Directors' Report
The directors are pleased to present their 27th annual report that forms part of the annual financial statements for the year ended 30 June 2015.
NATURE OF BUSINESS
On 1 July 2013, Growthpoint converted from a Property Loan Stock company to a Real Estate Investment Trust (REIT), which status was granted by the JSE in accordance with the REIT provisions contained in section 13 of the JSE Listings Requirements.
Growthpoint’s listing on the JSE (ISIN code: ZAE000179420) is in the Sector: Financial Services – Real Estate Investment Trusts (Diversified REITs).
The primary business of Growthpoint is long-term investment in quality, rental-generating properties, which are maintained and upgraded or refurbished as necessary, so as to increase the long-term value of the property assets.
As at 30 June 2015, Growthpoint’s property portfolio comprised 471 owned and managed properties in the South African Industrial, Office and Retail Sectors valued at R71,6 billion (2014: R49,4 billion). More information on the nature of the business of these sectors is reported on separately in the FY15 integrated annual report.
In addition, Growthpoint has a 50% shareholding in properties owned by V&A Waterfront Holdings (Pty) Ltd in Cape Town, with property assets totalling R13,5 billion (2014: R11,9 billion) as part of a joint arrangement with the Government Employees’ Pension Fund (GEPF) represented by the Public Investment Corporation (SOC) Limited (PIC), and holds a majority stake of 65.0% (2014: 64.0%) in Growthpoint Properties Australia, listed on the Australian Securities exchange (ASX) as an A-REIT (Code: GOZ), which owns 53 properties valued at AUD2,3 billion (R22,0 billion) as at 30 June 2015.
REGULATION
As a REIT, the company is regulated by the JSE.
SHARE CAPITAL
The number of authorised ordinary shares of no par value is 4 000 000 000. As at 30 June 2015, there were 2 711 056 264 ordinary shares of no par value in issue.
The following share issues took place during the financial year ended 30 June 2015:
- On 1 September 2014: 3 792 120 shares at R25.00 per share, as consideration for the remaining 50% interest in the properties owned by Truzen 75 Trust from its remaining beneficiaries and the remaining 50% shares in Erf 99 and 100 Parktown Township Share Block (Pty) Ltd from its remaining shareholder.
- On 23 September 2014: 42 221 311 shares, pursuant to elections of the dividend re-investment alternative offered in respect of the final 2014 dividend of 82.80 cents per share, issued at a price of R24.20 per share (which equated to a 1.71% discount to the five-day volume weighted average price of R25.45 less the dividend, as at the close of business on Thursday, 4 September 2014).
- On 1 April 2015: 46 472 377 shares, pursuant to elections of the dividend re-investment alternative offered in respect of the interim 2015 dividend of 84.40 cents per share for the six-month period ended 31 December 2014, issued at a price of R26.25 per share (which equated to a discount of 3.94% to the five-day volume weighted average price of R28.17 less the dividend, as at the close of business on Thursday, 12 March 2015).
- On 28 April 2015: 317 370 060 shares at R28.66 per share, being the clean spot price of a Growthpoint ordinary share on 1 April 2015, as consideration for Growthpoint’s acquisition by scheme of arrangement (the scheme) of all of the remaining issued shares in Acucap Properties Ltd (Acucap) that it did not already own, the effective date and implementation date of the scheme being 1 April and 28 April 2015, respectively.
- On 30 April 2015: 16 292 139 shares, pursuant to elections of the dividend re-investment alternative offered in respect of a special cash dividend of 44.50 cents per share for the three months ended 31 March 2015, issued at a price of R27.25 per share (which equated to a 2.97% discount to the five-day volume weighted average price of R28.53 less the special dividend, as at the close of business on Thursday, 9 April 2015).
DIVIDEND POLICY
The company declares and pays an interim and a final dividend in respect of each financial year (see shareholders’ information on page 106 of these annual financial statements).
In considering the payment of dividends, the Board, with the Audit Committee’s assurance, takes the following into account:
- the financial status of the company as at the end of the first and second six months of the financial year, subject to solvency and liquidity testing as required by the Act; and
- the capital commitments of the company and its funding requirements.
