Wrap Text
Audited Results for Year Ended 30 June 2013
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
A Real Estate Investment Trust, listed on the JSE
Share code: GRT ISIN: ZAE000179420
SUMMARY OF AUDITED
RESULTS FOR THE YEAR ENDED
30 JUNE 2013
HIGHLIGHTS
* 7.2% distribution growth to 149,0 cents per linked unit
* 21.2% return to investors for the year
* 35.2% return on R3,4 billion Australian investment
* R1,5 billion capital raised through Distribution Re-Investment Plan
* R2,5 billion capital raised through new equity issue
* REIT successful conversion post year-end
STATEMENT OF COMPREHENSIVE INCOME
30 June 30 June
2013 2012
Notes Rm Rm
Revenue, excluding straight-line lease income adjustment 5 773 5 107
Straight-line lease income adjustment 9 183
Revenue 5 782 5 290
Property expenses (1 237) (1 102)
Net property income 4 545 4 188
Other operating expenses (236) (176)
Operating profit 4 309 4 012
Fair value adjustments 1 (816) (756)
Equity-accounted investment profit/(loss) - V&A Waterfront (net of tax) 2 326 (38)
Finance costs (1 782) (1 677)
Non-cash charges 3 (102) (108)
Capital items (25) (17)
Finance income 4 566 501
Profit before debenture interest 2 476 1 917
Debenture interest (2 725) (2 392)
Loss before taxation (249) (475)
Taxation (460) (298)
Normal taxation (including withholding tax on GOZ distribution) (19) (1)
Capital gains taxation (CGT) (2) (2)
Deferred taxation charge (439) (295)
Loss after taxation (709) (773)
Loss attributable to:
Equity holders (1 006) (921)
Non-controlling interest 297 148
Other comprehensive income:
Foreign currency translation gain 498 646
Total comprehensive income (211) (127)
Attributable to:
Equity holders (665) (492)
Non-controlling interest 454 365
Calculation of distributable earnings
Operating profit 4 309 4 012
Less: Straight-line lease income adjustment (9) (183)
Finance costs (1 782) (1 677)
Finance income 566 501
Interest received exceeding distributable income - V&A Waterfront (55) (76)
Distributable income from GOZ retained (including NCI) (35) -
Non-controlling interest's share of distribution from GOZ (excluding
fair value adjustments) (228) (171)
Realised foreign exchange loss (19) (10)
Taxation (excluding deferred tax and CGT) (19) (1)
Distributable earnings 2 728 2 395
Total distribution 2 728 2 395
Debenture interest 2 725 2 392
Ordinary dividend 3 3
Linked units Linked units
Linked units in issue at the end of the year 1 891 558 328 1 743 080 918
Weighted number of linked units in issue 1 891 558 328 1 743 080 918
cents cents
Distribution per linked unit 149,0 139,0
Six months ended 31 December 72,7 67,8
Six months ended 30 June 76,3 71,2
Basic and diluted loss per share 5 (53,18) (52,84)
Headline earnings per linked unit 6 138,67 72,69
STATEMENT OF FINANCIAL POSITION
30 June 30 June
2013 2012
Notes Rm Rm
ASSETS
Non-current assets 61 120 54 288
Fair value of investment property for accounting purposes 51 908 45 056
Straight-line lease income adjustment 1 778 1 693
Payments made to acquire investment property - 842
Fair value of long-term property related assets 53 686 47 591
Equity-accounted investment - V&A Waterfront 7 5 444 4 912
Intangible assets 1 354 1 447
Equipment 8 2
Long-term loans granted 624 336
Derivative assets 4 -
Current assets 3 034 1 498
Investment property reclassified as held for sale 545 515
Trade and other receivables 577 588
Cash and cash equivalents 1 912 395
Total assets 64 154 55 786
EQUITY AND LIABILITIES 1 957
Shareholders' interest 208 893
Ordinary share capital 95 87
Foreign currency translation reserve 962 621
Non-distributable reserve (849) 185
Non-current liabilities - debentures 8 36 537 27 650
Linked unitholders' interest 36 745 28 543
Non-controlling interest 2 485 2 181
Total unitholders' interest 39 230 30 724
