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Growthpoint Properties Limited - Unaudited Interim Results And Distribution
Announcement
Growthpoint Properties Limited
("Growthpoint" or "the company")
(Registration number 1987/004988/06)
Share code: GRT ISIN: ZAE000037669
* 4,7% increase in interim distribution to 33,5 cents
* assets to exceed R6,6 billion
* market capitalisation of o ver R3,7 billion
* largest listed South African property investment company
* much-improved liquidity and tradability
UNAUDITED INTERIM RESULTS AND DISTRIBUTION ANNOUNCEMENT
for the six months ended 31 December 2003
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Revenue 434 221 188 281 452 982
Property expenses (141 523) (67 251) (158 775)
Net property income 292 698 121 030 294 207
Other operating
expenses (15 561) (3 626) (13 533)
Net property income
after other operating
expenses 277 137 117 404 280 674
Investment income 47 072 19 229 77 223
Capital items and
fair value
adjustments (Note 1) 11 404 (832) 14 140
Merger costs - - (8 827)
Operating profit 335 613 135 801 363 210
Interest paid (133 939) (43 099) (149 217)
Interest on nil
coupon loan (11 456) - (2 910)
Interest earned 19 726 16 129 19 904
Net income before
debenture interest 209 944 108 831 230 987
Debenture interest (208 552) (108 708) (227 197)
Net income before
taxation 1 392 123 3 790
Taxation (1 184) (14) (3 563)
Normal and secondary
tax on companies (148) (14) (1 151)
Capital gains taxation (1 036) - (2 412)
Net income after
taxation 208 109 227
Note 1: Capital items
and fair value
adjustments 11 404 (832) 14 140
Fair value adjustment
investment
properties - - 69 922
Fair value adjustment
listed investment
portfolio 76 031 60 546 135 329
Fair value adjustment
interest bearing
borrowings (52 145) - -
Fair value adjustment
debentures (19 867) (61 378) (206 108)
Realised profit on
sale of listed
investments 6 906 - 13 212
Realised profit on
sale of investment
property 479 - 1 785
Calculation of
distributable
earnings:
Net property income
after other operating
expenses 277 137 117 404 280 674
Investment income 47 072 19 229 77 223
Interest paid (133 939) (43 099) (149 217)
Interest earned 19 726 16 129 19 904
Taxation (148) (14) (1 151)
Distributable earnings 209 848 109 649 227 433
Distribution per
linked unit 33,50 32,00 66,55
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
ASSETS
Investment property 4 569 244 1 839 981 4 550 893
Listed investment portfolio 942 549 716 741 809 811
Receivables and other current
assets 42 183 70 036 40 792
Bank and call accounts 203 714 33 793 22 155
Total assets 5 757 690 2 660 551 5 423 651
EQUITY AND LIABILITIES
Ordinary share capital 31 156 17 003 17 164
Non-current liabilities
debentures 3 271 730 1 619 798 1 782 317
Linked unitholders" interest 3 302 886 1 636 801 1 799 481
Non-current liabilities 1 964 072 841 834 895 914
Non-current liabilities
non-in terest bearing 124 182 - 112 726
Amount owing to Primegro
Properties Limited
in respect of merger - - 2 278 604
Current liabilities 366 550 181 916 336 926
Total equity and liabilities 5 757 690 2 660 551 5 423 651
Number of linked units in issue 623 100 092 340 054 700 343 288 934
Net asset value per linked unit
(cents) 530 481 524
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
31 December 31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Cash generated by operations 274 084 125 723 343 007
Sundry income - - 263
Net finance costs (67 141) (26 970) (30 207)
Taxation paid (1 059) (9) (22)
Distribution paid to unitholders (40 294) (74 752) (261 645)
Cash flow from operating
activities 165 590 23 992 51 396
Cash flow from investing
activities (1 024 239) (263 210) (356 332)
Cash flow from financing
activities 1 040 208 199 435 253 515
Net increase in cash and cash
equivalents 181 559 (39 783) (51 421)
Cash and cash equivalents at
beginning of period 22 155 73 576 73 576
Cash and cash equivalents at end
of period 203 714 33 793 22 155
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
Total share
Ordinary capital and
share capital Reserves reserves
R"000 R"000 R"000
Audited balance at 30 June 2002 12 315 (7 040) 5 275
AC 133 transitional adjustment - 7 040 7 040
Shares issued 4 849 - 4 849
Net income for year - 227 227
Dividends - (227) (227)
Audited balance at 30 June 2003 17 164 - 17 164
Shares issued 13 992 - 13 992
Net income for period - 208 208
Dividends - (208) (208)
Unaudited balance at 31 December
2003 31 156 - 31 156
COMMENTARY
Basis of accounting
The unaudited interim financial statements have been prepared in accordance
with the South African Statement of Generally Accepted Accounting Practice
Interim Financial Reporting AC 127 and the accounting policies used are
consistent with those applied in the annual financial statements for the year
ended 30 June 2003.
