Wrap Text
Audited Results for the year ended 30 June 2012
Growthpoint Properties Limited
("Growthpoint" or "the company" or "Group")
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT ISIN: ZAE000037669
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2012
HIGHLIGHTS
- 6.1% distribution growth to 139,0 cents per linked unit
- 33.2% return to investors for the year
- 37.1% return on R3,1 billion Australian investment
- R1,0 billion raised through Distribution Re-Investment Plan, supported by 42.0% of linked unitholders
- Increased corporate bond programme by R1,5 billion, increasing unsecured debt to 39.0% of total RSA debt
STATEMENT OF COMPREHENSIVE INCOME
Restated
30 June 30 June
2012 2011
Note Rm Rm
Revenue, excluding straight-line lease income adjustment 5 107 4 410
Straight-line lease income adjustment 183 205
Revenue 5 290 4 615
Property expenses (1 102) (1 001)
Net property income 4 188 3 614
Other operating expenses (176) (135)
Operating profit 4 012 3 479
Fair value adjustments 1 (756) (282)
Equity-accounted investment loss V&A Waterfront (net of tax) 2 (38)
Finance costs (1 677) (1 237)
Non-cash charges 3 (108) (111)
Capital items (17)
Finance income 4 501 107
Profit before debenture interest 1 917 1 956
Debenture interest (2 392) (2 070)
Loss before taxation (475) (114)
Taxation (298) (121)
normal taxation (1) (1)
capital gains taxation (CGT) (2) (7)
deferred taxation charge (323) (141)
deferred taxation credit 28 28
Loss for the year (773) (235)
Loss attributable to:
Equity holders (921) (323)
Non-controlling interest 148 88
Other comprehensive income:
Foreign currency translation gain 646 325
Total comprehensive income (127) 90
Attributable to:
Equity holders (492) (97)
Non-controlling interest 365 187
Calculation of distributable earnings
Operating profit 4 012 3 479
Less: Straight-line lease income adjustment (183) (205)
Finance costs (1 677) (1 237)
Finance income 4 501 107
Interest received exceeding distributable income 2 (76)
Non-controlling interest's share of distribution from GOZ
(excluding fair value adjustments) (171) (71)
Realised foreign exchange loss (10)
Taxation (excluding deferred tax and CGT) (1) (1)
Distributable earnings 2 395 2 072
Total distribution 2 395 2 072
Debenture interest 2 392 2 070
Ordinary dividend 3 2
Linked units Linked units
Linked units in issue at the end of the year 1 743 080 918 1 591 971 441
Weighted number of linked units in issue 1 743 080 918 1 591 971 441
cents cents
Distribution per linked unit 139,00 131,00
Six months ended 31 December 67,80 63,90
Six months ended 30 June 71,20 67 , 10
Basic and diluted loss per share 5 (52,84) (20,29)
Headline earnings per linked unit 6 72,69 104,52
STATEMENT OF FINANCIAL POSITION
Restated
30 June 30 June
2012 2011
Note Rm Rm
ASSETS
Non-current assets 54 288 47 467
Fair value of investment property for accounting purposes 45 056 38 870
Straight-line lease income adjustment 1 693 1 510
Payments made to acquire investment property 842
Fair value of long-term property related assets 47 591 40 380
Equity-accounted investment V&A Waterfront 7 4 912 4 950
Intangible assets 1 447 1 535
Other long-term employee benefits 5
Equipment 2 1
Long-term loans granted to BEE consortia 336 594
Derivative assets 2
Current assets 1 498 1 197
Investment property reclassified as held-for-sale 515 539
Trade and other receivables 588 407
Cash and cash equivalents 395 251
Total assets 55 786 48 664
EQUITY AND LIABILITIES
Shareholders' interest 893 1 421
Ordinary share capital 87 79
Foreign currency translation reserve 621 192
Non-distributable reserve 185 1 150
Non-current liabilities debentures 8 27 650 23 463
Linked unitholders' interest 28 543 24 884
Non-controlling interest 2 181 1 372
Total unitholders' interest 30 724 26 256
Other non-current liabilities 20 744 16 502
Other non-current financial liabilities 19 894 15 983
Other long-term employee benefits 35
Deferred tax liability 815 519
Current liabilities 4 318 5 906
Trade and other payables 1 478 802
Current portion of other non-current liabilities 1 495 3 969
Taxation payable 3
Linked unitholders for interest and dividends 1 345 1 132
Total equity and liabilities 55 786 48 664
cents cents
Net asset value per linked unit 1 638 1 563
Tangible net asset value per linked unit which excludes intangible
assets and deferred tax 1 601 1 499
STATEMENT OF CASH FLOWS
Restated
30 June 30 June
2012 2011
Rm Rm
Cash generated from operations 4 130 3 136
Finance income 451 63
Finance costs (1 663) (1 233)
Taxation paid (6) (7)
Capital items (17)
Distribution to unitholders (2 366) (1 995)
Net cash inflow/(outflow) from operating activities 529 (36)
Net cash outflow from investing activities (2 994) (7 531)
