Harvey Norman has been criticised for the way it values its property empire, with Gerry Harvey having to defend its level of transparency.
Gerry Harvey has come under fire for the way the ASX-listed company discloses the value of its property portfolio to investors.
Harvey has defended how the retailer values its property empire. Harvey Norman’s has one-sixth of its $2.9 billion portfolio valued by market leading firms (including Savills, Knight Frank and CBRE) every six-months. The remainder of the valuations are carried out by a property team led by Gerry Harvey, which is then assessed by the company’s directors. The company does not detail which properties have been independently valued by external firms and which are based on director-valuations, nor does it declare how much each asset portfolio in worth.
While the process complies with accounting rules (requiring listed companies to revalue their assets regularly) it has raised questions for some in relation to transparency. Harvey has defended this practice, saying that disclosing this level of detail would give his competitors an edge.
While most major retailers pay rent to landlords, Harvey Norman owns the properties it occupies. The company declared a 2.4 percent increase in the value of its property portfolio in its most recent accounts. While Harvey has said it was not reliant on its property portfolio, recent accounts reveal that property accounts for 93 percent of its net assets and 60 percent of its total asset base.
Last week, Harvey Normal announced the addition John Craven as an independent non-executive director to its board. Craven was a former partner at Accenture. This is the first appointment of an independent director in many years. Harvey said in a statement that this addition would further strengthen the mix of skills, knowledge and experience on the board.
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