Wrap Text
Condensed unaudited results for the six months ended 31 December 2017
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
CONDENSED UNAUDITED RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
HIGHLIGHTS
- 101.2 cents
dividend per share
6.5% growth
- R2.9bn
distributable income
growth 10.6%
- 3.9%
increase in Group NAV from HY17 to 2 593 cents per share
- 4.6% Group vacancies
well contained albeit they have increased by 0.9% from FY17
- R127.7bn
Group property assets 4.4% increase from FY17
- 34.5% Group LTV
gearing levels remain conservative, down by 0.5% from FY17
- Largest South African primary listed REIT 21st largest company in the FTSE/JSE top 40 index
R80.4bn
Market capitalisation
R4.5bn
average value of shares traded per month
- Baa3 global scale and AAA .za national scale rating from Moody's
- Included in major sustainability indices:
FTSE/JSE Responsible Investment Index, Dow Jones Sustainability Index (DJSI) FTSE4Good Emerging Index
Investment proposition:
- Sustainable quality of earnings
- 14-year track record of uninterrupted dividend growth - 3.1% above inflation on average
- Underpinned by high-quality physical property assets
- Diversified across international geographies and sectors
- Dynamic and proven management track record
- Best practice corporate governance
- Transparent reporting
- Level 3 BEE contributor
COMMENTARY
Growthpoint is an international property company that provides space to thrive with innovative and sustainable
property solutions.
INTRODUCTION
Growthpoint is the largest South African primary listed REIT with a quality portfolio of 463 directly owned
properties in South Africa (RSA) valued at R80.1 billion.
Growthpoint has a 65.1% interest in Growthpoint Properties Australia (GOZ), which owns 56 properties in
Australia valued at R31.2 billion.
Growthpoint has five equity-accounted investments, valued at R12.1 billion. Our 50% share of the V&A Waterfront
(V&A) is the largest of these investments (R7.2 billion), followed by a 29.0% stake in London Stock Exchange
(AIM)-listed Globalworth Real Estate Investments (GWI) (R4.9 billion).
Growthpoint also has a listed investment which is an 18.2% investment in ASX-listed Industria REIT, owned by
GOZ, valued at R722.0 million.
In line with Growthpoint's vision "to be a leading international property company providing space to thrive",
the company's strategy incorporates the optimisation and streamlining of our existing portfolio, the
introduction of new revenue streams via the Funds Management business and trading and development and
lastly, further international diversification. The company has set a target to double the offshore
contribution to distributable income over the next three to five years.
The company's objective is to grow and nurture a diversified portfolio of quality investment properties,
providing accommodation to a wide spectrum of clients 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 administration and
operating overheads, interest on debt and normal taxation, is distributed to Growthpoint shareholders
bi-annually. Growthpoint's distributions are based on sustainable income generated from rentals, trading
profits and development fees and going forward, distributions and management fees from its Funds
Management business.
Growthpoint is included in the FTSE/JSE Top40 Index (J200) with a market capitalisation of R80.4 billion
at 31 December 2017 (HY18). Over this period, on average, more than 180.0 million shares traded per month
(HY17: 147.2 million). The monthly average value traded was R4.5 billion (HY17: R3.8 billion). This makes
Growthpoint the most liquid and tradable way to own commercial property in South Africa.
The value of Growthpoint's property portfolio is split between South African (inclusive of the V&A) (69.5%)
and international (30.5%) assets. The RSA portfolio represents 84.9% by gross lettable area (GLA), excluding
GWI. It is well diversified in the three major sectors of commercial property, being retail, office and
industrial. Most of the value of the RSA portfolio is in strong economic nodes within major metropolitan
areas.
For the period under review the net asset value (NAV) of the group increased by 3.9% to 2 593
(HY17: 2 495) cents per share.
GROWTH IN DISTRIBUTIONS
Growthpoint delivered growth in distributions per share for HY18 of 6.5% and has declared an interim dividend
of 101.2 cents per share for the six months ended 31 December 2017. This growth is in line with the guidance
given to the market for FY18.
Distributions increased by R281 million or 10.6% to R2.9 billion.
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 and Financial Pronouncements as issued by Financial Reporting Standards Council,
and the requirements of the Companies Act of South Africa. The accounting policies applied in preparing these
interim financial statements are in terms of International Financial Reporting Standards and are consistent
with those applied in the previous annual financial statements. Mr G Volkel (CA(SA)), Growthpoint's Financial
Director, was responsible for supervising the preparation of these condensed consolidated interim financial
statements.
These condensed interim financial statements for the period ended 31 December 2017 have not been reviewed or
audited by Growthpoint's independent external auditors.
GROWTHPOINT PROPERTIES AUSTRALIA (GOZ)
The investment in GOZ was 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 HY18 of R9.66:AUD1 (FY17: R10.04:AUD1).
On 13 July 2017, GOZ acquired an 18.2% stake in the Australian Securities Exchange (ASX)-listed Industria REIT,
classified as a Listed Investment, for AUD68.1 million (R681.0 million).
A deferred tax liability of R2.4 billion (FY17: R2.1 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.
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 R10.45: AUD1 (HY17: R10.55:AUD1) for HY18.
The resulting foreign currency translation difference is recognised in other comprehensive income.
A non-controlling interest was raised for the 34.9% (FY17: 34.9%) not owned by Growthpoint.
Included in the HY18 distributable income is R417.5 million income from GOZ, compared to R426.2 million for HY17.
Included in normal tax in the statement of profit or loss and other comprehensive income is R74.9 million
(HY17: R67.0 million) that relates to withholding tax paid on the distributions received from GOZ. The increased
withholding tax and stronger Rand had a negative impact on the distribution received from GOZ.
