Wrap Text
Unaudited results for the six months ended 31 December 2012
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT ISIN: ZAE000037669
("Growthpoint" or "the company")
UNAUDITED RESULTS FOR THE SIX MONTHS
ENDED 31 DECEMBER 2012
HIGHLIGHTS
- 7.2% distribution growth to 72,7 cents per linked unit
- 19.4% return to investors for the six months (annualised)
- 31.1% return on R3,2 billion Australian investment (annualised)
- Development pipeline of R1,2 billion
- R613,1 million cash retained through Distribution Reinvestment Plan, supported by 59.4% of linked unitholders
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Restated
Six months Six months 12 months
31 December 31 December 30 June
2012 2011 2012
Note Rm Rm Rm
Revenue, excluding straight-line lease income adjustment 2 849 2 480 5 107
Straight-line lease income adjustment 17 8 183
Revenue 2 866 2 488 5 290
Property expenses (597) (544) (1 102)
Net property income 2 269 1 944 4 188
Other operating expenses (109) (75) (176)
Operating profit 2 160 1 869 4 012
Fair value adjustments 1 (273) (199) (756)
Equity-accounted investment loss V&A Waterfront (net of tax) 2 (38)
Finance costs (938) (832) (1 677)
Non-cash charges 3 (53) (57) (108)
Capital items (17) (17)
Finance income 4 205 206 501
Profit before debenture interest 1 101 970 1 917
Debenture interest (1 284) (1 152) (2 392)
Loss before taxation (183) (182) (475)
Taxation (188) (141) (298)
normal taxation (15) 1 (1)
capital gains taxation (CGT) (4) (2)
deferred taxation charge (186) (152) (323)
deferred taxation credit 13 14 28
Loss for the period (371) (323) (773)
Loss attributable to:
Equity holders (472) (406) (921)
Non-controlling interest 101 83 148
Other comprehensive income:
Foreign currency translation gain 260 578 646
Total comprehensive income (111) 255 (127)
Attributable to:
Equity holders (304) (53) (492)
Non-controlling interest 193 308 365
Calculation of distributable earnings
Operating profit 2 160 1 869 4 012
Less: Straight-line lease income adjustment (17) (8) (183)
Finance costs (938) (832) (1 677)
Finance income 205 206 501
Interest received exceeding distributable income (76)
Non-controlling interest's share of distribution from GOZ
(excluding fair-value adjustments) (103) (76) (171)
Realised foreign exchange loss (7) (7) (10)
Taxation (excluding deferred tax and CGT) (15) 1 (1)
Distributable earnings 1 285 1 153 2 395
Total distribution (1 285) (1 153) (2 395)
Debenture interest (1 284) (1 152) (2 392)
Ordinary dividend (1) (1) (3)
Linked units Linked units Linked units
Linked units in issue at the end of the period 1 767 603 559 1 701 366 442 1 743 080 918
Weighted number of linked units in issue 1 767 603 559 1 701 366 442 1 743 080 918
cents cents cents
Distribution per linked unit 72,70 67,80 139,00
Six months ended 31 December 72,70 67,80 67,80
Six months ended 30 June 71,20
Basic and diluted loss per share 5 (26,70) (23,86) (52,84)
Headline earnings per linked unit 6 44,55 26,37 72,69
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Restated
31 December 31 December 30 June
2012 2011 2012
Note Rm Rm Rm
ASSETS
Non-current assets 56 091 51 704 54 288
Fair value of investment property for accounting purposes 47 752 43 414 45 056
Straight-line lease income adjustment 1 676 1 518 1 693
Payments made to acquire investment property 842
Fair value of long-term property related assets 49 428 44 932 47 591
Equity-accounted investment V&A Waterfront 7 4 912 4 950 4 912
Intangible assets 1 404 1 491 1 447
Equipment 2 2 2
Long-term loans granted to BEE consortia 345 329 336
Current assets 2 689 1 397 1 498
Investment property reclassified as held for sale 1 238 418 515
Trade and other receivables 981 643 588
