exposure.

Fair values

Financial liabilities and equity instruments are classifi ed according to the substance of the contractual arrangements

entered into.

Liquidity risk

The group manages liquidity risk by strict monitoring of daily cash balances and utilising forecasted cash fl ows. The group’s

borrowing powers are limited in terms of the articles of the company and all borrowings are approved by the board of

directors.

24. RETIREMENT BENEFIT COSTS

The company’s employees are members of defi ned contribution retirement plans to which either the company and/or the

employee contribute a fi xed percentage to recognised retirement annuity funds of the employee’s choice. The company has

no obligation to fund post-employment medical aid expenses.

25. CONTINGENT LIABILITIES

Guarantees and sureties in respect of the subsidiaries amount to R1 739 million (2003: R460 million) in respect of the

mortgage facilities granted to the subsidiaries.

26. POST-BALANCE SHEET EVENTS

There have been no material post-balance sheet events up to the date of authorisation of the issue of the fi nancial

statements by the directors.

GROUP COMPANY

2004 2003 2004 2003

R’000 R’000 R’000 R’000


1 108 Elizabeth Avenue (previous name – Strauss Scher) Sandton Office 2 15 Wellington Road * Parktown Office 3 24 Sturdee Avenue * Rosebank Office 4 35 Intersite Springfield Industrial 5 5 Wessels Road * Rivonia Office 6 547 Richards Drive Halfway House Industrial 7 Absa Towers * Vanderbijlpark Office 8 ACA Crown City Industrial 9 AECI Coatings * Linbro Business Park Industrial 10 Air Affairs Bryanston Office 11 Albany Bakery * Kokstad Industrial 12 Alert City West, Johannesburg Industrial 13 AMS House Midrand Office 14 Anderbolt McCarthy * Boksburg Industrial 15 APV SA Limited Midrand Industrial 16 BB Transport * Spartan Industrial 17 BDO Spencer Steward Pietermaritzburg Office 18 Bloemfontein Value Mart * Bloemfontein Retail 19 Bowline 1 & 2 Corporate Park, Midrand Industrial 20 Cable Feeder Founders View Industrial 21 Capstone Longmeadow Business Industrial 22 Catwalk Halfway House Industrial 23 Chislehurston (previous name – 30 Impala Road) Sandton Office 24 CIB House * Bedfordview Office 25 Computerkit Woodmead Office 26 Corporate Landing Corporate Park, Midrand Office 27 Crossroads * KwaMahlanga Retail 28 Culemborg Motor City Cape Town Retail 29 Dauphin Seatings Industria Industrial 30 De Beers * Ormonde Office 31 DPI * Pinetown Industrial 32 Dunkley Construction Bryanston Office 33 Eastside Corporate Park Midrand Industrial 34 Eli Lilly Bryanston Office 35 ETF House Bryanston Office 36 Fedics Park Randburg Office 37 FH Bertling Jet Park Industrial 38 Founders Hill * Edenvale Industrial 39 Fourways Office Park * Fourways Office 40 Fourways Value Centre * Fourways Retail 41 GEA Midrand Industrial 42 Givauden, Bauer, Starchoice * Linbro Business Park Industrial 43 Goodwood Pinetown Industrial 44 Grand Central Park Midrand Industrial 45 Grand Central Shopping Centre Eerste Rivier, Cape Town Retail 46 Hawthorne Place Pinetown Industrial 47 Heritage House Newlands, Cape Town Office 48 Hi Fi Corporation Longmeadow Business Industrial 49 I Fusion * Midrand Office 50 Jasco Durban North Industrial 51 Johnson Wax Fairlands, Johannesburg Office 52 Kaefer Germiston Industrial 53 Kathea House Rivonia Office 54 Kent Road 3 (previous name – Khrohne Building) Midrand Industrial 55 KLM House * Sandton Office 56 Kya Sands * Kya Sands Industrial 57 Liberty Pietermaritzburg Office 58 Longmeadows Toyota Longmeadow Business Retail

Usage

Property name Location type

property portfolio scheduleat 30 June 2004

*Indicates that the Property was externally valued at 30 June 2004.

