CAPE TOWN - Adrenna Property Group yesterday clarified a management decision not to impair a loan granted to the East Sydney Day Hospital (ESDH) in Australia, even though the private hospital was technically insolvent.
In Adrenna’s 2018 annual results the auditors issued a qualified opinion, because of the decision not to impair the loan, and due to some reportable irregularities.
In September, Adrenna entered into an agreement with ESDH to acquire a 15percent stake by subscribing in ESDH preference shares for an A$2million (R19.56m) investment. Adrenna advanced A$2m as an interest-bearing loan, until such time as shareholder approval for the preference shares was obtained. But the preference share agreement was terminated in May by mutual consent, and the investment is to remain as a loan, subject to the terms agreed at the time of the advancement of the cash, Adrenna said.
Reasons for the termination of the agreement included difficulty in obtaining the historical financial information (in a format) for inclusion in the circular to shareholders in accordance with JSE listings requirements, as well as associated costs.
“Based on the initial advice undertaken by a JSE-accredited IFRS adviser and the application of funds for the expansion of ESDH with future profits expected, the board had a different view on the recoverability of the loan compared to the auditors.