Wrap Text
Summary of unaudited results for the six months ended 31 December 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 UNAUDITED
RESULTS FOR THE
SIX MONTHS ENDED
31 DECEMBER 2013
HIGHLIGHTS
* 8.0%
distribution growth to 78,5 cents per share
* R7,8 billion
acquisition of two property portfolios
* R976 million
capital raised through Distribution Re-investment Plan
* REIT
successful conversion
* R2,0 billion
development pipeline
* 8.2%
increase in NAV to 2 103 cents per share
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months 12 months
31 December 31 December 30 June
2013 2012 2013
Note Rm Rm Rm
Revenue, excluding straight-line lease income adjustment 3 021 2 849 5 773
Straight-line lease income adjustment 24 17 9
Revenue 3 045 2 866 5 782
Property expenses (647) (597) (1 237)
Net property income 2 398 2 269 4 545
Other operating expenses (120) (109) (236)
Operating profit 2 278 2 160 4 309
Fair value adjustments 1 1 293 (273) (816)
Equity-accounted investment profit – V&A Waterfront 2 – – 326
Finance costs (874) (938) (1 782)
Non-cash charges (35) (53) (102)
Capital items (12) – (25)
Finance income 3 265 205 566
Profit before debenture interest 2 915 1 101 2 476
Debenture interest 7 – (1 284) (2 725)
Profit/(loss) before taxation 2 915 (183) (249)
Taxation (18) (188) (460)
Normal taxation (including withholding tax on
GOZ distribution) (12) (15) (19)
Capital gains taxation (CGT) – – (2)
Deferred taxation (6) (173) (439)
Profit/(loss) after taxation 2 897 (371) (709)
Profit/(loss) attributable to:
Equity holders 2 697 (472) (1 006)
Non-controlling interest 200 101 297
Other comprehensive income:
Foreign currency translation gain 298 260 498
Total comprehensive income 3 195 (111) (211)
Attributable to:
Equity holders 2 897 (304) (665)
Non-controlling interest 298 193 454
Calculation of distributable earnings
Operating profit 2 278 2 160 4 309
Less: Straight-line lease income adjustment (24) (17) (9)
Finance costs (874) (938) (1 782)
Finance income 265 205 566
Cum distribution portion on shares issued (accounted for in
Statement of changes in equity) 15 – –
Interest received exceeding distributable income –
V&A Waterfront – – (55)
Distributable income from GOZ retained (including NCI) – – (35)
Non-controlling interest's share of distribution from GOZ
(excluding fair value adjustments) (129) (103) (228)
Realised foreign exchange gain/(loss) 1 (7) (19)
Taxation (excluding deferred tax and CGT) (12) (15) (19)
Distributable earnings 1 520 1 285 2 728
Total distribution 1 520 1 285 2 728
Taxable dividend (declared on 3 March 2014) 7 1 520 – –
Debenture interest on linked units – 1 284 2 725
Ordinary dividend on linked units – 1 3
Shares Linked units Linked units
Total shares/linked units in issue at the end of the period 1 935 965 489 1 767 603 559 1 891 558 328
Weighted number of shares/linked units in issue 1 921 573 203 1 767 603 559 1 891 558 328
Cents Cents Cents
Distribution per share/linked unit 78,5 72,7 149,0
Six months ended 31 December 78,5 72,7 72,7
Six months ended 30 June – – 76,3
Basic profit/(loss) per share/linked unit 4 140,35 (26,70) (53,18)
Diluted profit/(loss) per share/linked unit 140,10 (26,70) (53,18)
Headline earnings per share/linked unit 5 75,41 44,55 138,67
Diluted headline earnings per share/linked unit 75,27 44,55 138,67
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
31 December 31 December 30 June
2013 2012 2013
Note Rm Rm Rm
ASSETS
Non-current assets 64 489 56 091 61 120
Fair value of investment property for accounting purposes 55 417 47 752 51 908
Straight-line lease income adjustment 1 822 1 676 1 778
Fair value of long-term property related assets 57 239 49 428 53 686
Equity-accounted investment – V&A Waterfront 5 444 4 912 5 444
Intangible assets 1 308 1 404 1 354
Equipment 8 2 8
Long-term loans granted 473 345 624
Derivative assets 17 – 4
Current assets 2 562 2 689 3 034
Investment property reclassified as held for sale 185 1 238 545
Trade and other receivables 776 981 577
Cash and cash equivalents 1 601 470 1 912
Total assets 67 051 58 780 64 154
EQUITY AND LIABILITIES
Shareholders'/unitholders' interest 40 404 29 650 36 745
Share capital 6 21 313 88 95