47

Low Rise Office Gauteng 2 099 0,41 Low Rise Office Gauteng 2 961 0,58 Low Rise Office Gauteng 2 147 0,42 Hi-tech Industrial KwaZulu-Natal 9 321 1,83 Office Park Gauteng 4 840 0,95 Mini Units Gauteng 3 300 0,65 Low Rise Office Gauteng 4 232 0,83 Warehousing Gauteng 8 338 1,64 Hi-tech Industrials Gauteng 1 345 0,26 Low Rise Office Gauteng 1 173 0,23 Warehousing KwaZulu-Natal 3 043 0,60 Warehousing Gauteng 3 347 0,66 Low Rise Office Gauteng 3 562 0,70 Motor Gauteng 3 026 0,59 Warehousing Gauteng 1 204 0,24 Warehousing Gauteng 1 800 0,35 Low Rise Office KwaZulu-Natal 1 918 0,38 Community Shopping Centre Free State 12 130 2,38 Warehousing Gauteng 2 810 0,55 Warehousing Gauteng 1 800 0,35Warehousing Gauteng 6 850 1,35 Warehousing Gauteng 1 000 0,20 Low Rise Office Gauteng 1 709 0,34 Office Park Gauteng 1 465 0,29 Office Park Gauteng 978 0,19 Office Park Gauteng 9 035 1,78 Community Shopping Centre Mpumalanga 11 064 2,17 Motor Western Cape 24 212 4,76 Low Grade Industrials Gauteng 3 476 0,68 Low Rise Office Gauteng 6 188 1,22 Warehousing KwaZulu-Natal 1 357 0,27 Office Park Gauteng 615 0,12 Hi-tech Industrials Gauteng 9 395 1,85 Low Rise Office Gauteng 2 415 0,47 Offce Park Gauteng 488 0,10 Low Rise Office Gauteng 5 503 1,08 Warehousing Gauteng 3 754 0,74 Warehousing Gauteng 3 516 0,69 Office Park Gauteng 11 501 2,26 Neighbourhood Shopping Centre Gauteng 7 970 1,57 Hi-tech Industrials Gauteng 3 203 0,63 Warehousing Gauteng 5 778 1,14 Warehousing KwaZulu-Natal 3 134 0,62 Mini Units Gauteng 5 033 0,99 Community Shopping Centre Western Cape 13 689 2,69 Warehousing KwaZulu-Natal 2 446 0,48 Low Rise Office Western Cape 3 007 0,59 Warehousing Gauteng 7 263 1,43 Low Rise Office Gauteng 3 150 0,62 High Grade Industrial KwaZulu-Natal 2 783 0,55 Low Rise Office Gauteng 1 716 0,34 High Grade Industrial Gauteng 3 931 0,77 Low Rise Office Gauteng 832 0,16 Mini Units Gauteng 1 517 0,30 Low Rise Office Gauteng 1 505 0,30 High Grade Industrials Gauteng 3 184 0,63 Office Park KwaZulu-Natal 1 777 0,35 Motor Gauteng 2 420 0,48

Property Gross % Gross

sub-category Geographical lettable lettable

split distribution area area


59 LV Switchgear * Longmeadow Business Industrial 60 Mahogany Ridge Pinetown Industrial 61 Metal Box Epping, Cape Town Industrial 62 Metro * Pinetown Industrial 63 Mettle and IQ Building Illovo Office 64 Midrand Protea Hotel Midrand Hotel 65 Mineag House Bryanston Office 66 Monarch Midrand Industrial 67 Mondi House Parktown Office 68 Morkels Pretoria Industrial 69 Morone Mall * Burgersfort Retail 70 MTN Mount Edgecombe Office 71 Muirfield Fourways Office 72 Namitech Linbro Business Park Industrial 73 North Ridge Road * Durban Office 74 Oak Place * Randburg Office 75 Oakfields Randburg Office 76 Omnigraphics * Linbro Business Park Industrial 77 Park Central Johannesburg Retail 78 Pebble Beach (previous name – Building 9) Fourways Office 79 Pleasure Foods Centurion Office 80 Quality Sugars * Bryanston Office 81 Searle Reuven, Johannesburg Industrial 82 Seatings Industria Industrial 83 Shoprite Claremont Claremont, Cape Town Retail 84 Siemens Linbro Business Park Industrial 85 SLK Isando Industrial 86 Sonopress Kya Sands Industrial 87 Soyatech Linbro Business Park Industrial 88 Stalcor Pinetown Industrial 89 Sunnyrock Close Germiston Industrial 90 SupaQuick Centre Umhlanga Retail 91 Suzuki Germiston Industrial 92 Trentyre * Kya Sands Industrial 93 Triton Spartan Industrial 94 Troika Edenvale Industrial 95 Turnberry * Fourways Office 96 Umgeni Products Chakashead Industria Industrial 97 UPS Express Isando Industrial 98 Virgin Active Roodepoort Leisure 99 Voltex Bedfordview Office 100 Wedgefield Office Park Bryanston Office 101 Wesbank Bedfordview Office 102 Western Province Cellars * Nelspruit Industrial 103 Wierda Road East Sandton Office 104 Woodmead Square Woodmead Retail 105 Woodmead Super Value Mall * Woodmead Retail 106 WSP House Sunninghill Office 107 Xerox House Durban Industrial 108 ZA Trans * Isando Industrial

Usage

Property name Location type

*Indicates that the property was externally valued at 30 June 2004.