FINAL AND INTERIM DIVIDENDS
The Board declared the following dividends in respect of the financial year
ended 30 June 2015:
| Dividend |
Gross amount
(cents per share) |
| Interim (6 months ended 31 December 2014) |
84.40 |
| Special (3 months ended 31 March 2015) |
44.50 |
| Final (3 months ended 30 June 2015) |
44.50 |
| Total |
173.40 |
These dividends have been declared from distributable earnings and
meet the requirements of a REIT “qualifying distribution” for purposes of
section 25BB of the Income Tax Act, No 58 of 1962 (as amended).
INTERESTS IN SUBSIDIARIES
Interests in subsidiaries and joint ventures are reflected in the notes to the
financial statements, and .
INTEREST AS VESTED BENEFICIARY OF A TRUST
The Growthpoint Securitisation Warehouse Trust (the Trust) holds
a portfolio of properties, which serves as security for funds raised by
Growthpoint from time to time. In terms of the Trust Deed, Growthpoint
is the sole beneficiary of income and capital gains held by the Trust.
Accordingly, the statement of financial position and statement of profit or
loss and other comprehensive income of the Trust are consolidated in the
Group financial statements.
The table below shows the salient financial results and position of the
Trust for the year ended 30 June 2015.
| |
2015
Rm |
|
2014
Rm |
| Profit before taxation |
1 173 |
|
1 228 |
| Fair value adjustments included in
profit before taxation |
397 |
|
468 |
| Net fair value adjustment of
investment property |
397 |
|
468 |
| Investment property at fair value |
10 238 |
|
9 727 |
ACQUISITIONS AND INVESTMENTS
On 1 April 2015, Growthpoint acquired the remaining shares in Acucap
Properties Ltd (Acucap) for a total net consideration of R8,96 billion
settled by new Growthpoint shares issued.
In the Acucap acquisition, Growthpoint acquired 46 properties and letting
enterprises, the management business of the Acucap Group, Sycom
Property Fund Managers Limited, being the management company of
Sycom Property Fund, a JSE-listed collective investment scheme in
property, as well as some undeveloped bulk and shares in certain joint
venture operations.
Growthpoint made further investments in its subsidiary Growthpoint
Properties Australia during FY15 as follows:
| Date |
Nature |
|
Shares |
|
ZAR (Rm) |
| 29 August 2014 |
DRIP |
|
12 052 214 |
|
281 |
| 27 February 2015 |
DRIP |
|
11 791 430 |
|
326 |
MANAGEMENT AND ADMINISTRATION
Growthpoint Management Services (Pty) Ltd (GMS) is a wholly owned
subsidiary of Growthpoint, and has been responsible, in terms of a
management agreement, for Growthpoint’s property, fund management
and administration services since 1 July 2007. GMS employed 700
(2014: 528) employees nationally as at 30 June 2015. This included
158 former Acucap and Sycom employees.
SUBSEQUENT EVENTS
Information on material events that occurred after 30 June 2015 is included in of these annual financial statements.
REMUNERATION POLICY
Growthpoint’s Remuneration Policy and Philosophy is contained in its FY15 integrated annual report and will be proposed for approval at the company’s annual general meeting to be held on 17 November 2015. It includes the policy on non-executive directors’ fees.
CAPITAL COMMITMENTS
Details are included in of these annual financial statements.
DIRECTORS AND SECRETARY
Brief curricula vitae of the directors and the Company Secretary have been included in the FY15 integrated annual report.
Growthpoint’s Financial Director was assessed by the Audit Committee (as is done annually) to be appropriately qualified and experienced for the position.
The Board recommends Ms LA Finlay for re-election as Chairman of the Audit Committee.
Mr CG Steyn retired from the Board with effect from the close of business on 18 November 2014, as announced at the annual general meeting earlier that day.