V&A WATERFRONT AND OTHER EQUITY-ACCOUNTED INVESTMENTS
The investments in the V&A, GWI and the other joint ventures were accounted for in terms of IFRS 11 Joint
Arrangements. The equity-accounting method was used, where the Group's share of the profit or loss and other
comprehensive income of these investments were accounted for.
Included in the HY18 finance income is R287.0 million from the V&A, compared to R256.0 million for HY17, and
R128.0 million from GWI (included in distributable income), compared to R78.0 million for FY17.
NET PROPERTY INCOME
Gross revenue increased by 6.0% for HY18 compared to HY17. RSA increased revenues by 6.4% compared to HY17,
and the GOZ operations increased revenues by 4.7%.
The ratio of property expenses to revenue for the Group increased slightly to 21.7% at HY18 from 21.3% at
HY17. For RSA the ratio increased to 24.0% from 23.7% at HY17, and increased for GOZ to 14.3% from 13.7%
at HY17.
FAIR VALUE ADJUSTMENTS
The revaluation of properties in RSA and GOZ resulted in an increase of R2.5 billion (2.3%) to R111.3 billion
for investment property (including investment properties classified as held for sale). This was driven mainly
by growth in future contractual rental. Interest-bearing borrowings and derivatives were fair valued using
the South African or EUR swap curve at HY18, decreasing the overall liability by R174.0 million.
These fair value adjustments and other non-distributable items, such as capital items, non-cash charges,
deferred taxation and the net effect of the non-controlling interests portion of the non-distributable items,
were transferred to the non-distributable reserve.
FINANCE COSTS
Finance costs increased by 4.3% to R1 308 million (HY17: R1 254 million). This was partly offset by the
proceeds from the Distribution Re-Investment Plans (DRIPs) offered by Growthpoint. The weighted average
interest rate for RSA borrowings was 9.1% (HY17: 9.2%) (7.5% including Euro loans and cross-currency
interest rate swaps (CCIRS) (HY17: 7.6%)). The weighted average maturity of debt decreased to 2.8 years
(FY17: 3.0 years). Finance costs for GOZ increased by 0.7% from R291.0 million in HY17 to R293.0 million
in HY18. The interest cover ratio, where income from the equity-accounted investments and listed
investments is included in the operating profit, remained at 3.5 times at HY18 (HY17: 3.5 times).
FINANCE INCOME
Finance income increased by 15.8% to R360.0 million (HY17: R311.0 million).
ACQUISITIONS AND COMMITMENTS
Growthpoint acquired one retail property, the remainder of N1 City, for R922.1 million and one industrial property,
for R132.0 million during the period for its RSA portfolio. The development and capital outlay for RSA of
R1.1 billion (HY17: R1.1 billion) was for various projects undertaken in the period, of which the Discovery
Head Office accounted for R275.7 million.
Growthpoint has commitments outstanding for RSA developments totalling R2.2 billion (HY17: R2.4 billion) of
which 144 Oxford, Rosebank is the largest at R600.2 million. These commitments also include Exxaro Head Office
in Centurion at R408.5 million.
GOZ acquired one industrial property for R517.8 million (AUD48.6 million) and it incurred development costs
of R64.7 million (AUD6.4 million), which includes an office property development at Buildings 1 & 3, 572-576
Swan Street, Richmond, VIC for R18.4 million (AUD1.7 million).
GOZ has commitments outstanding totalling R146.5 million (AUD14.8 million) (HY17: R218.0 million (AUD22.0 million))
of which 1 Charles Street, Parramatta, NSW is the largest at R59.4 million (AUD6.0 million). These commitments also
include Building 2, 572-576 Swan Street, Richmond, VIC at R37.6 million (AUD3.8 million).
Our 50% development and capital expenditure at the V&A amounted to R187.0 million (HY17: R312 million) for the period.
Growthpoint's share of the V&A's commitments outstanding at HY18 amounted to R99.7 million (HY17: R364.0 million).
The largest include the Dock Road Junction at R35.1 million, Battery Parkade at R23.8 million and Waterway House
at R18.6 million.
ADDITIONAL INVESTMENT GLOBALWORTH (GWI)
Growthpoint followed its rights in the GWI EUR340.0 million capital raise in December 2017 and made an additional
investment of R1.9 billion (EUR113.8 million) in GWI. This increased Growthpoint's interest to 29.0%.
GWI completed its strategic investment in Griffin Premium RE. N.V. ("GPRE") resulting in a shareholding of
71.7% in December 2017. GPRE has now been fully consolidated into Globalworth's accounts for FY17.
On 22 December 2017, GPRE completed the acquisition of three high quality properties in Wroclaw, Gdansk
and Katowice in Poland from Echo Polska Properties (EPP) for a total consideration of approximately
EUR160.0 million. This takes GWI's total properties to 39, 19 in Romania and 20 in Poland.
DISPOSALS AND HELD FOR SALE ASSETS
Growthpoint disposed of ten properties in the period (HY17: seven) for R478.6 million (HY17: R259.0 million),
achieving a collective R230.8 million (HY17: R85.0 million) profit on cost.
At HY18, five RSA properties (HY17: four) valued at R159.9 million (HY17: R968.0 million) were held for sale.
GOZ disposed of two properties in the period (HY17: five) with a book value of R1.7 billion (AUD169.4 million)
(HY17: R1.6 billion (AUD151.6 million)).
ARREARS
Total RSA arrears at HY18 were R76.6 million (HY17: R82.8 million) with a provision for bad debts of
R28.9 million (HY17: R34.2 million). Total RSA bad debt expenses were R7.1 million (HY17: R6.4 million).
