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GRT
GRT
GRT - Growthpoint - Results For The Six Months Ended 31 December 2010
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code GRT ISIN: ZAE000037669
("Growthpoint" or "the company")
RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
- 8.1% distribution growth to 63,9 cents per linked unit
- Acquisition of 50% interest in V&A Waterfront for R4,9 billion
- Tangible assets exceed R40 billion
- Market capitalisation exceeds R28 billion
Income Statement
Six months Six months 12 months
31 December 31 December 30 June
2010 2009 2010
Note Rm Rm Rm
Revenue, excluding 2 126 1 939 3 956
straight-line lease
income adjustment
Straight-line lease 102 161 250
income adjustment
Revenue 2 228 2 100 4 206
Property expenses (488) (455) (915)
Net property income 1 740 1 645 3 291
Other operating (61) (52) (101)
expenses
Operating profit 1 679 1 593 3 190
Fair value adjustments 1 (174) (111) (182)
Finance costs (584) (589) (1 157)
Non-cash items 2 (53) 131 67
Capital items (2) (13) (30)
Finance income 39 81 128
Profit before 905 1 092 2 016
debenture interest
Debenture interest (1 003) (914) (1 874)
(Loss)/profit before (98) 178 142
taxation
Taxation (68) 28 (36)
- normal taxation - - (2)
- capital gains - 14 13
taxation
- deferred taxation (82) - (75)
charge
- deferred taxation 14 14 28
credit
(Loss)/profit for the (166) 206 106
period
(Loss)/profit
attributable to:
Equity holders (212) 160 38
Non-controlling 46 46 68
interest
Other comprehensive
income:
Foreign currency 112 35 (8)
translation
gain/(loss)
Total comprehensive (54) 241 98
income
Equity holders (131) 187 32
Non-controlling 77 54 66
interest
Calculation of
distributable earnings
Operating profit 1 679 1 593 3 190
Less: straight-line (102) (161) (250)
lease income
adjustment
Finance costs (584) (589) (1 157)
Finance income 39 81 128
Non-controlling (28) (9) (36)
interest share of
profit
Pre-acquisition profit - - 3
Taxation - - (2)
Distributable earnings 1 004 915 1 876
Total distribution (1 004) (915) (1 876)
- Debenture interest (1 003) (914) (1 874)
- Ordinary dividend (1) (1) (2)
Linked Linked Linked
units units units
Linked units in issue 1 571 517 392 1 547 521 924 1 547 521 924
at the end of the
period
Weighted number of 1 571 517 392 1 547 521 924 1 547 521 924
linked units in issue
cents cents cents
Distribution per 63,90 59,10 121,20
linked unit
Six months ended 31 63,90 59,10 59,10
December
Six months ended 30 - - 62,10
June
Basic (loss)/earnings 3 (13,49) 10,34 2,46
per share
Headline earnings per 4 32,10 55,24 94,76
linked unit
Balance Sheet
31 December 31 December 30 June
2010 2009 2010
Note Rm Rm Rm
ASSETS
Non-current assets 40 185 36 439 36 398
Fair value of investment 36 616 32 912 32 903
property for accounting
purposes
Straight-line lease 1 407 1 216 1 305
income adjustment
Fair value of long-term 38 023 34 128 34 208
property assets
Intangible assets 1 585 1 684 1 634
Other long-term employee 25 39 29
benefits
Equipment 2 4 3
Long-term loans granted 548 430 491
to BEE consortia
Derivative assets 2 154 33
Current assets 1 440 1 378 1 293
Investment property 571 514 691
reclassified as held for
sale
Trade and other 347 331 292
receivables
Cash and cash 522 533 310
equivalents
Total assets 41 625 37 817 37 691
EQUITY AND LIABILITIES
Shareholders` interest 1 399 1 706 1 550
Ordinary share capital 78 77 77
Foreign currency 70 27 (6)
translation reserve
Non-distributable 1 251 1 602 1 479
reserve
Non-current liabilities 5 22 639 21 005 20 795
- debentures
Linked unitholders` 24 038 22 711 22 345
interest
Non-controlling interest 947 506 496
Total unitholders` 24 985 23 217 22 841
interest
Other non-current 11 230 10 817 10 338
liabilities
Other non-current 10 756 10 472 9 932
financial liabilities
Deferred tax liability 474 345 406
Current liabilities 5 410 3 783 4 512
Trade and other payables 734 969 821
Current portion of other 3 636 1 881 2 705
non-current liabilities
Taxation payable 1 1 2
