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Summary of audited results for the year ended 30 June 2016
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 2016
Highlights
183.8 cents
6.0% growth
dividend per share
30.5% LTV
RSA gearing levels remain conservative,
decreased from 32.1% in FY15
5.7% vacancies
same as FY15
FY16 - strong focus on tenant retention
R112.5 billion
property assets
R5.1 billion
19.8% distributable
income growth
26.1%
growth in
gross revenue
COMMENTARY
INTRODUCTION
Growthpoint is the largest South African primary listed REIT with a quality portfolio of 467 directly owned properties
in South Africa valued at R73.8 billion, as well as three equity-accounted investments, with our share of properties
valued at R8.2 billion, of which the V&A Waterfront is by far the largest. In addition, Growthpoint owns a 65.5% interest
in Growthpoint Properties Australia (GOZ), which owns 58 properties in Australia valued at R30.9 billion and a listed
investment with a value of R440 million that relates to a 22.9% investment in the Stenham European Shopping Centre Fund
(SESCF), a company listed on the Channel Island Stock Exchange as a closed fund which was acquired as part of the Acucap
Properties Limited (Acucap) and Sycom Property Fund (Sycom) business combination.
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,
optimised by effective financial structures. Effectively, net property income received by the property portfolios of South
Africa (RSA) and GOZ, including interest received, the distributable income received from the equity-accounted and listed
investments, less operating costs, interest on debt and normal taxation, is distributed to Growthpoint shareholders
bi-annually. Growthpoint's distributions are based on sustainable income generated from rentals.
Growthpoint is included in the JSE ALSI Top 40 Companies Index, with a market capitalisation of R71.5 billion at
30 June 2016 (FY16). Over this period, on average, more than 154.6 million shares traded per month (FY15: 119.7 million).
The monthly average value traded was R3.8 billion (FY15: R3.2 billion). This makes Growthpoint the most liquid and
tradable way to own commercial property in South Africa.
Excluding the equity-accounted investments, the South African portfolio represents 70.4% of the property portfolio by
value and 83.1% 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.
For the period under review, net asset value of the Group increased by 4.8% to 2 477 (FY15: 2 364) cents per share.
GROWTH IN DISTRIBUTIONS
Growthpoint delivered growth in distributions per share for FY16 of 6.0% and has declared a final dividend of
94.3 cents per share for the six months ended 30 June 2016. This growth is at the upper limit of the guidance given
to the market in the FY15 results of between 5.0% and 6.0%.
In Rand terms, distributions increased by R840 million or 19.8% and was driven by the inclusion of 100% of the former
Acucap and an effective 99.25% of Sycom for the full year under review, while the comparative period included the
distributions of Acucap and Sycom as listed investments held at 34.6% and 15.6% respectively for a period of nine months.
The distribution growth was well supported by a strong performance from the V&A Waterfront.
The increase in distributions was further enhanced by the investment in GOZ, where a hedging strategy led to
distributions from GOZ being received at an average rate of R10.45:AUD1 compared to R9.92:AUD1 for FY15.
BASIS OF PREPARATION
The summarised consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings
Requirements and the requirements of the South African Companies Act 2008, as amended. The accounting policies applied in
the preparation of these summarised consolidated financial statements are consistent with those applied in the previous
consolidated financial statements.
This summarised consolidated financial statements is extracted from the audited information, but is not itself
audited. The annual financial statements were audited by KPMG Inc., who expressed an unmodified opinion thereon.
That auditor's report does not necessarily report on all the information contained in this summarised consolidated
financial statements.
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 audited consolidated financial
statements, both of which are available for inspection at the company's registered office. The directors of Growthpoint
Properties Limited take full responsibility for the preparation of this report and that the selected financial information
has been correctly extracted from the underlying consolidated financial statements.
Mr G Volkel (CA(SA)), Growthpoint's Financial Director, was responsible for supervising the preparation of these
summarised consolidated financial statements.
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 statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the closing exchange
rate at FY16 of R11.04:AUD1 (FY15: R9.40:AUD1). The statement of profit or loss and other comprehensive income also
includes 100% of the revenue and expenses of GOZ, which were translated at an average exchange rate of R10.57:AUD1
(FY15: R9.55:AUD1) for FY16. The resulting foreign currency translation difference is recognised in other comprehensive
income. A non-controlling interest was raised for the 34.5% (FY15: 35%) not owned by Growthpoint.
A deferred tax liability of R2.1 billion (FY15: R1.3 billion) is included in the statement of financial position. This
relates to capital gains tax payable in Australia if Growthpoint were to sell its investment in GOZ. Included in normal
tax in the statement of profit or loss and other comprehensive income is R72 million (FY15: R73 million) that relates
to withholding tax paid on the distributions received from GOZ.
V&A WATERFRONT AND OTHER EQUITY-ACCOUNTED INVESTMENTS
The investments in the V&A Waterfront and the other joint ventures have been accounted for in terms of IFRS 11 Joint
arrangements. The equity-accounting method was used, whereby the Group's share of the profit or loss and other
comprehensive income of these investments was accounted for.
Retail operations at the V&A Waterfront continued to perform well where 22% year-on-year growth in sales was recorded
with contributing factors being the weaker Rand affording tourists the opportunity to spend more, as well as an
enhanced tenant mix including stores such as H&M, Versace, Hackett and Seafolly. Included in the FY16 finance income
is R479 million income from the V&A Waterfront, compared to distributable income for FY15 of R368 million.