Cash and cash equivalents 470 336 395
Total assets 58 780 53 101 55 786
EQUITY AND LIABILITIES
Shareholders' interest 588 1 363 893
Ordinary share capital 88 85 87
Foreign currency translation reserve 800 546 621
Non-distributable reserve (300) 732 185
Non-current liabilities debentures 8 29 062 26 079 27 650
Linked unitholders' interest 29 650 27 442 28 543
Non-controlling interest 2 278 1 867 2 181
Total unitholders' interest 31 928 29 309 30 724
Other non-current liabilities 21 112 18 437 20 744
Other non-current financial liabilities 20 056 17 767 19 894
Other long-term employee benefits 68 13 35
Deferred tax liability 988 657 815
Current liabilities 5 740 5 355 4 318
Trade and other payables 1 106 913 1 478
Liability for Australian acquisition 484 1 619
Current portion of other non-current liabilities 2 750 1 585 1 495
Taxation payable 12 5
Linked unitholders for interest and dividends 1 388 1 233 1 345
Total equity and liabilities 58 780 53 101 55 786
cents cents cents
Net asset value per linked unit 1 677 1 613 1 638
Tangible net asset value per linked unit which excludes
intangible assets and deferred tax 1 654 1 564 1 601
STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Restated
Six months Six months 12 months
31 December 31 December 30 June
2012 2011 2012
Rm Rm Rm
Cash generated from operations 2 003 1 740 4 130
Finance income 99 183 451
Finance costs (957) (831) (1 663)
Taxation paid (3) (1) (6)
Capital items (17) (17)
Distribution to unitholders (1 348) (1 136) (2 366)
Net cash (outflow)/inflow from operating activities (206) (62) 529
Net cash outflow from investing activities (1 167) (1 659) (2 994)
Net cash inflow from financing activities 1 441 1 793 2 592
Net increase in cash and cash equivalents 68 72 127
Translation effects on cash and cash equivalents of foreign operation 7 13 17
Cash and cash equivalents at beginning of the period 395 251 251
Cash and cash equivalents at end of the period 470 336 395
STATEMENT OF CHANGES IN EQUITY
Ordinary share Non-distributable Foreign currency trans- Retained Total shareholders' Non-controlling Total
capital reserve (NDR) lation reserve (FCTR) earnings interest interest (NCI) equity
Rm Rm Rm Rm Rm Rm Rm
Audited restated balance at 30 June 2011 79 1 150 192 1 421 1 372 2 793
Shares issued 6 6 6
Total comprehensive income profit/(loss) after taxation (406) (406) 83 (323)
Total comprehensive income other comprehensive income 353 353 225 578
Transfer amortisation net of deferred taxation to NDR (35) 35
Rights issue and acquisition GOZ 1 (11) (10) 263 253
Transfer to NDR reserves with NCI (11) 11
Transfer fair value adjustment on GOZ to NDR (372) 372
Dividends declared NCI (76) (76)
Dividends declared (1) (1) (1)
Unaudited restated balance at 31 December 2011 85 732 546 1 363 1 867 3 230
Shares issued 2 2 2
Total comprehensive income (loss)/profit after taxation (515) (515) 65 (450)
Total comprehensive income other comprehensive income 44 44 24 68
Transfer amortisation net of deferred taxation to NDR (36) 36
Rights issue and acquisition GOZ 31 (30) 1 320 321
Transfer to NDR reserves with NCI (30) 30
Transfer fair value adjustment on GOZ to NDR (481) 481
Dividends declared NCI (95) (95)
Dividends declared (2) (2) (2)
Audited balance at 30 June 2012 87 185 621 893 2 181 3 074
Shares issued 1 1 1
Total comprehensive income (loss)/profit after taxation (472) (472) 101 (371)
Total comprehensive income other comprehensive income 168 168 92 260
Transfer amortisation net of deferred taxation to NDR (36) 36
Rights issue and acquisition GOZ 11 (12) (1) 7 6
Transfer to NDR reserves with NCI (12) 12
Transfer fair value adjustment on GOZ to NDR (437) 437
Dividends declared NCI (103) (103)