Other non-current liabilities 20 160 20 744
Other non-current financial liabilities 18 805 19 894
Other long-term employee benefits 101 35
Deferred tax liability 1 254 815
Current liabilities 4 764 4 318
Trade and other payables 1 196 1 478
Current portion of other non-current liabilities 2 000 1 495
Taxation payable 5 -
Linked unitholders for interest and dividends 1 563 1 345
Total equity and liabilities 64 154 55 786
Cents cents
Net asset value per linked unit 1 943 1 638
Tangible net asset value per linked unit which excludes intangible assets and
deferred tax 1 937 1 601
STATEMENT OF CASH FLOWS
30 June 30 June
2013 2012
Rm Rm
Cash generated from operations 3 903 4 130
Finance income 524 451
Finance costs (1 795) (1 663)
Taxation paid (16) (6)
Capital items (25) (17)
Distribution to unitholders (2 757) (2 366)
Net cash (outflow)/inflow from operating activities (166) 529
Net cash outflow from investing activities (1 550) (3 598)
Net cash inflow from financing activities 3 228 3 196
Net increase in cash and cash equivalents 1 512 127
Translation effects on cash and cash equivalents of foreign operation 5 17
Cash and cash equivalents at beginning of the year 395 251
Cash and cash equivalents at end of the year 1 912 395
STATEMENT OF CHANGES IN EQUITY
Foreign currency
Ordinary share Non-distributable translation reserve Total shareholders' Non-controlling
capital reserve (NDR) (FCTR) Retained earnings interest interest (NCI) Total equity
Rm Rm Rm Rm Rm Rm Rm
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
Shares issued 8 - - - 8 - 8
Total comprehensive income - (loss)/profit after taxation - - - (1 006) (1 006) 297 (709)
Total comprehensive income - other comprehensive income - - 323 - 323 175 498
Transfer amortisation net of deferred taxation to NDR - (71) - 71 - - -
Distribution reinvestment plan taken up - GOZ - - 18 (25) (7) 60 53
Transfer to NDR reserves with NCI - (25) - 25 - - -
Transfer fair value adjustment on GOZ to NDR - (938) - 938 - - -
Dividends declared - NCI - - - - - (228) (228)
Dividends declared - - - (3) (3) - (3)
Balance at 30 June 2013 95 (849) 962 - 208 2 485 2 693
NOTES
30 June 30 June
2013 2012
Rm Rm
Note 1:
Fair value adjustments (816) (756)
Gross investment property fair value adjustment 3 765 1 953
Less: Straight-line lease income adjustment (9) (183)
Net investment property revaluation 3 756 1 770
Borrowings and derivatives - gain/(loss) 404 (892)
Foreign exchange - loss (3) (6)
Long-term loans granted - profit/(loss) 8 (103)
Debentures (4 981) (1 525)
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 debenture fair value adjustment consists of:
Fair value adjustments on other assets and liabilities, excluding fair value adjustment on
debentures (4 165) (769)
Straight-line lease income adjustment (9) (183)
Capital gains taxation 2 2
Deferred taxation (excluding deferred taxation credit accounted for in NDR) 468 323
Fair value adjustment on GOZ (938) (853)
Equity-accounted investment - V&A Waterfront (381) (38)
Foreign exchange losses and retained income (43) (10)
Non-controlling interest's portion of fair value adjustments 57 (23)
Other long-term employee benefits 3 9
Capital items 25 17
Debenture fair value adjustment (4 981) (1 525)
Note 2:
Equity-accounted investment profit/(loss) - V&A Waterfront (net of tax) 326 (38)
Interest received from investment (367) (369)
Distributable income 312 293
Interest received exceeding distributable income* (55) (76)
Non-distributable income from investment (fair value adjustments, capital items and
deferred taxation) 381 38
* The distribution of the finance income amounting to R367 million earned on the investment
in the V&A Waterfront, is limited to the distributable income earned by the V&A
Waterfront, which amounted to R312 million during the 2013 financial year.