property portfolio schedule (continued)

at 30 June 2004

49

Warehousing Gauteng 910 0,18 Warehousing KwaZulu-Natal 1 765 0,35 High Grade Industrial Western Cape 12 921 2,54 Warehousing KwaZulu-Natal 9 380 1,84 Low Rise Office Gauteng 6 137 1,21 Other Gauteng 10 524 2,07 Office Park Gauteng 440 0,09 Hi-tech Industrials Gauteng 3 098 0,61 Low Rise Office Gauteng 6 191 1,22 Warehousing Gauteng 4 500 0,88 Community Shopping Centre Mpumalanga 13 482 2,65 Low Rise office KwaZulu-Natal 8 930 1,75 Office Park Gauteng 2 785 0,55 Hi-tech Industrials Gauteng 7 845 1,54 Low Rise Office KwaZulu-Natal 3 345 0,66 Low Rise Office Gauteng 5 527 1,09 Low Rise Office Gauteng 4 471 0,88 Hi-tech Industrials Gauteng 5 776 1,13 Neighbourhood Shopping Centre Gauteng 8 592 1,69 Office Park Gauteng 1 869 0,37 Office Park Gauteng 1 530 0,30 Office Park Gauteng 557 0,11 Low Grade Industrials Gauteng 7 115 1,40 Low Grade Industrials Gauteng 5 289 1,04 Neighbourhood Shopping Centre Western Cape 4 615 0,91 Hi-tech Industrials Gauteng 4 640 0,91 Warehousing Gauteng 27 283 5,36 Hi-tech Industrials Gauteng 2 917 0,57 Hi-tech Industrials Gauteng 2 900 0,57 Warehousing KwaZulu-Natal 4 294 0,84 Mini Units Gauteng 15 038 2,95 Motor KwaZulu-Natal 1 914 0,38 Warehousing Gauteng 3 192 0,63 Motor Gauteng 1 227 0,24 Warehousing Gauteng 2 238 0,44 Mini Units Gauteng 7 148 1,40 Office Park Gauteng 1 476 0,29 Warehousing KwaZulu-Natal 4 181 0,82 Warehousing Gauteng 1 750 0,34 Other Gauteng 2 500 0,49 Low Rise Office Gauteng 4 729 0,93 Office Park Gauteng 851 0,17 Office Park Gauteng 653 0,13 Warehousing Mpumalanga 1 110 0,22 Low Rise Office Gauteng 4 358 0,86 Neighbourhood Shopping Centre Gauteng 2 485 0,49 Neighbourhood Shopping Centre Gauteng 7 090 1,39 Office Park Gauteng 1 920 0,38 Hi-tech Industrials KwaZulu-Natal 1 240 0,24 Warehousing Gauteng 11 000 2,16

508 984 100,00

Property Gross % Gross

sub-category Geographical lettable lettable

split distribution area area


Notice is hereby given that the second annual general

meeting of shareholders of iFour Properties Limited

(“iFour”) or (“the company”) will be held in the company’s

Board Room, 2nd Floor, Pangbourne House, 382 Jan

Smuts Avenue, Craighall, on Thursday, 14 October 2004

at 14:00 for the following business:

1. Annual financial statements

To receive and consider the audited annual financial

statements for the year ended 30 June 2004.

2. Directors’ remuneration

To consider and, if deemed fit, to pass with or

without modification, the following resolution:

“Resolved that fees of R631 614, payable to the

directors for their services for the year ended

30 June 2004, be approved”.

Directors’ remuneration (for executive directors as

well as non-executive directors) are disclosed in

note 22.12 of the annual financial statements.

Details of the iFour Executive Unit Purchase

Scheme are disclosed in note 9 of the annual

financial statements.

3. Re-election of directors

3.1 To consider the re-appointment of Mr R C Johnson

who retires in terms of the Company’s Articles of

Association.

R C Johnson (53) (Diploma in town and regional

planning)

Robert Johnson has 33 years experience in the

South African commercial property industry, having

served as an executive director of Sage Properties

Limited and, since 1980, as an executive director

of Intraprop, the developer of Illovo Boulevard. He

is also a director of Kagiso Property Holdings and

has experience in the management of listed

property entities, direct property management and

property development.

3.2 To consider the re-appointment of Mr E P M Moses


Association.

E P M Moses (70)

Peter Moses commenced his career as an

accountant and later managing director of Harding

& Parker. In 1981 he joined the property division of

Barlow Rand Limited. In 1988 he was appointed to

the board of Barlow Rand Properties as marketing

director and in 1992 he was appointed as managing

director. The following year Mr Moses was

appointed to the board of RMP Properties. Mr

Moses retired in 1996, but continued to share his

extensive experience in all facets of investment and

marketing of property as a consultant to and non-

executive director of companies. He is also a

trustee of the African Game Bird Research and

Education and Development Trust.

3.3 To consider the re-appointment of Mr U J van der

Walt who retires in terms of the Company’s Articles

of Association.