NET PROPERTY INCOME
Gross revenue increased by 26.1% for FY16 compared to FY15. The South African operations increased revenues by
28.7% compared to FY15, as a result of the acquisition of Acucap and Sycom now included for the full year under review.
In Rand terms the GOZ operations increased revenues by 18.0%.
The ratio of property expenses to revenue for the Group increased marginally to 21.8% at FY16 from 21.1% at FY15.
For RSA the ratio increased to 24.6% from 24.0% at FY15.
Best practice recommendations were issued by the SA REIT Association during the financial year, outlining the need to
provide consistent presentation and disclosure of relevant ratios in the SA REIT sector. This will ensure information
and definitions are clearly presented, enhancing comparability and consistency across the sector. Below are the Group
cost-to-income ratios, set out in terms of the three different definitions to comply with these best practice
recommendations.
2016 2015
% %
Property cost-to-income ratios
Gross cost-to-income ratio 31.66 30.23
Net cost-to-income ratio 17.32 16.69
Cost-to-income ratio based on IFRS reported figures 21.77 21.06
Operating cost-to-income ratios
Gross cost-to-income ratio 3.49 4.29
Net cost-to-income ratio 3.15 3.91
Cost-to-income ratio based on IFRS reported figures 3.15 3.91
Total cost-to-income ratios
Gross cost-to-income ratio 34.61 33.91
Net cost-to-income ratio 20.65 20.82
Cost-to-income ratio based on IFRS reported figures 24.93 24.97
FAIR VALUE ADJUSTMENTS
The revaluation of properties in South Africa and GOZ resulted in an upward revision of R0.8 billion (0.1%) to
R104.7 billion for investment property (including investment properties classified as held for sale). Interest-bearing
borrowings and derivatives were fair valued using the swap curve at FY16, resulting in an increase of R159 million in
the overall liability. In addition, losses of R136 million and R113 million were realised on the settlement of an
interest rate swap by the South African operations and GOZ respectively.
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 increased by 18.2% to R2 466 million (FY15: R2 086 million) as a result of the acquisition of Acucap and
Sycom. These outflows were somewhat negated by the proceeds from the Distribution Re-Investment Plans (DRIPs) offered
by Growthpoint. The weighted average interest rate for RSA borrowings was 9.3% (8.5% including CCIRS) (FY15: 8.9%).
The weighted average maturity of debt increased to 3.0 years (FY15: 2.9 years). Finance costs for GOZ increased by
12.8% from R423 million in FY15 to R477 million in FY16. The interest cover ratio, whereby the income from the
equity-accounted investments and listed investments are included in the operating profit, decreased to 3.3 times
at FY16 (FY15: 3.4 times).
FINANCE INCOME
Finance income decreased by 24.7% to R690 million (FY15: R916 million). In the prior year distributions received from
the listed investment in Acucap and Sycom were accounted for in finance income, but it is consolidated in the current
year as a result of the business combination (FY15: R345 million).
ACQUISITIONS AND COMMITMENTS
Growthpoint acquired four industrial properties for R442 million and four office properties for R220 million during
the period. Development and capital expenditure for RSA amounting to R2.4 billion (FY15: R1.9 billion) relates to
various projects undertaken during the period, of which the Discovery Head Office accounted for R497 million.
Growthpoint RSA has commitments in respect of developments amounting to R1.7 billion (FY15: R2.7 billion), of which
the Discovery Head Office (55% share) of R1.1 billion is the largest and also includes Vaal Mall at R124 million and
Greenacres phases 2 and 3 at R218 million. Further commitments in respect of property acquisitions amount to R50.7 million
(FY15: R531 million).
GOZ acquired two industrial properties for R412 million (AUD43.8 million) and three office properties for R3.0 billion
(AUD270.5 million) and incurred development expenditure amounting to R361 million (AUD33.1 million) in respect of
office property development situated at 211 Wellington Road, Mulgrave, Victoria, and 1 Charles Street, as well as an
industrial property development situated at 99 and 101 - 103 William Angliss Drive. Other development and capital
expenditure for GOZ amounting to R80 million (AUD7.4 million) relates to various projects undertaken during the period.
GOZ has commitments of R497 million (AUD45.0 million) which includes a commitment to fund the development of
211 Wellington Road for an amount of R331.1 million (AUD30.0 million).
Development and capital expenditure at the V&A Waterfront amounted to R420 million (FY15: R309 million) for the
period. Growthpoint's share of the V&A Waterfront's commitments outstanding at FY16 amounted to R483 million
(FY15: R475 million), which relate to The Canal District, Silo Number 6 (Raddison Red Hotel) and Silo Number 3
(Residential for sale).
ACQUISITION OF REMAINING 50% IN PIN MILL SHARE BLOCK (PTY) LTD (PIN MILL)
Growthpoint acquired the remaining 50% of the shares in Pin Mill Share Block (Pty) Ltd that it did not already own from
MMI Group Limited for R172.1 million, effective from 1 February 2016. This is in line with Growthpoint's stated
objective of defensively growing its property portfolio through the acquisition of complementary and quality enhancing assets.