Note 3:
Non-cash charges (102) (108)
Amortisation of intangible asset (99) (99)
Other long-term employee benefits (3) (9)
30 June 30 June
2013 2012
Rm Rm
Note 4:
Finance income 566 501
Banks 33 25
Investment in joint venture - V&A Waterfront 367 369
Antecedent divestiture of distribution 77 23
Long-term loans 47 43
Long-term loans (additional interest on refinanced BEE loan) 31 34
Other 11 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 2/2013, 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: Rm Rm
Loss after taxation - attributable to equity holders (1 006) (921)
Add back: Net fair value adjustment - investment property (4 077) (1 302)
Fair value adjustment, net of straight-line lease income (3 717) (1 666)
Fair value adjustment (V&A Waterfront, included in equity-accounted investment) (321) (38)
NCI portion of fair value adjustment (39) (104)
Applicable taxation - 507
Headline loss attributable to shareholders (5 083) (2 223)
Add back: Net fair value adjustment - debentures 4 981 1 098
Fair value adjustment 4 981 1 525
Applicable taxation - (427)
Add back: Debenture interest paid 2 725 2 392
Headline earnings attributable to linked unitholders 2 623 1 267
Note 7:
Equity-accounted investment - V&A Waterfront 5 444 4 912
Investment in joint venture - opening balance 118 156
Debentures in/loan to joint venture 5 000 4 794
Share of equity-accounted results 326 (38)
Note 8:
Non-current liabilities - debentures
Fair value at the beginning of the year 27 650 23 463
Issued during the year 3 906 2 662
Fair value adjustment (Note 1) 4 981 1 525
Fair value at the end of the year 36 537 27 650
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 2013
Revenue, excluding
straight-line lease income
adjustment 1 576 1 776 1 002 1 419 5 773 442 6 215
Property expenses (439) (423) (216) (159) (1 237) (118) (1 355)
Segment results 1 137 1 353 786 1 260 4 536 324 4 860
Fair value adjustment:
Investment property 1 740 1 297 616 73 3 726 372 4 098
Investment property -
non-controlling interest - - - 39 39 - 39
Total fair value
adjustment on total
investment property 1 740 1 297 616 112 3 765 372 4 137
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 (175) (61) (236) (29) (265)
Finance costs (1 272) (510) (1 782) (4) (1 786)
Finance income 561 5 566 22 588
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 2013
Investment property
Opening balance
1 July 2012 13 145 14 592 7 251 13 118 48 106 4 950 53 056
Acquisitions 13 435 44 748 1 240 - 1 240
Developments and capital
expenditure 197 432 275 681 1 585 227 1 812
Disposals (180) (545) (144) (688) (1 557) - (1 557)
Foreign exchange gain - - - 1 092 1 092 - 1 092
Fair value adjustments 1 740 1 297 616 112 3 765 372 4 137
Fair value of total
property related assets -
30 June 2013 14 915 16 211 8 042 15 063 54 231 5 549 59 780
Fair value of long-term
property assets 14 565 16 086 7 972 15 063 53 686 5 549 59 235
Investment property
reclassified as held
for sale 350 125 70 - 545 - 545
South Total as V&A
Africa Australia reported Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of statement of financial position
Intangible assets 1 354 - 1 354 - 1 354
Trade and other receivables 540 37 577 66 643
Cash and cash equivalents 1 827 85 1 912 90 2 002
Trade and other payables (1 021) (175) (1 196) (200) (1 396)
Other financial liabilities (13 388) (7 417) (20 805) (194) (20 999)
Nominal value - interest-bearing liabilities (12 468) (7 103) (19 571) (194) (19 765)
Fair value adjustment (920) (264) (1 184) - (1 184)
Foreign translation differences - (50) (50) - (50)
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 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 9 501 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) (204) (1 682)
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)
COMMENTARY
INTRODUCTION