U J van der Walt (54) BEcon (Hons)

Banus van der Walt has 28 years property

experience with the Sanlam group. From 1994 to

2001, Banus was the managing director of Gensec

Properties Limited. With effect from the

commencement of 2002, he was appointed

managing director of Sanlam Property Asset

Management (Pty) Limited. Banus is a member of

the executive committee of Sanlam Investment

Management (Pty) Limited and a past president of

the South African Property Owners Association

(SAPOA).

3.4 To consider the re-appointment of Mr J B Gibbon


Association.

J B Gibbon (63) CA(SA)

John Gibbon retired as a partner of

PricewaterhouseCoopers in 2001 having been with

the practice since 1964. He is a past president of

Rotary, was extensively involved in Upliftment

Trusts and is currently on the Council of the

University of Port Elizabeth, where he chairs the

finance committee. While in Port Elizabeth,

notice of annual general meeting of shareholders

51

Mr Gibbon played a major role in the rescue of the

private bus service and its development into a very

successful community owned business. Mr Gibbon

is a non-executive director of Hudaco Industries

Limited and Pangbourne Properties Limited and is

also chairman of Hudaco’s and Pangbourne’s

Audit Committees.

4. Re-appointment of auditors

To consider the re-appointment of

PricewaterhouseCoopers Inc. as auditors of the

company until the conclusion of the next annual

general meeting.

5. Auditors’ remuneration

To authorise the directors to fix and pay the

auditors’ remuneration for the year ended

30 June 2004.

6. Issue of shares


without modification, the following resolution as an

ordinary resolution:

“Resolved that the directors be and are hereby

authorised to allot and issue all or any portion of

the unissued ordinary shares of 0,1 cent each in

the capital of the company, at such time or times to

such persons, company or companies and upon

such terms and conditions as they may determine,

subject to the requirements of the Companies Act,

1973, and the JSE Securities Exchange South

Africa (“the JSE”), provided that each ordinary

share is linked to a debenture of R4,60, such

authority to expire at the next annual general

meeting of the company.”

7. Issue of shares for cash


without modification, the following resolution:

“Resolved that the directors of the company be

given the general authority in terms of the Listings

Requirements of the JSE to issue shares for cash

as and when situations arise subject to the following

limitations:

● that each ordinary share is linked to a debenture

of R4,60;

● that this authority shall be valid until the

company’s next annual general meeting provided

that it shall not extend beyond 15 months from

the date of this annual general meeting;

● that a paid press announcement giving full

details, including the impact on net asset value

and earnings per linked unit, will be published at

the time of any issue representing, on a

cumulative basis, within one financial year, 5% or

more of the number of ordinary shares in issue

prior to the issue;

● that issues in the aggregate in any one financial

year will not exceed 15% the number of ordinary

shares of the company’s issued share capital.

The number of ordinary shares which may be

issued shall be based on the number of ordinary

shares in issue, aggregated (where applicable)

with any ordinary shares that may be issued in

future arising from the conversion of options/

convertible securities, at the date of such

application, less any ordinary shares issued, or

to be issued in future arising from options/

convertible securities issued, during the current

financial year, provided that any ordinary shares

to be issued pursuant to a rights issue (which

has been announced and is irrevocable and fully

underwritten) or acquisition (which has had final

terms announced) may be included as though

they were shares in issue at the date of

application;

● that, in determining the price at which an issue

of linked units will be made in terms of this

authority, the maximum discount permitted will

be 10% of the weighted average traded price of

the linked units on the JSE, as determined over

the 30 business days prior to the date that the

price of the issue is determined or agreed by the

directors of the company; and

● that the issue must be made to public

shareholders as defined in paragraphs 4.25 to

4.27 of the Listings Requirements of the JSE,

unless the JSE otherwise agrees.”


In terms of the rules of the JSE, this resolution requires a majority of 75% or more of votes cast by shareholders present or represented by proxy to be cast in favour of this resolution.

8. General authority to repurchase shares

To consider and, if deemed fit, to pass with or without modification, the following as a special resolution:

“Resolved that subject to the provisions of the Companies Act, 1973, the Company’s articles of association and the Listings Requirements of the JSE, the board of directors of the company be authorised, up to and including the date of the following annual general meeting, to approve the repurchase by the company of its own shares provided that:

● the general authority shall not extend beyond 15 months from the date of the passing of this resolution;

● the general authority to the repurchase by the company shall not exceed 20% in aggregate of the company’s issued share capital in a financial year (or such other percentage permitted from time to time by the JSE for repurchase);

● the repurchase by the company shall not be made at a price more than that permitted pursuant to the Listings Requirements of the JSE;

● the repurchase is effected through the order book operated by the JSE trading system, without prior understanding or arrangement between the company and the counter party;

● the repurchase will not take place during a period within which repurchases are prohibited in terms of the Listings Requirements of the JSE;

● details of the directors and management (pages 10 and 11), major shareholders and debenture holders (page 59), directors’ interests in securities (page 20), share capital and debenture capital of the company (page 35), the directors’ responsibility statement (page 16) are dealt with in detail elsewhere in the annual report; and

● a paid press announcement containing full details of such acquisition will be published as soon as

the company has acquired securities constituting,

on a cumulative basis, 3% of the number of

securities in issue prior to the acquisition.”