The directors to retire by rotation and, being eligible, hold themselves available for re-election at the annual general meeting to be held on 17 November 2015, are as follows:
- Mr MG Diliza
- Mr PH Fechter
- Mr JC Hayward
- Mr HSP Mashaba
DIRECTORS’ INTERESTS IN ORDINARY SHARES AS AT 30 JUNE 2015
| |
Beneficial |
Non-beneficial |
|
|
| Director |
Direct |
Indirect |
|
Total |
|
| EK de Klerk |
|
1 170 659* |
|
1 170 659 |
|
| EK de Klerk: Staff Incentive Scheme Options 2010 |
27 931 |
|
|
27 931 |
|
| EK de Klerk: Staff Incentive Scheme Options 2011 |
57 377 |
|
|
57 377 |
|
| EK de Klerk: Staff Incentive Scheme Options 2012 |
119 061 |
|
|
119 061 |
|
| EK de Klerk: Staff Incentive Scheme Options 2012 |
25 961 |
|
|
25 961 |
|
| EK de Klerk: Staff Incentive Scheme Options 2013 |
96 698 |
|
|
96 698 |
|
| EK de Klerk: Retention Scheme Award 2014 |
2 400 000 |
|
|
2 400 000 |
|
| EK de Klerk: Staff Incentive Scheme Options 2014 |
153 225 |
|
|
153 225 |
|
| MG Diliza |
|
|
38 648 707 |
38 648 707 |
|
| MG Diliza |
|
|
36 100 637# |
36 100 637 |
|
| MG Diliza |
|
|
2 548 070* |
2 548 070 |
|
| PH Fechter |
|
1 338 504 |
3 109 535* |
4 448 039 |
|
| LA Finlay |
86 397 |
|
|
86 397 |
|
| JC Hayward |
79 162 |
|
|
79 162 |
|
| HS Herman |
|
170 000* |
|
170 000 |
|
| JF Marais |
|
108 793* |
|
108 793 |
|
| HSP Mashaba |
|
2 475 000 |
|
2 475 000 |
|
| R Moonsamy |
|
1 287 347 |
|
1 287 347 |
|
| NBP Nkabinde |
|
4 000^ |
|
4 000 |
|
| LN Sasse |
1 568 625 |
|
|
1 568 625 |
|
| LN Sasse: Staff Incentive Scheme Options 2010 |
61 363 |
|
|
61 363 |
|
| LN Sasse: Staff Incentive Scheme Options 2011 |
125 682 |
|
|
125 682 |
|
| LN Sasse: Staff Incentive Scheme Options 2012 |
224 604 |
|
|
224 604 |
|
| LN Sasse: Staff Incentive Scheme Options 2012 |
32 452 |
|
|
32 452 |
|
| LN Sasse: Staff Incentive Scheme Options 2013 |
143 667 |
|
|
143 667 |
|
| LN Sasse: Retention Scheme Award 2014 |
4 000 000 |
|
|
4 000 000 |
|
| LN Sasse: Staff Incentive Scheme Options 2014 |
220 882 |
|
|
220 882 |
|
| G Völkel: Staff Incentive Scheme Options 2013 |
13 814 |
|
|
13 814 |
|
| G Völkel: Staff Incentive Scheme Options 2014 |
19 899 |
|
|
19 899 |
|
| # BEE interest |
* Associate: Family Trust |
^ Associate spouse |
DIRECTORS’ INTERESTS IN ORDINARY SHARES AS AT 30 JUNE 2014
| |
Beneficial |
Non-beneficial |
|
|
| Director |
Direct |
Indirect |
|
Total |
|
| EK de Klerk |
|
1 126 333* |
|
1 126 333 |
|
| EK de Klerk: Staff Incentive Scheme Options 2009 |
31 985 |
|
|
31 985 |
|
| EK de Klerk: Staff Incentive Scheme Options 2010 |
55 864 |
|
|
55 864 |
|
| EK de Klerk: Staff Incentive Scheme Options 2011 |
86 065 |
|
|
86 065 |
|
| EK de Klerk: Staff Incentive Scheme Options 2012 |
238 126 |
|
|
238 126 |
|
| EK de Klerk: Staff Incentive Scheme Options 2012 |
51 920 |
|
|
51 920 |
|
| EK de Klerk: Staff Incentive Scheme Options 2013 |
145 047 |
|
|
145 047 |
|
| EK de Klerk: Retention Scheme Award 2014 |
2 400 000 |
|
|
2 400 000 |
|
| MG Diliza |
|
|
36 999 547 |
36 999 547 |
|
| MG Diliza |
|
|
34 363 333# |
34 363 333 |
|
| MG Diliza |