Dividends declared (1) (1) (1)
Unaudited balance at 31 December 2012 88 (300) 800 588 2 278 2 866
SEGMENTAL ANALYSIS
South Africa
Total as V&A
Retail Office Industrial Australia reported Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of comprehensive
income extracts six months
ended 31 December 2012
Revenue, excluding
straight-line lease
income adjustment 803 891 497 658 2 849 213 3 062
Property expenses (222) (201) (101) (73) (597) (58) (655)
Segment results 581 690 396 585 2 252 155 2 407
Fair-value adjustment:
Investment property 402 253 180 16 851 851
Investment property
non-controlling
interest 8 8 8
Total fair-value adjustment
non total investment
property 402 253 180 24 859 859
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 (80) (29) (109) (12) (121)
Finance costs (691) (247) (938) (1) (939)
Finance income 203 2 205 9 214
South Africa
Restated V&A
Retail Office Industrial Australia total Waterfront Total
Rm Rm Rm Rm Rm Rm Rm
Statement of comprehensive
income extracts six months
ended 31 December 2011
Revenue, excluding
straight-line lease
income adjustment 724 846 461 449 2 480 201 2 681
Property expenses (203) (191) (102) (48) (544) (55) (599)
Segment results 521 655 359 401 1 936 146 2 082
Fair-value adjustment:
Investment property 392 334 238 115 1 079 1 079
Investment property
non-controlling
interest 73 73 73
Total fair-value adjustment
non total investment
property 392 334 238 188 1 152 1 152
South Restated V&A
Africa Australia total Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of statement
of comprehensive income
Other operating expenses (56) (19) (75) (12) (87)
Finance costs (643) (189) (832) (1) (833)
Finance income 202 4 206 8 214
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
31 December 2012
Investment property
Opening balance
1 July 2012 13 145 14 592 7 251 13 118 48 106 4 950 53 056
Acquisitions 13 524 537 537
Developments and
capital expenditure 65 241 106 602 1 014 128 1 142
Disposals (47) (284) (51) (382) (382)
Foreign exchange gain 532 532 532
Fair-value adjustments 402 253 180 24 859 859
Fair-value of total property
related assets
31 December 2012 13 578 14 802 7 486 14 800 50 666 5 078 55 744
Fair-value of long-term
property assets 13 446 14 401 7 399 14 182 49 428 5 078 54 506
Investment property
reclassified as
held for sale 132 401 87 618 1 238 1 238
South Total as V&A
Africa Australia reported Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of statement
of financial position
Intangible assets 1 404 1 404 1 404
Trade and other receivables 942 39 981 36 1 017
Cash and cash equivalents 353 117 470 30 500
Trade and other payables (896) (694) (1 590) (160) (1 750)
Other financial liabilities (15 414) (7 392) (22 806) (22 806)
Nominal value
interest-bearing liabilities (13 818) (7 011) (20 829) (20 829)
Fair-value adjustment (1 596) (348) (1 944) (1 944)
Foreign translation differences (33) (33) (33)
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
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)
NOTES
Unaudited Unaudited Audited
Restated
Six months Six months 12 months
31 December 31 December 30 June
2012 2011 2012
Rm Rm Rm
Note 1:
Fair value adjustments (273) (199) (756)
Gross investment property fair-value adjustment 859 1 152 1 953
Less: Straight-line lease income adjustment (17) (8) (183)
Net investment property revaluation 842 1 144 1 770
Borrowings and derivatives loss (306) (508) (892)
Foreign exchange (loss)/gain (5) 3 (6)
Long-term loans granted to BEE consortia profit/(loss) 4 (107) (103)
Debentures (808) (731) (1 525)
Debentures are adjusted to fair value which represents
the net asset value attributable to Growthpoint's
debenture holders, excluding the intangible assets.