The reason for and effect of this resolution is to

enable the board of directors, up to the earlier of the

date of the next annual general meeting or 15

months from the date of the passing of this

resolution, to approve the repurchase by the

company of its shares as part of the purchase of its

linked units, subject to the limitations included in the

resolution and provided that after such repurchase,

the company will still comply with the shareholder

spread requirements set out in the Listings

Requirements of the JSE. For the purposes hereof,

the company may, at any point in time, only appoint

one agent to effect repurchases on its behalf. At

present the JSE does not allow repurchases to be

made at a price greater than 10% above the

weighted average of the market value of the linked

units for the 5 business days immediately preceding

the date on which the transaction is effected. The

directors of iFour are of the opinion that opportunities

to repurchase the company’s linked units, which

could enhance the earnings per linked unit and/or

net asset value per linked unit, may present

themselves in the future. Accordingly, in order that

the group be placed in a position to be able to utilise

the provisions of the Companies Act, 1973, it is

proposed that the board of directors of the company

be authorised to authorise the company, by way of

general authority, to acquire, as part of the purchase

of its linked units, the maximum shares permitted by

the JSE, which is currently 20% in aggregate of the

issued shares of the company in a financial year.

The directors of the company (whose names

appear on pages 10 and 11 of the annual report)

are not aware of any legal or arbitration proceedings,

including proceedings that are pending or

threatened, that may have or had in recent past,

(being at least the previous 12 months), a material

effect on the company’s position.

Other than the facts and developments reported

on in the annual report, there have been no

material changes in the affairs of financial position

notice of annual general meeting of shareholders (continued)

53

of the company, or subsidiaries, since the date of

signature of the audit report and up to the date

of notice.

The directors of iFour are of the opinion that, taking

into account the maximum number of linked units

that could be repurchased:

● the company and the group would be in a

position to repay their debts in the ordinary

course of business for a period of 12 months

after the date of the notice of this annual general

meeting (“the next year”);

● the assets of the company and the group,

recognised and measured in accordance with

the accounting policies used in the company’s

latest audited annual group financial statements,

would be in excess of the liabilities of the

company and the group for the next year;

● the ordinary capital and reserves of the company

and the group for the next year will be adequate

for ordinary business purposes; and

● the working capital of the company and the

group will be adequate for the next year for

ordinary business purposes.

VOTING AND PROXIES

iFour shareholders holding certificated linked units and

iFour shareholders who have already dematerialised their

iFour linked units and who have elected own-name

registration in a sub-register through a CSDP, who are

unable to attend the general meeting of shareholders but

wish to be represented thereat, must complete and return

the form of proxy, in accordance with the instructions

contained therein, to the company’s transfer secretaries,

Computershare Investor Services 2004 (Proprietary)

Limited, Ground Floor, 70 Marshall Street, Johannesburg

(PO Box 61051, Marshalltown, 2107), to be received by

no later than 14:00 on Tuesday, 12 October 2004.

iFour shareholders who have already dematerialised

their iFour linked units through a CSDP or broker and who

have not elected own-name registration and who wish to

attend the general meeting of shareholders must instruct

their CSDP or broker to issue them with the necessary

authority to attend. Should iFour shareholders who have

already dematerialised their iFour linked units wish to vote

and are unable to attend the meeting and wish to be

represented thereat by way of proxy, must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between them and their CSDP or broker.

In respect of dematerialised linked units, it is important to ensure that the person or entity (such as a nominee) whose name has been entered into the relevant sub-register maintained by a CSDP completes the form of proxy in terms of which he/she appoints a proxy to vote at the annual general meeting of shareholders.

On a show of hands, every shareholder present in person or by proxy shall have only one vote irrespective of the number of shares he/she holds or represents, provided that a proxy shall in respect of the number of shareholders he/she represents have only one vote.

On a poll, every shareholder of iFour present in person or represented by proxy shall be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by him/her bears to the aggregate amount of the nominal value of all the shares issued by the company.

A resolution put to the vote shall be decided on a show of hands, unless before or on the declaration of the results of the show of hands, a poll shall be demanded by any person entitled to vote at the meeting and, unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands been carried, or carried unanimously, or by a regular majority, or lost, and an entry to that effect in the minute book of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, such resolution.

