positioned for
growth.
2019 Annual Report
for the year ended 30 June 2019
Growthpoint Properties Australia
Growthpoint Properties Australia Trust ARSN 120 121 002
Growthpoint Properties Australia Limited ABN 33 124 093 901 AFSL 316409
2 Growthpoint Properties Australia | 2019 Annual Report
What’s inside.
Directors’ Report
Business Overview
FY19 Highlights
Our business strategy
Introduction from the Chairman
and Managing Director
Year in review
How we create value
Development update
Portfolio Review
Property portfolio overview
Property portfolio summary
Operating sustainably
Financial Management
3
4
6
10
12
14
16
20
22
24
Financial management
Funds From Operations
27
Ten year financial performance summary 28
Board & Remuneration Report
Board of Directors
Executive Management
Remuneration report
Additional information
Financial Report
Contents
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Auditor’s Independence Declaration
Independent Auditor’s Report
Additional information
Detailed Portfolio information
About Growthpoint South Africa
Securityholder information
Frequently asked questions
Securityholder calendar
Glossary
Contact details
Corporate directory
30
31
32
54
55
56
61
96
97
98
102
105
106
108
110
110
111
111
About the
Directors’ Report
The Directors’ Report which
follows is signed in Melbourne on
22 August 2019 in accordance
with a resolution of the Directors
of Growthpoint Properties
Australia Limited.
The Directors’ Report
comprises pages 3 to 55 of this
report except where referenced
otherwise.
Images
Cover: Botanicca 3, 570 Swan Street,
Richmond, VIC
This page: 15 Green Square Close,
Fortitude Valley, QLD
Further information can
be found in the 2019
Sustainability Report:
growthpoint.com.au/
sustainability/operating-
sustainably/
To view our Corporate
Governance Statement go to:
growthpoint.com.au/about/
corporate-governance/
About this Report
This is the Annual Report for Growthpoint Properties Australia (comprising
Growthpoint Properties Australia Limited and its controlled entities and Growthpoint
Properties Australia Trust and its controlled entities) for the year ended 30 June 2019.
It is available online at www.growthpoint.com.au and in hard copy. Persons can
request a hard copy through any of the communication methods listed on the inside
back cover of this report.
This report provides readers with an overview of Growthpoint’s business including
summaries of the strategies, objectives, assets, operating model, achievements, key
risks and opportunities at 22 August 2019 as well as detailed financial information
over the last six months, one year, five and ten year periods. There are also
references which enable readers to obtain more information should they wish to.
Growthpoint Properties Australia | 2019 Annual Report 3
FY19 Highlights.
Funds From
Operations
25.1cps
+0.4% on FY18
Distributions
per security
23.0cps
+3.6% on FY18
Property
portfolio value
$4.0bn
+18.7% on 30 June 2018
Net tangible
assets per security
$3.521
+10.3% on 30 June 2018
Net Property
Income
$230.4m
+5.4% on FY18
Portfolio
occupancy
98%
(30 June 2018: 98%)
Completed $386 million in property
transactions2
Development pipeline of $353 million
Like-for-like portfolio valuation growth of 10%
Completed two significant equity raisings
which were oversubscribed3
Reduced gearing by 380 basis points to 30.1%1
1. Pro forma for the settlement of the Institutional Placement and Security Purchase Plan launched in FY19
but settled in early FY20, raising $174 million for the issue of 43.7 million securities and the repayment of
debt from those proceeds.
2. Includes acquisitions and divestments.
3. Comprising a $135 million Rights Offer completed in December 2018 and an Institutional Placement and
Security Purchase Plan which were launched in June 2019 with the $174 million proceeds settling in early
FY20.
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 4 Growthpoint Properties Australia | 2019 Annual Report
Our business
strategy.
Our goal is to provide Securityholders with sustainable
income returns and long-term capital appreciation
from properties we own, develop and manage.
Performance is driven through the following
strategic initiatives:
1.
Invest in
quality assets.