A summary of the acquisition is set out in the table below:
2016 2015
Rm Rm
The fair value of the assets and liabilities acquired were as follows:
Investment property 356 -
Net working capital - -
Net asset value 356 -
Consideration financed by borrowings (172) -
Fair value of the previously held investment in Pin Mill Share Block 178 -
Gain from bargain purchase 6 -
Net cash outflow 172 -
DISPOSALS AND HELD-FOR-SALE ASSETS
Growthpoint RSA disposed of sixteen properties in the current period (FY15: eighteen) for R1.1 billion
(FY15: R621 million) with a collective R220 million (FY15: R205 million) profit on cost achieved.
At FY16, six RSA properties (FY15: five) valued at R264 million (FY15: R539 million) and five Australian
properties valued at R1.7 billion, were classified as held-for-sale assets.
ARREARS
Total RSA arrears at FY16 amounted to R64.0 million (FY15: R63.7 million) with a provision for bad debts of
R29.8 million (FY15: R25.9 million). Total RSA bad debt expenses amounted to R15.9 million (FY15: R15.1 million).
VACANCY LEVELS
At FY16, the total square metres of Growthpoint's portfolio and vacancy levels expressed as a percentage of GLA were:
GLA Vacancy
m2 m2 % %
FY16 FY15 FY16 FY15
Retail 1 420 570 1 410 461 2.6 3.3
Office 1 799 391 1 790 428 7.8 8.0
Industrial 2 251 089 2 225 075 6.0 5.3
RSA total 5 471 050 5 425 964 5.7 5.7
V&A Waterfront (50%) 206 838 202 658 1.4 2.6
GOZ 1 109 545 1 050 611 0.3 1.0
Total/average % 6 787 433 6 679 233 4.7 4.8
Vacancies have decreased across the retail and office sectors in RSA, while the industrial sector had an increase in
vacancies as a result of a few large facilities becoming vacant. Plans are afoot with three of these large facilities,
either being let or disposed of. Tenant retention remains a priority and is being facilitated through various initiatives
including the UNdeposit and SmartMove campaigns.
EQUITY RAISED
During the year, Growthpoint issued 75.0 million shares and raised R1.8 billion. Details thereof are as follows:
In September 2015 R482.7 million and in April 2016 R1.2 billion was raised through the DRIP programmes, where
19.3 million and 52.3 million shares were issued at R25.00 and R23.50 per share respectively. The equity raised
from the DRIP was utilised to finance Growthpoint's investment activities.
Growthpoint issued 1.1 million shares for the acquisition of Silverhorn Properties (Pty) Ltd and Basfour 2721 (Pty)
Ltd, and 2.4 million shares for the fulfilment of the scheme of arrangement by which the remaining issued units of
Sycom Property Fund were acquired.
The company has 2.8 billion shares in issue at FY16 and the authorised capital is 4.0 billion shares. Growthpoint held
28 529 523 treasury shares at FY16 (FY15: 30 631 827).
BORROWINGS AND NET WORKING CAPITAL
At FY16, the consolidated loan to value (LTV) ratio, 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 investments and the listed investments, was 33.7% (FY15: 33.2%). The higher LTV ratio relates directly
to the higher LTV ratio of GOZ. Growthpoint has consistently applied its policy on fair value measurement in respect
of long-term interest-bearing loans and derivatives and there has been no change in valuation techniques, nor have
there been any transfers between level 1, level 2 and level 3 during the period under review.
Growthpoint has unutilised committed bank facilities in RSA amounting to R5.9 billion and in Australia R4.3 billion
(AUD373 million) at FY16 which provides assurance that it will be able to meet its short-term commitments which exceeded
current assets by R1.4 billion at FY16 (FY15: R4.7 billion).
CHANGE IN DIRECTORATE
Mr Herman Mashaba resigned on 27 January 2016 as a non-executive director and Deputy Chairman of Growthpoint.
EVENTS AFTER THE REPORTING PERIOD
Takeover offer for GPT Metro Office Fund (GMF)
On 1 July 2016, GOZ announced a AUD321 million off-market takeover offer for ASX listed GMF. GMF owns six assets
valued at AUD440.3 million. As at 24 August 2016, GOZ's holding in GMF increased to 48.53%. The incremental
interest does not become unconditional until at least 50.1% interest is achieved. It is expected that the
takeover will be complete in FY17.
As well as adding six well-leased A-grade office properties to the GOZ portfolio, the GMF takeover is expected to
increase GOZ's FY17 distributable income guidance by 4.9%, its market capitalisation to over AUD2.1 billion and the
liquidity of GOZ's securities.
GOZ investment property classified as held for sale
An industrial property portfolio comprising five properties was being sold pursuant to an expression of interest
process that closed on 15 June 2016. A joint bid to purchase the portfolio was received from Investec and Sentinel
Property Group and as at 30 June 2016, the properties were classified as an asset held for sale. Subsequent to year end,
the parties went into exclusive due diligence, however, Sentinel withdrew. Negotiations with Investec has also since ceased.
Management and the directors determined that the portfolio will no longer be on the market and will be reclassified to
investment properties. Given this is an event after the reporting period, the decision to reclassify the asset to investment
properties has no impact on the financial statements as at 30 June 2016.