Growthpoint is the largest South African listed property company with a quality portfolio of 393 directly owned
properties in South Africa valued at R39,1 billion, a 65.8% interest in Growthpoint Properties Australia (GOZ)
which owns 44 properties in Australia valued at R15,1 billion and a 50% interest in the V&A Waterfront with
Growthpoint's share of the properties valued at R5,6 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 the
property portfolios of South Africa and GOZ, including interest received, and the 50% portion of distributable
income received from the V&A Waterfront, less operating costs, interest on debt and normal taxation, is distributed
to shareholders bi-annually. 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 R49,9 billion
at 30 June 2013. Over the last year, on average, more than 77,9 million linked units traded per month (2012:
62,8 million). The monthly average value traded was R2,0 billion (2012: R1,2 billion). This makes Growthpoint the
most liquid and tradable way to own commercial property in South Africa.
The South African (RSA) portfolio represents 65.5% of the total portfolio by value, and 79.4% by gross lettable
area (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 strong economic nodes within the
major metropolitan areas.
GROWTH IN DISTRIBUTIONS
Growthpoint delivered growth in distributions per linked unit for the year ended 30 June 2013 of 7.2%. This growth
exceeds the guidance released to the market in the prior year-end financial results of around 6.1%.The growth in
the unit price from R23,00 at 30 June 2012 to R26,39 at 30 June 2013 gave investors a capital growth of 14.7% for
the year. The distribution of 149,0 cents per share accounts for an income yield of 6.5%, providing a total return
of 21.2% for the year.
Apart from normal escalations in the RSA property portfolio's revenue, the increase in distributions was further
enhanced by the investment in GOZ, where a weaker Rand against the Australian Dollar (AUD) was in Growthpoint's
favour and distributions per unit from GOZ grew by 10.2% in Rand terms on a like-for-like basis. For the year
ended 30 June 2013, Growthpoint entered into foreign exchange contracts to hedge the distributions received at
an average rate of R8,65:AUD1, compared to R7,82:AUD1 for the year ended 30 June 2012.
EQUITY RAISED
The following equity was raised during the year:
R613 million through a Distribution Re-investment Plan (DRIP), 24 522 641 linked units issued at R25,00 per
linked unit in September 2012;
R857 million through a DRIP, 33 954 769 linked units issued at R25,25 per linked unit, in March 2013; and
R2,5 billion through the issue of 90 000 000 linked units at R28,00 per linked unit, in May 2013.
The equity raised from the DRIPs was utilised to finance Growthpoint's investing activities during the financial
year. The R2,5 billion equity raise will be utilised to fund the capital expenditure and acquisition programmes for
the 2014 financial year. The cash proceeds were partly utilised to reduce liabilities which incorporate drawdown
facilities, with the balance of R1,9 billion reflected as cash on the statement of financial position at 30 June 2013.
SUCCESSFUL CONVERSION TO REAL ESTATE INVESTMENT TRUST (REIT)
On 1 July 2013, Growthpoint converted from a Property Loan Stock company (PLS) to a REIT, following approval
granted by the JSE Limited. As part of the REIT conversion, Growthpoint converted the linked unit capital structure
to an all-equity capital structure in order to align the capital structure with the capital structures of international
REITs.
Investment property comprises land and buildings held to generate rental income over the long term. Capital profit
on the sale of investment property will no longer be subject to capital gains taxation under the new REIT legislation.