We seek to invest in the
best quality commercial
real estate available,
given our cost of capital,
that provide an attractive
income yield and long-
term capital appreciation.
2.
Maximise
value.
Asset retention and
management strategies
are developed for
each property owned
by Growthpoint to
maximise income
and value including
leasing, refurbishment,
expansion, development
or divestment.
3.
Maintain
occupancy.
High levels of tenant
satisfaction with our
properties and services
help maintain high
occupancy levels and
consistent rental income.
We focus on providing
quality accommodation
with high green
credentials and low
operating costs,
understanding individual
tenant needs and
developing long-term
relationships.
Growthpoint Properties Australia | 2019 Annual Report 5
3 Murray Rose Avenue, Sydney Olympic Park, NSW
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 6 Growthpoint Properties Australia | 2019 Annual Report
Introduction from Chairman
and Managing Director.
Geoff Tomlinson
Independent Chairman & Director
Timothy Collyer
Managing Director
2018 to 30.1%2, below the Group’s
target range, providing significant
flexibility to take advantage of growth
opportunities as they arise
t Successfully completed a 10 year
USPP debt placement of $161 million.
The Group’s weighted average
debt maturity is 4.6 years, with no
refinancing required until September
2020
Growthpoint had a busy year,
undertaking significant transactions
during FY19, including:
Acquisitions – purchased two modern,
A-Grade office buildings for a total
consideration of $341.3 million.
Disposals – two non-core office
buildings located at Bedford Park, South
Australia and Cambridge, Tasmania were
sold for $45.2 million.
Debt – raised $161 million of 10 year
debt in the USPP market, refinancing a
bridge facility.
Development – Building 3, Botanicca,
Victoria, a 19,300 sqm A-Grade office
building, proceeding well for completion
in early 2020. Gepps Cross, South
Australia distribution facility leased by
Woolworths undergoing a $54 million
expansion. Currently considering
development options for 25.0 hectare
Broadmeadows industrial land.
Growthpoint finishes its 10th
year with strong returns and
a quality portfolio in the
office and logistics sectors.
In August 2019, Growthpoint Properties
Australia celebrated its 10th anniversary
as an ASX listed A-REIT. Since its
inception, Growthpoint’s business has
grown substantially, whilst at the same
time providing strong total returns to
Securityholders. Our concentration
has been to build and manage the
property portfolio for the long-term, on a
sustainable basis.
In FY19 attractive long-term returns
to Securityholders continued, with the
Group delivering an above-sector total
Securityholder return of 21.0%1.
Other key highlights over the year
were:
t Statutory earnings of 52.9 cents per
security (cps)
t FFO of 25.1 cps, an increase of 0.4%
on FY18
t Annual distribution of 23.0 cps, an
increase of 3.6% on FY18
t 10.3% increase in NTA per security, up
from $3.19 at 30 June 2018 to $3.522
t Completed over $386.5 million
in property transactions, taking
advantage of strong pricing to sell and
reinvest favourably into modern office
properties, with quality tenants and
long WALEs
t Undertaken 116,901 sqm of new
and extended leasing, equating to
approximately 11.4% of total portfolio
lettable area, maintaining portfolio
occupancy at 98%.
t Undertaken two significant equity
raisings that were oversubscribed,
raising $309 million, increasing the
market capitalisation of the Group and
trading free float
t Reduced gearing by 380 basis points
(bps), from 33.9% as at 30 June
Total
Securityholder
return over
10 years
18.4%
compared to 14.0% for
the S&P/ASX 300 A-REIT
accumulation index return
for the same period1
Growthpoint
S&P/ASX 300 A-REIT
accumulation index
21.0
19.4
16.3
8.4
18.2
18.4
13.8
14.0
1 year
3 years
5 years
10 years
Total Securityholder return
over 1, 3, 5 & 10 years (%)1
1. Source: UBS Investment Research: Annual
compound returns to 30 June 2019.
2. Pro forma for the settlement of the Institutional
Placement and Security Purchase Plan
launched in FY19 but settled in early FY20,
raising $174 million for the issue of 43.7 million
securities and the repayment of debt from those
proceeds.