By order of the board

iFour Properties Limited

J J Groenewald

Company Secretary

Johannesburg

22 September 2004


Notice is hereby given that a general meeting of debenture

holders of iFour Properties Limited (“iFour” or “the company”)

will be held in the company’s Board Room, Pangbourne

House, 382 Jan Smuts Avenue, Craighall, Johannesburg on

Thursday, 14 October 2004 at 14:30 or immediately following

the annual general meeting of shareholders which has been

convened for 14:00 on that day, for the following business:

1. EXTRAORDINARY RESOLUTION NUMBER 1

“Resolved that the directors be and are hereby

authorised to allot and issue all or any portion of the

unissued ordinary shares of 0,1 cent each in the capital

of the company, at such time or times to such persons,

company or companies and upon such terms and

conditions as they may determine, subject to the

requirements of the Companies Act, 1973, and the

JSE, and provided that each ordinary share is linked to

one debenture of R4,60, and that this authority shall be

valid only until the date of the next annual general

meeting of shareholders unless it is varied or revoked

by any general meeting of the debenture holders prior

to such annual general meeting of shareholders.”

VOTING AND PROXIES

iFour debenture holders holding certificated linked

units who are unable to attend the general meeting of

debenture holders but wish to be represented thereat and

iFour debenture holders who have already dematerialised

their iFour debentures and who have elected own-name

registration in a sub-register through a CSDP, must

complete and return the form of proxy, in accordance with

the instructions contained therein, to the company’s

transfer secretaries, Computershare Investor Services

2004 (Proprietary) Limited, Ground Flooor, 70 Marshall

Street, Johannesburg (PO Box 61051, Marshalltown,

2107), to be received by no later than 14:30 on Tuesday,

12 October 2004.

iFour debenture holders who have already dematerialised

their iFour linked units through a CSDP or broker and who

have not elected own-name registration and who wish to

attend the general meeting of debenture holders must

instruct their CSDP or broker to issue them with the

necessary authority to attend. Should iFour debenture

holders who have already dematerialised their iFour linked

units wish to vote and are unable to attend the meeting

and wish to be represented thereat by way of proxy, must

provide their CSDP or broker with their voting instructions

in terms of the custody agreement entered into between

them and their CSDP or broker.

In respect of dematerialised linked units, it is important to

ensure that the person or entity (such as a nominee)

whose name has been entered into the relevant sub-

register maintained by a CSDP completes the form of

proxy in terms of which he/she appoints a proxy to vote

at the general meeting of debenture holders.

On a show of hands, every debenture holder present in

person or as a representative of a company or other body

corporate shall have only one vote irrespective of the

number of debentures he/she holds or represents,

provided that a proxy shall in respect of the number of

debenture holders he/she represents have only one vote.

On a poll, every iFour debenture holder present in person or

as a representative of a company or other body corporate

or by proxy shall have one vote for every iFour debenture of

which he/she is the registered holder or representative.

A resolution put to the vote shall be decided on a show of

hands, unless before or on the declaration of the results

of the show of hands a poll shall be demanded by the

chairman or any one or more of the debenture holders

present in person or by proxy or, being a company or

other body corporate, by its duly authorised representative

and entitled in the aggregate to not less than 10% of the

total votes of all debenture holders entitled to be present

and vote at the meeting.

Unless a poll is demanded, a declaration by the chairman

that on a show of hands a resolution has been carried, or

carried by a particular majority, or lost, shall be conclusive

evidence of the fact, without proof of the number of votes

cast in favour of or against such resolution.

By order of the board

iFour Properties Limited

J J Groenewald

Company Secretary

Johannesburg

22 September 2004

notice of general meeting of debenture holders

55

FORM OF PROXY FOR iFOUR SHAREHOLDERSFor use only by iFour shareholders holding certificated iFour linked units, Central Securities Depository Participants’ (“CSDPs”) nominee companies, brokers’ nominee companies and iFour shareholders who have dematerialised their linked units and who have elected own-name registration at the annual general meeting of shareholders of iFour to be held in the board room, iFour, 2nd Floor, Pangbourne House, 382 Jan Smuts Avenue, Craighall, Johannesburg, 2196 at 14:00 on Thursday, 14 October 2004 (“the general meeting of shareholders”).

iFour shareholders who have already dematerialised their linked units through a CSDP or broker must not complete this form of proxy and must provide their CSDP or broker with their voting instructions, except for iFour shareholders who have elected own-name registration in the sub-register through a CSDP or broker, which iFour shareholders must complete this form of proxy and lodge it with the transfer secretaries to be received by no later than 14:00 on Tuesday, 12 October 2004.