It is not the company"s policy to revalue Investment Property at the interim
stage. The significant increase in demand for property over the last six
months has resulted in a lowering of capitalisation rates which, if sustained,
is likely to result in an increase in the valuation of the physical property
portfolio at the end of the current financial year.
Financial results of Growthpoint
The merger with Primegro Properties Limited ("Primegro"), effective from 1 May
2003, more than doubled the value of the property portfolio, interest bearing
loans and linked unitholders" interest.
Revenue, expenses and interest paid have also more than doubled as a result of
the merger. The substantial increase in investment income was due to the fact
that the listed investment portfolio was only acquired in October 2002.
The successful implementation of the merger has created the largest South
African listed property investment company with assets in excess of R5,7
billion and a market capitalisation of over R3,7 billion. The overall high
quality of the portfolio, with retail comprising 63% by value at balance sheet
date, including exposure to 10 dominant/regional shopping centres, should
ensure the long-term sustainability of earnings.
The company has achieved the critical mass to take advantage of large
acquisition opportunities and has concluded two large purchases in the period
as set out in the note on post-balance sheet events. The larger and more
diversified shareholder base has contributed to much-improved liquidity and
tradability of the linked units traded on the JSE Securities Exchange South
Africa ("JSE"), as described in more detail later in this report.
The short to medium term goal of Growthpoint is to be included in the FTSE/JSE
Alsi 40 index as this should create significant additional investment demand,
further increasing liquidity and tradability and could potentially lead to a
further positive rerating of the linked units.
Earnings per share
The disclosure of earnings per share set out below, while obligatory in terms
of accounting standards, is not meaningful to investors as the shares are
traded as part of a linked unit and virtually all of the revenue earnings are
distributed in the form of debenture interest plus dividend in the ratio of 1
000 to 1. In addition, headline earnings include profit on the sale of listed
property investments, fair value adjustments for debentures as well as interest
adjustments on nil coupon loans, which do not affect distributable earnings. It
is submitted that the distribution per linked unit as shown above is more
meaningful.
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
31 December 31 December 30 June
2003 2002 2003
Shares in issue 623 100 092 340 054 700 343 288 934
Weighted number of
shares in issue 623 100 092 254 116 303 314 910 131
Basic earnings per
share (cents) 0,03 0,04 0,07
Headline
earnings/(loss) per
share (cents) (0,04) 0,04 (15,90)
Basic
earnings/Headline
earnings are
calculated
as follows: R"000 R"000 R"000
Net income after
taxation 208 109 227
Realised profit on
sale of investment
property (479) - (1,785)
Capital Gains
Taxation on realised
capital profits - - 430
Fair value adjustment
investment properties
net of tax - - (48,945)
Headline loss/(earnings) (271) 109 (50,073)
Segmental information
Retail Commercial Industrial
R"000 R"000 R"000
Revenue 251 980 152 484 12 509
Property expenses (79 078) (55 292) (4 216)
Net income 172 902 97 192 8 293
Percentage of total 59,1 33,2 2,8
Book value 2 891 210 1 362 744 98 490
Percentage of total 63,3 29,8 2,2
Warehousing Hotels Total
R"000 R"000 R"000
Revenue 8 598 8 650 434 221
Property expenses (1 224) (1 713) (141 523)
Net income 7 374 6 937 292 698
Percentage of total 2,5 2,4 100,0
Book value 96 800 120 000 4 569 244
Percentage of total 2,1 2,6 100,0
Refer to pie chart published in the press.
Borrowings and cash balances
Total interest bearing borrowings at 31 December 2003 amounted to R1,9 billion.
Interest rates in respect of 100% of total borrowings have been fixed for
varying periods with the earliest expiry being April 2004 and the latest expiry
being October 2013. The weighted average interest rate paid by Growthpoint on
these borrowings in terms of which interest rates have been fixed amounts to
12,25%. Growthpoint"s debt, including non-interest bearing debt as a percentage
of investment property plus listed property investments ("loan to value
ratio"), is 38,4%.
Refer to graph published in the press.
The above graph shows the years in which the fixed interest rate contracts
expire in respect of the value of debt shown.
Lease expiry profile
Refer to graph published in the press.