Growthpoint's CEO, Norbert Sasse, has been appointed as the chairman of the newly established SA REIT
Association. The association is a representative umbrella body comprising voluntary members from all the listed
SA REIT companies and trusts and is modelled on National Association of Real Estate Investment Trusts (NAREIT)
in the United States and European Public Real Estate Association (EPRA) in Europe. The SA REIT Association
consolidates and replaces the old Property Loan Stock Association and the Association of Property Unit Trusts.
BASIS OF PREPARATION
The consolidated financial statements are considered preliminary based on the JSE Listings Requirements and are
summarised from a complete set of the Group 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.
This report is extracted from audited information, but is not itself audited. The auditor's report does not necessarily
report on all of the information contained in this announcement. Shareholders are therefore advised that in order
to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's
report together with the accompanying financial information from the company's registered office.
The directors of Growthpoint take full responsibility for the preparation of this report and that the financial
information has been correctly extracted from the underlying annual financial statements.
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 SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee, the Companies Act of 2008, as amended, and the JSE Listings Requirements.
Mr G Völkel (CA(SA)), Growthpoint's Financial Director, was responsible for supervising the preparation of the
annual financial statements and these summarised 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 in the current year compared to the prior year.
A copy of the annual financial statements that have been summarised in this report can be obtained from the
company's registered office.
GROWTHPOINT PROPERTIES AUSTRALIA (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 2013 of R9,03:AUD1 (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 R9,07:AUD1 (2012: R8,04:AUD1) for the year ended 30 June 2013. The resulting foreign
currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised
for the 34.2% (2012: 35.5%) not owned by Growthpoint.
V&A WATERFRONT
The investment in the V&A Waterfront has been accounted for in terms of IAS 31, Interests in Joint Ventures.
The equity accounting method was used, whereby the Group's share of the profit or loss and other comprehensive
income of the V&A Waterfront was accounted for. The equity-accounted results in profit or loss relate to non-
distributable items of the V&A Waterfront, of which the upward fair valuation of investment property, amounting
to R372 million (2012: R38 million), was the most significant.
Growthpoint earned interest on the loan of R4,8 billion advanced to the V&A Waterfront at the prime overdraft
rate less 1% up to 30 September 2012, subsequent to which the loan was converted to a linked unit structure.
A further R206 million was advanced in the current year for capital expenditure. The distribution of the finance
income earned of R367 million (Note 2) is however limited to the distributable income delivered by the V&A
Waterfront, which amounted to R312 million, an increase of 6.5% on the prior year and representing 11.4% of total
distributable income for the current year.
The investment in the V&A Waterfront has been accounted for in the statement of financial position as the fair
value of Growthpoint's 50% interest in the V&A Waterfront amounting to R5 444 million (2012: R4 912 million).
NET PROPERTY INCOME (NPI)
The increase in revenue (13.0%) from the prior year was largely due to the effects of contractual rental escalations
and higher revenue from GOZ (40.4%), resulting from property acquisitions made, and a favourable increase in the
average exchange rate applied. NPI from GOZ contributed 27.8% (2012: 22.6%) to total NPI.
The ratio of property expenses to revenue for the Group has improved slightly from 21.6% to 21.4% in the
current year as a result of the increase in the NPI contribution from GOZ, with a cost to income ratio of 11.2%
(2012: 10.4%). For the South African operations the ratio has increased from 24.3% to 24.8% due to cost pressures,
particularly in the office sector.
FAIR VALUE ADJUSTMENTS
The revaluation of properties resulted in an upward revision of R3,8 billion (7.5%) to R54,2 billion for investment
property (including investment properties reclassified as held for sale). This was due to a decrease in the discount
rate applied to the valuation as a result of a decrease in the risk free rate, based on the 10-year long bond rate,
a revision of market cap rates, as well as increased future contractual rentals. Interest-bearing borrowings and
derivatives were fair valued using the yield curve at 30 June 2013, resulting in a decrease in the overall liability of
R404 million (1.9%).