Treasury shares (298) – –
Foreign currency translation reserve 1 119 800 962
Non-distributable reserve 6 16 750 (300) (849)
Retained earnings 7 1 520 – –
Debentures 6 – 29 062 36 537
Non-controlling interest 3 436 2 278 2 485
Total equity/unitholders' interest 43 840 31 928 39 230
Non-current liabilities 20 323 21 112 20 160
Non-current financial liabilities 19 061 20 056 18 805
Other long-term employee benefits – 68 101
Deferred tax liability 1 262 988 1 254
Current liabilities 2 888 5 740 4 764
Trade and other payables 1 250 1 106 1 196
Liability for Australian acquisition – 484 –
Current portion of non-current financial liabilities 1 500 2 750 2 000
Taxation payable 10 12 5
Linked unitholders for distribution 7 128 1 388 1 563
Total equity and liabilities 67 051 58 780 64 154
Cents Cents Cents
Net asset value per share/linked unit 2 103 1 677 1 943
Tangible net asset value per share/linked unit which excludes
intangible assets and deferred tax 2 100 1 654 1 937
ABRIDGED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months 12 months
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Cash generated from operations 2 226 2 003 3 903
Finance income 124 99 524
Finance costs (882) (957) (1 795)
Taxation paid (7) (3) (16)
Capital items (12) – (25)
Distribution to unitholders (1 563) (1 348) (2 757)
Net cash outflow from operating activities (114) (206) (166)
Net cash outflow from investing activities (682) (1 167) (1 550)
Net cash inflow from financing activities 480 1 441 3 228
Net (decrease)/increase in cash and cash equivalents (316) 68 1 512
Translation effects on cash and cash equivalents of foreign operation 5 7 5
Cash and cash equivalents at beginning of the period 1 912 395 395
Cash and cash equivalents at end of the period 1 601 470 1 912
STATEMENT OF CHANGES IN EQUITY
Foreign currency Retained
translation Non-distributable earnings Shareholders' Non-controlling
Share capital Treasury shares reserve (FCTR) reserve (NDR) (RE) interest interest (NCI) Total equity
Notes Rm Rm Rm Rm Rm Rm Rm Rm
Audited balance at 30 June 2012 87 – 621 185 – 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 7 – – – – (1) (1) – (1)
Unaudited balance at 31 December 2012 88 – 800 (300) – 588 2 278 2 866
Shares issued 7 – – – – 7 – 7
Total comprehensive income – (loss)/profit after taxation – – – – (534) (534) 196 (338)
Total comprehensive income – other comprehensive income – – 155 – – 155 83 238
Transfer amortisation net of deferred taxation to NDR – – – (35) 35 – – –
Distribution reinvestment plan taken up – GOZ – – 7 – (13) (6) 53 47
Transfer to NDR reserves with NCI – – – (13) 13 – – –
Transfer fair value adjustment on GOZ to NDR – – – (501) 501 – – –
Dividends declared – NCI – – – – – – (125) (125)
Dividends declared 7 – – – – (2) (2) – (2)
Audited balance at 30 June 2013 95 – 962 (849) – 208 2 485 2 693
Conversion of debentures to ordinary share capital and NDR 6 20 257 – – 16 280 – 36 537 – 36 537
Shares issued and cum distribution portion on issue 961 – – – 15 976 – 976
Acquisition of treasury shares – (342) – – – (342) – (342)
Total comprehensive income – profit after taxation – – – – 2 697 2 697 200 2 897
Total comprehensive income – other comprehensive income – – 200 – – 200 98 298
Transfer non-distributable items to NDR – – – 1 192 (1 192) – – –
Share-based payment transactions – 44 – 57 – 101 – 101
Rights issue and acquisition – GOZ – – (43) – 70 27 782 809
Transfer to NDR reserves with NCI – – – 70 (70) – – –
Dividends declared – NCI – – – – – – (129) (129)
Unaudited balance at 31 December 2013 21 313 (298) 1 119 16 750 1 520 40 404 3 436 43 840
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 2013
Revenue, excluding straight-
line lease income adjustment 827 922 527 745 3 021 239 3 260
Property expenses (231) (214) (115) (87) (647) (67) (714)
Segment results 596 708 412 658 2 374 172 2 546
Fair value adjustment:
Investment property 350 509 245 107 1 211 – 1 211
Investment property –
non-controlling interest – – – 61 61 – 61
Total fair value adjustment
on total investment
property 350 509 245 168 1 272 – 1 272
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 (77) (43) (120) (7) (127)