PROSPECTS
The low growth and high interest rate environment in South Africa is expected to remain for FY17. While the portfolio
dynamics are stable, there is limited opportunity for growth locally. We expect the V&A Waterfront to continue to
perform well, given the strong property fundamentals, weak Rand and the conversion of the significant development
pipeline into income generating investments. The GOZ property fundamentals remain intact and GOZ performance for
FY17 is expected to be in line with that of FY16. Growthpoint thus expects dividend growth for FY17 to be similar
to that achieved for FY16.
This forecast has not been subject to audit or review by the company's independent external auditors.
FINAL DIVIDEND WITH THE ELECTION TO RE-INVEST THE CASH DIVIDEND IN RETURN FOR GROWTHPOINT SHARES
Notice is hereby given of the declaration of the final dividend number 61 of 94.30000 cents per share for the period
ended 30 June 2016.
Shareholders will be entitled to elect to re-invest 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.
The entitlement of shareholders to elect to participate in the share re-investment alternative is subject to the Board,
either itself or through a Board sub-committee appointed to set the pricing and terms of the share re-investment
alternative, having the discretion to withdraw the entitlement to elect the share re-investment alternative should
market conditions warrant such action. A withdrawal of the entitlement to elect the share re-investment alternative
will be communicated to shareholders before the publication of the finalisation announcement on
Tuesday, 13 September 2016.
Other information:
- issued shares at 30 June 2016: 2 786 093 366 ordinary shares of no par value.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7.
In accordance with Growthpoint's status as a Real Estate Investment Trust (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 taxable 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 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 above mentioned 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. With effect from 1 January 2014, any dividend received by a non-resident from a REIT is 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 80.15500 cents per share. A reduced dividend
withholding tax 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, 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 Service.
If applicable, non-resident shareholders are advised to contact the CSDP, broker or the company, as the case may be,
to arrange for the above mentioned 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:
2016
Circular and form of election posted to shareholders Tuesday, 6 September
Last date for Growthpoint to withdraw the entitlement
for shareholders to elect to participate in the share re-investment
alternative before the publication of the announcement of the
share alternative issue price and finalisation information on SENS Monday, 12 September
Announcement of share alternative issue price and
finalisation information Tuesday, 13 September
Last day to trade (LDT) cum dividend Tuesday, 20 September
Shares to trade ex dividend Wednesday, 21 September
Listing of maximum possible number of share alternative
shares commences on the JSE Friday, 23 September
Last day to elect to receive the share alternative (forms of election
will not be accepted after 12:00 South African time) Friday, 23 September
Record date Friday, 23 September
Announcement of results of cash dividend and share
alternative released on SENS Monday, 26 September
Cheques posted to certificated shareholders and accounts
credited by CSDP or broker to dematerialised shareholders
electing the cash alternative, on or about Monday, 26 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, 28 September
Adjustment to shares listed, on or about Thursday, 29 September
Notes:
1. Shareholders electing the share alternative are alerted to the fact that the new shares will be listed on
LDT + 3 and that these new shares can only be traded on LDT + 3, due to the fact that settlement of the
shares will be three 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 Wednesday, 21 September 2016 and close of trade
on Friday, 23 September 2016.
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 advisers should they be in any doubt as to
the appropriate action to take.
By order of the Board
GROWTHPOINT PROPERTIES LIMITED
31 August 2016
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2016
30 June 30 June
2016 2015
Note Rm Rm
Revenue, excluding straight-line lease income adjustment 9 764 7 740
Straight-line lease income adjustment 455 130
Revenue 10 219 7 870
Property expenses (2 126) (1 630)
Net property income 8 093 6 240
Other operating expenses and income (308) (303)
Operating profit 7 785 5 937
Fair value adjustments 409 3 562
Equity-accounted investment earnings - net of tax 543 484
Finance costs (2 466) (2 086)
Non-cash charges (121) (1 723)
Capital items (32) 1 078
Finance and other investment income 1 690 916
Profit before taxation 6 808 8 168
Taxation (841) (264)
Normal taxation (including withholding tax on
GOZ distribution) (76) (72)
Deferred taxation (765) (192)
Profit after taxation 5 967 7 904
Profit attributable to:
Equity holders 5 159 6 955
Non-controlling interest (NCI) 808 949