Linked unitholders for 1 039 932 984
interest and dividends
Total equity and 41 625 37 817 37 691
liabilities
Net asset value per 1530 1468 1444
linked unit (cents)
Tangible net asset value 1459 1381 1365
per linked unit (cents)
Statement of Cash Flows
Six months Six months 12 months
31 December 31 December 30 June
2010 2009 2010
Rm Rm Rm
Cash generated from operations 1 480 1 842 3 048
Net finance costs (603) (588) (1 109)
Taxation (paid)/received (1) 12 10
Capital items (2) (13) (30)
Distribution to unitholders (949) (820) (1 715)
Net cash (outflow)/inflow from (75) 433 204
operating activities
Net cash outflow from investing (1 767) (1 663) (1 741)
activities
Net cash inflow from financing 2 055 1 266 1 352
activities
Translation effects on cash and (1) - (2)
cash equivalents of foreign
operation
Net increase/(decrease) in cash and 212 36 (187)
cash equivalents
Cash and cash equivalents at 310 497 497
beginning of the period
Cash and cash equivalents at end of 522 533 310
the period
Statement of Changes in Equity
Foreign
Non- currency
Ordinary distributable translation
share reserve reserve Retained
capital (NDR) (FCTR) earnings
Rm Rm Rm Rm
Balance at 30 June 2009 70 1 366 - -
Shares issued 7 - - -
Total comprehensive - - 27 160
income
Transfer amortisation - (35) - 35
net of deferred
taxation to NDR
Transfer bargain - 202 - (202)
purchase to NDR
Business acquisition - - - - 77
GOZ
Transfer NDR reserves - 77 - (77)
with NCI
Transfer fair value - (8) - 8
adjustment on GOZ to
NDR
Dividends declared - - - - -
NCI
Dividends declared - - - (1)
Balance at 31 December 77 1 602 27 -
2009
Total comprehensive - - (33) (122)
income
Transfer amortisation - (36) - 36
net of deferred
taxation to NDR
Transfer fair value - (87) - 87
adjustment on GOZ to
NDR
Dividends declared - - - - -
NCI
Dividends declared - - - (1)
Balance at 30 June 2010 77 1 479 (6) -
Shares issued 1 - - -
Total comprehensive - - 81 (212)
income
Transfer amortisation - (35) - 35
net of deferred
taxation to NDR
Rights issue by GOZ - - (5) (15)
Transfer NDR reserves - (15) - 15
with NCI
Transfer fair value - (178) - 178
adjustment on GOZ to
NDR
Dividends declared - - - - -
NCI
Dividends declared - - - (1)
Balance at 31 December 78 1 251 70 -
2010
Non-
controlling
Shareholders` interest Total
interest (NCI) equity
Rm Rm Rm
Balance at 30 June 2009 1 436 - 1 436
Shares issued 7 - 7
Total comprehensive 187 54 241
income
Transfer amortisation - - -
net of deferred
taxation to NDR
Transfer bargain - - -
purchase to NDR
Business acquisition - 77 466 543
GOZ
Transfer NDR reserves - - -
with NCI
Transfer fair value - - -
adjustment on GOZ to
NDR
Dividends declared - - (14) (14)
NCI
Dividends declared (1) - (1)
Balance at 31 December 1 706 506 2 212
2009
Total comprehensive (155) 12 (143)
income
Transfer amortisation - - -
net of deferred
taxation to NDR
Transfer fair value - - -
adjustment on GOZ to
NDR
Dividends declared - - (22) (22)
NCI
Dividends declared (1) - (1)
Balance at 30 June 2010 1 550 496 2 046
Shares issued 1 - 1
Total comprehensive (131) 77 (54)
income
Transfer amortisation - - -
net of deferred
taxation to NDR
Rights issue by GOZ (20) 402 382
Transfer NDR reserves - - -
with NCI
Transfer fair value - - -
adjustment on GOZ to
NDR
Dividends declared - - (28) (28)
NCI
Dividends declared (1) - (1)
Balance at 31 December 1 399 947 2 346
2010
Notes
Rm Rm Rm
1. Fair value adjustments (174) (111) (182)
Gross investment property fair value 1 675 687 865
adjustment
Less: straight-line lease income (102) (161) (250)
adjustment
Net investment property fair value 1 573 526 615
adjustment
Listed property investments - 1 1
Borrowings and derivatives (311) (50) (492)
Foreign exchange - (loss)/profit (2) - 18
Long-term loans granted to BEE 36 14 54
consortia
Zero-coupon loans - profit - - 14
Debentures (1 470) (602) (392)
Debentures are adjusted to fair
value which represents the net asset
value attributable to Growthpoint`s
debenture holders, excluding the
intangible assets.