The debentures fair-value adjustment consists of:
Fair-value adjustments on other assets and liabilities, excluding
fair-value adjustment on debentures (535) (532) (769)
Straight-line lease income adjustment (17) (8) (183)
Capital gains taxation 4 2
Deferred taxation GOZ 186 151 323
Fair-value adjustment on GOZ (437) (372) (853)
Equity-accounted investment loss V&A Waterfront (38)
Foreign losses and retained income (7) (6) (10)
Non-controlling interest's portion of fair value adjustments (2) 7 (23)
Other long-term employee benefits 4 8 9
Capital items 17 17
Debenture fair value adjustment (808) (731) (1 525)
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 (note 4) (150) (140) (369)
Distributable income 150 140 293
Note 3:
Non-cash charges (53) (57) (108)
Amortisation of intangible asset (49) (49) (99)
Other long-term employee benefits (4) (8) (9)
Unaudited Unaudited Audited
Restated
Six months Six months 12 months
31 December 31 December 30 June
2012 2011 2012
Rm Rm Rm
Note 4:
Finance income 205 206 501
Banks 11 8 25
Investment in joint venture V&A Waterfront 150 140 369
Antecedent divestiture of distribution 8 10 23
Long-term loans (BEE loans) 20 23 43
Long-term loans (additional interest on refinanced BEE loan) 16 19 34
Other 6 7
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, 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:
Loss after taxation attributable to equity holders (472) (406) (921)
Add back: Net fair-value adjustment investment property (606) (824) (1 302)
Fair-value adjustment (including V&A Waterfront) (842) (1 144) (1 809)
Applicable taxation 236 320 507
Headline loss attributable to shareholders (1 078) (1 230) (2 223)
Add back: Net-fair value adjustment debentures 582 526 1 098
Fair-value adjustment 808 731 1 525
Applicable taxation (226) (205) (427)
Add back: Debenture interest paid 1 284 1 152 2 392
Headline earnings attributable to linked unitholders 788 448 1 267
Note 7:
Equity-accounted investment V&A Waterfront 4 912 4 950 4 912
Investment in joint venture 118 156 156
Loan to joint venture 4 794 4 794 4 794
Share in equity accounted results (38)
Note 8:
Non-current liabilities debentures
Fair-value at the beginning of the period 27 650 23 463 23 463
Issued during the period 604 1 885 2 662
Fair-value adjustment (note 1) 808 731 1 525
Fair-value at the end of the period 29 062 26 079 27 650
COMMENTARY
INTRODUCTION
Growthpoint is the largest South African listed property company. It has a quality portfolio of 390 directly owned
properties in South Africa valued at R35,9 billion and a 50.0% interest in the V&A Waterfront with properties
valued at R5,1 billion. Growthpoint has international exposure through a 65.3% interest in Growthpoint
Properties Australia (GOZ) which owns 43 properties in Australia valued at R14,8 billion.
The company's objective is to grow and nurture a diversified portfolio of quality investment properties,
providing accommodation to a wide spectrum of users and delivering sustainable income distributions and
capital appreciation, while optimising effective financial structures. Effectively, net property income received
by South Africa and GOZ, including interest received and the 50.0% portion of distributable income received
from the V&A Waterfront, less operating costs and interest on debt, is distributed to unitholders bi-annually.
This structure 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 and had a market capitalisation of R43,3 billion
at 31 December 2012. During the six months, on average, more than 66,8 million linked units traded per month
(June 2012: 62,8 million). The monthly average value traded was R1,7 billion (June 2012: R1,2 billion).
The South African portfolio (excluding V&A Waterfront) represents 64.3% of the total portfolio by value,
and 79.3% by GLA. It is well-diversified in the three major sectors of commercial property, being office, retail and
industrial. Most of the South African properties are situated in the major metropolitan areas in strong economic
nodes.
GROWTH IN DISTRIBUTION
Growthpoint has delivered growth in distribution per linked unit for the period ended 31 December 2012
of 7.2%. The 7.2% growth is higher than the guidance released to the market in the year end financial results
of around 6.1%.
The increase in the unit price from R23,00 at 30 June 2012 to R24,50 at 31 December 2012, translates into an
annualised capital growth of 13.1% for the period under review. The distribution of 72,7 cents per linked unit
accounts for an annualised income yield of 6.3%, providing a total return of 19.4%.
Apart from normal escalations in the South African property portfolio's revenue, the increase in distributions
was further influenced by the investment in GOZ, where a weaker Rand against the AUD was in Growthpoint's
favour and distributions per unit from GOZ grew by 12.3%. For the period ended 31 December 2011, Growthpoint
entered into foreign exchange contracts for the interim distribution at a rate of R7,48:AUD1, compared to
R8,47:AUD1 for the current period.
BASIS OF PREPARATION
The interim consolidated financial statements have not been reviewed or audited by Growthpoint's independent
external auditors.
These condensed 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 Financial Reporting Guides as issued
by the Accounting Practices Board, the Companies Act of 2008, as amended, and the JSE Limited Listings
Requirements.
Messrs LN Sasse, (CA(SA)), EK de Klerk (CA(SA)) and G Volkel (CA(SA)), executive directors of Growthpoint
Properties Limited, were responsible for supervising the preparation of these condensed financial statements.