Other comprehensive income:
Items that are or may be reclassified to profit or loss:
Translation of foreign operations 2 282 (703)
Fair value of listed investments - 1 143
Fair value of listed investments - reclassified
to profit or loss - (1 097)
Total comprehensive income 8 249 7 247
Attributable to:
Equity holders 6 653 6 548
Non-controlling interest 1 596 699
Calculation of distributable earnings
Operating profit 7 785 5 937
Less: Straight-line lease income adjustment (455) (130)
Finance costs (2 466) (2 086)
Finance and other investment income 690 916
Cash adjustment on business combination (accounted
for in statement of changes in equity) - 4
Dividends received on treasury shares (accounted
for in statement of changes in equity) 39 66
NCI's share of distribution (excluding
fair value adjustments) (439) (374)
Distributable income from GOZ retained (including NCI) (79) (74)
Realised foreign exchange (loss)/gain (9) 45
Profit on the sale of Roeland Street Investment
(Pty) Ltd (Stor-Age) 51 -
Antecedent dividend received 31 -
Taxation (excluding deferred taxation) (76) (72)
Distributable earnings 5 072 4 232
Total dividend 2 5 072 4 232
Taxable dividend (interim) 2 444 1 967
Taxable dividend (special interim) - 1 058
Taxable dividend (final) 2 628 1 207
Shares Shares
Total shares in issue at the end of year 2 786 093 366 2 711 056 264
Treasury shares (28 529 523) (30 631 827)
Total shares in issue at the end of year
(excluding treasury shares) 2 757 563 843 2 680 424 437
Weighted average number of shares in issue 2 711 111 433 2 359 724 314
Cents Cents
Dividend per share 183.8 173.4
Six months ended 31 December 89.5 84.4
Three months ended 31 March - 44.5
Six months (FY15: three months) ended 30 June 94.3 44.5
Basic earnings per share 3 190.29 294.74
Diluted earnings per share 3 189.53 292.68
Headline earnings per share 4 140.57 149.42
Diluted headline earnings per share 140.01 148.38
STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
30 June 30 June
2016 2015
Rm Rm
ASSETS
Non-current assets 113 176 103 187
Fair value of investment property for
accounting purposes 100 274 90 917
Straight-line lease income adjustment 2 478 2 118
Fair value of property assets 102 752 93 035
Equity-accounted investments 6 821 6 464
Listed investments 440 380
Intangible assets 2 461 2 580
Equipment 6 9
Long-term loans granted 589 614
Derivative assets 107 105
Current assets 5 351 3 216
Investment property classified as held for sale 1 938 539
Current portion of long-term loans granted 16 467
Trade and other receivables 2 496 1 705
Cash and cash equivalents 901 505
Total assets 118 527 106 403
EQUITY AND LIABILITIES
Shareholders' interest 68 295 63 369
Share capital 42 929 41 132
Treasury shares (600) (646)
Foreign currency translation reserve 2 602 1 072
Non-distributable reserve 20 736 20 604
Retained income 2 628 1 207
Non-controlling interest 5 871 4 713
Total equity 74 166 68 082
Non-current liabilities 37 565 30 372
Interest-bearing borrowings 34 089 27 979
Derivative liabilities 1 094 776
Deferred taxation liability 2 382 1 617
Current liabilities 6 796 7 949
Trade and other payables 2 045 1 802
Current portion of non-current financial liabilities 4 491 5 930
Taxation payable 29 31
Linked unitholders for distribution 231 186
Total equity and liabilities 118 527 106 403
Cents Cents
Net asset value per share 2 477 2 364
Tangible net asset value per share which excludes
intangible assets and the deferred taxation liability 2 474 2 328
STATEMENT OF CASH FLOWS
For the year ended 30 June 2016
30 June 30 June
2016 2015
Rm Rm
Cash generated from operations 7 322 5 911
Finance and other investment income 51 497
Finance costs (2 538) (2 055)
Taxation paid (78) (54)
Capital items (32) (38)
Distribution to shareholders/unitholders (4 073) (5 618)
Net cash inflow/(outflow) from operating activities 652 (1 357)
Net cash outflow from investing activities (5 259) (2 283)
Net cash inflow from financing activities 4 948 3 781
Net increase in cash and cash equivalents 341 141
Translation effects on cash and cash
equivalents of foreign operation 55 (11)
Cash and cash equivalents at beginning of year 505 375
Cash and cash equivalents at end of year 901 505
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016
Foreign
currency Non-
translation distributable
Share Treasury reserve reserve
capital shares (FCTR) (NDR)
Note Rm Rm Rm Rm
Balance at 30 June 2014 29 436 (682) 1 506 17 743
Total comprehensive income -
profit after taxation - - - -
Total comprehensive income -
other comprehensive income - - (453) 46
Transactions with owners recognised
directly in equity:
Contribution by and distributions
to owners
Shares issued 11 696 - - -
Acquisition of subsidiary with NCI - - - -
Cash adjustment on business
combination - - - -
Dividends received on
treasury shares - - - -
Transfer non-distributable
items to NDR - - - 2 790
Share-based payment transactions - 36 - 72
Transfer to NDR reserves with NCI - - - (47)
Dividends declared - NCI - - - -
Dividends declared - - - -
Changes in ownership interests
Rights issue and
acquisitions - GOZ - - 19 -
Balance at 30 June 2015 41 132 (646) 1 072 20 604
Total comprehensive income -
profit after taxation - - - -
Total comprehensive income -
other comprehensive income - - 1 494 -
Transactions with owners
recognised