The debenture fair value adjustment
consists of:
Fair value adjustments on other (1 296) (492) (210)
assets and liabilities excluding
fair value adjustment on debentures
Straight-line lease income (102) (161) (250)
adjustment
Non-controlling interest`s portion 18 30 35
of fair value adjustments
Capital gains taxation - (14) (13)
Deferred taxation - GOZ 82 - 75
Non-cash financing charge - 14 20
Fair value adjustment on GOZ (178) - (95)
Decrease in other long-term employee 4 8 16
benefits
Capital items 2 13 30
Debenture fair value adjustment (1 470) (602) (392)
2. Non-cash items (53) 131 67
Non-cash financing charge - (14) (20)
Amortisation of intangible asset (49) (49) (99)
Negative goodwill - 202 202
Decrease in other long-term employee (4) (8) (16)
benefits
3. 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 listing
requirements, is not meaningful to investors as the shares are traded as
part of a linked unit and practically all the revenue earnings are
distributed in the form of debenture interest plus dividends in the ratio of
1 000 to 1. In addition, headline earnings include profit on the sale of
listed property investments, fair value adjustments on listed property
investments, fair value adjustments on interest-bearing and zero-coupon
borrowings and debentures as well as non-cash items, which do not affect
distributable earnings. The calculation of distributable earnings as set out
above is more meaningful to investors and is in accordance with
Growthpoint`s reporting policy.
4. In terms of Circular 3/2009, issued by SAICA, both the fair value
adjustment on investment property and debentures are added back in the
calculation of headline earnings per linked unit. The Circular does not make
provision for the fair value adjustment on other non-current financial
liabilities to be added back.
Rm Rm Rm
Basic (loss)/earnings are reconciled to
headlineearnings as follows:
(Loss)/profit after taxation (212) 160 38
Bargain purchase - (202) (202)
Add back: net fair value adjustment - (1 345) (451) (526)
investment property
- Fair value adjustment (1 573) (527) (615)
- Applicable taxation 228 76 89
Headline loss attributable to shareholders (1 557) (493) (690)
Add back: net fair value adjustment - 1 058 433 282
debentures
- Fair value adjustment 1 470 602 392
- Applicable taxation (412) (169) (110)
Add back: debenture interest paid 1 003 914 1 874
Headline earnings attributable to linked 504 854 1 466
unitholders
5. Non-current liabilities - debentures
Fair value at the beginning of the period 20 795 18 641 18 641
Issued during the period 374 1 762 1 762
Fair value adjustment (Note 1) 1 470 602 392
Fair value at the end of the period 22 639 21 005 20 795
Segmental Analysis
South Africa Australia Total
Retail Office Industrial 100%
Rm Rm Rm Rm Rm
INCOME
STATEMENTEXTRACT
S
Six months ended
31 December 2010
Revenue, 676 749 427 274 2 126
excluding
straight-line
lease income
adjustment
Property (192) (177) (95) (24) (488)
expenses
Segment result 484 572 332 250 1 638
Fair value
adjustment:
- investment 691 620 356 6 1 673
property
- investment - - - 2 2
property - non-
controlling
interest
Total fair value 691 620 356 8 1 675
adjustment on
investment
property
South Africa Australia Total
100%
Rm Rm Rm
Further extracts
of income
statement
Other operating 47 14 61