Finance costs (629) (245) (874) (10) (884)
Finance income 263 2 265 2 267
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
31 December 2013
Investment property
Opening balance
1 July 2013 14 915 16 211 8 042 15 063 54 231 5 549 59 780
Acquisitions 1 227 179 712 1 119 – 1 119
Developments and capital
expenditure 145 164 97 266 672 108 780
Disposals (282) (126) (80) – (488) – (488)
Foreign exchange gain – – – 618 618 – 618
Fair value adjustments 350 509 245 168 1 272 – 1 272
Fair value of total property
related assets –
31 December 2013 15 129 16 985 8 483 16 827 57 424 5 657 63 081
Fair value of long-term
property assets 15 013 16 985 8 414 16 827 57 239 5 657 62 896
Investment property
reclassified as held for sale 116 – 69 – 185 – 185
South Total as V&A
Africa Australia reported Waterfront Total
Rm Rm Rm Rm Rm
Further extracts of Statement of Financial Position
Intangible assets 1 308 – 1 308 – 1 308
Trade and other receivables 693 83 776 97 873
Cash and cash equivalents 1 513 88 1 601 111 1 712
Trade and other payables (1 029) (221) (1 250) (98) (1 348)
Other financial liabilities (13 545) (7 016) (20 561) (194) (20 755)
Nominal value – interest-bearing liabilities (12 668) (6 873) (19 541) (194) (19 735)
Fair value adjustments (877) (85) (962) – (962)
Foreign translation differences – (58) (58) – (58)
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 31 December
2012
Revenue, excluding straight-
line lease income adjustment 803 891 497 658 2 849 216 3 065
Property expenses (222) (201) (101) (73) (597) (61) (658)
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
on 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) (6) (115)
Finance costs (691) (247) (938) – (938)
Finance income 203 2 205 2 207
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 adjustments (920) (264) (1 184) – (1 184)
Foreign translation differences – (50) (50) – (50)
NOTES
Unaudited Unaudited Audited
Six months Six months 12 months
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Note 1: Fair value adjustments 1 293 (273) (816)
Gross investment property fair value adjustment 1 272 859 3 765
Less: Straight-line lease income adjustment (24) (17) (9)
Net investment property revaluation 1 248 842 3 756
Borrowings and derivatives – gain/(loss) 85 (311) 401
Long-term loans granted – (loss)/gain (40) 4 8
Debentures* – (808) (4 981)
* After conversion of debentures to equity, the fair value adjustments are
transferred to the NDR (Note 6)
Note 2: Equity-accounted investment profit – V&A Waterfront – – 326
Interest received from investment (157) (150) (367)
Distributable income 157 150 312
Interest received exceeding distributable income* – – (55)
Non-distributable income from investment (fair value adjustments, capital
items and deferred taxation) – – 381
* The distribution of the finance income amounting to R367 million earned on
the investment in the V&A Waterfront, was limited to the distributable income
earned by the V&A Waterfront, which amounted to R312 million during FY13.
Note 3: Finance income 265 205 566
Banks 59 11 33
Investment in joint venture – V&A Waterfront (Note 2) 157 150 367
Antecedent divestiture of distribution – 8 77
Long-term loans 33 20 47
Long-term loans (additional interest on refinanced BEE loan) 16 16 31
Other – – 11
Note 4: Basic profit/(loss) per share/linked unit
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 basic profit includes fair value adjustments, as well as
other non-distributable items.
In prior periods the shares traded as part of a linked unit and practically all the revenue earnings were distributed in the form of
debenture interest plus dividends in the ratio of 1 000 to 1, resulting in the basic loss per share calculation being based on non-
distributable items.
The calculation of distributable earnings and the distribution per share/linked unit is more meaningful.
Note 5: Headline earnings per share/linked unit
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 non-
current financial liabilities, accounting adjustments required to account for lease income on a straight line basis, as well as other
non-cash accounting adjustments that do no affect distributable earnings, to be added back.