Net cash inflow from financing activities 2 592 7 493
Net increase/(decrease) in cash and cash equivalents 127 (74)
Translation effects on cash and cash equivalents of foreign operation 17 15
Cash and cash equivalents at the beginning of the year 251 310
Cash and cash equivalents at the end of the year 395 251
STATEMENT OF CHANGES IN EQUITY
Non- Foreign currency Total Non-controlling
Ordinary share distributable translation Retained shareholders' interest Total
capital reserve (NDR) reserve (FCTR) earnings interest (NCI) equity
Rm Rm Rm Rm Rm Rm Rm
Balance at 30 June 2010 77 1 479 (6) 1 550 496 2 046
Shares issued 2 2 2
Total comprehensive income (loss)/profit after taxation (323) (323) 88 (235)
Total comprehensive income other comprehensive income 226 226 99 325
Transfer amortisation net of deferred taxation to NDR (71) 71
Rights issue and acquisition GOZ (28) (4) (32) 756 724
Transfer to NDR reserves with NCI (4) 4
Transfer fair value adjustment on GOZ to NDR (254) 254
Foreign translation on NCI 4 4
Dividends declared NCI (71) (71)
Dividends declared (2) (2) (2)
Restated balance at 30 June 2011 79 1 150 192 1 421 1 372 2 793
Shares issued 8 8 8
Total comprehensive income (loss)/profit after taxation (921) (921) 148 (773)
Total comprehensive income other comprehensive income 397 397 249 646
Transfer amortisation net of deferred taxation to NDR (71) 71
Rights issue and acquisition GOZ 32 (41) (9) 583 574
Transfer to NDR reserves with NCI (41) 41
Transfer fair value adjustment on GOZ to NDR (853) 853
Dividends declared NCI (171) (171)
Dividends declared (3) (3) (3)
Balance at 30 June 2012 87 185 621 893 2 181 3 074
SEGMENTAL ANALYSIS
for the year ended 30 June 2012
South Africa
Total as V&A
Retail Office Industrial Australia reported Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of
comprehensive income
2012
Revenue, excluding
straight-line lease
income adjustment 1 441 1 712 943 1 011 5 107 412 5 519
Property expenses (401) (390) (206) (105) (1 102) (107) (1 209)
Segment results 1 040 1 322 737 906 4 005 305 4 310
Fair value adjustment:
Investment property 850 618 211 170 1 849 39 1 888
Investment property
non-controlling
interest 104 104 104
Total fair value adjustment
on total investment
property 850 618 211 274 1 953 39 1 992
South Total as V&A
Africa Australia reported Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of
statement of
comprehensive income
Other operating expenses (128) (48) (176) (25) (201)
Finance costs (1 276) (401) (1 677) (372) (2 049)
Finance income 492 89 501 17 518
South Africa
Total as V&A
Retail Office Industrial Australia reported Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of
financial position extracts
at 30 June 2012
Investment property
Opening balance
1 July 2011 11 985 13 669 6 841 8 424 40 919 4 783 45 702
Acquisitions 424 146 5 1 441 2 016 2 016
Payments made to
acquire investment property 842 842 842
Developments and
capital expenditure 174 350 359 831 1 714 128 1 842
Disposals (288) (191) (165) (43) (687) (687)
Foreign exchange gain 1 349 1 349 1 349
Fair value adjustments 850 618 211 274 1 953 39 1 992
Fair value of total
property related assets
30 June 2012 13 145 14 592 7 251 13 118 48 106 4 950 53 056
Fair value of long-term
property assets 13 105 14 187 7 181 13 118 47 591 4 950 52 541
Investment property
reclassified as held
for sale 40 405 70 515 515
South Total as V&A
Africa Australia reported Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of
statement of
financial position
Intangible assets 1 447 1 447 1 447
Trade and other receivables 560 28 588 29 617
Cash and cash equivalents 100 295 395 14 409
Trade and other payables (890) (588) (1 478) (94) (1 572)
Other financial liabilities (14 933) (6 456) (21 389) (21 389)
Nominal value
interest-bearing
liabilities (13 613) (6 118) (19 731) (19 731)
Fair value adjustment (1 320) (318) (1 638) (1 638)
Foreign translation
differences (20) (20) (20)
South Africa
Restated V&A
Retail Office Industrial Australia total Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of
comprehensive income
2011
Revenue, excluding
straight-line lease
income adjustment 1 374 1 555 874 607 4 410 25 4 435
Property expenses (390) (367) (191) (53) (1 001) (8) (1 009)
Segment results 984 1 188 683 554 3 409 17 3 426
Fair value adjustment:
Investment property 1 149 686 100 15 1 950 1 950
Investment property
non-controlling interest 10 10 10
Total fair value adjustment
on total investment
property 1 149 686 100 25 1 960 1 960
Restated V&A
South Africa Australia total Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of
statement of comprehensive income
Other operating expenses (101) (34) (135) (135)
Finance costs (950) (287) (1 237) (1 237)