directly in equity:
Contribution by and distributions
to owners
Shares issued 1 797 - - -
Dividends received on
treasury shares 2 - - - -
Transfer non-distributable
items to NDR - - - 150
Share-based payment transactions - 46 - 7
Transfer to NDR reserves with NCI - - - (25)
Dividends declared - NCI - - - -
Dividends declared 2 - - - -
Changes in ownership interests
Rights issue and
acquisitions - GOZ - - 36 -
Acquisition of NCI - Sycom - - - -
Balance at 30 June 2016 42 929 (600) 2 602 20 736
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016 continued
Non-
Retained Share- controlling
income holders' interest Total
(RI) interest (NCI) equity
Rm Rm Rm Rm
Balance at 30 June 2014 1 892 49 895 4 180 54 075
Total comprehensive income -
profit after taxation 6 955 6 955 949 7 904
Total comprehensive income -
other comprehensive income - (407) (250) (657)
Transactions with owners recognised
directly in equity:
Contribution by and distributions
to owners
Shares issued - 11 696 - 11 696
Acquisition of subsidiary with NCI - - 64 64
Cash adjustment on business
combination 4 4 - 4
Dividends received on
treasury shares 66 66 - 66
Transfer non-distributable
items to NDR (2 790) - - -
Share-based payment transactions - 108 - 108
Transfer to NDR reserves with NCI 47 - - -
Dividends declared - NCI - - (374) (374)
Dividends declared (4 920) (4 920) - (4 920)
Changes in ownership interests
Rights issue and
acquisitions - GOZ (47) (28) 144 116
Balance at 30 June 2015 1 207 63 369 4 713 68 082
Total comprehensive income -
profit after taxation 5 159 5 159 808 5 967
Total comprehensive income -
other comprehensive income - 1 494 788 2 282
Transactions with owners
recognised
directly in equity:
Contribution by and distributions
to owners
Shares issued - 1 797 - 1 797
Dividends received on
treasury shares 39 39 - 39
Transfer non-distributable
items to NDR (150) - - -
Share-based payment transactions - 53 - 53
Transfer to NDR reserves with NCI 25 - - -
Dividends declared - NCI - - (439) (439)
Dividends declared (3 652) (3 652) - (3 652)
Changes in ownership interests
Rights issue and
acquisitions - GOZ - 36 66 102
Acquisition of NCI - Sycom - - (65) (65)
Balance at 30 June 2016 2 628 68 295 5 871 74 166
SEGMENTAL ANALYSIS
For the year ended 30 June 2016
South Africa
Total
South Total as V&A Other joint
Retail Office Industrial Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Statement of profit or loss
and other comprehensive income
extracts - 30 June 2016
Revenue, excluding straight-line
lease income adjustment 2 953 3 428 1 208 7 589 2 175 9 764 639 8 10 411
Property expenses (814) (794) (256) (1 864) (262) (2 126) (177) (4) (2 307)
Segment results 2 139 2 634 952 5 725 1 913 7 638 462 4 8 104
Material non-cash item
Fair value adjustment on
investment property 448 (457) 106 97 730 827 585 (7) 1 405
Fair value adjustment on
investment property - NCI - - - - 385 385 - - 385
Total material non-cash item 448 (457) 106 97 1 115 1 212 585 (7) 1 790
South Total as V&A Other joint
Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm
Further extracts of statement
of profit or loss and other
comprehensive income - 30 June 2016
Other operating expenses and income (204) (104) (308) (20) - (328)
Finance costs (1 989) (477) (2 466) (30) (8) (2 504)
Finance and other investment income 684 6 690 69 - 759
South Africa
Total
South Total as V&A Other joint
Retail Office Industrial Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Statement of financial
position extracts at
30 June 2016
Investment property
Opening balance 1 July 2015 28 213 32 901 10 436 71 550 22 024 93 574 6 761 631 100 966
Acquisitions - business
combination - 178 - 178 - 178 - - 178
Acquisitions - other - 220 442 662 3 410 4 072 - - 4 072
Developments and
capital expenditure 549 1 302 543 2 394 441 2 835 420 27 3 282
Disposals - (887) (242) (1 129) - (1 129) - (240) (1 369)
Foreign exchange gain - - - - 3 948 3 948 - - 3 948
Fair value adjustments 448 (457) 106 97 1 115 1 212 585 (7) 1 790
Fair value of total property
assets - 30 June 2016 29 210 33 257 11 285 73 752 30 938 104 690 7 766 411 112 867
Fair value of long-term
property assets 29 210 33 112 11 166 73 488 29 264 102 752 7 766 411 110 929
Investment property classified
as held for sale - 145 119 264 1 674 1 938 - - 1 938
South Total as V&A Other joint
Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm
Further extracts of statement
of financial position - 30 June 2016
Intangible assets 2 461 - 2 461 - - 2 461
Listed investments 440 - 440 - - 440
Trade and other receivables 2 008 488 2 496 48 - 2 544
Cash and cash equivalents 121 780 901 28 5 934
Trade and other payables (1 606) (439) (2 045) (84) (3) (2 132)
Financial liabilities (25 704) (13 970) (39 674) (306) (404) (40 384)
Nominal value -
interest-bearing liabilities (24 818) (13 760) (38 578) (306) (404) (39 288)
Fair value adjustments (880) (210) (1 090) - - (1 090)
Foreign translation differences (6) - (6) - - (6)
South Africa
Total
South Total as V&A Other joint
Retail Office Industrial Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Statement of profit or
loss and other comprehensive
income extracts - 30 June 2015
Revenue, excluding
straight-line lease income
adjustment 1 995 2 752 1 149 5 896 1 844 7 740 553 19 8 312
Property expenses (525) (635) (257) (1 417) (213) (1 630) (154) (5) (1 789)