VACANCY LEVELS
At HY18 Growthpoint's vacancy levels as a percentage of its total portfolio GLA were:
Total GLA Vacancy
m2 m2 % %
HY18 HY17 HY18 HY17
Retail 1 423 816 1 422 121 3.0 2.6
Office 1 757 898 1 759 080 8.4 6.9
Industrial 2 244 535 2 273 094 4.1 6.0
RSA total 5 426 249 5 454 295 5.2 5.4
GOZ 1 003 529 1 065 623 2.4 0.5
V&A (50%) 229 315 217 920 1.2 1.1
Total/Average % 6 659 093 6 737 838 4.6 4.5
Vacancies decreased in the industrial sector but increased across the retail and office sectors.
Tenant retention remains a priority and we are driving it through various initiatives including
the UNdeposit and Smartmove campaigns, as well as the launch of Growthpoint's resource efficient,
sustainable Thrive Portfolio.
EQUITY RAISED
During the period Growthpoint issued 45.7 million shares and raised R1.1 billion through its DRIP programme.
The DRIP equity raised was used to finance Growthpoint's investment activities.
BORROWINGS AND NET WORKING CAPITAL
At HY18, 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 and
the equity-accounted investments and the listed investments, was 34.5% (HY17: 36.7%). Growthpoint has
consistently applied its policy for measuring the fair value of long-term interest-bearing loans and
derivatives. There were no changes in valuation techniques, nor were there any transfers between level 1,
level 2 and level 3 during the period.
Growthpoint had unused committed bank facilities of R3.0 billion in RSA and R2.2 billion (AUD230.9 million)
in Australia at HY18, which assures that it can meet its short-term commitments.
CHANGE IN DIRECTORATE
Mr HS Herman retired as a non-executive director on 14 November 2017.
Ms N Siyotula was appointed as a non-executive director on 1 January 2018.
EVENTS AFTER THE REPORTING PERIOD
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.
PROSPECTS
The quality and diversity of the underlying South African property portfolio and our strong corporate customer
base, together with our investment in the prestigious V&A, will continue to ensure sustainable, quality earnings
domestically, against the back drop of a domestic economy where property fundamentals remain weak. Growthpoint's
increased internationalisation has added further geographic exposure to our business. The contribution to
distributable income from GOZ is expected to increase in line with guidance provided by GOZ but the strong
ZAR and increased dividend withholding tax are expected to have a negative impact. GWI, through the GPRE
acquisition, now has a Polish footprint which further adds to the diversification and defensiveness of the
investment opportunity. Large multi-national tenants continue to be attracted to both Poland and Romania
due to the young, educated, affordable and ambitious labour force, and as such GWI is expected to perform
well. Given the above, the Growthpoint Board is of the view that the dividend growth for FY18 will be
similar to that achieved for FY17.
INTERIM DIVIDEND WITH THE ELECTION TO REINVEST THE CASH DIVIDEND IN RETURN FOR GROWTHPOINT SHARES
Notice is hereby given of the declaration of the final dividend number 64 of 101.20000 cents per share for
the period ended 31 December 2017. 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. 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 would be
communicated to shareholders before the publication of the finalisation announcement on Friday,
9 March 2018.
Other information:
- issued shares at 31 December 2017: 2 934 202 472 ordinary shares of no par value.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7.
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 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. Any dividend received by a non-resident from a REIT is subject to
Dividend Tax at 20%, 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 20%, the net amount due to non-resident shareholders
is 80.96000 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 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:
Salient dates and times 2018
Circular and form of election posted to shareholders
and announced on SENS Friday, 2 March
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 Friday, 9 March
Announcement of share re-investment alternative issue price
and finalisation information published on SENS Monday, 12 March
Last day to trade (LDT) cum dividend Monday, 19 March
Shares to trade ex-dividend Tuesday, 20 March
Listing of maximum possible number of share alternative shares
commences on the JSE Friday, 23 March
Last day to elect to receive the share alternative (no late
forms of election will be accepted) at 12:00 (South African time) Friday, 23 March
Record date Friday, 23 March
Announcement of results of cash dividend and share re-investment
alternative published on SENS Monday, 26 March
Cheques posted to certificated shareholders and accounts credited
by CSDP or broker to dematerialised shareholders electing the cash
alternative on Monday, 26 March
Share certificates posted to certificated shareholders and
accounts credited by CSDP or broker to dematerialised shareholders
electing the share re-investment alternative on Wednesday, 28 March
Adjustment to the maximum number of shares listed on or about Thursday, 29 March
Notes:
1. Shareholders electing the share reinvestment 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 commencement of trade on
Tuesday, 20 March 2018 and the close of trade on Friday, 23 March 2018.