The trading market value of the investment in GOZ, based on a stapled security price of AUD2,40 (2012: AUD2,10)
at the closing exchange rate of R9,03:AUD1 (2012: R8,35:AUD1) at the financial year-end, resulted in a positive fair
value adjustment of R938 million.
FINANCE COSTS
Finance costs increased by 6.3% to R1 782 million (2012: R1 677 million), as a result of the funding of GOZ's
acquisitions. Finance costs for the South African operation of R1 272 million decreased slightly compared to
the prior year. Most of the capital expenditure was funded by the cash raised through the DRIPs, as well as the
capital raising done in May 2013. The weighted average interest rate for RSA borrowings is 9.7% (2012: 9.5%).
The weighted average maturity of the fixed interest rate profile was maintained at 4.9 years (2012: 4.9 years).
FINANCE INCOME
The increase is mainly attributable to the accrued distribution interest included in the market prices at which the
capital raisings took place. The accrued interest portion is included in finance income as antecedent divestiture of
distributions, amounting to R77 million (2012: R23 million).
ACQUISITIONS AND COMMITMENTS
Growthpoint acquired three office and two industrial properties amounting to R492 million (2012: R575 million)
during the year. Development and capital expenditure for South Africa amounting to R904 million
(2012: R883 million) relates to various projects undertaken during the year, of which 44 On Grand Central (office
development) and Meadowbrook Estate (industrial development) with costs to date of R75 million and R86 million
respectively, were the largest.
GOZ acquired three adjoining industrial properties in Erskine Park, NSW for a total purchase price of R748 million
(AUD83 million). Two of the properties are existing income producing properties; the third comprises vacant land
on which a new pharmaceutical warehouse is being developed. Practical completion is expected in August 2013.
GOZ has a capital commitment at year end towards this development amounting to R229 million (AUD25 million).
The development expenditure of R681 million (AUD75 million) mainly relates to two office developments,
219-247 Pacific Highway and 1231-1241 Sandgate Road that were completed during the year.
In addition, Growthpoint South Africa has commitments outstanding in respect of developments amounting to
R303 million (2012: R910 million) and acquisitions amounting to R99 million (2012: R401 million).
The development at the V&A Waterfront for Allan Gray commenced during the 2012 financial year with an
amount of R253 million spent to date. Growthpoint's share of the V&A Waterfront's commitments outstanding at
30 June 2013 amounted to R226 million, which mainly relates to residential developments.
DISPOSALS AND HELD FOR SALE ASSETS
Growthpoint South Africa disposed of 23 properties in the current year (2012: 23) for R869 million
(2012: R644 million) with a collective R292 million (2012: R184 million) profit on cost achieved.
GOZ disposed of one property during the year for R688 million (AUD74 million).
At 30 June 2013, nine properties (2012:14 properties) valued at R545 million (2012: R515 million) were classified as
held for sale assets.
LONG-TERM LOANS GRANTED
An amount of R273 million was advanced to 323 Festival Street Proprietary Limited (Festival) during the year for the
construction of the Tshedimosetso House in Hatfield. Festival entered into a five year lease with the Department of
Government Communications and Information Systems.
ARREARS
Total RSA arrears at 30 June 2013 amounted to R29,9 million (2012: R32,6 million) with a provision for bad debts
of R14,6 million (2012: R14,6 million). Total RSA bad debt expenses amounted to R10,9 million (2012: R7,8 million).
VACANCY LEVELS
At 30 June 2013 the total m2 of Growthpoint's portfolio and vacancy levels expressed as a percentage of GLA were:
GLA VACANCY
m2 m2 % %
2013 2012 2013 2012
Retail 942 501 975 373 3.7 3.1
Office 1 151 079 1 156 944 7.8 5.8
Industrial 2 176 887 2 219 781 3.0 3.4
RSA Total 4 270 467 4 352 098 4.4 4.0
V&A Waterfront 193 873 192 086 0.6 1.6
GOZ 886 975 900 676 0.4 0.3
Total 5 351 315 5 444 860 3.6 3.3
The ongoing challenging economic conditions resulted in the loss of several major tenants in the office sector
during the year, the vacancy was further impacted by developments that were not fully let. This is being addressed
through various initiatives including the UNdeposit campaign, which to date has received significant traction.