The purchase of the two Investec Bank Limited ("Investec") properties and
conclusion of a twenty-year lease with Investec will result in approximately
15% of rentals (at current levels) being secured for the next 20 years and
together with the Waterfall Mall acquisition should improve the overall lease
expiry profile.
Vacancies
Average vacancies decreased substantially following the merger with Primegro,
effective from 1 May 2003. The properties acquired were predominantly retail,
with average vacancies of approximately 3,5%. This is a further indication of
the quality of the properties acquired. Since the merger date, vacancies have
continued to be well managed and have decreased to a level of 7,2% based on
gross letable area.
Refer to graph published in the press.
The company is in the process of disposing of its remaining Johannesburg C.B.D.
properties. This, together with the disposal of other non-core properties and
ongoing letting activities, should result in vacancies decreasing further.
Liquidity and trading of Growthpoint linked units on the JSE
The graphs below show the value of units traded and the percentage of units
traded relative to the total units in issue over the past 20 months:
Refer to graph published in the press.
The average Rand value of units traded has increased from R11 million to R98
million per month since the merger with Primegro. Likewise the volume of units
traded as a percentage of units in issue has increased from a monthly average
of 0,75% to 2,59%. For the reporting period 1 July 2003 to 31 December 2003
nearly 90 million linked units, valued at R542 million were traded on the JSE.
Post-balance sheet events
The following significant transactions, which have been announced in the press
and circularised to linked unitholders, will be effective after the balance
sheet date:
1. The acquisition of the Cape Town and Sandton offices of Investec for a total
cost of R995 million and the entering into of a 20-year lease with Investec
over the two properties. The acquisition will be financed by a mortgage loan
to the extent of R502,5 million, the issue of new Growthpoint linked units
to the value of R292,5 million and an interest-free loan of R200 million
payable in equal tranches at the end of one and two years. The effective
date of the transaction will be on registration of transfer, which is
imminent.
2. The acquisition of Waterfall Mall, a premier regional shopping mall in
Rustenburg for an amount of R294,6 million.
This transaction will be effective from 1 April 2004.
3. The specific repurchase of 62 000 000 Growthpoint linked units from the Mine
Pension Funds ("MPF") for a consideration of R375,1 million paid for by
transferring to MPF a portfolio of listed property investments.
The pro forma balance sheet below has been prepared to show the impact of the
above transactions:
Pro-forma balance sheet, after post-balance sheet transactions
Unaudited
31 December 2003 Pro forma
R"000 R"000
ASSETS
Investment property 4 569 244 5 827 849
Listed investment portfolio 942 549 567 449
Receivables and other current assets 42 183 42 183
Bank and call accounts 203 714 203 714
Total assets 5 757 690 6 641 195
EQUITY AND LIABILITIES
Ordinary share capital 31 156 30 599
Non-current liabilities debentures 3 271 730 3 189 687
Non-current liabilities interest bearing 1 964 072 2 761 172
Non-current liabilities non interest
bearing 124 182 293 187
Current liabilities 366 550 366 550
Total equity and liabilities 5 757 690 6 641 195
Number of linked units in issue 623 100 092 611 969 657
Prospects
Subject to market conditions remaining stable, the Growthpoint board
anticipates that the company"s distribution for the second half of this
financial year should exceed that of the first half and therefore the total
distribution for the year will be in excess of the 67 cents per linked unit
previously forecast.
Declaration of interim dividend and interest payment Notice is hereby given of
interim dividend declaration number 34 of 0,03347 cent and debenture interest
payment number 34 of 33.46653 cents, totalling 33,5 cents per linked unit for
the income distribution period 1 July 2003 to 31 December 2003.
Timetable for interim distribution 2004
Last day to trade "cum"the interim distribution Friday, 12 March
Linked units commence trading "ex"the interim
distribution Monday, 15 March
Record date to participate in the interim
distribution Friday, 19 March
Payment date of the interim distribution Tuesday, 23 March
No dematerialisation or rematerialisation of Growthpoint linked unit
certificates may take place between Monday, 15 March 2004 and Friday, 19 March
2004, both days inclusive.
By order of the board
Growthpoint Properties Limited
26 February 2004
Registered office
Ground floor
100 Grayston Drive
Sandown
Sandton, 2196
PO Box 78949
Sandton, 2146
Transfer secretaries
Computershare Limited
Registration number 2000/006082/06
Ground Floor, 70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown 2107
Sponsor
Investec Securities Limited
100 Grayston Drive
Sandown
Sandton, 2196
PO Box 785700
Sandton, 2146
Managed by
INVESTEC
Property Group
Date: 26/02/2004 12:00:17 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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