Finance income 101 6 107 1 108
South Africa
Restated V&A
Retail Office Industrial Australia total Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of
financial position extracts
at 30 June 2011
Investment property
Opening balance
1 July 2010 10 669 12 686 6 667 4 877 34 899 34 899
Acquisitions V&A Waterfront
income-producing assets 4 179 4 179
Acquisitions V&A Waterfront
undeveloped bulk 600 600
Acquisitions other 253 122 82 2 881 3 338 3 338
Developments and capital
expenditure 167 265 144 20 596 4 600
Disposals (253) (90) (152) (129) (624) (624)
Foreign exchange gain 750 750 750
Fair value adjustments 1 149 686 100 25 1 960 1 960
Fair value of total
property related assets
30 June 2011 11 985 13 669 6 841 8 424 40 919 4 783 45 702
Fair value of long-term
property assets 11 842 13 442 6 710 8 386 40 380 4 783 45 163
Investment property
reclassified as
held for sale 143 227 131 38 539 539
South Restated V&A
Africa Australia total Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of
statement of financial position
Intangible assets 1 535 1 535 1 535
Trade and other receivables 376 31 407 22 429
Cash and cash equivalents 76 175 251 88 339
Trade and other payables (718) (84) (802) (56) (858)
Other financial liabilities (15 022) (4 930) (19 952) (19 952)
Nominal value interest-bearing liabilities (14 249) (4 844) (19 096) (19 093)
Fair value adjustment (773) (75) (848) (848)
Foreign translation differences (11) (11) (11)
NOTES
Note 1: Rm Rm
Fair value adjustments (756) (282)
Gross investment property fair value adjustment 1 953 1 960
Less: Straight-line lease income adjustment (183) (205)
Net investment property revaluation 1 770 1 755
Borrowings and derivatives loss (892) (128)
Foreign exchange (loss)/gain (6) 2
Long-term loans granted to BEE consortia (loss)/profit (103) 59
Debentures (1 525) (1 970)
Debentures are adjusted to fair value which represents
the net asset value attributable to Growthpoint's debenture holders,
excluding the intangible assets.
Fair value adjustments
The debentures fair value adjustment consists of:
Fair value adjustments on other assets and liabilities, excluding
fair value adjustment on debentures (769) (1 688)
Straight-line lease income adjustment (183) (205)
Capital gains taxation 2 7
Deferred taxation GOZ 323 141
Fair value adjustment on GOZ (853) (254)
Equity-accounted investment loss V&A Waterfront (38)
Foreign losses and retained income (10)
Non-controlling interest's portion of fair value adjustments (23) 17
Other long-term employee benefits 9 12
Capital items 17
Debenture fair value adjustment (1 525) (1 970)
Note 2:
Equity-accounted investment loss V&A Waterfront (net of tax) (38)
Non-distributable income from investment (fair value adjustments,
capital items and deferred taxation) 38
Interest received exceeding distributable income* (76)
Interest received from investment (369) (18)
Distributable income 293 18
* The distribution of the finance income of R368,8 million
is limited to the distributable income earned
by the V&A Waterfront, which amounted to R293,4 million.
Note 3:
Non-cash charges (108) (111)
Amortisation of intangible asset (99) (99)
Decrease in other long-term employee benefits (9) (12)
Note 4: Rm Rm
Finance income 501 107
Interest received from banks 25 28
Interest received from investment in joint venture V&A Waterfront 369 18
Interest received from antecedent divestiture of distribution 23 13
Interest received from long-term loans (BEE loans) 43 44
Interest received from long-term loans (additional interest on refinanced BEE loan) 34
Interest received from others 7 4
Note 5:
The directors are of the view that the disclosure of earnings per share, while obligatory in terms of IAS 33, Earnings per
share, and the JSE Limited Listings Requirements, is not meaningful to investors as the shares are traded as part of a linked
unit and practically all the revenue earnings are distributed in the form of debenture interest plus dividends in the ratio of
1 000 to 1. In addition, headline earnings include fair value adjustments for financial liabilities and accounting adjustments
required to account for lease income on a straight-line basis, as well as other non-cash accounting adjustments that do not
affect distributable earnings. The calculation of distributable earnings and the distribution per linked unit as set out below is
more meaningful.
Note 6:
In terms of Circular 3/2012, issued by SAICA, which has been early adopted, both the fair value adjustment on investment
property and debentures are added back in the calculation of headline earnings per linked unit. The Circular does not make
provision for the fair value adjustment on other non-current financial liabilities to be added back.