BORROWINGS
At 30 June 2013, 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 29.6% (2012: 36.5%). As a result of the cash
proceeds from the equity raised, Growthpoint's liabilities have been reduced and cash balances are elevated,
resulting in the decrease in LTV. The upward revaluation of properties further contributed to the decrease.
Growthpoint RSA's available unutilised credit facilities amounted to R3,3 billion at 30 June 2013.
SHARE AND DEBENTURE CAPITAL
At 30 June 2013, the authorised share capital was R100 million comprising two billion ordinary shares of five
cents each. Each ordinary share was linked to ten variable rate debentures of 250 cents each. Subsequent to year-
end the ordinary shares of five cents each were converted to shares of no par value, and the number of ordinary
shares that the company is authorised to issue increased from two to four billion.
Up to 1 August 2013, the ordinary shares and debentures traded as linked units on the JSE. In terms of the debenture
trust deed, the interest payable on the debenture component of the linked unit was always 1 000 times greater
than the dividend payable per ordinary share. As the linked unit structure was still in place at the time of the year-
end, the final distribution for the year ended 30 June 2013, will remain part dividend and part interest earned on
the linked unit. With effect from the start of Growthpoint's 2014 financial year on 1 July 2013, Growthpoint will
be subject to tax in terms of section 25BB of the Income Tax Act, whereby the distribution to shareholders will be
a deductible qualifying distribution for the company. The full income distribution received by shareholders will
be in the form of a taxable dividend. For South African shareholders this dividend will not be subject to dividend
withholding tax.
The company adopted a new Memorandum of Incorporation (MOI) to replace its Memorandum and Articles of
Association by special resolution on 28 June 2013, which was registered on 23 July 2013. The new MOI entrenches
the relevant REIT provisions.
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 at Ernst & Young where he was an audit
partner and as a former Financial Director of the JD Group Limited.
The Board also appointed Mr SP (Patrick) Mngconkola as a non-executive Director with effect from
13 November 2012.
WITHDRAWAL OF THE FOUNTAINHEAD OFFER
Growthpoint shareholders are referred to the various announcements released on SENS in relation to the offer
to acquire the property assets of Fountainhead Properties Limited. The Directors confirm that the prospective
transaction is no longer being pursued and the company will no longer pursue any action involving the Regulators.
UPDATE ON BEE SHARE BUY-BACK TRANSACTIONS
As noted in SENS announcements released on 28 June 2013 and 1 July 2013, Growthpoint entered into agreements
with Phatsima Properties Proprietary Limited (Phatsima), Unipalm Investment Holdings Limited (Unipalm), as well
as Desert Wind Properties 84 Proprietary Limited (Desert Wind). Unipalm and Desert Wind are both beneficiaries
of the AMU Trust (AMU). AMU and Phatsima own 100 million and 22 million Growthpoint shares respectively.
In terms of these agreements, Unipalm and Desert Wind agreed to sell their entire indirect beneficial holding
of Growthpoint shares to Growthpoint Management Services, Growthpoint Staff Incentive Trust and Miganu
Investment Holdings Proprietary Limited (Miganu). Subsequent to signature of these agreements, the parties
agreed to include the Amabubesi Consortium as a party who wished to purchase a portion of the shares being sold
by Unipalm and Desert Wind.
Further details and an update on the above transactions will be contained in a seperate SENS announcement and a
Circular to shareholders that will be posted on or after Tuesday, 3 September 2013.