|
|
2 636 214* |
2 636 214 |
|
| PH Fechter |
|
1 338 504 |
3 109 535* |
4 448 039 |
|
| LA Finlay |
79 636 |
|
|
79 636 |
|
| JC Hayward |
72 967 |
|
|
72 967 |
|
| HS Herman |
|
150 000* |
|
150 000 |
|
| JF Marais |
|
100 279* |
|
100 279 |
|
| HSP Mashaba |
|
2 475 000# |
|
2 475 000 |
|
| R Moonsamy |
|
1 287 347 |
|
1 287 347 |
|
| LN Sasse |
1 568 625 |
|
|
1 568 625 |
|
| LN Sasse: Staff Incentive Scheme Options 2009 |
70 322 |
|
|
70 322 |
|
| LN Sasse: Staff Incentive Scheme Options 2010 |
122 727 |
|
|
122 727 |
|
| LN Sasse: Staff Incentive Scheme Options 2011 |
188 524 |
|
|
188 524 |
|
| LN Sasse: Staff Incentive Scheme Options 2012 |
449 208 |
|
|
449 208 |
|
| LN Sasse: Staff Incentive Scheme Options 2012 |
64 902 |
|
|
64 902 |
|
| LN Sasse: Staff Incentive Scheme Options 2013 |
215 499 |
|
|
215 499 |
|
| LN Sasse: Retention Scheme Award 2014 |
4 000 000 |
|
|
4 000 000 |
|
| G Völkel: Staff Incentive Scheme Options 2013 |
20 721 |
|
|
20 721 |
|
| # BEE interest |
* Associate: Family Trust |
^ Associate spouse |
DIRECTORS’ TRANSACTIONS DURING THE FINANCIAL YEAR ENDED 30 JUNE 2015
| Director |
Date |
|
Number
of shares |
|
Purchase/Sale |
Price per share
(R) |
|
| EK de Klerk |
1 September 2014 |
|
153 225 |
|
Staff Incentive Scheme Deferred Options 2014 |
25.13 |
|
| |
23 September 2014 |
|
38 537 |
|
Distribution re-investment option |
24.20 |
|
| |
23 September 2014 |
|
5 789 |
|
Distribution re-investment option |
24.20 |
|
| |
9 December 2014 |
|
(31 985) |
|
On-market sale of securities |
26.03 |
|
| |
9 December 2014 |
|
(27 933) |
|
On-market sale of securities |
26.03 |
|
| |
9 December 2014 |
|
(28 689) |
|
On-market sale of securities |
26.03 |
|
| |
9 December 2014 |
|
(119 062) |
|
On-market sale of securities |
26.03 |
|
| |
9 December 2014 |
|
(25 960) |
|
On-market sale of securities |
26.03 |
|
| |
9 December 2014 |
|
(48 349) |
|
On-market sale of securities |
26.03 |
|
 |
|
|
|
|
|
|
|
| MG Diliza |
23 September 2014 |
|
7 |
|
Distribution re-investment option |
24.20 |
|
| |
1 April 2015 |
|
4 |
|
Distribution re-investment option |
26.25 |
|
| |
30 June 2015 |
|
1 737 304 |
|
Change in shareholding in B-BBEE entity |
— |
|
| |
30 June 2015 |
|
(88 155) |
|
Correction of overstatement in associate holding |
— |
|
|
|
|
|
|
|
|
|
| LA Finlay |
23 September 2014 |
|
2 725 |
|
Distribution re-investment option |
24.20 |
|
| |
1 April 2015 |
|
2 648 |
|
Distribution re-investment option |
26.25 |
|
| |
30 April 2015 |
|
1 388 |
|
Distribution re-investment option |
27.25 |
|
|
|
|
|
|
|
|
|
| JC Hayward |
23 September 2014 |
|
2 497 |
|
Distribution re-investment option |
24.20 |
|
| |
1 April 2015 |
|
2 426 |
|
Distribution re-investment option |
26.25 |
|
| |
30 April 2015 |
|
1 272 |
|
Distribution re-investment option |
27.25 |
|
|
|
|
|
|
|
|
|
| HS Herman |
23 September 2014 |
|
5 132 |
|
Distribution re-investment option |
24.20 |
|
| |
1 December 2014 |
|
4 868 |
|
On-market acquisition of securities |
27.03 |
|
| |
1 April 2015 |
|
5 144 |
|
Distribution re-investment option |