Basic loss is reconciled to headline earnings as follows: Rm Rm
Loss after taxation attributable to equity holders (921) (323)
Add back: Net fair value adjustment investment property (1 302) (1 501)
Fair value adjustment (including V&A Waterfront) (1 809) (1 755)
Applicable taxation 507 254
Headline loss attributable to shareholders (2 223) (1 824)
Add back: Net fair value adjustment debentures 1 098 1 418
Fair value adjustment 1 525 1 970
Applicable taxation (427) (552)
Add back: Debenture interest paid 2 392 2 070
Headline earnings attributable to linked unitholders 1 267 1 664
Note 7:
Equity-accounted investment V&A Waterfront 4 912 4 950
Investment in joint venture 156 156
Loan to joint venture 4 794 4 794
Share in equity accounted results (38)
Note 8:
Non-current liabilities debentures
Fair value at the beginning of the year 23 463 20 795
Issued during the year 2 662 698
Fair value adjustment (Note 1) 1 525 1 970
Fair value at the end of the year 27 650 23 463
COMMENTARY
INTRODUCTION
Growthpoint is the largest South African listed property company with a quality portfolio of 403 directly owned properties
in South Africa valued at R35,0 billion, a 64.5% interest in Growthpoint Properties Australia (GOZ) which owns 41 properties in
Australia valued at R13,1 billion and a 50.0% interest in the V&A Waterfront with properties valued at R5,0 billion.
The company's objective is to grow and nurture a diversified portfolio of quality investment properties, providing accommodation
to a wide spectrum of tenants and delivering sustainable income distributions and capital appreciation, optimised by effective
financial structures. Effectively, all rental income received by the company, less operating costs and interest on debt, including
interest received are distributed to unitholders bi-annually, so that the company is very similar to the Real Estate Investment Trust
(REIT) models that are well-established internationally. Growthpoint's distributions are based on sustainable income generated
from rentals. The company does not distribute capital profits.
Growthpoint is included in the JSE ALSI Top 40 Companies Index, with a market capitalisation of R40,1 billion at 30 June 2012.
Over the last year, on average, more than 62,8 million linked units traded per month (2011: 59,4 million). The monthly average
value traded was R1,2 billion (2011: R1,0 billion).
The South African portfolio (excluding V&A Waterfront) represents 65.9% of the total portfolio by value, and 79.4% by GLA, and
is well-diversified in the three major sectors of commercial property, being retail, office and industrial. The bulk of the value of the
South African properties is situated in the major metropolitan areas in strong economic nodes.
SEE PRESS FOR GRAPH
HIGHLIGHTS FOR THE YEAR
ADDITIONAL INVESTMENTS BY GOZ
In July 2011, following the acquisition of six properties held in the Rabinov Property Trust, GOZ undertook a renounceable
rights issue underwritten by Growthpoint to raise AUD102,6 million at an issue price of AUD1,90. The proceeds from the
rights offer were utilised to reduce bank debt and to provide additional capital for the investment into the Energex office
development in Nundah, Brisbane. Growthpoint paid a total of AUD65,4 million (R468,9 million) to follow its rights and the
rights that were not taken up by security holders at the time.
In December 2011, GOZ announced the acquisition of three office properties as well as a 100% pre-committed office
development for an aggregate purchase consideration of AUD289,5. The acquisition was partly funded by a rights offer which
raised AUD166,4 million (R1,4 billion) at an issue price of AUD1.90 per stapled security, and the balance with debt. Growthpoint
paid AUD126,3 million (R1,1 billion) to follow its rights and the rights that were not taken up by security holders at the time.
The above-mentioned new investment of R1,5 billion taken into account, the total amount invested at year-end by Growthpoint
for its 64.5% interest amounts to R3,1 billion. The market value of the investment at 30 June 2012 was R4,3 billion, realising a
37.1% return on investment for the year.
These new properties are fully let and together represent an initial property income yield of 8.7% at a 4.6 year weighted average
lease expiry. The portfolio has also diversified from a purely industrial property fund in 2010 to a spread of 46.9% offices and
53.1% industrial properties, by value, after the acquisition, prior to the completion of the developments.
Taking the additional R468,9 million and R1,1 billion investments into account (refer to above), the total amount invested at year-end
by Growthpoint for its 64.5% interest amounts to R3,1 billion. The market value of the investment at 30 June 2012 was R4,3 billion.
EQUITY RAISED AND REPAYMENT OF CMBS NOTES
The following raising took place during the year:
- July 2011, R1,8 billion raised through the issue of 100 000 000 linked units at R18,00 per linked unit
- September 2011, R167,3 million (15%) Distribution Re-investment Plan (DRIP), 9 395 001 linked units issued at R17,80 per
linked unit
- March 2012, R792,6 million (69%) DRIP, 41 714 476 linked units issued at R17,80 per linked unit
In August 2011 and September 2011 two Commercial Mortgage Backed Securitisation (CMBS) notes of R969,0 million and
R1,0 billion, respectively, were repaid.