SUBSEQUENT EVENTS
As mentioned in the highlights, Growthpoint converted to a REIT subsequent to year-end. The linked unit capital
structure was also converted to an all-equity structure as part of the conversion.
PROSPECTS
Should current economic conditions prevail, growth in distribution per share for the year to 30 June 2014 is
expected to be similar to that achieved this year.
This forecast has been based on the company's budgets for the year to 30 June 2014, taking into account that the
majority of the company's income is contractual rental income, as well as the fact that 87.8% of the South African
debt has been fixed for the next year.
This forecast has not been subject to audit or review by the company's independent external auditors.
CASH DISTRIBUTION WITH THE ELECTION TO REINVEST THE CASH DISTRIBUTION IN RETURN FOR
GROWHTPOINT SHARES
Notice is hereby given of declaration of final dividend number 54 of 0,07622 cents and debenture interest payment
number 54 of 76,22378 cents per share, totaling 76,30000 cents per share (Cash Distribution) for the six months
ended 30 June 2013 bringing the total income distribution for the year ended 30 June 2013 to 149,00000 cents
per share.
The dividend will be subject to a maximum local dividend withholding 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 0,06479 cents per share to those shareholders who bear the maximum rate of dividend withholding tax of 15%,
with withholding tax equal to 0,01143 cents per share. Shareholders who are exempt from paying dividend tax will
receive the total distribution of 76,30000 cents per share.
Shareholders will be entitled to elect to reinvest the net Cash Distribution after the applicable dividend withholding
tax, in return for Growthpoint shares (Share Alternative), failing which they will receive the net Cash Distribution in
respect of all or part of their shareholdings.
Shareholders who have dematerialised their shares 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 shareholder and their CSDP or broker.
Other information:
- issued shares at 27 August 2013: 1 891 558 328 ordinary shares of no par value.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7.
Summary of the salient dates relating to the Cash Distribution and Share Alternative are as follows:
2013
Circular and form of election posted to shareholders Friday, 30 August
Announcement of Share Alternative issue price and finalisation information Friday, 6 September
Last day to trade ("LDT") cum distribution Friday, 13 September
Shares to trade ex distribution Monday, 16 September
Listing of maximum possible number of Share Alternative shares commences
on the JSE Tuesday, 17 September
Last day to elect to receive the Share Alternative (no late forms of election will
be accepted after 12:00 South African time) Friday, 20 September
Record date Friday, 20 September
Announcement of results of Cash Distribution and Share Alternative released
on SENS Monday, 23 September
Cash distributions posted to certificated shareholders and accounts credited by
CSDP or broker to dematerialised shareholders electing the Cash Alternative on
or about Monday, 23 September
Share certificates posted to certificated shareholders and accounts credited by
CSDP or broker to dematerialised shareholders electing the Share Alternative
on or about Wednesday, 25 September
Announcement of results of Cash Distribution and Share Alternative published
in the press Wednesday, 25 September
Adjustment to shares listed, on or about Wednesday, 25 September
Notes:
1. Shareholders electing the Share Alternative are alerted to the fact that the new shares will be listed on LDT + 2
and that these new shares can only be traded on LDT + 2, due to the fact that settlement of the shares will be
two days after record date, which differs from the conventional one day after record date settlement process.
2. Shares may not be dematerialised or rematerialised between Monday, 16 September 2013 and close of business
on Friday, 20 September 2013.
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 Share Alternative may have tax implications for resident and non-resident shareholders.
Shareholders 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
27 August 2013
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
A Real Estate Investment Trust, listed on the JSE
Share code: GRT ISIN: ZAE000179420
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
COMPANY SECRETARY
RA Krabbenhöft
REGISTERED OFFICE
The Place, 1 Sandton Drive, Sandton, 2196
PO Box 78949, Sandton, 2146
TRANSFER SECRETARY
Computershare Investor Services Proprietary 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
Date: 28/08/2013 10:00:00 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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