Growthpoint Properties Australia | 2019 Annual Report 7
Botanicca 3, 570 Swan Street, Richmond, VIC
21.5
22.2
23.0
23.8
19.7
20.5
Ten years of
sustainable growth.
FY15
FY16
FY17
FY18
FY19
FY20*
Distributions (¢)
per stapled security
*Distribution guidance only.
99
99
98
98
97
FY10 s FY19
Property
portfolio value $0.8bn
$4.0bn
Total office
assets
Total industrial
assets
–
25
26
31
Share price
(at 30 June)
Market
capitalisation
Free float
$1.80
$4.12
$0.3bn
$0.1bn
$3.4bn1,2
$1.3bn1,2
26
2015
2016
2017
2018
2019
Portfolio occupancy (%)
as at 30 June
No. employees 5
1. Pro forma for the settlement of the Institutional Placement and Security Purchase Plan launched in FY19 but settled in early FY20, raising
$174 million for the issue of 43.7 million securities and the repayment of debt from those proceeds.
2. Pro forma, using the closing price of $4.39 on 31 July 2019, multiplied by 771.5 million securities on issue.
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 8 Growthpoint Properties Australia | 2019 Annual Report
Introduction from Chairman
Introduction from Chairman
and Managing Director continued
and Managing Director continued
836 Wellington Street, West Perth, WA
Property
portfolio value
$4.0bn
(30 June 2018: $3.4bn)
4.0
3.3
3.4
2.8
2.4
2015
2016
2017
2018
2019
Total portfolio value ($bn)
as at 30 June
1. The settlement of the Institutional Placement
and Security Purchase Plan occurred in early
FY20.
2. Pro forma, using the closing price of $4.39
on 31 July 2019, multiplied by 771.5 million
securities on issue.
3. Pro forma for the settlement of the Institutional
Placement and Security Purchase Plan
launched in FY19 but settled in early FY20,
raising $174 million for the issue of 43.7 million
securities and the repayment of debt from those
proceeds.
Equity raising – during the year
Growthpoint successfully raised
$309 million of equity via a Rights
Offer, an Institutional Placement and
Security Purchase Plan1. These issues
were well supported by existing and
new Securityholders and accord with
the strategy of increasing the market
capitalisation and trading free float of the
Group.
The above transactions have left
Growthpoint well placed in the market.
With an office and logistics property
portfolio value of $4.0 billion and a
market capitalisation of $3.4 billion2,3,
there is an increasing universe of
investors interested in Growthpoint.
The balance sheet is in good shape
with gearing at 30.1%3, providing future
flexibility should opportunities arise. The
targeted mixture of long-term debt capital
markets and traditional institutional bank
debt, provides Growthpoint with diversity
of debt providers and a long weighted
average debt expiry of 4.6 years.
The Group is well placed with a quality
property portfolio in the favoured
office and logistics sectors. Modern
assets, with quality tenants and a long
WALE are key characteristics. Major
internal development opportunities
will be completed in FY20 and further
opportunities are under review. Whilst we
favour the office and logistics markets,
we will consider investment and business
opportunities in other markets.
Growthpoint has continued to review and
enhance the sustainability of its property
portfolio and operations and maintains
high governance standards. We seek
to invest in modern office buildings
with high NABERS energy and water
ratings, we have committed to additional
investments in on-site renewable energy
projects and have developed an energy
procurement strategy with the aim of
securing the most cost-effective, long-
term approach to purchasing renewable
energy. Annually, we participate and
are benchmarked in the GRESB and
CDP surveys and these have showed
continuous improvement.
Growthpoint Properties Australia | 2019 Annual Report 9
FY19 –
transactions.