FINANCIAL RESULTS
Growthpoint delivered growth in distributions per linked unit for the year ended 30 June 2012 of 6.1%. The 6.1% growth is in the
upper end of the guidance previously given to the market. This was achieved despite the fact that Growthpoint expensed, rather
than capitalised, the R46,8 million of interest relating to the undeveloped bulk at the V&A Waterfront.
The growth in the unit price from R18,31 to R23,00 at 30 June 2012 gave investors a capital growth of 25.6% for the year. The
distribution of 139.0 cents per linked unit accounts for an income yield of 7.6%, a total return of 33.2% for the year.
The economic conditions during the year of review continued to improve, albeit at a slow pace. This was evidenced by a decrease
in vacancies in the industrial and office sectors.
The receipt of income from the cancellation of two bare dominium properties, a saving of interest on borrowings not incurred
due to the capital raising of R1,8 billion in July 2011, and an increase in earnings received from GOZ driven by the acquisition
of additional properties, as well as the fact that the V&A Waterfront was included for a full year for the first time were factors
contributing towards the performance.
BASIS OF PREPARATION
The consolidated financial statements are considered preliminary based on the JSE Limited (JSE) Listings Requirements and are
summarised from a complete set of the Group annual financial statements on which the independent auditors, KPMG Inc, has
expressed an unmodified audit opinion, which is available for inspection at the company's registered office. KPMG has also issued
an unmodified audit opinion on these summarised financial statements stating that these summarised results are consistent
in all material respects with the complete financial statements. A copy of the auditor's report is available for inspection at the
company's registered office.
These summarised consolidated financial statements have been prepared in accordance with the measurement and recognition
requirements of International Financial Reporting Standards (IFRS), and the presentation and disclosure requirements of IAS 34,
Interim financial reporting, the AC 500 standards as issued by the Accounting Standards Board, the Companies Act of 2008, as
amended, and the JSE Listings Requirements.
Messrs LN Sasse, (CA)(SA)) and EK de Klerk, (CA)(SA)), Growthpoint Properties Limited executive directors were responsible for
supervising the preparation of the annual financial statements and preparing these summarised financial statements.
The company's accounting policies as set out in the audited financial statements for the year ended 30 June 2011 have been
consistently applied in the current period compared to the prior period, except for a change in the accounting policy with
respect to jointly controlled entities as allowed per IAS 31, Interests in joint ventures. The Group changed from the proportional
consolidation method whereby the Group's share of the jointly controlled assets, liabilities, income, expenses and cash flows from
the V&A Waterfront are consolidated on a line-by-line basis to, using the equity accounting method, whereby the Group's share
of the profit or loss and other comprehensive income of equity accounted investees are accounted for in the financial statements.
The Group believes this change in accounting policy is consistent with industry practice in relation to these types of investments
and is a proactive approach to the new IFRS 11, Joint arrangements, that will come into effect in the 2014 financial year.
A copy of the annual financial statements that have been summarised in this report can be obtained from the company's
registered office.
V&A WATERFRONT
The change in accounting policy relating to the 50.0% interest in the V&A Waterfront was applied retrospectively in accordance
with IAS 8, Accounting policies, changes in estimates and errors and only had an impact on the comparative amounts as the jointly
controlled entity was acquired in the prior financial year.
The effect of the change in policy is summarised as follows:
2012 2011
Balance as
Balance reported
before before
change in change in
accounting Effect of accounting Effect of Restated
policy at change in Balance at policy at change in balance at
30 June accounting 30 June 30 June accounting 30 June
2012 policy 2012 2011 policy 2011
Rm Rm Rm Rm Rm Rm
Statement of
financial position
Non-current assets
Fair value of investment
property for accounting
purposes 50 848 (4 950) 45 898 43 653 (4 783) 38 870
Equity-accounted investment
V&A Waterfront 4 912 4 912 4 950 4 950
Other non-current assets 144 (142) 2 143 (142) 1
Current assets
Trade and other receivables 617 (29) 588 411 (4) 407
Cash and cash equivalents 409 (14) 395 339 (88) 251
Non-controlling interest 2 187 (6) 2 181 1 377 (5) 1 372
Other non-current liabilities
Deferred taxation liability 823 (8) 815
Current liabilities
Trade and other payables 1 572 (94) 1 478 858 (56) 802
Taxation payable 5 (5) 9 (6) 3
2012 2011
Balance as
Balance reported
before before
change in change in
accounting Effect of accounting Effect of Restated
policy at change in Balance at policy at change in balance at
30 June accounting 30 June 30 June accounting 30 June
2012 policy 2012 2011 policy 2011
Rm Rm Rm Rm Rm Rm
Statement of
comprehensive income
Revenue, excluding straight-line
lease income adjustment 5 519 (412) 5 107 4 435 (25) 4 410
Straight-line lease income
adjustment 122 61 183
Property expenses (1 209) 107 (1 102) (1 009) 8 (1 001)
Other operating expenses
and fair value adjustments (201) 25 (176)
Equity-accounted investment
loss V&A Waterfront
(net of tax) (38) (38)
Finance costs (1 680) 3 (1 677)
Non-cash charges and other
capital items (118) (7) (125)
Finance income 149 352 501 90 17 107
Taxation (307) 9 (298)
Statement of cash flows
Net cash inflow/(outflow)
from operating activities 848 (319) 529 (21) (15) (36)
Net cash outflow from
investing activities (3 110) 116 (2 994) (7 458) (73) (7 531)
Net cash inflow from
financing activities 2 315 277 2 592 7 493 7 493
Net movement in cash
and cash equivalents 53 74 127 14 (88) (74)
GOZ
The investment in GOZ has been accounted for in terms of IAS 21, The effects of changes in foreign exchange rates. The consolidated
statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the closing exchange rate at
30 June 2012 of R8,35:AUD1 (2011: R7,24:AUD1). The consolidated statement of comprehensive income also includes 100% of the
revenue and expenses of GOZ, which was translated at an average exchange rate of R8,01:AUD1 (2011: R6,91:AUD1) for the year
ended 30 June 2012. The resulting foreign currency translation difference is recognised in other comprehensive income. A non-
controlling interest was raised for the 35.5% (2011: 39.4%) not owned by Growthpoint.