Unaudited Unaudited Audited
Six months Six months 12 months
31 December 31 December 30 June
2013 2012 2013
Basic profit/(loss) is reconciled to headline earnings as follows: Rm Rm Rm
Profit/(loss) after taxation – attributable to equity holders 2 697 (472) (1 006)
Add back: Net fair value adjustment – investment property (1 248) (606) (4 077)
Fair value adjustment, net of straight-line lease income (1 187) (834) (3 717)
Fair value adjustment (V&A Waterfront, included in equity-accounted
investment) – – (321)
NCI portion of fair value adjustment (61) (8) (39)
Applicable taxation – 236 –
Headline earning/(loss) attributable to shareholders 1 449 (1 078) (5 083)
Add back: Net fair value adjustment – debentures – 582 4 981
Fair value adjustment – 808 4 981
Applicable taxation – (226) –
Add back: Debenture interest paid – 1 284 2 725
Headline earnings attributable to shareholders/linked unitholders 1 449 788 2 623
Note 6: Conversion to an all-equity capital structure
Share capital NDR Debentures
Opening balance – 1 July 2013 95 (849) 36 537
Real Estate Investment Trust (REIT) conversion 20 257 16 280 (36 537)
Other transactions in Statement of Changes in Equity 961 1 319 –
Closing balance – 31 December 2013 21 313 16 750 –
Note 7: Declaration of dividend after reporting date
In line with IAS 10, Events after the Reporting Period, the declaration of the dividend occurred after the end of the reporting period
resulting in a non-adjusting event that is not recognised in the financial statements. In prior periods the distribution consisted mainly
of debenture interest that accrued on a daily basis, as well as a dividend. The R128 million of Linked unitholders for distribution in the
Statement of Financial Position (HY14) relates to the NCI's portion of distribution.
CONVERSION TO REIT
The implications of the conversion to a REIT on financial reporting are summarised below:
Before conversion After conversion
Status Property Loan Stock Company (PLS) Real Estate Investment Trust (REIT)
Applicable date Up to 30 June 2013, incl. distribution From 1 July 2013, first REIT distribution
paid September 2013 payable March 2014
Capital structure 10 debentures, linked to 1 share Ordinary shares with no par value
Distribution Debenture interest and dividend: Dividend
1 000 to 1
Declaration of distribution Statement of Comprehensive Income: Statement of Changes in Equity: Prior
Debenture Interest period dividend
Statement of Changes in Equity:
Dividend
Statement of Financial Position: Liability Interim dividend declared 3 March 2014:
for interest and dividend Event after reporting period
Deductibility of distribution Debenture interest – deductible (S24J of Dividend – deductible (S25BB of the
for tax by Growthpoint Income Tax Act) Income Tax Act)
Dividend – not deductible
Fair value adjustments on
assets and liabilities Transfer to debenture Transfer to non-distributable reserve
Capital gains tax Applicable Not applicable
COMMENTARY
INTRODUCTION
Growthpoint is the largest South African listed REIT with a quality portfolio of 388 directly owned properties in
South Africa valued at R40,6 billion, a 63.5% interest in Growthpoint Properties Australia (GOZ) which owns
49 properties in Australia valued at R16,8 billion and a 50% interest in the V&A Waterfront with Growthpoint's
share of the properties valued at R5,7 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 R47,0 billion at
31 December 2013 (HY14). Over the last year, on average, more than 93,9 million shares traded per month (FY13:
77,9 million). The monthly average value traded was R2,3 billion (FY13: R2,0 billion). This makes Growthpoint the
most liquid and tradable way to own commercial property in South Africa.
The South African (RSA) portfolio (excluding the V&A Waterfront) represents 64.3% of the total portfolio by
value, and 78.0% 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 share for HY14 of 8.0%. This growth exceeds the guidance given
to the market in the FY13 results of around 7.2%.
Apart from normal escalations in the RSA property portfolio, Growthpoint benefited from the capital raising in May
2013, where 90 million linked units were issued at R28.00 per linked unit. The R2,5 billion raised, resulted in an
interest saving of approximately R90 million.
The increase in distribution was further enhanced by the investment in GOZ, where a weaker Rand against the
Australian Dollar (AUD) was in Growthpoint's favour and distribution per unit from GOZ grew by 13.9% in Rand
terms on a like-for-like basis. For HY14, Growthpoint entered into foreign exchange contracts to hedge the
distributions received at an average rate of R9.30:AUD1, compared to R8.47:AUD1 for HY13.
BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared in accordance with International Financial
Reporting Standard, IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards
Council and the requirements of the Companies Act of South Africa. Except for the new standards adopted as set
out below, all accounting policies applied in the preparation of these interim financial statements are in terms of
International Financial Reporting Standards and are consistent with those applied in the previous annual financial
statements. Growthpoint adopted the following new standards:
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 13 Fair Value Measurement
- Amendments to IAS1 Presentation of Items of Other Comprehensive Income
- Annual Improvements to IFRS 2009 – 2011
There was no material impact on the interim financial statements identified based on management's assessment
of these standards.
Mr G Völkel (CA(SA)), Growthpoint's Financial Director, was responsible for supervising the preparation of these
condensed consolidated interim financial statements. These condensed consolidated interim financial statements
have not been reviewed or audited by Growthpoint's independent external auditors.
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 HY14 of R9.39:AUD1 (FY13: R9.03: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 R9.29:AUD1 (HY13: R8.79:AUD1) for HY14. The resulting foreign currency translation
difference is recognised in other comprehensive income. A non-controlling interest was raised for the 36.5% (FY13:
34.2%) not owned by Growthpoint.
Growthpoint increased its investment in GOZ from R3,4 billion at FY13 to R4,3 billion at HY14. R617 million of the
investment was due to a Rights Issue, where Growthpoint took up 66% of the units and the balance of R215 million
related to the DRIP, where Growthpoint selected not to receive the distribution in August 2013, but to reinvest the
amount into GOZ.
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 were accounted for.
Included in finance income of HY14, is R157 million (Note 2) of distributable income from the V&A Waterfront
(HY13: R150 million). The 4.7% increase in distribution was negatively impacted by Allan Gray relocating to their
new premises, resulting in them vacating 11 760 m2 at the end of August 2013.
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's net asset value amounting to R5,4 billion
(FY13: R5,4 billion). No non-distributable adjustments were made on the equity investment in the V&A Waterfront
for HY14 and HY13 (FY13: R326 million, related mainly to the fair value adjustments on investment property).
NET PROPERTY INCOME (NPI)
The increase in revenue (6.0%) for the HY14, compared to HY13 was largely due to revenue from GOZ (13.2%),
resulting from property acquisitions made, and a favourable increase in the average exchange rate applied.
Disposals amounting to R869 million were made in the RSA portfolio in FY13 and impacted negatively on revenue
growth in the current period.
The ratio of property expenses to revenue for the Group has remained stable compared to FY13 at 21.4%. For RSA
the ratio has improved slightly from 24.8% at FY13 to 24.6%.
FAIR VALUE ADJUSTMENTS
The revaluation of properties resulted in an upward revision of R1,3 billion (2.3%) to R57,4 billion for investment
property (including investment properties reclassified as held for sale). This was due to an increase in future
contractual rental. Interest-bearing borrowings and derivatives were fair valued using the swap curve at HY14,
resulting in a decrease of R229 million (1.1%) in the overall liability. In addition, a loss of R150 million was realised
on the settlement of an interest rate swap by GOZ.
These fair value adjustments, together with the other non-distributable items such as capital items, non-
cash charges, deferred taxation and the net effect of the non-controlling interest's portion of the non-distributable
items were transferred to the non-distributable reserve.
FINANCE COSTS
Finance costs decreased by 6.8% to R874 million (HY13: R938 million), as a result of the capital raising in May 2013,
where R1,1 billion was utilised to settle debt. The weighted average interest rate for RSA borrowings was 9.5%
(FY13: 9.7%). The weighted average maturity of debt increased from 3.5 years at FY13 to 3.6 years. Finance costs
for GOZ decreased marginally from R247 million at HY13 to R245 million at HY14. The additional equity raised
by GOZ, was used for the acquisition of properties and to settle debt, resulting in the decrease. The interest cover
ratio, whereby the income from the V&A Waterfront is included in the operating profit, increased from 2.6 at HY13
to 3.1 at HY14.
FINANCE INCOME
Finance income increased by 29.3% to R265 million (HY13: R205 million). The increase is mainly attributable to the
increased cash balances due to the capital raising done in May 2013.