By order of the Board
GROWTHPOINT PROPERTIES LIMITED
27 February 2018
DIRECTORS
JF Marais (Chairman), LN Sasse* (Group Chief Executive Officer), EK de Klerk* (Chief Executive Officer
South Africa), G Volkel* (Financial Director), MG Diliza, PH Fechter, LA Finlay, JC Hayward, SP Mngconkola,
R Moonsamy, NBP Nkabinde, N Siyotula, 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
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 31 December 2017
Unaudited Unaudited Audited
six months six months 12 months
31 December 31 December 30 June
2017 2016 2017
Notes Rm Rm Rm
Revenue, excluding straight-line lease income adjustment 5 487 5 178 10 716
Straight-line lease income adjustment 7 40 39
Total revenue 5 494 5 218 10 755
Property-related expenses (1 192) (1 103) (2 245)
Net property income 4 302 4 115 8 510
Other administrative and operating overheads (213) (196) (416)
Operating profit 4 089 3 919 8 094
Equity-accounted investment profit - net of tax 555 68 369
Fair value adjustments, capital items and other charges 2 926 1 595 1 850
Finance and other investment income 1 360 311 692
Finance expense (1 308) (1 254) (2 510)
Profit before taxation 6 622 4 639 8 495
Taxation (179) 137 (48)
Profit for the year 6 443 4 776 8 447
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Translation of foreign operations (917) (1 891) (1 571)
Total comprehensive income for the year 5 526 2 885 6 876
Profit attributable to: 6 443 4 776 8 447
Owners of the company 5 748 4 416 7 524
Non-controlling interests 695 360 923
Total comprehensive income attributable to: 5 526 2 885 6 876
Owners of the company 5 092 3 154 6 507
Non-controlling interests 434 (269) 369
Cents Cents Cents
Basic earnings per share 200.07 158.86 267.72
Diluted earnings per share 198.80 158.02 266.21
Headline earnings per share 2 101.04 100.12 179.66
Diluted headline earnings per share 2 100.40 99.58 178.64
STATEMENT OF FINANCIAL POSITION
As at 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Rm Rm Rm
Assets
Cash and cash equivalents 631 1 027 613
Trade and other receivables 3 697 2 970 3 214
Investment property classified as held for sale 160 1 070 1 241
Derivative assets 697 347 356
Listed investments 722 382 226
Fair value of property assets 111 145 107 593 108 201
Fair value of investment property for accounting purposes 108 557 105 085 105 641
Straight-line lease income adjustment 2 588 2 508 2 560
Long-term loans granted 353 761 709
Equity-accounted investments 12 142 9 627 9 920
Equipment 14 5 15
Intangible assets 2 314 2 412 2 362
Total assets 131 875 126 194 126 857
Liabilities and Equity
Liabilities
Trade and other payables 2 739 2 442 2 572
Derivative liabilities 566 537 587
Taxation payable 71 60 44
Interest-bearing borrowings 43 810 44 843 42 568
Deferred tax liability 2 441 2 178 2 332
Total liabilities 49 627 50 060 48 103
Shareholders' interest 75 371 69 922 72 045
Share capital 45 993 43 390 44 876
Retained income 2 943 2 688 2 886
Other reserves 26 435 23 844 24 283
Non-controlling interest 6 877 6 212 6 709
Total liabilities and equity 131 875 126 194 126 857
STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2017
Attributable to owners of the company
Non-distributable
reserves (NDR)
Share Foreign
capital currency Non- Non-
net of translation distributable Retained Share- controlling
treasury reserve reserve earnings holders' interest Total
shares (FCTR) (NDR) (RE) interest (NCI) equity
Rm Rm Rm Rm Rm Rm Rm
Balance at 30 June 2016 42 329 2 602 20 736 2 628 68 295 5 871 74 166
Total comprehensive income:
- Profit after taxation - - - 4 416 4 416 360 4 776
- Other comprehensive income - (1 262) - - (1 262) (629) (1 891)
Transactions with owners
recognised directly in equity:
Contributions by and distributions
to owners:
Shares issued 1 057 - - - 1 057 - 1 057
Transfer non-distributable
items to NDR - - 1 754 (1 754) - - -
Share-based payment transactions 4 - 23 - 27 - 27
Dividends declared - - - (2 602) (2 602) (249) (2 851)
Changes in ownership interest:
Rights issue and acquisitions - GOZ - (9) - - (9) 859 850
Balance at 31 December 2016 43 390 1 331 22 513 2 688 69 922 6 212 76 134
Total comprehensive income:
- Profit after taxation - - - 3 108 3 108 563 3 671
- Other comprehensive income - 245 - - 245 75 320
Transactions with owners recognised
directly in equity:
Contributions by and distributions
to owners:
Shares issued 1 476 - - - 1 476 - 1 476
Transfer non-distributable
items to NDR - - 248 (248) - - -
Share-based payment transactions 10 - (50) - (40) - (40)
Dividends declared - - - (2 662) (2 662) (253) (2 915)
Changes in ownership interest:
Rights issue and acquisitions - GOZ - (4) - - (4) 112 108
Balance at 30 June 2017 44 876 1 572 22 711 2 886 72 045 6 709 78 754
Total comprehensive income:
- Profit after taxation - - - 5 748 5 748 695 6 443
- Other comprehensive income - (656) - - (656) (261) (917)
Transactions with owners recognised
directly in equity:
Contributions by and distributions
to owners:
Shares issued 1 107 - - - 1 107 - 1 107
Transfer non-distributable
items to NDR - - 2 805 (2 805) - - -
Share-based payment transactions 10 - 3 - 13 - 13
Dividends declared - - - (2 886) (2 886) (266) (3 152)
Balance at 31 December 2017 45 993 916 25 519 2 943 75 371 6 877 82 248
2017 2016
Cents Cents
Dividend per share 101.2 95.0
STATEMENT OF CASH FLOWS
For the six months ended 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Rm Rm Rm
Cash flows from operating activities
Cash generated from operations 3 796 3 747 7 580
Finance expense paid (1 008) (1 187) (2 438)
Finance and other investment income received 29 55 105
Taxation paid (43) (65) (84)
Distribution to shareholders (3 153) (2 761) (5 766)
Net cash outflow from operating activities (379) (211) (603)
Net cash outflow from investing activities (1 917) (8 783) (8 637)
Net cash inflow from financing activities 2 331 9 165 8 993
Net increase/(decrease) in cash and cash equivalents 35 171 (247)
Translation effects on cash and cash equivalents of foreign operation (17) (45) (41)
Cash and cash equivalents at beginning of period 613 901 901
Cash and cash equivalents at end of period 631 1 027 613
SEGMENTAL ANALYSIS
For the six months ended 31 December 2017
Segment Analysis
The Group determines and presents operating segments based on the information that is provided internally to
the Executive Management Committee (EXCO), the Group's operating decision-making forum. The Group comprises
six segments, namely Retail, Office, Industrial, Growthpoint Australia, V&A Waterfront and Globalworth.