Investment property comprises land and buildings held to generate rental income over the long term. Should any properties
no longer meet the company's investment criteria and be sold, any profits or losses will be of a capital nature and will be taxed
at rates applicable to capital gains. Deferred taxation on the revaluation of investment property is offset against the deferred
taxation asset that arises on the revaluation of the company's issued debentures (excluding deferred taxation on intangible assets
and deferred taxation on the investment in GOZ).
NET PROPERTY INCOME (NPI)
The increase in revenue (15.8%) from the prior year was largely due to contractual rental escalations and higher revenue from
GOZ (66.6%) resulting from property acquisitions made.
The ratio of property expenses to revenue for the Group has improved from 22.7% to 21.6% in the current year.
FAIR VALUE ADJUSTMENTS
The revaluation of properties resulted in an upward revision of R1 953,0 million (4.2%) to R48,1 billion for investment property
(including investment properties reclassified as held-for-sale). This was mainly due to an increase in future contractual rentals.
Interest-bearing borrowings and derivatives were fair valued upwards by R892,1 million (4.5%), using the yield curve at 30 June 2012.
The trading market value of the investment in GOZ, based on a stapled security price of AUD2,10 (2011: AUD1,90), translated
at the closing rate of R8,35:AUD1 (2011: R7,24:AUD1) at the financial year-end, resulted in a positive fair value adjustment of
R853,5 million.
EQUITY-ACCOUNTED RESULTS IN THE V&A Waterfront
The fair value of investment property in the V&A Waterfront has been adjusted upwards by a revaluation of R38,4 million.
Growthpoint earned interest on the loan of R4 794,6 million advanced to the V&A Waterfront at the prime overdraft rate less 1%.
The distribution of the finance income of R368,8 million (Note 2) is however limited to the distributable income earned by the
V&A Waterfront, which amounted to R293,4 million.
The distributable income earned has been slightly lower than our expectation at the time of concluding the transaction. The
on-going difficult economic conditions impacting negatively on the hotel and leisure industries has reduced the turnover rentals
earned from the V&A Waterfront. Due to only 12.3% NPI being hotel turnover related, the impact thereof was not significant.
Construction has commenced on a state-of-the-art 4-Star Green Star design rated, 18 100m2 head office for Allan Gray with
related retail and parking facilities, with completion anticipated in September 2013.
FINANCE COSTS
Finance costs increased by 35.6% to R1 677,4 million (2011: R1 237,4 million). This was as a result of an increase in borrowings for
the acquisition of the 50.0% interest in the V&A Waterfront of R5,0 billion in June 2011, as well as the higher debt of GOZ as a
result of property acquisitions. The weighted average interest rate for RSA borrowings was 9.5% (2011: 9.2%). Debt is fixed for a
weighted average of 4.9 years (5.3 years).
FINANCE INCOME
The increase in finance income is mainly attributable to a full year's interest earned from the loan advanced to the V&A
Waterfront, of R368,8 million (2011: R17,9 million for 23 days), as well as the additional interest earned on the BEE loan
that was refinanced during the current year of R34,4 million and the antecedent divestiture of distributions of R22,7 million
(2011: R12,5 million).
ACQUISITIONS AND COMMITMENTS
Growthpoint acquired the remaining 64.3% of Alberton City for R423,8 million during the year.
Growthpoint acquired a 50.0% interest in vacant land in Rosebank, with Growthpoint's share amounting to R43,3 million. This
land is close to the Rosebank Gautrain Station and a development for 35 000m2 is intended for office space.
In addition, Growthpoint South Africa has commitments outstanding in respect of developments amounting to R910,6 million
and acquisitions amounting to R401,3 million.