Property acquisitions
$341m
Purchased two modern, A-Grade
office buildings located at
Newstead, QLD and West Perth, WA
Development pipeline
$353m
t Bldg 3, Botanicca, VIC, a 19,300
sqm A-Grade office building,
completion expected in Q1 2020
t Gepps Cross, SA distribution
facility leased by Woolworths
undergoing a $54 million
expansion
t Considering development options
for 25.0 hectare Broadmeadows,
VIC industrial land
Strategic
divestments
$45m
Sold two non-core office buildings
located at Bedford Park, SA and
Cambridge, TAS
Equity & Debt
$470m
t Equity – successfully raised
$309 million of equity via a Rights
Offer, an Institutional Placement
and Security Purchase Plan
t Debt – raised $161 million of 10
year debt in the USPP market,
refinancing a prior bridge facility
The Board has had a continued focus on
the Group’s “culture”. Through internal
and external surveys and reporting, the
culture has been observed as a positive
one. Employees have also articulated
the culture and the core values that
we operate by – Respect, Success,
Inclusion, Integrity and Fun. More
information on these initiatives can be
found in the Group’s FY19 Sustainability
Report.
As highlighted in last year’s annual
report, to adopt best practice, the Board
implemented three key changes to
Remuneration in FY19 that will further
align management remuneration with the
Securityholder. Further, PWC continued
to advise the Nomination, Remuneration
and HR Committee on benchmarking of
remuneration and directors’ fees. More
information on the Group’s remuneration
can be found on pages 32 to 53 of this
report.
Directors, management and employees
are proud of the achievements of the
Group during the last 10 years and we
would like to thank all stakeholders
and Securityholders for their continued
support.
Geoff Tomlinson
Independent Chairman & Director
Growthpoint Properties Australia Limited
Timothy Collyer
Managing Director
Growthpoint Properties Australia Limited
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 10 Growthpoint Properties Australia | 2019 Annual Report
Strong returns and
significant transactions.
Our continued focus on acquisitions,
portfolio repositioning and property
enhancement deliver sustainable
returns for Securityholders.
$149m
July 20181
Botanicca 3
development
commences
14
4.40
4.20
4.00
3.80
3.60
$250m
December 20182
Newstead
office
acquisition
16
$91m
October 20182
West Perth
office
acquisition
16
$135m
December 2018
Successful
Rights Offer
24
July 2018
August 2018
September 2018
October 2018
November 2018
December 2018
January 2019
February 2019
March 2019
April 2019
May 2019
June 2019
1. Market value as if complete, assuming vacant possession.
2. Prior to acquisition costs.
3. Prior to disposal costs.
Growthpoint Properties Australia | 2019 Annual Report 11
Property
acquisitions
$341m
Strategic
divestments
$45m
Development
pipeline
$353m
Equity
raisings
$309m
$161m
February 2019
Successful
US Private
Placement
24
$174m
June 2019
Placement & SPP
launched
24
$45m
April 20193
Asset
divestments
16
$54m
January 2019
Gepps Cross
expansion
commences
14
Distributions
per security
23.0cps
+3.6% on FY18
Funds From
Operations
25.1cps
+0.4% on FY18
4.40
4.20
4.00
3.80
3.60
July 2018
August 2018
September 2018
October 2018
November 2018
December 2018
January 2019
February 2019
March 2019
April 2019
May 2019
June 2019
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 12 Growthpoint Properties Australia | 2019 Annual Report
How we
create value.
Growthpoint’s Portfolio has grown by 10.0% on a
like-for-like basis over the last 12 months, with the
average market capitalisation rate now 5.9% down
from 6.2% over the year.
Key drivers of valuation
growth have been:
Yield
compression
Market
rent growth1
Development
investment
33bps
2.9%
$72.9m
New leasing2
116,901sqm
28%
increase in value
since acquisition
Value creation
case study:
75 Dorcas St,
South Melbourne, VIC
June 2016
Purchased for
$166.0 million
reflecting an initial yield of 6.6%
What we liked at the time:
t The high quality of the
improvements and the tenant
mix within the asset
t The improving market
fundamentals of the St Kilda
Road and Melbourne Fringe
office markets
t The relatively low passing rents
of the major tenants ANZ and
Mondelez
t The new train station being
constructed proximate to the
site, creating better long-term
transport linkages
June 2019
Value as at 30 June 2019
$212.5 million
reflecting a market yield of 5.5%
What we have done:
t Extended major tenant ANZ’s
lease for 6 years from
March 2020
t Increased rents within the
property
1. Excluding 120 Northcorp Boulevard, Broadmeadows, Victoria which will likely become a development following the expiry of the existing lease.