Segment results 1 470 2 117 892 4 479 1 631 6 110 399 14 6 523
Material non-cash item
Fair value adjustment on
investment property 896 772 202 1 870 1 077 2 947 480 19 3 446
Fair value adjustment on
investment property - NCI - - - - 587 587 - - 587
Impairment of goodwill (949) (569) (40) (1 558) - (1 558) - - (1 558)
Total material non-cash items (53) 203 162 312 1 664 1 976 480 19 2 475
South Total as V&A Other joint
Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm
Further extracts of statement
of profit or loss and other
comprehensive income - 30 June 2015
Other operating expenses and income (222) (81) (303) (16) (3) (322)
Finance costs (1 663) (423) (2 086) (28) (11) (2 125)
Finance and other investment income 909 7 916 8 - 924
South Africa
Total
South Total as V&A Other joint
Retail Office Industrial Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Statement of financial position
extracts at 30 June 2015
Investment property
Opening balance 1 July 2014 15 756 24 012 9 286 40 054 20 859 69 913 5 947 315 76 175
Acquisition - Acucap and Sycom 11 324 6 789 473 18 586 - 18 586 - 569 19 155
Acquisition - Other - 755 21 776 637 1 413 25 - 1 438
Developments and capital
expenditure 352 1 003 530 1 885 306 2 191 309 - 2 500
Disposals (115) (430) (76) (621) (237) (858) - (272) (1 130)
Foreign exchange loss - - - - (1 205) (1 205) - - (1 205)
Fair value adjustments 896 772 202 1 870 1 664 3 534 480 19 4 033
Fair value of total property
assets - 30 June 2015 28 213 32 901 10 436 71 550 22 024 93 574 6 761 631 100 966
Fair value of long-term
property assets 28 213 32 432 10 366 71 011 22 024 93 035 6 761 631 100 427
Investment property classified
as held for sale - 469 70 539 - 539 - - 539
South Total as V&A Other joint
Africa Australia reported Waterfront ventures Total
Rm Rm Rm Rm Rm Rm
Further extracts of statement
of financial position - 30 June 2015
Intangible assets 2 580 - 2 580 - - 2 580
Opening balance 1 July 2014 1 258 - 1 258 - - 1 258
Acquisition through
business combination 2 978 - 2 978 - - 2 978
Impairment of goodwill (1 558) - (1 558) - - (1 558)
Additions during the year 4 - 4 - - 4
Amortisation for the year (102) - (102) - - (102)
Listed investments 380 - 380 - - 380
Trade and other receivables 1 353 352 1 705 23 - 1 728
Cash and cash equivalents 253 252 505 129 3 637
Trade and other payables (1 514) (288) (1 802) (102) (10) (1 914)
Financial liabilities (26 130) (8 555) (34 685) (197) (502) (35 384)
Nominal value - interest-bearing
liabilities (25 444) (8 367) (33 811) (197) (502) (34 510)
Fair value adjustments (686) (131) (817) - - (817)
Foreign translation differences - (57) (57) - - (57)
NOTES
For the year ended 30 June 2016
30 June 30 June
2016 2015
Rm Rm
Note 1: Finance and other investment income 690 916
- Investment in joint venture - V&A Waterfront 429 368
- V&A Waterfront development funding interest 50 -
Total V&A Waterfront income 479 368
Other finance income 189 203
Listed investments 22 345
Note 2: Dividends on treasury shares
The interim dividend of R2 444 million (HY15: R1 967 million) included dividends on treasury shares of R13 million (HY15: R26 million).
The net interim dividend paid by Growthpoint for accounting purposes is R2 431 million (HY15: R1 941 million).
The total dividend of R5 072 million (FY15: R4 232 million) includes dividends on treasury shares of R39 million (FY15: R53 million).
The net total dividend paid and payable is therefore R5 033 million (FY15: R4 179 million).
Note 3: Basic and diluted earnings per share
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.
The calculation of distributable earnings and the dividend per share is more meaningful.
Note 4: Headline earnings per share
In terms of Circular 2/2015, issued by SAICA, the fair value adjustment on investment property is added back in the calculation of
headline earnings per share. 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
fair value accounting adjustments that do not affect distributable earnings, to be added back.
30 June 30 June
2016 2015
Rm Rm
Basic profit is reconciled to
headline earnings as follows:
Profit after taxation -
attributable to equity holders 5 159 6 955
(Bargain purchase)/Impairment of goodwill (6) 1 558
Realised profit on sale of
listed investments - (1 097)
Add back: Net fair value adjustment -
investment property (1 342) (3 890)
Fair value adjustment, net of
straight-line lease income adjustment (372) (2 817)
Fair value adjustment
(equity-accounted investments) (585) (486)
NCI portion of fair value adjustment (385) (587)
Headline earnings attributable to shareholders 3 811 3 526
Note 5: Financial Instrument fair value disclosure
Measurement of fair values
A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and
non-financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation
team that has overall responsibility for overseeing all significant fair value measurements, including level 3 fair values,
and reports directly to the financial director.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third-party information,
such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence
obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including
the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are reported to the Group's Audit Committee.