26.25 |
|
| |
30 April 2015 |
|
2 697 |
|
Distribution re-investment option |
27.25 |
|
| |
12 June 2015 |
|
2 159 |
|
On-market acquisition of securities |
25.32 |
|
|
|
|
|
|
|
|
|
| JF Marais |
23 September 2014 |
|
3 431 |
|
Distribution re-investment option |
24.20 |
|
| |
1 April 2015 |
|
3 335 |
|
Distribution re-investment option |
26.25 |
|
| |
30 April 2015 |
|
1 748 |
|
Distribution re-investment option |
27.25 |
|
|
|
|
|
|
|
|
|
| NBP Nkabinde |
4 August 2014 |
|
4 000 |
|
On-market acquisition of securities |
29.56 |
|
|
|
|
|
|
|
|
|
| LN Sasse |
1 September 2014 |
|
220 882 |
|
Staff Incentive Scheme Deferred Options 2014 |
25.13 |
|
| |
10 December 2014 |
|
(70 322) |
|
On-market sale of securities |
25.77 |
|
| |
10 December 2014 |
|
(61 364) |
|
On-market sale of securities |
25.77 |
|
| |
10 December 2014 |
|
(62 842) |
|
On-market sale of securities |
25.77 |
|
| |
10 December 2014 |
|
(224 604) |
|
On-market sale of securities |
25.77 |
|
| |
10 December 2014 |
|
(32 450) |
|
On-market sale of securities |
25.77 |
|
| |
10 December 2014 |
|
(71 832) |
|
On-market sale of securities |
25.77 |
|
|
|
|
|
|
|
|
|
| G Völkel |
1 September 2014 |
|
19 899 |
|
Staff Incentive Scheme Deferred Options 2014 |
25.13 |
|
| |
23 September 2014 |
|
142 |
|
Distribution re-investment option |
24.20 |
|
| |
1 December 2014 |
|
4 144 |
|
Off-market acquisition of securities |
27.16 |
|
| |
2 December 2014 |
|
(4 144) |
|
On-market sale of securities |
26.86 |
|
| |
2 December 2014 |
|
(2 763) |
|
On-market sale of securities |
26.86 |
|
| |
18 December 2014 |
|
(4 286) |
|
On-market sale of securities |
26.55 |
|
There have been no changes since year end as the directors are in a closed period until the publication of the results.
UNVESTED OPTIONS FOR EXECUTIVE DIRECTORS AS AT 30 JUNE 2015
| |
Total |
30 June 2015 |
30 June 2016 |
30 June 2017 |
| 2010 options |
|
|
|
|
| LN Sasse |
61 363 |
61 363 |
– |
– |
| EK de Klerk |
27 932 |
27 932 |
– |
– |
|
|
|
|
|
| 2011 options |
|
|
|
|
| LN Sasse |
125 683 |
62 842 |
62 841 |
– |
| EK de Klerk |
57 377 |
28 688 |
28 689 |
– |
|
|
|
|
|
| 2012 options |
|
|
|
|
| LN Sasse |
224 604 |
224 604 |
– |
– |
| EK de Klerk |
119 061 |
119 061 |
– |
– |
|
|
|
|
|
| 2012 options |
|
|
|
|
| LN Sasse |
32 451 |
32 451 |
– |
– |
| EK de Klerk |
25 961 |
25 961 |
– |
– |
|
|
|
|
|
| 2013 options |
|
|
|
|
| LN Sasse |
143 667 |
71 832 |
71 835 |
– |
| EK de Klerk |
96 698 |
48 349 |
48 349 |
– |
| G Völkel |
13 814 |
6 907 |
6 907 |
– |
|
|
|
|
|
| 2014 options |
|
|
|
|
| LN Sasse |
220 882 |
73 626 |
73 626 |
73 630 |
| EK de Klerk |
153 225 |
51 074 |
51 074 |
51 077 |
| G Völkel |
19 899 |
6 632 |
6 632 |
6 635 |
KEY STAFF RETENTION SCHEME AWARDS
| 2014 options |
Total |
30 June 2015 |
30 June 2016 |
30 June 2017 |
30 June 2018 |
30 June 2019 |
30 June 2020 |
30 June 2021 |
| LN Sasse |
4 000 000 |
400 000 |
400 000 |
800 000 |
800 000 |
800 000 |
400 000 |
400 000 |
| EK de Klerk |
2 400 000 |
240 000 |
240 000 |
480 000 |
480 000 |
480 000 |
240 000 |
240 000 |