expenses
Finance costs 452 132 584
South Africa
Retail Office Industrial Australia Total
Rm Rm Rm Rm Rm
Year ended 30
June 2010
Revenue, 1 258 1 442 838 418 3 956
excluding
straight-line
lease income
adjustment
Property (337) (321) (209) (48) (915)
expenses
Segment result 921 1 121 629 370 3 041
Fair value
adjustment:
- investment 359 449 (108) 126 826
property
- investment - - - 39 39
property - non-
controlling
interest
Total fair value 359 449 (108) 165 865
adjustment on
investment
property
South Africa Australia Total
Rm Rm Rm
Further extracts
of income
statement
Other operating 79 22 101
expenses
Finance costs 954 203 1 157
South Africa Australia Total
Retail Office Industrial 100%
Rm Rm Rm Rm Rm
BALANCE SHEET
EXTRACTS
At 31 December
2010
- Investment
property
- Opening 10 669 12 686 6 667 4 877 34 899
balance - 30
June 2010
- Acquisitions - - - 1 557 1 557
- other
- Developments 102 141 47 - 290
and capital
expenditure
- Disposals - (4) (76) - (80)
- Foreign - - - 253 253
exchange profit
- Fair value 691 620 356 8 1 675
adjustment
- Long-term 691 620 356 8 1 675
property assets
Fair value of 11 462 13 443 6 994 6 695 38 594
property assets
- 31 December
2010
- Fair value of 11 410 13 133 6 874 6 606 38 023
long-term
property assets
- Investment 52 310 120 89 571
property
reclassified as
held for sale
South Africa Australia Total
100%
Rm Rm Rm
Further extracts
of balance sheet
Trade and other 325 22 347
receivables
Cash and cash 395 127 522
equivalents
Trade and other (671) (63) (734)
payables
Interest-bearing (10 638) (3 754) (14 392)
liabilities
- Nominal value (9 653) (3 566) (13 219)
- interest-
bearing
liabilities
- Fair value (985) (188) (1 173)
adjustment
South Africa Australia Total
Retail Office Industrial 100%
Rm Rm Rm Rm Rm
At 30 June 2010
- Investment
property
- Opening 10 152 12 399 6 682 - 29 233
balance - 30
June 2009
- Acquisitions - - - 4 272 4 272
- GOZ
- Acquisitions 102 11 50 467 630
- other
- Developments 202 284 103 14 603
and capital
expenditure
- Disposals (146) (457) (60) - (663)
- Foreign - - - (41) (41)
exchange loss
- Fair value 359 449 (108) 165 865
adjustment
- Long-term 359 339 (108) 165 755
property assets
- Reclassified - 110 - - 110
as held for sale
Fair value of 10 669 12 686 6 667 4 877 34 899
property assets
- 30 June 2010
- Fair value of 10 669 12 124 6 600 4 815 34 208
long-term
property assets
- Investment - 562 67 62 691
property
reclassified as
held for sale
South Africa Australia Total
100%
Rm Rm Rm
Further extracts
of balance sheet
Trade and other 273 19 292
receivables
Cash and cash 202 108 310
equivalents
Trade and other (782) (39) (821)
payables
Interest-bearing (9 846) (2 791) (12 637)
liabilities
- Nominal value (9 191) (2 730) (11 921)
- interest-
bearing
liabilities
- Fair value (655) (61) (716)
adjustment
Basis of accounting
These interim consolidated financial statements have not been reviewed or
audited by Growthpoint`s independent external auditors.
These condensed consolidated financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting, the AC 500 series
issued by the Accounting Practices Board, and the Companies Act of South
Africa.
The company`s accounting policies as set out in the audited financial
statements for the year ended 30 June 2010 have been consistently applied.