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the entire measurement.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value
information for financial assets and financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value.*
Carrying amount Fair value
Designated
Held for trading at fair value Total Level 1 Level 2 Level 3
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Financial assets
measured at fair value
Non-current financial assets
Listed investments - - 440 380 440 380 - - - - 440 380
Long-term loans granted - - 589 614 589 614 - - - - 589 614
Derivative assets 107 105 - - 107 105 - - 107 105 - -
Current assets
Current portion of
long-term loans granted - - 16 467 16 467 - - - - 16 467
Total financial assets
measured at fair value 107 105 1 045 1 461 1 152 1 566 - - 107 105 1 045 1 461
Financial liabilities
measured at fair value
Non-current financial
liabilities
Interest-bearing borrowings - - 34 089 27 979 34 089 27 979 - - 34 089 27 979 - -
Derivative liabilities 1 094 776 - - 1 094 776 - - 1 094 776 - -
Current financial liabilities
Current portion of non-current
financial liabilities - - 4 491 5 930 4 491 5 930 - - 4 491 5 930 - -
Total financial liabilities
measured at fair value 1 094 776 38 580 33 909 39 674 34 685 - - 39 674 34 685 - -
There have been no significant changes in valuation techniques or significant transfers between level 1, level 2 and level 3 during
the year under review.
* The Group has not disclosed the fair values for financial instruments such as trade and other receivables, cash and cash equivalents,
trade and other payables and linked unitholders for distribution because their carrying amounts are a reasonable approximation of fair value.
Note 5: Financial Instrument fair value disclosure continued
Measurement of fair values continued
The following tables show the valuation techniques used in measuring level 2 and level 3 fair values at 30 June 2016 and 30 June 2015
for financial instruments measured at fair value in the statement of financial position, as well as the significant unobservable inputs used.
Financial instruments measured at fair value
Type Valuation technique Unobservable inputs Inter-relationship between
unobservable inputs and fair
value measurement
Listed investments While SESCF is a listed Net initial yield - 6.41% The estimated fair value would
investment, there is an absence increase/(decrease) if:
of observable trading prices - increase/(decrease) in the stabilised
for its shares. As a result, the net operating income;
fair value of the investment, - (decrease)/increase in the yield used to
on 30 June 2016, has been determined calculate the terminal value indication; and
on the net asset value of SESCF. - (decrease)/increase in the discount rate used
The net asset value of SESCF to calculate the gross capital value.
includes an independent revaluation
of the underlying investment property,
which is the significant asset per
the statement of financial position.
The fair value movement for the year,
which comprises the revaluation based
on the change in the underlying value
of the investment, as well as the
exchange rate movement, amounted
to R60 million.
Long-term loans
granted
323 Festival Street Valued by discounting future cash Credit margin: 3.00% Estimated fair value would increase/(decrease)
(Pty) Ltd flows using the South African swap (FY15: 3.00%) if the credit margin were lower/(higher)
curve plus the historic charged credit
margin at the dates when the cash
flows will take place.
Rabie Property Group Valued by discounting future cash Not applicable Not applicable
(Pty) Ltd flows using the floating rate that
is applicable to this loan.
Acucap Unit Purchase Valued by discounting future cash Not applicable Not applicable
Scheme flows using the South African swap
curve at the dates when the cash
flows will take place.
Interest-bearing
borrowings
and derivatives
Interest-bearing Valued by discounting future cash Credit margins: 0.45% to Estimated fair value would increase/(decrease)
borrowings flows using the South African swap 3.60% (FY15: 0.36% to 3.00%) if the credit margin were lower/ (higher)
curve plus an appropriate credit
margin at the dates when the cash
flows will take place.
Derivative assets Valued by discounting the forward Not applicable Not applicable
and liabilities: rates applied at year end to the
forward exchange open hedged positions.
contracts
Derivative assets and Valued by discounting the future Not applicable Not applicable
liabilities: cash flows using the South African
interest rate swaps swap curve at the dates when the
cash flows will take place.
Derivative assets and Valued by discounting the future Not applicable Not applicable
liabilities: cash flows using the basis swap
cross-currency interest curve of the respective currencies
rate swaps at the dates when the cash flows
will take place.
Note 5: Financial Instrument fair value disclosure continued
Financial instruments measured at fair value continued
The following table shows a reconciliation from the opening balances to the closing balances for
level 3 fair values.
Gain/(loss) in
profit for the Acquired/
year and other (disposed)
Opening comprehensive Accrued and advanced/ Closing
balance income interest (settled) balance
Rm Rm Rm Rm Rm
2016
Listed investments 380 60 - - 440
Long-term loans granted 1 081 (6) 29 (499) 605
2015
Listed investments - 2 - 378 380
Long-term loans granted 466 1 15 599 1 081
The fair value gains and losses are included in the fair value adjustment line in profit or loss.
The gains and losses in other comprehensive income are included in the translation of foreign operations.
A 1% decrease in the spread used to determine the fair value of long-term loans would increase the
value to R609 million (FY15: R1 087 million). A 1% increase in the spread would decrease the value
to R601 million (FY15: R1 075 million).
ADMINISTRATION
DIRECTORS
JF Marais (Chairman), LN Sasse* (Chief Executive Officer), EK de Klerk* (Managing Director),
G Volkel* (Financial Director), MG Diliza, PH Fechter, LA Finlay, JC Hayward, HS Herman,
SP Mngconkola, R Moonsamy, NBP Nkabinde, FJ Visser
* Executive
COMPANY SECRETARY
RA Krabbenhoft
REGISTERED OFFICE
The Place, 1 Sandton Drive, Sandton, 2196
PO Box 78949, Sandton, 2146
TRANSFER SECRETARY
Computershare Investor Services (Pty) Ltd
(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
1 September 2016
http://www.growthpoint.co.za
Date: 01/09/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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