The company's accounting policies as set out in the audited financial statements for the year ended 30 June 2012
have been consistently applied. The restatement of 31 December 2011 relates to the change in accounting
policy with respect to jointly controlled entities as allowed per IAS 31, Interest in joint ventures that was
applied for the year ended 30 June 2012. 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 were 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.
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.
The effect of the change in policy is summarised below:
2012 2011
Balance Balance as
as reported 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
31 December accounting 31 December 31 December accounting 31 December
2012 policy 2012 2011 policy 2011
Rm Rm Rm Rm Rm Rm
Statement of
financial position
ASSETS
Non-current assets
Fair value of long-term
property-related assets 54 506 (5 078) 49 428 49 774 (4 842) 44 932
Equity-accounted investment
V&A Waterfront 4 912 4 912 4 950 4 950
Other non-current assets 143 (141) 2 144 (142) 2
Current assets
Trade and other receivables 1 017 (36) 981 614 (29) 643
Cash and cash equivalents 500 (30) 470 378 (42) 336
EQUITY AND LIABILITIES
Non-controlling interest 2 285 (7) 2 278 1 872 (5) 1 867
Other non-current liabilities
Deferred taxation liability 996 (8) 988 657 657
Current liabilities
Trade and other payables 1 266 (160) 1 106 977 (64) 913
Taxation payable 17 (5) 12 11 (6) 5
Statement of
comprehensive income
Revenue, excluding
straight-line lease income
adjustment 3 062 (213) 2 849 2 681 (201) 2 480
Property expenses (655) 58 (597) (599) 55 (544)
Other operating expenses
and fair-value
adjustments (394) 12 (382) (286) 12 (274)
Finance costs (939) 1 (938) (833) 1 (832)
Finance income 64 141 205 74 132 206
Taxation (16) 1 (15) (4) 1 (3)
Statement of
cash flows
Net cash outflow from
operating activities (4) (202) (206) (49) (13) (62)
Net cash outflow from
investing activities (1 287) 120 (1 167) (1 718) 59 (1 659)
Net cash inflow from
financing activities 1 375 66 1 441 1 793 1 793
Net movement in cash and cash
equivalents 84 (16) 68 26 46 72
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 31 December 2012 of R8,70:AUD1 (June 2012: R8,35: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 R8,79:AUD1 for the period ended 31 December 2012
(December 2011: R7,84:AUD1). The resulting foreign currency translation difference is recognised in other
comprehensive income. A non-controlling interest was raised for the 34.7% (June 2012: 35.5%) not owned by
Growthpoint.
At 30 June 2012, Growthpoint owned 64.5% of GOZ. Unitholders were entitled to elect to re-invest the final 2012
distribution. Growthpoint re-invested the R179,4 million distribution, resulting in our shareholding increasing
to 65.3% and received an additional R7,9 million in distributions in respect of the increased investment. The
December 2012 distribution was negatively impacted by withholding tax of R8,1 million that was payable for the
first time. The GOZ distribution per unit, after withholding tax was AUD8,63 cents (December 2011: AUD8,70).
NET PROPERTY INCOME (NPI)
The increase in revenue (14.9%) was largely due to contractual rental escalations and higher revenue from GOZ
(46.5%) resulting from property acquisitions made.
Property expenses increased (9.7%) as a result of higher corresponding expenses from GOZ (52.1%).
The ratio of property expenses to revenue for the Group has improved from 21.9% to 21.0%, and for South Africa
from 24.4% to 23.9%.
As a result NPI increased by 16.3%.
FAIR-VALUE ADJUSTMENTS
The revaluation of investment properties (including investment properties reclassified as held for sale) for the
period ended 31 December 2012, resulted in an upward revision of R859,4 million (1.7%) to R50,7 billion. This was
mainly due to an increase in future contractual rentals. Interest-bearing borrowings and derivatives were fair valued
upwards by R305,5 million (1.4%), using the yield curve at 31 December 2012.
The trading market value of the investment in GOZ, based on a stapled security price of AUD2,21 (June 2012:
AUD2,10), translated at the closing rate of R8,70:AUD1 (June 2012: R8,35:AUD1) at the end of the period,
resulted in a positive fair valuation adjustment of R436,7 million.
EQUITY ACCOUNTED RESULTS IN THE V&A WATERFRONT
No fair-value adjustment has been made on the investment property of the V&A Waterfront (June 2012:
R38,4 million).