Investment property comprises land and buildings held to generate rental
income over the long term. Should any properties no longer meet the
company`s investment criteria and be sold, any profits or losses will be of
a capital nature and will be taxed at rates applicable to capital gains.
Deferred taxation on the revaluation of investment property is off-set
against the deferred taxation asset that arises on the revaluation of the
company`s issued debentures (excluding deferred taxation on intangible
assets and deferred taxation on the investment in GOZ).
Commentary
INTRODUCTION
Growthpoint is the largest South African listed property company with a
quality portfolio of 426 properties in South Africa valued at R31,9 billion
and 33 properties in Australia, valued at R6,7 billion.
The company`s objective is to grow and nurture a diversified portfolio of
quality investment properties, providing accommodation to a wide spectrum of
commercial users and delivering sustainable income distributions and capital
appreciation, optimised by effective financial structures. Effectively, all
rental income received by the company, less operating costs and interest on
debt, is distributed to unitholders semi-annually, so that the company is
very similar to the Real Estate Investment Trust (REIT) models that are well
established internationally. Growthpoint`s distributions are based on
sustainable income generated from rentals. The company does not distribute
capital profits.
Growthpoint is included in the JSE ALSI Top 40 Companies Index, having a
market capitalisation of R28,8 billion at 31 December 2010. Over the six
months, on average more than 64 million linked units traded per month (June
2010: 67 million). The monthly average value traded was R1,1 billion (June
2010: R950 million).
The South African portfolio represents 83% of the total portfolio by value,
and 85% by GLA, and is well diversified in the three major sectors of
commercial property, being office, retail and industrial. The bulk of the
value of the South African properties is situated in the major metropolitan
areas in strong economic nodes.
ACQUISITION OF 50% INTEREST IN V&A WATERFRONT FOR R4,9 BILLION
After the reporting period, Growthpoint together with the Public Investment
Corporation Limited (PIC), on behalf of the Government Employee Pension
Fund, entered into an agreement with Strawinsky Properties BV and Istithmar
South Africa FZE (the seller) to acquire, in equal proportions, 100% of the
seller`s interest in the V&A Waterfront for R9,7 billion. The transaction is
subject to approval by the Competition Commission as well as the South
African Reserve Bank.
The V&A Waterfront is a landmark South African property asset and is South
Africa`s top tourist destination. The developed property portfolio boasts a
well established and high quality portfolio of properties offering
attractive rentals, rental escalations and lease expiry profiles. Whilst the
transaction is consistent with Growthpoint`s objectives of providing its
linked unitholders with long-term sustainable income and capital growth, the
transaction also creates the opportunity to unlock significant value through
the development of the undeveloped bulk.
Retail activities within the V&A Waterfront are spread amongst various
buildings, with the largest being the Victoria Wharf shopping centre, and
contains a diverse mix of national tenants, high end international fashion,
jewellery and line shops. Offices primarily consist of A-grade rated office
buildings and include numerous blue chip tenants. The hotel sector includes
a combination of owned hotels operated by key independent operators as well
as land leases for hotels such as the Cape Grace, One & Only and Table Bay.
The fishing and industrial property consists primarily of fish processing
and freezing operations for key South African fishing operators.
Approximately 220 000m2 of bulk remains available for development
("undeveloped bulk"). The development rights provide flexibility in terms of
land use rights and timing of development.
Overview of the developed portfolio:
% Average Weighted
base rental average
escalation lease expiry
Sector GLA (by GLA) (years)
Retail 88 923 7.8 4
Office 89 023 8.7 10
Hotels 83 508 Note 1 25
Fishing and Industrial 122 379 8.9 23
383 833
Note 1: The nature of the hotel leases varies significantly between tenants,
the majority of which are land leases.
Financial impact
The anticipated initial yield on the income producing assets acquired is
expected to be between 7.2% - 7.3%. Relative to the balance of Growthpoint`s
existing portfolio this is lower than the average yield. This is to be
expected taking into account the high quality and greater retail weighting
of the V&A Waterfront properties. It is however expected that the net income
of the V&A Waterfront properties will grow at a higher rate than the
existing portfolio.