2. Excludes an additional 29,504 sqm of leasing completed since 30 June 2019.
Growthpoint Properties Australia | 2019 Annual Report 13
60%
increase in value
since June 2018
Value creation
case study:
599 Main North Rd,
Gepps Cross, SA
June 2018
Value as at 30 June 2018
$79.0 million
Key metrics:
t Market yield: 6.75%
t WALE: 3.1 years
t GLA: 67,238 sqm
June 2019
Value as at 30 June 2019
$126.0 million
reflecting market yield of 5.25%1
What we have done:
t Agreed terms with Growthpoint’s
major tenant Woolworths to
expand the buildings at a cost of
circa $54 million
t Growthpoint will receive a coupon
for project costs at a yield of
6.75% per annum
t Lease over existing and expanded
buildings resets for 15 years from
practical completion, expected
Q1 FY20
t Market yield 5.25%1
t Gross Lettable Area on
completion 89,752 square metres
1. Market capitalisation rate on completion of works.
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 14 Growthpoint Properties Australia | 2019 Annual Report
Development
update.
Development project:
Construction of new 19,300 sqm office
building underway in Richmond, VIC
t Construction currently tracking ahead of schedule with
completion expected in first quarter of 2020
t Feedback from active tenants is positive, with a number shortlisting
the development for their occupation requirements
t Expected to deliver fully let yield on development cost of
between 7.5% and 8.5% with opportunity for capital gain
above development cost
t End value: $149 million
Development project:
Expansion of Woolworths Distribution Centre in
Gepps Cross, SA
t Expansion including an extension of the existing temperature
controlled and ambient warehouses, construction of a new
recycling facility and other ancillary improvements
t Growthpoint will receive a coupon for project costs at a yield of
6.75% p.a
t Planning includes 1.5MW solar installation
t Lease extended by 15 years from practical completion which is
anticipated in early FY21
t Cost: $54 million
Future pipeline:
Internal development opportunity under
consideration1
t Growthpoint is currently evaluating development options at its
industrial site in Broadmeadows, Victoria
t Prime industrial site of 25 hectares in Melbourne’s north, suitable for
redevelopment
t Potential for an industrial estate of approximately 120,000 sqm
lettable area
t End value: $150 million1
Construction begins,
July 2018
1. Broadmeadows development is subject to Board and third party approvals. On-completion value based on an estimate capital value calculated at $1,250 per sqm of lettable
area. Growthpoint may also consider leasing the property ‘as is’ or selling the property.
Underutilised site with
site coverage of 23%
Growthpoint Properties Australia | 2019 Annual Report 15
Growthpoint
Properties Australia
Follow us on LinkedIn to keep
up to date with progress on
our development projects
Topping out ceremony,
June 2019
Glazing added to
exterior, July 2019
Practical completion
expected Q1, 2020
Practical completion
expected July 2020
Under development
consideration
Business OverviewFinancial ManagementBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio Review 16 Growthpoint Properties Australia | 2019 Annual Report
Property portfolio
review.
t The realisation of the leasing strategy at
Quads 2 and 3, Sydney Olympic Park,
New South Wales, is well underway,
with the response to the small suite
design being very positive. 2,807
sqm has been leased over the last six
months representing approximately
27% of total lettable area.
Capital Transactions
The Group has had an active and
purposeful year acquiring and divesting
a number of assets which has further
increased the Group’s diversity of tenants,
WALE and exposure to core markets.