An operating segment's operating results are reviewed regularly by Exco to make decisions about resources
to be allocated to the segment and assess its performance, and for which discrete financial information
is available.
Segment Brief description of segment
Retail The Growthpoint retail portfolio consists of 54 properties, comprising shopping
centres with the balance being vacant land. It includes regional, community,
neighbourhood, speciality and small regional shopping centres as well as
retail warehouses.
Office The Growthpoint office portfolio consists of 182 properties which includes high
rise and low rise offices, office parks, office warehouses, hospitals as well as
mixed use properties comprising both office and retail.
Industrial The Growthpoint industrial portfolio consists of 227 properties which includes
warehousing, industrial parks, retail warehousing, motor-related outlets, low
and high grade industrial, high-tech industrial as well as mini, midi and maxi
units, as well as mixed use properties comprising both industrial and retail.
Growthpoint Australia The GOZ portfolio consists of 56 properties which includes both industrial and
office properties, all situated in Australia.
V&A Waterfront The V&A Waterfront is a 122 hectare mixed-use property development situated in
and around the historic Victoria and Alfred Basins, which formed Cape Town's
original harbour, with Table Mountain as its backdrop. Its properties include
retail, office, fishing and industrial, hotel and residential as well as
undeveloped bulk.
Globalworth The Globalworth portfolio consists of 39 properties which includes mostly
modern A-grade office properties, industrial properties as well as a residential
property complex concentrated in Bucharest and in Timisoara, Romania (19)
and major cities in Poland (20).
Geographic segments
In addition to the main reportable segments, the Group also includes a geographical analysis of net property
income, excluding straight-line lease income adjustment and investment property.
The following geographic segments have been identified:
- South Africa
- Australia
- V&A Waterfront
- Central Eastern Europe
Profit or loss and assets and liabilities disclosure
Unaudited 31 December 2017
Total Central
South Total as V&A Eastern
Retail Office Industrial Africa Australia reported Waterfront Europe Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Revenue, excluding
straight-line lease
adjustment 1 612 1 871 705 4 188 1 299 5 487 420 356 6 263
Property-related expenses (420) (426) (160) (1 006) (186) (1 192) (121) (123) (1 436)
Net property income 1 192 1 445 545 3 182 1 113 4 295 299 233 4 827
Other administrative and
operating overheads (150) (63) (213) (12) (66) (291)
Equity-accounted investment
profit - net of tax 555 - 555 - 10 565
Fair value adjustment on
investment property 763 544 202 1 509 1 253 2 762 - 32 2 794
Fair value adjustments
(other than investment
property) 176 65 241 - 131 372
Capital items and
other charges (70) - (70) 86 (52) (36)
Finance and other
investment income 359 1 360 11 7 378
Finance expense (1 015) (293) (1 308) (10) (176) (1 494)
Consolidated profit
before taxation 4 546 2 076 6 622 374 119 7 115
Assets
Cash and cash equivalents 326 305 631 395 1 191 2 217
Trade and other receivables 3 011 686 3 697 101 112 3 910
Investment property
classified as held for sale - 126 34 160 - 160 - - 160
Derivative assets 695 2 697 - - 697
Listed investments - 722 722 - 123 845
Fair value of
property assets
Acquisitions made
during the year 922 - 132 1 054 518 1 572 - 3 532 5 104
Balance at year end 31 245 35 698 12 954 79 897 31 248 111 145 8 660 7 739 127 544
Long-term loans granted 353 - 353 - - 353
Equity-accounted investments 12 142 - 12 142 - 95 12 237
Equipment 3 11 14 - - 14
Intangible assets 2 314 - 2 314 - 53 2 367
Total assets 98 901 32 974 131 875 9 156 9 313 150 344
Liabilities
Trade and other payables 1 962 777 2 739 153 231 3 123
Derivative liabilities 455 111 566 - - 566
Taxation payable - 71 71 - 4 75
Interest-bearing borrowings 31 836 11 974 43 810 192 3 751 47 753
Deferred tax liability 2 438 3 2 441 - 429 2 870
Total liabilities 36 691 12 936 49 627 345 4 415 54 387
Unaudited 31 December 2016
Total Central
South Total as V&A Eastern
Retail Office Industrial Africa Australia reported Waterfront Europe Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Revenue, excluding
straight-line lease
adjustment 1 544 1 739 654 3 937 1 241 5 178 349 - 5 527
Property-related expenses (395) (395) (143) (933) (170) (1 103) (95) - (1 198)
Net property income 1 149 1 344 511 3 004 1 071 4 075 254 - 4 329
Other administrative
and operating overheads (135) (61) (196) (9) - (205)
Equity-accounted
investment profit -
net of tax 68 - 68 - - 68
Fair value adjustment
on investment property 540 436 281 1 257 329 1 586 - - 1 586
Fair value adjustments
(other than investment
property) 98 34 132 - - 132
Capital items and
other charges (70) (13) (83) - - (83)
Finance and other
investment income 308 3 311 22 - 333
Finance expense (963) (291) (1 254) (10) - (1 264)
Consolidated profit
before taxation 3 567 1 072 4 639 257 - 4 896
Assets
Cash and cash
equivalents 653 374 1 027 36 - 1 063
Trade and other
receivables 2 387 583 2 970 222 - 3 192
Investment property
classified as held
for sale - 966 2 968 102 1 070 - - 1 070
Derivative assets 347 - 347 - - 347
Listed investments 382 - 382 - - 382