Apart from the five properties acquired by GOZ, GOZ entered into development agreements. In terms of these agreements,
GOZ has made payments to acquire investment properties (Energex office at Nundah, Brisbane and the Fox Sport office at
219-247 Pacific Highway in Sydney) to the value of AUD100,8 million (R842,0 million). These financials assets will be transferred
to investment property upon completion of these developments, which is expected to be December 2012. GOZ also has a capital
commitment to the value of AUD61,7 million in respect of these developments. Included in trade and other payables is an amount
of AUD54,0 million for the acquisition liability of a further two properties, that have been included in investment property at year-
end. Subsequent to year-end, this acquisition liability was settled through an increase of debt facility.
The development at the V&A Waterfront for Allan Gray commenced in the current year. The commitment outstanding at 30 June
2012 amounts to R207,6 million. A further R15,2 million has been committed to other projects.
DISPOSALS AND HELD-FOR-SALE ASSETS
Growthpoint South Africa disposed of 23 properties in the current year (2011: 11) for R518,2 million (2011: R232,6 million) with
a collective R183,6 million profit on cost.
In the prior year Growthpoint swapped 18.0% of its interest in Brooklyn Mall for 82.0% interest in Design Square. During the
current year an additional 7.0% interest in Brooklyn Mall/Design Square was disposed of for R120,3 million, realising a profit
on cost of R54,9 million. Growthpoint's interest in Brooklyn Mall/Design Square is now 75.0%.
GOZ disposed of one property during the year for AUD5,2 million (R42,8 million).
Held-for-sale assets decreased to 14 properties, valued at R515,3 million (2011: 17 properties, valued at R538,5 million).
LONG-TERM LOANS GRANTED TO BEE CONSORTIA
In November 2011, Growthpoint's first BEE transaction was refinanced and Growthpoint received R306,4 million as partial
repayment of the loan. Interest accrues at 15.0% per annum on the remaining balance of R200,0 million and is payable bi-annually.
EQUITY-ACCOUNTED INVESTMENT: V&A WATERFRONT
In terms of the change in accounting policy, the investment in the V&A Waterfront has been accounted for separately as the fair
value of Growthpoint's 50% interest in the V&A Waterfront amounting to R4 912,0 million (2011: R4 950,3 million).
ARREARS
Total RSA arrears at 30 June 2012 amounted to R32,6 million (2011: R34,8 million) with a provision for bad debts of R14,6 million
(2011: R16,2 million). Total bad debt expenses amounted to R7,8 million (2011: R9,6 million).
VACANCY LEVELS
At 30 June 2012 Growthpoint's vacancy levels in South Africa (excluding V&A Waterfront), as a percentage of gross lettable area
(GLA) were:
Vacancy
2012 2011
Retail 3.1% 2.9%
Office 5.8% 8.1%
Industrial 3.4% 4.3%
Total 4.0% 5.0%
V&A Waterfront 1.6% 3.5%
GOZ 0.3%
Total 3.3% 4.2%
Improvement in vacancies is evident in the office and industrial sectors. The slight increase in vacancies in the retail sector can be
ascribed to the redevelopment of various shopping centres.
BORROWINGS
At 30 June 2012, the consolidated loan to value ratio (LTV) measured by dividing the nominal value of interest-bearing borrowings
(net of cash) by the fair value of property assets, including investment property held-for-sale, plus the equity accounted
investment of the V&A Waterfront was 36.5% (2011: 41.1%).
The decrease in debt mainly results from:
- The issue of new linked units in July 2011 for R1,8 billion
- DRIP in September 2011, R167,3 million
- DRIP in March 2012, R792,6 million.
Growthpoint also managed to increase the percentage of unsecured debt to total debt from 21.1% at 30 June 2011 to 39,0% at
30 June 2012. The increase in unsecured debt was aided by three further issues of R500,0 million (4,25 years), R260,0 million
(5 years) and R750,0 million (3 years), respectively, into the bond market, as well as two commercial paper issues of
R400,0 million each.
SHARE AND DEBENTURE CAPITAL
The authorised share capital is R100 000 000, divided into two billion ordinary shares of five cents each. Each ordinary share
is linked to ten variable rate debentures of 250 cents each.
The ordinary shares and debentures trade as linked units on the JSE. In terms of the debenture trust deed, the interest payable
on the debenture component of the linked unit is always 1 000 times greater than the dividend payable per ordinary share.
SUBSEQUENT EVENTS
There were no material transactions from 30 June 2012 until the date of this report.
CHANGE IN DIRECTORS
It is with great sadness that we note the death of Stuart Snowball on 3 August 2012, our Financial Director, friend and
colleague. Stuart joined Growthpoint in 2003 and was a valuable member of the team. Our thoughts go out to his family
in this difficult time.
The executives are currently busy recruiting a new Financial Director to fill the position and an announcement will be made
as soon as the appointment is finalised.