I/We (BLOCK LETTERS please)

of

Telephone work ( ) Telephone home ( )

being the holder/s or custodians of shares hereby appoint (seen note 1 overleaf):

1. or failing him/her


3. the chairman of the general meeting of shareholders,

as my/our proxy to act for me/us at the annual general meeting of shareholders for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against the resolution and/or abstain from voting in respect of the iFour shares registered in my/our name (see note 2 overleaf) as follows:

Please indicate with an X For Against Abstain 1. To receive and consider the annual financial statements for the

year ended 30 June 2004. 2. To approve the directors’ remuneration for the year ended

30 June 2004 3. Re-appointment of directors 3.1 To re-appoint Mr R C Johnson 3.2 To re-appoint Mr E P M Moses 3.3 To re-appoint Mr U J van der Walt 3.4 To re-appoint Mr J B Gibbon 4. To re-appoint PricewaterhouseCoopers Inc. as auditors 5. To authorise the directors to fix and pay the auditors’ remuneration 6. To authorise the directors to issue shares 7. To authorise the directors to issue shares for cash 8. To authorise the directors to repurchase shares 8.1 Repurchase on the open market and repurchase on a pro rata basis

and generally to act as my/our proxy at the said annual general meeting of shareholders. (Tick whichever is applicable. If no directions are given, the proxy holder will be entitled to vote or to abstain from voting, as that proxy holder deems fit.)

Signed at on 2004

Signature Assisted by (where applicable)

Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder/s of iFour) to attend, speak and vote in place of that shareholder at the annual general meeting of shareholders.

Please read the notes on the reverse side hereof

iFOUR PROPERTIES LIMITED

(“iFour”)

(Incorporated in the Republic of South Africa)

(Registration number 2001/016118/06)

Share code: IFR

ISIN: ZAE000039236


1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space/s provided, with or without deleting “the chairman of the annual general meeting of members”, but any such deletion must be initialled by the shareholder. Any insertion or deletion not complying with the aforegoing will be deemed not to have been validly effected. The person whose name stands first on the form of proxy and who is present at the annual general meeting of shareholders will be entitled to act as proxy to the exclusion of those whose names follow.

2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate box provided. So as to provide for voting on a show of hands or on a poll, as the case may be, shareholders are requested to complete the form of proxy by stating the number of shares held by them. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting of shareholders as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A shareholder or the proxy is not obliged to use all the votes exercisable by the shareholder or by his proxy, or to cast all those votes in the same way, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the shareholder or by the proxy.

3. Forms of proxy must be lodged with, posted or faxed to the company’s transfer secretaries to be received by no later than 14:00 on Tuesday, 12 October 2004.

4. The completion and lodging of this form of proxy by iFour shareholders holding certificated linked units, CSDP’s nominee companies, brokers’ nominee companies and iFour shareholders who have dematerialised their linked units and who have elected own-name registration in the sub-register through a CSDP, will not preclude the relevant iFour shareholder from attending the annual general meeting of shareholders and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative or other legal capacity (such as power of attorney or other written authority) must be attached to this form of proxy unless previously recorded by iFour.

6. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

7. The chairman of the annual general meeting may accept or reject any form of proxy which is completed and/or received otherwise than in accordance with these notes, provided that the chairman is satisfied as to the manner in which the shareholder concerned wishes to vote.

8. On a show of hands, every shareholder present in person or by proxy shall have only one vote irrespective of the number of shares he/she holds or represents, provided that a proxy shall in respect of the number of shareholders he/she represents have only one vote.

9. On a poll, every shareholder of iFour present in person or represented by proxy shall be entitled to that proportion of the total votes in the company which the aggregate amount of the nominal value of the shares held by him/her bears to the aggregate amount of the nominal value of all the shares issued by the company.

10. A resolution put to the vote shall be decided on a show of hands, unless before or on the declaration of the results of the show of hands a poll shall be demanded by any person entitled to vote at the meeting.

11. Unless a poll is demanded, a declaration by the chairman that a resolution has, on a show of hands been carried, or carried unanimously, or by a regular majority, or lost, and an entry to that effect in the minute book of the company, shall be conclusive evidence of the fact, without proof of the number or proportion of votes recorded in favour of, or against, such resolution.

12. If a poll is demanded, the resolution put to the vote shall be decided on a poll.

Computershare Investor Services 2004 (Proprietary) Limited

70 Marshall StreetJohannesburg 2001

PO Box 61051Marshalltown 2107South Africa

Fax (011) 370-5390

notes

57

FORM OF PROXY FOR iFOUR DEBENTURE HOLDERS

For use only by iFour debenture holders holding certificated iFour linked units, Central Securities Depository Participants’

(“CSDPs”) nominee companies, brokers’ nominee companies and iFour debenture holders who have dematerialised their

linked units and who have elected own-name registration at the annual general meeting of iFour debenture holders to be

held in the board room, iFour, 2nd Floor, Pangbourne House, 382 Jan Smuts Avenue, Craighall, Johannesburg at 14:30 on

Thursday, 14 October 2004 or immediately after the conclusion of the annual general meeting of shareholders, whichever

is the earlier, which will take place at the same venue, on the same day at 14:00 (“the general meeting of debenture

holders”).

iFour debenture holders who have already dematerialised their linked units through a CSDP or broker must not complete

this form of proxy and must provide their CSDP or broker with their voting instructions, except for debenture holders who

have elected own-name registration in the sub-register through a CSDP or broker, which debenture holders must complete

this form of proxy and lodge it with the transfer secretaries to be received by no later than 14:30 on Tuesday, 12 October

2004.