Fair value of
property assets
Acquisitions made
during the year - 1 168 12 1 180 3 860 5 040 312 3 813 9 165
Balance at year end 30 035 33 782 12 247 76 064 31 529 107 593 7 965 3 813 119 371
Long-term loans granted 761 - 761 - - 761
Equity-accounted
investments 9 627 - 9 627 - - 9 627
Equipment 5 - 5 - - 5
Intangible assets 2 412 - 2 412 - - 2 412
Total assets 93 606 32 588 126 194 8 223 3 813 138 230
Liabilities
Trade and other payables 1 692 750 2 442 108 - 2 550
Derivative liabilities 537 - 537 - - 537
Taxation payable (8) 68 60 - - 60
Interest-bearing borrowings 31 011 13 832 44 843 195 - 45 038
Deferred tax liability 2 180 (2) 2 178 - - 2 178
Total liabilities 35 412 14 648 50 060 303 - 50 363
Audited 30 June 2017
Total Central
South Total as V&A Eastern
Retail Office Industrial Africa Australia reported Waterfront Europe Total
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Revenue, excluding
straight-line
lease adjustment 3 099 3 632 1 348 8 079 2 637 10 716 726 140 11 582
Property-related
expenses (792) (819) (290) (1 901) (344) (2 245) (204) (52) (2 501)
Net property income 2 307 2 813 1 058 6 178 2 293 8 471 522 88 9 081
Other administrative
and operating overheads (289) (127) (416) (24) (16) (456)
Equity-accounted
investment profit
net of tax 369 - 369 - - 369
Fair value adjustment on
investment property 481 293 332 1 106 848 1 954 492 4 2 450
Fair value adjustments
(other than investment
property) 35 4 39 - - 39
Capital items and other
charges (91) (13) (104) (1) 8 (97)
Finance and other
investment income 1 521 (829) 692 28 4 724
Finance expense (1 944) (566) (2 510) - (108) (2 618)
Consolidated profit
before taxation 6 885 1 610 8 495 1 017 (20) 9 492
Assets
Cash and cash equivalents 298 315 613 81 1 139 1 833
Trade and other receivables 2 649 565 3 214 73 46 3 333
Investment property
classified as held for sale 173 - 29 202 1 039 1 241 - - 1 241
Derivative assets 356 - 356 - - 356
Listed investments 226 - 226 - - 226
Fair value of
property assets
Acquisitions made
during the year - 1 758 116 1 874 5 047 6 921 - 192 7 113
Balance at year end 29 415 34 732 12 557 76 704 31 497 108 201 8 705 4 200 121 106
Long-term loans granted 709 - 709 - - 709
Equity-accounted
investments 9 920 - 9 920 - 8 9 928
Equipment 3 12 15 - - 15
Intangible assets 2 362 - 2 362 - 52 2 414
Total assets 93 429 33 428 126 857 8 859 5 445 141 161
Liabilities
Trade and other payables 1 829 743 2 572 111 51 2 734
Derivative liabilities 523 64 587 - - 587
Taxation payable (4) 48 44 6 - 50
Interest-bearing borrowings 29 492 13 076 42 568 195 559 43 322
Deferred tax liability 2 332 - 2 332 - 74 2 406
Total liabilities 34 172 13 931 48 103 312 684 49 099
Distributable earnings reconciliation
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Rm Rm Rm
Revenue, excluding straight-line lease income adjustment 5 487 5 178 10 716
Property-related expenses (1 192) (1 103) (2 245)
Other administrative and operating overheads (213) (196) (416)
Net interest (948) (943) (1 818)
Finance and other investment income 360 311 692
Finance expense (1 308) (1 254) (2 510)
GWI dividend declared after half-year end, based
on HY18 earnings* 128 - -
Antecedent dividends 22 20 45
Non-controlling portion of distribution
(excluding fair value adjustments) - GOZ (266) (249) (502)
Distributable income from GOZ retained
(including NCI's portion) - - (165)
Realised foreign exchange (loss)/gain (1) 22 31
Current normal taxation (74) (67) (98)
Distributable earnings 2 943 2 662 5 548
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Distributable earnings (Rm) 2 943 2 662 5 548
Net number of shares in issue 2 906 954 088 2 802 007 024 2 860 702 595
Distribution per share 101.2 95.0 195.8
- Interim taxable dividend (cents) 101.2 95.0 95.0
- Final taxable dividend (cents) 100.8
Number of shares
Shares issued during the period:
Issued ordinary shares at the beginning of the period 2 888 462 582 2 786 093 366 2 786 093 366
Effect of shares issued 45 739 890 44 023 040 102 369 216
Shares in issue at end of the period 2 934 202 472 2 830 116 406 2 888 462 582
Effect of treasury shares held (27 248 384) (28 109 382) (27 759 987)
Net shares in issue at end of the period 2 906 954 088 2 802 007 024 2 860 702 595
* R78.0 million distribution from GWI included in finance and other investment income for FY17.
Unaudited Unaudited Unaudited
31 December 31 December 30 June
2017 2016 2017
Cents Cents Cents
Net asset value*
Net asset value per share 2 593 2 495 2 518
Tangible net asset value per share 2 597 2 487 2 517
Rm Rm Rm
Net asset value per share is reconciled to
tangible net asset value per share as follows:
Net asset value attributable to shareholders 75 371 69 922 72 045
Less: Net effect of business acquisitions
and other intangibles 127 (234) (30)
Intangible assets (2 314) (2 412) (2 362)
Deferred tax liability 2 441 2 178 2 332
Tangible net asset value 75 498 69 688 72 015
Key reporting ratios*
Best practice recommendations were issued by the SA REIT Association 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.
Property cost-to-income ratio
Gross 31.29 31.19 30.42
Net 16.82 16.82 16.56
Based on IFRS reported figures 21.72 21.30 20.95
Property cost-to-income ratio is based on the total
property related expenses divided by the revenue,
excluding straight-line lease income adjustments.
The figures are adjusted for gross, net and IFRS
reported expense.