ACQUISITIONS AND COMMITMENTS
Growthpoint acquired six portions of land and one industrial property in the RSA portfolio, amounting to
R407 million during the period. Development and capital expenditure for RSA amounting to R406 million
(HY13: R412 million) relates to various projects undertaken during the period, of which Walmer Park Shopping
Centre and Brooklyn Mall/Design Square (owned 75%) accounted for R51 million and R26 million respectively.
GOZ acquired five industrial properties in Victoria for a total purchase price of R712 million (AUD77 million).
Three of the properties are existing income producing properties, with the 19&20 Southern Court Road properties
comprising vacant land on which new properties are being developed. Practical completion is expected in
March 2014. GOZ has a capital commitment at HY14 towards these developments amounting to R85 million
(AUD9 million). The development and capital expenditure of R266 million (AUD28 million) relates mainly to an
industrial development, 27-49 Lenore Lane, that was completed during the period.
Growthpoint RSA has commitments outstanding in respect of developments amounting to R2,0 billion (FY13: R303
million) of which the Discovery Head Office (55% share) of R1,4 billion is the largest. Commitments in respect of
property acquisitions amount to R124 million (FY13: R99 million). In addition, the commitments in respect of the
purchase consideration for Abseq Properties (Pty) Ltd (Abseq) and the Tiber Group of Companies (Tiber) amount to
R396 million and R4,6 billion respectively. Growthpoint has a further commitment of R192 million to Zenprop, for
the acquisition of 50% of two properties, where the other 50% is owned by Tiber.
Development and capital expenditure at the V&A Waterfront amounted to R108 million (HY13: R128 million)
during the period. Growthpoint's share of the V&A Waterfront's commitments outstanding at HY14 amounted to
R417 million (HY13: R245 million), which relates to the residential developments, the museum development of the
grain silo and a car park.
DISPOSALS AND HELD FOR SALE ASSETS
Growthpoint South Africa disposed of nine properties in the current period (HY13: 13) for R488 million
(HY13: R382 million) with a collective R94 million (HY13: R129 million) profit on cost achieved.
At 31 December 2013, three RSA properties (HY13:13 properties) valued at R185 million (HY13: R620 million) were
classified as held for sale assets.
SHARE BUY-BACK TRANSACTION
In October 2013, Growthpoint's BEE transaction with Phatsima Properties Ltd was refinanced. The settlement of
the loan amounted to R157 million. As part of the refinancing, the Growthpoint Staff Incentive Scheme Trust and
Growthpoint Management Services (Pty) Ltd (GMS) repurchased 16,5 million of the shares for R355 million. The
shares acquired will be used as a hedge against options granted to employees in terms of current and future share
incentive schemes.
ARREARS
Total RSA arrears at HY14 amounted to R43,7 million (HY13: R48,0 million) with a provision for bad debts of
R14,5 million (HY13: R18,1 million). Total RSA bad debt expenses amounted to R2,3 million (HY13: R7,1 million).
VACANCY LEVELS
At 31 December 2013 the total m2 of Growthpoint's portfolio and vacancy levels expressed as a percentage of GLA
were:
GLA Vacancy
m2 m2 % %
HY14 FY13 HY14 FY13
Retail 908 948 942 501 3.3 2.9
Office 1 145 218 1 151 079 7.5 7.1
Industrial 2 161 595 2 176 887 3.6 3.1
RSA Total 4 215 761 4 270 467 4.6 4.1
V&A Waterfront 190 335 193 873 0.3 0.9
GOZ 995 492 886 975 0.4 0.8
Total 5 401 588 5 351 315 3.7 3.4
The on-going challenging economic conditions resulted in the loss of several major tenants in the office sector
and one tenant in the industrial sector, during the period under review. The vacancies were further impacted by
developments that were not fully let and one tenant in the industrial sector. This is being addressed through various
initiatives including the UNdeposit campaign, which to date has received significant traction.
EQUITY RESTRUCTURED AND EQUITY RAISED
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. The restructuring
resulted in an increase in share capital of R20,3 billion, and an increase in the non-distributable reserve of
R16,3 billion. The non-distributable reserve mainly relates to cumulative fair value adjustments on investment
property that were previously accounted for as a debenture fair value adjustments.
During the period, Growthpoint raised R976 million in September 2013, through a Distribution Re-investment Plan
(DRIP), where 44 407 161 shares were issued at R22.00 per share, inclusive of the cum distribution portion on issue.