I/We (BLOCK LETTERS please)

of

Telephone work ( ) Telephone home ( )

being the holder/s or custodians of debentures hereby appoint (seen note 1 overleaf):



3. the chairman of the general meeting of debenture holders,

as my/our proxy to act for me/us at the annual general meeting of debenture holders for the purpose of considering

and, if deemed fit, passing, with or without modification, the resolution to be proposed thereat and at each

adjournment or postponement thereof, and to vote for and/or against the resolution and/or abstain from voting in

respect of the iFour debentures registered in my/our name (see note 2 overleaf) as follows:

Please indicate with an X For Against Abstain

1. Extraordinary resolution number 1 to authorise the

directors to issue shares

and generally to act as my/our proxy at the said annual general meeting of debenture holders. (Tick whichever is

applicable. If no directions are given, the proxy holder will be entitled to vote or to abstain from voting, as that proxy holder

deems fit.)

Signed at on 2004

Signature Assisted by (where applicable)

Each debenture holder is entitled to appoint one or more proxies (who need not be a debenture holder/s of iFour) to

attend, speak and vote in place of that debenture holder at the general meeting of debenture holders.

Please read the notes on the reverse side hereof

iFOUR PROPERTIES LIMITED

(“iFour”)

Incorporated in the Republic of South Africa

(Registration No. 2001/016118/06)

Share code: IFR

ISIN: ZAE000039236


1. A debenture holder may insert the name of a proxy or the names of two alternative proxies of the debenture holder’s choice in the space/s provided, with or without deleting “the chairman of the general meeting of debenture holders”, but any such deletion must be initialled by the debenture holder. Any insertion or deletion not complying with the aforegoing will be deemed not to have been validly effected. The person whose name stands first on the form of proxy and who is present at the general meeting of debenture holders will be entitled to act as proxy to the exclusion of those whose names follow.

2. A debenture holder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that debenture holder in the appropriate box provided. So as to provide for voting on a show of hands or on a poll, as the case may be, debenture holders are requested to complete the form of proxy by stating the number of debentures held by them. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the general meeting of debenture holders as he/she deems fit in respect of all the debenture holders’ votes exercisable thereat. A debenture holder or the proxy is not obliged to use all the votes exercisable by the debenture holder or by his proxy, or to cast all those votes in the same way, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the debenture holder or by the proxy.

3. Forms of proxy must be lodged with, posted or faxed to the company’s transfer secretaries to be received by no later than 14:30 on Tuesday, 12 October 2004.

4. The completion and lodging of this form of proxy by debenture holders holding certificated linked units, CSDP’s nominee companies, brokers’ nominee companies and debenture holders who have dematerialised their linked units and who have elected own-name registration through a CSDP or broker, will not preclude the relevant debenture holder from attending the general meeting of debenture holders and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative or other legal capacity (such as power of attorney or other written authority) must be attached to this form of proxy unless previously recorded by iFour.

6. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

7. On a show of hands, every debenture holder present in person or as a representative of a company or other body corporate shall have only one vote irrespective of the number of debentures he/she holds or represents, provided that a proxy shall, irrespective of the number of debenture holders he/she represents, have only one vote.

8. On a poll, every iFour debenture holder present in person or as a representative of a company or other body corporate or by proxy shall have one vote for every iFour debenture of which he/she is the registered holder or representative.

9. A resolution put to the vote shall be decided on a show of hands, unless before or on the declaration of the results of the show of hands a poll shall be demanded by the chairman or any one or more of the debenture holders present in person or by proxy or, being a company or other body corporate, by its duly authorised representative and entitled in the aggregate to not less than 10% of the total votes of all debenture holders entitled to be present and vote at the meeting.

10. Unless a poll is demanded, a declaration by the chairman that on a show of hands a resolution has been carried, or carried by a particular majority, or lost, shall be conclusive evidence of the fact, without proof of the number of votes cast in favour of or against such resolution.

If a poll is demanded, the resolution put to the vote shall be decided on a poll.

Computershare Investor Services 2004 (Proprietary) Limited

70 Marshall StreetJohannesburg 2001

PO Box 61051Marshalltown 2107South Africa

Fax (011) 370-5390

notes

Documents

iFOUR PROPERTIES LIMITED - ShareData · 1 2004 2003 R’000 R’000 Revenue and other income 229 441 139 861 Investors distributable earnings 87 036 44 818 Earnings on linked units