Growthpoint acquired $341.3 million of
modern office property at a blended yield
of 6.4% with a weighted average lease
expiry of 7.7 years, weighted average rent
review of 3.8% and an average NABERS
rating of 5.5 stars.
t In October we settled the $91.3 million
acquisition of 836 Wellington Street,
West Perth, Western Australia, a
measured acquisition into the Perth
office market.
t In December, the Group made its
largest single office acquisition,
purchasing the modern Bank of
Queensland Headquarters building in
Newstead, Queensland for $250 million
on an attractive yield of 6.1%.
Growthpoint has also taken advantage
of buoyant market conditions to divest
two properties which were no longer
considered core assets within the
portfolio. The Bedford Park, South
Australia and Cambridge Park, Tasmania
properties were originally acquired via
the successful takeover of the Rabinov
Property Trust. Post extending Westpac’s
lease for a second time at the Bedford
Park property, the Group decided to take
both the assets to market. Proceeds
from the sale will be used to fund
Growthpoint’s development pipeline and
future acquisitions.
Michael Green
Chief Investment Officer
Portfolio quality improves
through strategic investment
and asset management
initiatives within favoured
office and industrial markets.
Leasing
The Group have undertaken 116,901
sqm of leasing over the past 12 months
equating to approximately 11% of
the portfolio’s lettable area1. Another
successful year of leasing has resulted in
the portfolio occupancy being maintained
at 98% and near term expiries reduced.
Leasing highlights during the year
include:
t Major lease extensions to key tenants
including ANZ at 75 Dorcas Street,
South Melbourne, Victoria (13,744
sqm) and Paper Australia at Lots 2,
3 & 4, 34-44 Raglan Street, Preston,
Victoria (14,110 sqm) have reduced
potential FY20 lease expiries to 9%
from 11% one year ago.
t Extending Woolworth’s lease at 599
Main North Road, Gepps Cross,
South Australia for 15 years post a
Growthpoint funded major ~25,000
sqm expansion of the property.
1. Excludes an additional 29,504 sqm of leasing completed since 30 June 2019.
2. Assumes CPI change of 1.6% per annum as per Australian Bureau of Statistics release for FY19.
3. Excludes IDR distributions.
Total portfolio value
$3,983.8m
(30 June 2018: $3,356.1m)
Portfolio
occupancy
98%
(30 June 2018: 98%)
WALE
5.0yrs
(30 June 2018: 5.3 years)
Number of assets
57
Total lettable area 1,026,466 sqm
Weighted average
capitalisation rate
WARR2
5.9%
3.3%
Weighted average
property age
11.3 years
Average value
(per sqm)
FY net property
income3
$3,881
$225.4m
Number of tenants
155
Growthpoint Properties Australia | 2019 Annual Report 17
100 Skyring Terrace, Newstead, QLD
Portfolio ReviewFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportAdditional Information 18 Growthpoint Properties Australia | 2019 Annual Report
Property portfolio review
continued
Development
The Group’s Botanicca 3 Development
in Richmond, Victoria is progressing well,
with the structure “topping out” in June
2019. The 19,300 sqm development is
on target to achieve practical completion
in Q1 2020. The well-designed building
is garnering a lot of interest via various
tenants in the market and the Group is
hopeful of announcing leasing progress
soon. On completion it is expected that
the property will be worth approximately
$150 million and will provide the Group a
yield on cost of between 7.5% and 8.5%.
In January 2019, we announced that
we would be partnering with our major
tenant Woolworths to expand their South
Australian Regional Distribution Centre at
a cost of approximately $54 million and a
yield on cost of 6.75%.
The expansion will add an additional
25,000 sqm of gross lettable area to the
site and the Woolworths lease will be
extended by 15 years from completion
(practical completion anticipated in Q1
2020).
Over the next 12 months the Group’s
development focus will turn to 120
Northcorp Boulevard, Broadmeadows,
Victoria, where Woolworths will vacate
the 25-hectare site in February 2020.
The site has the potential for an industrial
estate of approximately 120,000 sqm
of gross lettable area with an estimated
value on completion of approximately
$150 million1.