Operating cost-to-income ratio
Gross 3.41 3.52 4.15
Net 4.13 3.79 3.88
Based on IFRS reported figures 3.88 3.79 3.88
Operating cost-to-income ratio is based on the total
operating expenses divided by the revenue, excluding
straight-line lease income adjustments. The figures
are adjusted for gross, net and IFRS reported expense.
Total cost-to-income ratio
Gross 34.70 34.71 34.00
Net 20.95 20.82 20.66
Based on IFRS reported figures 25.61 25.09 24.83
Total cost-to-income ratio is based on the total
expenses divided by the revenue, excluding
straight-line lease income adjustments.
The figures are adjusted for gross, net and
IFRS reported expense.
* This information has not been audited by Growthpoint's independent external auditors.
Unaudited Unaudited Unaudited
six months six months 12 months
31 December 31 December 30 June
2017 2016 2017
% % %
Interest cover ratio 3.46 3.45 3.51
Interest cover ratio (excluding GOZ) 3.42 3.43 3.43
Interest cover ratio for Growthpoint is based on
the operating profit excluding straight-line lease
income adjustment plus the investment income from
equity-accounted investments divided by the finance
costs, after deducting finance income from banks
and long-term loans.
Loan to value ratio 34.53 36.70 34.98
Loan to value ratio (excluding GOZ) 33.84 34.69 33.40
Loan to value ratio for Growthpoint is based on the
nominal value of debt (net of cash), divided by the
fair value of property assets, including investment
property held for sale, equity-accounted investments
and listed investments.
NOTES
For the six months ended 31 December 2017
Note 1: Finance and other investment income
Unaudited Unaudited Audited
six months six months 12 months
31 December 31 December 30 June
2017 2016 2017
Rm Rm Rm
Finance income
Banks 28 12 23
Long-term loans 17 22 19
45 34 42
Investment income
Dividends received from equity-accounted investments 287 256 605
Other 28 21 45
315 277 650
Total finance and other investment income 360 311 692
Note 2: Headline earnings per share
Reconciliation between basic earnings, diluted earnings and headline earnings
Gross Total
Unaudited Unaudited Audited Unaudited Unaudited Audited
six months six months 12 months six months six months 12 months
31 December 31 December 30 June 31 December 31 December 30 June
2017 2016 2017 2017 2016 2017
Rm Rm Rm Rm Rm Rm
Profit for the year 5 748 4 416 7 524
Bargain purchase 2 926* 1 595* 1 850* (1) (80) (78)
Fair value adjustments
on investment property 2 926* 1 595* 1 850* (2 845) (1 553) (2 397)
Fair value adjustment:
Net of straight-line
lease adjustment (2 486) (1 431) (1 993)
NCI portion of fair
value adjustments (359) (122) (404)
Headline earnings 2 902 2 783 5 049
* Both the bargain purchase and fair value adjustment on investment property are included in the "Fair value
adjustments, capital items and other charges" line item on the statement of profit or loss and other
comprehensive income.
Note 3: Fair Value Disclosure
Classification of financial assets and liabilities
Loans and Outside
Held for Designated other scope
trading at fair value receivables of IAS 39 Total
Rm Rm Rm Rm Rm
Assets
Unaudited six months 31 December 2017
Cash and cash equivalents - - 631 - 631
Trade and other receivables - - 2 929 768 3 697
Derivative assets 697 - - - 697
Listed investments - 722 - - 722
Long-term loans granted - 353 - - 353
Unaudited six months 31 December 2016
Cash and cash equivalents - - 1 027 - 1 027
Trade and other receivables - - 2 185 785 2 970
Derivative assets 347 - - - 347
Listed investments - 382 - - 382
Long-term loans granted - 761 - - 761
Audited 30 June 2017
Cash and cash equivalents - - 613 - 613
Trade and other receivables - - 2 426 788 3 214
Derivative assets 356 - - - 356
Listed investments - 226 - - 226
Long-term loans granted - 709 - - 709
Liabilities
Unaudited six months 31 December 2017
Trade and other payables - - 2 395 344 2 739
Derivative liabilities 566 - - - 566
Taxation payable - - - 71 71
Interest-bearing borrowings - 43 810 - - 43 810
Deferred tax liabilities - - - 2 441 2 441
Unaudited six months 31 December 2016
Trade and other payables - - 2 151 291 2 442
Derivative liabilities 537 - - - 537
Taxation payable - - - 60 60
Interest-bearing borrowings - 44 843 - - 44 843
Deferred tax liabilities - - - 2 178 2 178
Audited 30 June 2017
Trade and other payables - - 2 302 270 2 572
Derivative liabilities 587 - - - 587
Taxation payable - - - 44 44
Interest-bearing borrowings - 42 568 - - 42 568
Deferred tax liabilities - - - 2 332 2 332
Fair value estimation
Fair value measurement of assets and liabilities
The table below includes only those assets and liabilities that are measured at fair value including non-recurring
items measured at fair value:
Unaudited Unaudited Audited
31 December 2017 31 December 2016 30 June 2017
Rm Rm Rm
Fair value Level 1 Level 2 Level 3 Fair value Level 2 Level 3 Fair value Level 2 Level 3
Assets
Recurring fair
value measurement
Fair value of
property assets 111 305 - - 111 305 107 593 - 107 593 108 201 - 108 201
Listed investments 722 722 - - 382 - 382 226 - 226
Long-term loans
granted 353 - - 353 761 - 761 709 - 709
Derivative assets 697 - 590 107 347 347 - 356 249 107
Non-recurring fair
value measurement
Non-current assets
held for sale 160 - - 160 1 070 - 1 070 1 241 - 1 241
Total assets
measured
at fair value 113 237 722 590 111 925 110 153 347 109 806 110 733 249 110 484
Liabilities
Recurring fair
value measurement
Interest-bearing
borrowings 43 810 - 43 810 - 44 843 44 843 - 42 568 42 568 -
Derivative
liabilities 566 - 535 31 537 537 - 537 556 31
Total liabilities
measured
at fair value 44 376 - 44 345 31 45 380 45 380 - 43 155 43 124 31
The carrying amount of assets and liabilities that are not measured at fair value reasonably approximate their fair value
due to their short-term nature. These include trade and other receivables, cash and cash equivalents and trade and
other payables.