It is anticipated that borrowing costs in respect of the undeveloped bulk
acquired will be capitalised, while in development stage.
Development rights have been approved for 603 868m2, of which 220 000m2
remains to be developed. All services in respect of electricity, water,
sewerage and roads are in place. The rights are flexible in terms of the mix
of development (residential, office, hotel or retail) as well as the
location of these developments.
Approximately 45% of the bulk is allocated to residential development in
terms of currently approved precinct plans. There is potential to unlock
significant value through the development and sale of residential units on a
sectional title basis.
Growthpoint has secured the necessary funding for its portion of the
transaction value, amounting to approximately R4,9 billion and will utilise
primarily long-term debt funding raised from banks. It is the intention of
Growthpoint to refinance a portion of the initial funding with a combination
of corporate bond issuance and the issue of new equity when appropriate.
Growthpoint currently enjoys a very favourable investment grade rating from
Moody`s rating agency. Following the announcement of the V&A Waterfront
transaction, Moody`s placed Growthpoint`s ratings under review for a
possible downgrade. This is standard practice following a significant event
as the rating agency needs time to assess the potential impact and there are
still uncertainties regarding the ultimate mix of funding for the
transaction. Once these issues have been resolved, Moody`s will re-assess
and either retain the existing rating or potentially downgrade the rating.
Growthpoint will endeavour to maintain a good investment grade rating and at
the same time keep gearing levels at an acceptable level for the long-term
benefit of linked unitholders.
INVESTMENT IN GOZ - ADDITIONAL R282 MILLION
In the previous financial year, Growthpoint acquired a 76.2% holding in
Growthpoint Australia (GOZ) for R1,3 billion. In September 2010, GOZ
acquired seven direct property assets from Property Solutions Group for a
total price of AUD172 million (R1,2 billion) at a weighted average yield of
8.4%. The acquisition diversified the previously 100% industrial portfolio
of GOZ to include the office sector. The properties are located in the
attractive Queensland property market with quality tenants and good lease
covenants.
GOZ funded the acquisition by a 1 for 3 pro-rata renounceable rights offer
at AUD1,90 per stapled security, providing AUD101 million, with the balance
being funded from existing syndicated debt facilities.
Growthpoint took up the rights offer for 42% of its unitholding at the time
for R282 million, resulting in a dilution of its holding in GOZ to 67.6%
subsequent to the rights issue.
In terms of IAS 21, The Effects of Changes in Foreign Exchange Rates, the
consolidated balance sheet includes 100% of the assets and liabilities of
GOZ, converted at the closing exchange rate at 31 December 2010 of R6,76:
AUD (30 June 2010 R6,44: AUD). The consolidated income statement also
includes 100% of the revenue and expenses of GOZ, which was translated at an
average exchange rate of R6,72: AUD (30 June 2010 R6,71: AUD) for the
period. The resulting foreign currency translation difference is recognised
in other comprehensive income. A non-controlling interest was raised for the
32.4% (30 June 2010: 23.8%) not owned by Growthpoint.
Commentary on results
FINANCIAL RESULTS
Growthpoint has delivered good growth in distributions for the period ended
31 December 2010 of 8.1%.
The economic conditions during the period of review continued to improve,
albeit at a slow pace. This was reflected in the improvement in occupancy
levels and in arrears.
NET PROPERTY INCOME
The increase in gross revenue (9.6%) was mainly due to contractual rental
escalations, as well as accounting for the acquisition of GOZ made in August
2009, for a full six month period in the current results. On a "like-for-
like" basis, net property income increased by 6.7% in South Africa.
FAIR VALUE ADJUSTMENTS
The revaluation of properties resulted in an upward revaluation of R1,6
billion (4.4%) to R38,6 billion for investment property. This was due to
rental escalations as well as a decrease in discount rates as a result of
lower interest rates. Interest-bearing borrowings were fair valued upwards
by R311 million, using the yield curve at 31 December 2010. The trading
market value of the investment in GOZ, based on a stapled security price of
AUD1,96 (June 2010: AUD1,80) and translated at the closing exchange rate at
the end of the period, resulted in an upward fair valuation adjustment of
R178 million.