Zakhele Sithole, a Non-executive Director and a member of both the Audit Committee and Risk Management Committee
passed away on 18 August 2012. We extend our condolences to his wife and family.
PROSPECTS
Should economic conditions prevail, growth in distribution per linked unit for the year to 30 June 2013 is expected to be in
line with that achieved in the current year.
The forecast has been based on the company's budgets for the year to 30 June 2013, taking into account that the majority
of the company's income is contractual rental income, as well as the fact that 83.1% of the South Africa debt has been fixed
for the next year.
The forecast has not been subject to audit or review by the company's independent external auditor.
CASH DISTRIBUTION WITH THE ELECTION TO RE-INVEST THE CASH DISTRIBUTION IN RETURN FOR
GROWTHPOINT LINKED UNITS
Notice is hereby given of final dividend declaration number 52 of 0,07113 cents and debenture interest payment number 52
of 71,12887 cents per linked unit totalling 71,20000 cents per linked unit for the six months ended 30 June 2012 bringing the total
income distribution for the year ended 31 June 2012 to 139,00000 cents per linked unit.
The dividend will be subject to a maximum local dividend tax rate of 15% in accordance with South African Income Tax
legislation, subject to any available or applicable exemptions. This will result in a net dividend of 0,06046 cents per linked unit
to those linked unitholders who bear the maximum rate of dividend withholding tax of 0,01067 cents per linked unit. Linked
unitholders who are exempt from paying dividend tax will receive the total distribution of 71,20000 cents per linked unit.
Linked unitholders will be entitled to elect to re-invest the net Cash Distribution after the applicable dividend withholding
tax, in return for linked units (Linked Unit Alternative), failing which they will receive the net Cash Distribution in respect of
all or part of their linked unitholdings.
Linked unitholders who have dematerialised their linked units are required to notify their duly appointed Central Securities
Depository Participant ("CSDP") or broker of their election in the manner and time stipulated in the custody agreement
governing the relationship between the linked unitholder and their CSDP or broker.
Other information:
- Issued share capital as at 28 August 2012: 1 743 080 918, ordinary shares of 5 cents each.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7P.
- There are no Secondary Tax on Company ("STC") credits available for utilisation against the dividend tax.
Summary of the salient dates relating to the Cash Distribution and Linked Unit Alternative are as follows:
2012
Circular and form of election posted to linked unitholders Friday, 31 August
Announcement of linked unit alternative issue price and finalisation information Friday, 7 September
Last day to trade ("LDT") cum distribution Friday, 14 September
Linked units to trade ex distribution Monday, 17 September
Listing of maximum possible number of Linked Unit Alternative linked units
commences on the JSE Monday, 17 September
Last day to elect to receive the Linked Unit Alternative
(no late forms of election will be accepted after 12:00 South African time) Friday, 21 September
Record date Friday, 21 September
Announcement of results of Cash Distribution and Linked Unit Alternative
released on SENS Tuesday, 25 September
Cash distributions posted to certificated linked unitholders and accounts credited
by CSDP or broker to dematerialised linked units for unitholders electing the cash
alternative on or about Tuesday, 25 September
Linked unit certificates posted to certificated linked unitholders and accounts
credited by CSDP or broker to dematerialised linked unitholders electing the
linked unit alternative on or about Wednesday, 26 September
Announcement of results of Cash Distribution and Linked Unit Alternative
published in the press Wednesday, 26 September
Adjustment to linked units listed on or about Wednesday, 26 September
Notes:
1. Linked unitholders electing the linked unit alternative are alerted to the fact that although the new linked units will be listed
on LDT + 1, these new linked units can only be traded on LDT + 2, due to the fact that settlement of the linked units will be two
days after record date, which differs from the conventional one day after record date settlement process.
2. Linked units may not be dematerialised or rematerialised between Monday, 17 September 2012, and Friday, 21 September 2012,
both days inclusive.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in the press.
4. The Cash Distribution or Linked Unit Alternative may have tax implications for resident and non-resident linked unitholders.
Linked unitholders are therefore encouraged to consult their professional advisors should they be in any doubt as to the
appropriate action to take.
By order of the Board
Growthpoint Properties Limited
28 August 2012
Directors
JF Marais (Chairman)
HSP Mashaba (Deputy Chairman)
LN Sasse* (Chief Executive Officer)
EK de Klerk*
MG Diliza
PH Fechter
LA Finlay
JC Hayward
HS Herman
R Moonsamy
NBP Nkabinde
CG Steyn
JHN Strydom
FJ Visser
* Executive
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT ISIN: ZAE000037669
Registered office
The Place, 1 Sandton Drive, Sandton, 2196
PO Box 78949, Sandton, 2146
Transfer secretary
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
100 Grayston Drive, Sandown, Sandton, 2196
PO Box 785700, Sandton, 2146
www.growthpoint.co.za
Date: 29/08/2012 11:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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