In the prior year, Growthpoint earned interest on the R4,8 billion loan advanced to the V&A Waterfront at
the prime overdraft rate less 1%. The distribution of the finance income (note 2) was however limited to the
distributable income earned by the V&A Waterfront. During the current period the loan was converted to
debentures and the distribution received from the V&A Waterfront is now in line with the Group policy, whereby
the total distribution represents the interest payable on the debentures.
The R150,0 million distributable income earned is up 6.8% from a R140,4 million in December 2011.
FINANCE COSTS
Finance costs increased by 12.8% to R938,4 million (December 2011: R832,2 million). A large portion of the
increase was due to the higher debt balances in GOZ (AUD606,3 million at 31 December 2011 compared to
AUD805,9 million at 31 December 2012) as a result of acquisitions.
ACQUISITIONS, DEVELOPMENTS AND COMMITMENTS
Development and capital expenditure for South Africa amounting to R412,3 million relates to various projects
undertaken during the period, of which the Lakeside 3 development cost to date of R46,4 million was the largest.
Growthpoint South Africa has approved and contracted a further R722,4 million for developments, of which
the Waterfall Mall retail development (R215,8 million) and the Hatfield Festival office development for GCIS
(R129,7 million) are the most significant. Acquisitions of R393,5 million were also approved, mainly relating
to the office buildings for Menlyn Corner in Pretoria (R213,0 million) and Deloitte & Touche in Durban
(R113,4 million).
GOZ acquired two properties in New South Wales during the period:
- 6 7 John Morphett Place for AUD36,0 million (R322,5 million), with a 7 year lease term at an initial yield
of 8.2%; and
- 51 65 Lenore Lane for AUD22,5 million (R201,8 million), with a 15 year lease term at an initial yield of 8.0%.
Development and capital expenditure of AUD68,7 million (R601,5 million) for GOZ, mostly relates to the
successfully completed developments for the Energex office at Nundah, Brisbane (AUD26,8 million) and the
Fox Sport office at 219 247 Pacific Highway in Sydney (AUD34,8 million).
Commitments relating to the development of a pharmaceutical warehouse in New South Wales have been made
to the value of AUD45,7 million (R397,6 million). Upon completion this will add 29 055 m2 of GLA with an initial
yield of 8.0%.
The V&A Waterfront spent R256,0 million during the period on developments and capital expenditure, mostly
relating to a 18 100m2 head office for Allan Gray with related retail and parking facilities, of which Growthpoint's
effective share is 50%.
The commitment outstanding in respect of the Allan Gray development at 31 December 2012 amounts to
R245,2 million, of which Growthpoint's effective share is 50%.
DISPOSALS
Growthpoint South Africa disposed of 13 buildings in the current period for R381,8 million, realising a profit of
R128,5 million on the cost of the buildings. The largest disposal was the sale of the ABSA building in Midrand
(R114,0 million).
GOZ has entered into a contract to sell a property in New South Wales for AUD71,0 million (R617,7 million).
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 and the fair value of Growthpoint's 50% interest in the V&A Waterfront amounts to R4,9 billion
(June 2012: R4,9 billion).
ARREARS
As at 31 December 2012, arrears for the South African business (excluding V&A Waterfront) amounted to
R48,0 million (December 2011: R49,3 million) with a provision for bad debts of R18,1 million (December 2011:
R15,3 million).
For the period to 31 December 2012, total bad debts expensed amounted to R3,9 million (December 2011:
R3,9 million).
VACANCY LEVELS
At 31 December 2012 Growthpoint's vacancy levels, as a percentage of gross lettable area (GLA) were:
Vacancy
December 2012 June 2012
Retail 2.9% 3.1%
Office 7.1% 5.8%
Industrial 3.1% 3.4%
Total 4.1% 4.0%
V&A Waterfront 0.9% 1.6%
GOZ 0.8% 0.3%
Total 3.4% 3.3%
The ongoing challenging economic conditions resulted in the loss of several major tenants in the office sector
during the period. This is being addressed through various initiatives including the UNdeposit campaign, which
to date has received significant traction.
BORROWINGS
At 31 December 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 the equity-
accounted investment in V&A Waterfront and investment property held for sale, was 36,6% (June 2012: 36,5%).
GOZ's loan to value ratio increased slightly as more debt was utilised to fund acquisitions and developments.