FINANCE COSTS
Finance costs (excluding Australia) decreased by 8.9% from December 2009
(R496 million) to December 2010 (R452 million).
Following the favourable credit rating obtained in November 2009 from
Moody`s Investors Services, Growthpoint was able to issue short-term (three-
month and six-month) commercial paper at relatively low margins.
This has contributed to the decrease in the average interest rate (including
margin) from 10.3% in December 2009 to 9.7% in December 2010.
In December 2010, Growthpoint issued R500 million of corporate bonds for the
first time at a margin of 156 bps for a period of four years.
NON-CASH ITEMS
The acquisition of the Property Services Businesses from Investec in FY2008
gave rise to a R1,5 billion intangible asset as well as R448 million of
goodwill on initial recognition. In terms of accounting standards, the
intangible asset is amortised over a 15 year period.
The staff incentive scheme put in place as part of the management "buy-in"
transaction concluded in the 2008 year has given rise to a plan asset, which
is reflected on the balance sheet net of the plan liability. The net
increase in the staff incentive scheme liability and the fair valuation of
the plan asset amounting to R4 million are book entries that do not affect
cash flow or distributable income.
ARREARS
At the end of December 2010, arrears for the South African business amounted
to R41,1 million (June 2010: R36,3 million) with a provision of R17,0
million (June 2010: R14,9 million) having been raised for potential bad
debts.
For the period to December 2010, the total bad debts expense amounted to
R3,3 million (December 2009: R9,7 million).
VACANCY LEVELS
At 31 December 2010 Growthpoint`s vacancy levels in South Africa, as a
percentage of gross lettable area (GLA) were:
Retail 2.4% (June 2010: 2.7%)
Office 8.1% (June 2010: 9.0%)
Industrial 5.5% (June 2010: 6.7%)
Total 5.5% (June 2010: 6.4%)
ACQUISITIONS AND DISPOSALS
In addition to the acquisition of the seven properties by GOZ, mentioned in
the highlights, the foreign subsidiary also acquired Worldpark, an office
building in Adelaide, for AUD49,5 million (R334 million). The initial yield
on the property is 8.4% and the weighted average lease expiry is 12.8 years.
DISPOSALS
Five properties were disposed of in the current period for R80 million,
realising a profit of R27,4 million on cost.
BORROWINGS
At 31 December 2010, the 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, was 32.9%
(30 June 2010: 33.2%). Excluding GOZ, the LTV decreases to 29.0% (30 June
2010: 29.9%). 92.1% (June 2010: 99.3%) of interest-bearing borrowings was
fixed for a weighted average of 8.7 years at 31 December 2010.
At 31 December 2010, Growthpoint had R3,6 billion of loans expiring in the
next 12 months, consisting of a R1,2 billion bank loan in February, R400
million of 6-month commercial paper in March and R2,0 billion of CMBS paper
in August/September 2011. The bank loan has been renegotiated and extended
to 30 November 2012. Based on the strong demand from investors since
Growthpoint`s first commercial paper issued in November 2009, we are
confident that the commercial paper can be rolled over. Alternative
available bank facilities will nevertheless be in place. New bank term
facilities have also been arranged to cover the CMBS maturities.
SHARE AND DEBENTURE CAPITAL
The authorised share capital is R100 000 000 divided into two billion
ordinary shares of five cents each. Each ordinary share is linked to ten
variable rate debentures of 250 cents each.
The ordinary shares and debentures trade as linked units on the JSE Limited
(JSE). In terms of the debenture trust deed, the interest payable on the
debenture component of the linked unit is always 1 000 times greater than
the dividend payable per ordinary share.
23 995 468 linked units were issued in September 2010 to those Growthpoint
linked unitholders who elected to reinvest their 2010 final distribution.
The linked units were issued at R15,90 per unit.
AFTER BALANCE SHEET EVENT - ACQUISITION OF 50% INTEREST IN V&A WATERFRONT
In terms of IAS 31, Interest in Joint Ventures, Growthpoint will
proportionately consolidate their 50% interest of income, expenses, assets
and liabilities in its financial statements.