Movement in level 3 instruments
Unaudited Unaudited Audited
six months six months 12 months
31 December 2017 31 December 2016 30 June 2017
Rm Rm Rm
Long- Long- Long-
Listed term Listed term Listed term
Property invest- loans Property invest- loans Property invest- loans
assets ments granted assets ments granted assets ments granted
Opening balance 109 442 226 709 104 690 440 605 104 690 440 605
Gain/(loss) from fair value
adjustments and translation
of foreign operations 1 298 10 37 (1 898) (58) 31 (1 086) (214) 53
Acquisitions 2 744 - - 7 717 - 172 9 529 - -
Disposals (2 179) (236) - (1 846) - - (3 691) - -
Advances - - 50 - - - - - 463
Settlements - - (443) - - (47) - - (412)
Closing balance 111 305 - 353 108 663 382 761 109 442 226 709
Valuation process
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.
Valuation techniques using observable inputs - Level 1 and 2
Fair values classified as Level 1 and 2 have been determined using models for which inputs are observable
in an active market. A valuation input is considered observable if it is obtained directly, such as quoted
prices, or indirectly, such as those derived from quoted prices.
Valuation technique using significant unobservable inputs - level 3
Fair values are classified at Level 3 if their determination incorporates significant inputs that are not
based on observable market data.
Valuation techniques and significant observable and unobservable inputs
Level 1 instruments
Listed investments
Description Valuation technique Significant observable inputs
Industria REIT The fair value is based on the last Market price of AUD2.52
traded market price from the per listed share
Australian Securities Exchange (ASX)
as at 31 December 2017.
The estimated fair value would increase/(decrease) if the credit margin were lower/(higher).
Level 2 instruments
Interest-bearing borrowings
Description Valuation technique Significant observable inputs
Interest-bearing Valued by discounting future cash Credit margins: 0.49%
borrowings flows using the South African or to 3.60% (FY17: 0.43%
EUR swap curve plus an appropriate to 3.60%)
credit margin at the dates when the
cash flows will take place.
The estimated fair value would increase/(decrease) if the credit margin were lower/(higher).
Derivative instruments
Description Valuation technique Significant observable inputs
Forward exchange Valued by discounting the forward Not applicable
contracts rates applied at year end to the
open hedged positions.
Interest rate swaps Valued by discounting the future Not applicable
cash flows using the South African
swap curve at the dates when
the cash flows will take place.
Cross-currency Valued by discounting the future Not applicable
interest rate swaps cash flows using the basis swap
curve of the respective currencies
at the dates when the cash flows
will take place.
Level 3 instruments
In terms of the Group's accounting policy, at least 75% of the fair value of investment properties
should be determined by an external, independent property valuer, having appropriate recognised
professional qualifications and recent experience in the location and category of the property
being valued.
The balance of the South African portfolio was valued by Growthpoint's qualified internal valuers.
The South African properties were valued at HY18 using the discounted cash flow of future income
streams method by the following valuers who are all registered valuers in terms of section 19 of
the Property Valuers Professional Act, No 47 of 2000:
Mills Fitchet PWV PG Mitchell NDip (Prop Val), MIV (SA), CIEA, professional valuer
Eris Property Group C Everatt BSc (Hons) Estate management, MRICS, MIV (SA),
professional valuer
Jones Lang LaSalle J Karg BSc, MRICS, MIV (SA), professional valuer
Spectrum PL O'Connell NDip (Prop Val), professional valuer
Sterling Ali Su Greybe-Smith BSc (Hons), MIVSA, professional associated valuer
The Australian properties were valued at HY18 using the discounted cash flow of future income streams
method by Savills, Urbis, m3property, JLL, CBRE, Colliers, Knight Frank and LMW. The fair value of
properties not externally valued as at 31 December 2017 were based solely on director valuations.
At the reporting date, the key assumptions and unobservable inputs used by the Group in determining fair
value were in the following ranges for the Group's portfolio of properties:
Investment property
Significant unobservable inputs and range of estimates used
Valuation Discount Exit capitalisation Capitalisation
Description technique rate (%) rate (%) rate (%)
Retail sector Discounted 12.5 - 17.0 6.8 - 11.00 6.8 - 11.0
Office sector cash flow 13.3 - 16.0 7.5 - 10.3 7.5 - 10.0
Industrial sector model 13.8 - 17.0 8.0 - 12.0 8.0 - 13.4
GOZ office 6.8 - 9.0 6.5 - 8.5 5.3 - 13.4
GOZ industrial 6.8 - 8.8 6.0 - 10.0 5.8 - 8.8
The estimated fair value would increase/(decrease) if the expected market rental growth was higher/
(lower), expected expense growth was lower/(higher), the vacant periods were shorter/(longer), the
occupancy rate was higher/(lower), the rent-free periods were shorter/(longer), the discount rate
was lower/(higher) and/or the reversionary capitalisation rate was lower/(higher).
Long-term loans granted
Description Valuation technique Significant unobservable inputs
Acucap Unit Valued by discounting future cash Not applicable
Purchase Scheme flows using the South African swap
curve at the dates when the cash
flows will take place.
Roeland Street Valued by discounting future cash Not applicable
Investment 2 (Pty) Ltd flows using a floating rate that
is applicable to this loan including
an estimated counter party
credit spread.
OPEN Valued by discounting future cash Not applicable
flows using the South African swap
curve at the dates when the cash
flows will take place.
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