Growthpoint South Africa's loan to value ratio decreased slightly due to the successful raising of equity
(R613,1 million) through the Distribution Reinvestment Plan in September 2012.
The percentage of unsecured debt to total debt for Growthpoint South Africa, has increased from 39.0%
to 41.7%, primarily due to a R500 million 5-year corporate bond issue. The weighted average term of the
Growthpoint South Africa liabilities is 4.2 years, which has increased from 4.1 years at June 2012. Growthpoint
South Africa has unutilised committed facilities in excess of R2,5 billion.
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 Limited (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. In September 2012, 24 522 641 linked units were issued to 59.4%
of linked unitholders who elected to reinvest their 2012 final distribution. The linked units were issued at R25,00
per unit, raising R613,1 million.
REIT LEGISLATION INTRODUCED TO SOUTH AFRICA
In February 2013 the REIT tax laws were promulgated into South African law. This favourable tax dispensation
will be applicable to current listed property investment companies and property unit trusts that elect and qualify
to be listed as REITs on the JSE Limited's securities exchange on or after 1 April 2013.
Growthpoint will endeavour to ensure that the company will be ready to list as a REIT on 1 July 2013, the start
of the company's tax year. An information circular will shortly be forwarded to unitholders relating to the
conversion process.
CHANGE IN DIRECTORS
Mr G (Gerald) Völkel has been appointed as Financial Director with effect from 1 February 2013. Gerald is a
Chartered Accountant with over 25 years' relevant experience, initially with Ernst & Young where he was an audit
partner and as a former Financial Director of the JD Group Ltd.
The Board also appointed Mr SP (Patrick) Mngconkola with effect from 13 November 2012 as a non-executive
Director.
FOUNTAINHEAD
On 21 February 2013, Growthpoint submitted a revised offer to the Board of Fountainhead Property Trust
(Fountainhead), increasing the previous offer of 35 Growthpoint linked units for every 100 Fountainhead
participatory interests, to 37 Growthpoint linked units for every 100 Fountainhead participatory interests.
For further details on the revised offer refer to the Growthpoint SENS announcement released on
21 February 2013.
PROSPECTS
It is expected that growth in distributions for the full year to 30 June 2013 will be between 7.0% and 7.5%
higher than the prior period.
The forecast has not been subject to audit or review by the company's independent external auditor.
The results for the six months ended 31 December 2012 were approved by the Board.
CASH DISTRIBUTION WITH THE ELECTION TO REINVEST THE CASH DISTRIBUTION IN RETURN
FOR GROWTHPOINT LINKED UNITS
Notice is hereby given of interim dividend declaration number 53 of 0,07263 cents and debenture interest
payment number 53 of 72,62737 cents per linked unit totalling 72,70000 cents per linked unit for the six
months ended 31 December 2012.
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 0,06174 cents per linked unit to those linked unitholders who bear the maximum rate of dividend
withholding tax of 0,01089 cents per linked unit. Linked unitholders who are exempt from paying dividend
tax will receive the total distribution of 72,70000 cents per linked unit.
Linked unitholders will be entitled to elect to reinvest 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 26 February 2013: 1 767 603 559 ordinary share 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:
2013
Circular and form of election posted to linked unitholders Thursday, 28 February
Announcement of Linked Unit Alternative issue price and finalisation information Thursday, 7 March
Last day to trade ("LDT") cum distribution Thursday, 14 March
Linked units to trade ex distribution Friday, 15 March
Listing of maximum possible number of Linked Unit Alternative linked units
commences on the JSE Monday, 18 March
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, 22 March
Record date Friday, 22 March
Announcement of results of Cash Distribution and Linked Unit Alternative
released on SENS Monday, 25 March
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 Monday, 25 March
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 Tuesday, 26 March
Announcement of results of Cash Distribution and Linked Unit Alternative
published in the press Tuesday, 26 March
Adjustment to linked units listed on or about Tuesday, 26 March
Notes:
1. Linked unitholders electing the Linked Unit Alternative are alerted to the fact that the new linked units
will be listed on LDT + 2 and that 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 Friday 15 March 2013 and Friday 22 March 2013,
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
26 February 2013
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
SP Mngconkola
R Moonsamy
NBP Nkabinde
CG Steyn
JHN Strydom
FJ Visser
G Völkel*
* Executive
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
27 February 2013
www.growthpoint.co.za
Date: 27/02/2013 09:05:00 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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