The estimated fair value of the 50% of significant assets of the V&A
Waterfront acquired (based on the preliminary purchase price allocation) are
as follows:
R`m
Investment property 4 050
Estimated value of bulk and other non income producing assets 690
Long-term loan 119
Deferred tax (918)
Significant assets acquired 3 941
Consideration to acquire the significant assets 4 859
Goodwill 918
The purchase consideration of R9,7 billion (R4,9 billion relating to
Growthpoint`s 50% interest) for the V&A Waterfront excludes the value of the
net current assets (estimated value of R96 million).
CHANGES TO THE BOARD
Mr Zakhele Johannes Sithole was appointed as a non-executive director of
Growthpoint with effect from 3 November 2010.
PROSPECTS
It is expected that growth in distributions for the full year will be
similar to the growth rate achieved in the six months ended 31 December
2010.
This profit forecast has not been reviewed or reported on by Growthpoint`s
independent external auditors.
CASH DISTRIBUTION WITH THE ELECTION TO RE-INVEST THE CASH DISTRIBUTION IN
RETURN FOR GROWTHPOINT LINKED UNITS
Notice is hereby given of interim dividend declaration number 49 of 0,064
cents and debenture interest payment number 49 of 63,836 cents per linked
unit totalling 63,9 cents per linked unit for the six months ended 31
December 2010.
Linked unitholders will be entitled to re-invest the Cash Distribution in
return for linked units (Linked Unit Alternative), failing which they will
receive the Cash Distribution in respect of all or part of their linked
unitholding.
Linked unitholders who have dematerialised their linked units are required
to notify their duly appointed Central Securities Depository Participant
(CSDP) or broker of their election in the manner and time stipulated in the
custody agreement governing the relationship between the linked unitholder
and their CSDP or broker.
Summary of the salient dates relating to the Cash Distribution and Linked
Unit Alternative are as follows:
2011
Circular and form of election posted to linked Friday, 25 February
unitholders
Announcement of linked unit ratio Friday, 4 March
Last day to trade in order to participate in the Friday, 11 March
Cash Distribution and Linked Unit Alternative
Linked units to trade ex distribution Monday, 14 March
Listing of maximum number of Linked Unit Monday, 14 March
Alternativelinked units commences on the JSE
Last day to elect to receive a Linked Unit Friday, 18 March
Alternative and/or to receive the Cash
Distribution
Record date Friday, 18 March
Announcement of results of Cash Distribution and Tuesday, 22 March
Linked Unit Alternative on SENS
Linked unit certificates posted and Cash Tuesday, 22 March
Distribution posted/paid to certificated linked
unitholders
Accounts credited by CSDP or broker to Tuesday, 22 March
dematerialised linked unitholders
Announcement of results of election of Cash Wednesday, 23 March
Distribution or Linked Unit Alternative in the
press
Adjustment to linked unit listed on or about Wednesday, 23 March
Linked units may not be dematerialised between Monday, 14 March 2011 and
Friday, 18 March 2011, both days inclusive. The above dates and times are
subject to amendment. Any such amendment will be released on SENS and
published in the press.
By order of the Board
Growthpoint Properties Limited
22 February 2011
Directors
JF Marais (Chairman)
HSP Mashaba (Deputy Chairman)
LN Sasse* (Chief Executive Officer)
EK de Klerk*
MG Diliza
PH Fechter
LA Finlay
JC Hayward
HS Herman
R Moonsamy
N Nkabinde
ZJ Sithole
SM Snowball*
CG Steyn
JHN Strydom
FJ Visser
* Executive
Registered office
The Place, 1 Sandton Drive, Sandton, 2196.
PO Box 78949, Sandton, 2146
Transfer secretary
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001.
PO Box 61051, Marshalltown, 2107
Sponsor
Investec Bank Limited
100 Grayston Drive, Sandown, Sandton, 2196.
PO Box 78949, Sandton, 2146
Date: 23/02/2011 10:00:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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