The equity raised from the DRIP was utilised to finance Growthpoint's investment activities.
The company has 1,9 billion shares in issue at HY14 and the authorised share capital is 4,0 billion shares.
Subsequent to the reporting period, Growthpoint issued 15,9 million shares and 87,6 million shares for the purchase
consideration of the Abseq and Tiber portfolios respectively. An additional 5,7 million shares will be issued on
transfer of the one remaining property of Tiber. Refer to the commentary on the acquisition of the Abseq and Tiber
portfolios.
BORROWINGS
At HY14, 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 28.5% (FY13: 29.6%). RSA on a stand alone basis
is 24.2% (FY13: 23.9%) and GOZ 40.3% (FY13: 46.6%). The equity raised through the DRIP, and the upward
revaluation of properties contributed to the decrease.
Growthpoint RSA's available unutilised credit facilities amounted to R2,7 billion at HY14.
CHANGE IN DIRECTORS
Mr JHN (Jan) Strydom retired with effect from 12 November 2013 as a non-executive director of Growthpoint. The
Board thanks Mr Strydom for his ten years of distinguished service and contribution to the group.
ACQUISITION OF ABSEQ AND TIBER PORTFOLIOS AFTER THE REPORTING PERIOD
Growthpoint shareholders are referred to the announcements released on SENS in relation to the offers to acquire
the property assets of Abseq, as well as the property portfolio and management business (Manco) of Tiber.
The purchase price allocation for these transactions still needs to be performed. A summary of the acquisitions is
set out in the table below:
Abseq Tiber* Total
Effective date 1 Jan 2014 1 Mar 2014
Number of properties (100%) 13 27 40
Number of properties (50% owned Abseq, 50% owned Tiber) 4 4 4
Number of properties (50% owned) – 5 5
Fair value of properties and Manco (R'million) 1 328 6 497 7 825
Fair value of properties 1 328 6 147 7 475
Value of Manco – 350 350
Net working capital 8 23 31
External debt (940) (1 749) (2 689)
Purchase consideration (R'million) 396 4 771 5 167
Issue of share capital 396 2 613 3 009
Debt/cash utilised – 2 158 2 158
GLA of portfolios (m²) 79 971 316 568 396 539
Office 79 971 277 660 357 631
Retail – 4 258 4 258
Industrial – 34 650 34 650
Vacancy (%) 6.7 7.9 7.7
Office 6.7 4.7 5.1
Industrial – 34.7 34.7
Forward yield (incl. Manco and bulk)(%) 8.7 7.7
*This includes the acquisition of 50% of two properties from Zenprop where the other 50% is owned by Tiber. The purchase
consideration will be settled by the issue of 3,8 million shares at R25.00 per share. The transaction is still subject to Competition
Commission approval.
OTHER SUBSEQUENT EVENTS
Growthpoint entered into agreements with Unipalm Investment Holdings Ltd (Unipalm) and Desert Wind
Properties 84 (Pty) Ltd (Desert Wind). Unipalm and Desert Wind are both beneficiaries of the AMU Trust
(AMU). Quickleap Investments 429 (Pty) Ltd (100% owned by AMU) owns 100 million Growthpoint shares. In
terms of these agreements, Unipalm and Desert Wind agreed to sell 17,0 million Growthpoint shares to GMS for
R365 million.
PROSPECTS
Should current economic conditions prevail, growth in distribution per share for FY14 is expected to be similar to
that achieved at HY14.
This forecast has been based on the company's budgets for FY14, taking into account that the majority of the
company's income is contractual rental income, as well as the fact that the interest expense in respect of 86.5% of
the South African debt has been fixed as at HY14.
This forecast has not been subject to audit or review by the company's independent external auditors.
INTERIM DIVIDEND WITH THE ELECTION TO REINVEST THE CASH DIVIDEND IN RETURN FOR
GROWTHPOINT SHARES
Notice is hereby given of declaration of interim dividend number 55 of 78,50000 cents per share for the six months
ended 31 December 2013.
Shareholders will be entitled to elect to reinvest the net Cash Dividend, in return for Growthpoint shares (Share
Alternative), failing which they will receive the net Cash Dividend in respect of all or part of their shareholdings.
Other information:
- issued shares at 3 March 2014: 2 039 414 551 ordinary shares of no par value.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7.
- There are no Secondary Tax on Company (STC) credits available for utilisation against the dividend tax.
In accordance with Growthpoint's status as REIT with effect from 1 July 2013, shareholders are advised that the
dividend meets the requirements of a ‘qualifying distribution' for the purposes of section 25BB of the Income Tax
Act, No. 58 of 1962 (Income Tax Act). The dividends on the shares will be deemed to be dividends for South African
tax purposes in terms of section 25BB of the Income Tax Act.
Tax implications for South African resident shareholders
Dividends received by or accrued to South African tax residents must be included in the gross income of such
shareholders and will not be exempt from the income tax in terms of the exclusion to the general dividend
exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act because they are dividends distributed by
a REIT. These dividends are however exempt from dividend withholding tax (Dividend Tax) in the hands of South
African resident shareholders provided that the South African resident shareholders have provided to the Central
Securities Depository Participant (CSDP) or broker, as the case may be, in respect of uncertificated shares, or the
company, in respect of certificated shares, a DTD(EX) (Dividend Tax: Declaration and undertaking to be made by
the beneficial owner of a share) form to prove their status as South African residents.
If resident shareholders have not submitted the abovementioned documentation to confirm their status as
South African residents, they are advised to contact their CSDP, or broker, as the case may be, to arrange for the
documents to be submitted prior to the payment of the dividend.
Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not be taxable as income and instead will be
treated as ordinary dividends which are exempt from income tax in terms of the general dividend exemption
section 10(1)(k) of the Income Tax Act. It should be noted that up to 31 December 2013 dividends received by non-
residents from a REIT were not subject to Dividend Tax. With effect from 1 January 2014, any dividend received by a
non-resident from a REIT will be subject to Dividend Tax at 15%, unless the rate is reduced in terms of any applicable
agreement for the avoidance of double taxation (DTA) between South Africa and the country of residence of the
non-resident shareholder. Assuming Dividend Tax will be withheld at a rate of 15%, the net amount due to non-
resident shareholders is 66,72500 cents per share. A reduced dividend withholding rate in terms of the applicable
DTA may only be relied on if the non-resident shareholder has provided the following forms to their CSDP or broker,
as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:
- A declaration that the dividend is subject to a reduced rate as a result of the application of the DTA; and
- A written undertaking to inform the CSDP, or broker or the company, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner, both
in the form prescribed by the Commissioner of the South African Revenue Services.
If applicable, non-resident shareholders are advised to contact the CSDP, broker or the company, as the case
may be, to arrange for the abovementioned documents to be submitted prior to payment of the dividend if such
documents have not already been submitted.
Summary of the salient dates relating to the Cash Dividend and Share Alternative are as follows:
2014
Circular and form of election posted to shareholders Thursday, 6 March
Announcement of Share Alternative issue price and finalisation information Thursday, 13 March
Last day to trade ("LDT") cum dividend Thursday, 20 March
Shares to trade ex dividend Monday, 24 March
Listing of maximum possible number of Share Alternative shares commences on
the JSE Tuesday, 25 March
Last day to elect to receive the Share Alternative (no late forms of election will be
accepted after 12:00 South African time) Friday, 28 March
Record date Friday, 28 March
Announcement of results of Cash Dividend and Share Alternative released on SENS Monday, 31 March
Cash dividends posted to certificated shareholders and accounts credited by CSDP or
broker to dematerialised shareholders electing the Cash Alternative on or about Monday, 31 March
Share certificates posted to certificated shareholders and accounts credited by CSDP
or broker to dematerialised shareholders electing the Share Alternative on or about Tuesday, 1 April
Announcement of results of Cash Dividend and Share Alternative published in
the press Tuesday, 1 April
Adjustment to shares listed, on or about Tuesday, 1 April
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, 24 March 2014 and close of trade on Friday,
28 March 2014.
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 Dividend 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
3 March 2014
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,
FJ Visser, G Völkel*
* Executive
COMPANY SECRETARY
RA Krabbenhöft
TRANSFER SECRETARY
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Registered office
The Place, 1 Sandton Drive, Sandton, 2196
PO Box 78949, Sandton, 2146
SPONSOR
Investec Bank Limited
(Registration number 1969/004763/06)
100 Grayston Drive, Sandown, Sandton, 2196
PO Box 785700, Sandton, 2146
4 March 2014
Date: 04/03/2014 09:30:00 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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