Valuations
Growthpoint’s portfolio is well situated
within the markets of office and industrial
logistics.
The portfolio has increased on a like-
for-like basis by 10.0% or $330.9 million
over the last 12 months with the average
market capitalisation rate for the portfolio
moving to 5.9% from 6.2%.
The continued strength in the capital
and national office occupier markets
has resulted in another positive year
of valuation growth for Growthpoint’s
office portfolio. With Growthpoint’s office
assets situated in favoured CBD and
metropolitan office locations throughout
Australia there has been sustained
valuation growth of 11.5% on a like-for-
like basis since 30 June 2018.
Industrial logistics property is widely
regarded as the global property sector
of choice and this has been reflected in
capital market transaction activity, yields
continue to fall and logistics land values
appreciate. Growthpoint’s modern and
well-located portfolio has performed well
with valuations increasing by 7.1% on a
like-for-like basis since 30 June 2018.
Looking Ahead
Growthpoint’s successful $174 million
equity raising in July 2019 has provided
the Group with significant capacity
for future acquisitions. As always, we
will maintain a disciplined approach to
acquisitions and seek to maximise value
for our Securityholders.
With approximately 7% of the portfolio to
lease over the next 12 months2, the focus
is on ensuring early engagement with
tenants well in advance of future expiries
and leasing the Botanicca 3 development
in Richmond, Victoria.
We will also be focusing on delivering
our two major developments in a timely
manner and finalising our future strategy
for our exciting potential development
on our 25-hectare industrial site in
Broadmeadows, Victoria.
1. Broadmeadows development is subject to Board and third party approvals. On-completion value
based on an estimate capital value calculated at $1,250 per sqm of lettable area. Growthpoint may also
consider leasing the property ‘as is’ or selling the property.
2. Excluding 120 Northcorp Boulevard, Broadmeadows, Victoria.
Case study:
6 Parkview Drive,
Sydney Olympic Park,
New South Wales
Creating flexible spaces
for small businesses
Growthpoint identified a gap
in the office market for small
businesses seeking good quality,
flexible office accommodation.
Growthpoint worked with their
leasing agents, GJS Property, and
project delivery team, Intermain
to provide the specification and
layout suited to small business.
The spaces created by
Growthpoint have been extremely
successful as they not only provide
solutions for flexible working, but
also offer a central Sydney location
in Sydney Olympic Park, which is
an attractive geographic location
for businesses whose clients are
located throughout Sydney.
Growthpoint Properties Australia | 2019 Annual Report 19
6 Parkview Drive,
Sydney Olympic Park, NSW
6 Parkview Drive,
Sydney Olympic Park, NSW
6 Parkview Drive,
Sydney Olympic Park, NSW
Top ten tenants
by passing rent, as at 30 June 2019
Portfolio lease expiry profile (%)
per financial year, by income
%
14
8
8
4
4
3
3
2
2
2
50
50
100
Woolworths
NSW Police
Commonwealth of Australia
Bank of Queensland
Linfox
Country Road Group
Samsung Electronics
Lion
ANZ Banking Group
Jacobs Group
Total / weighted Average
Balance of portfolio
Total portfolio
Office
Industrial
WALE
(yrs)
Major lease expiries (>1% of portfolio income)
5.3
4.9
7.0
7.6
3.9
13.0
2.7
4.8
6.7
7.3
6.1
3.9
5.0
Office
Industrial
Central SEQ 1.9%
Fox Sports 1.8%
Fed Gov. 2.9%
Australia Post 1.8%
Monash Uni. 1.4%
SA Gov. 1.1%
Woolworths 5.7%
Samsung 2.5%
Downer 1.6%
Woolworths 2.3%1
Optus 1.6%
Linfox 1.2%
34 %
NSW Police 8.2%
Lion 2.4%
Linfox 1.5%
Peabody 1.5%
19%
9%
6%
2%
16%
8%
6%
Vacant
FY20
FY21
FY22
FY23
FY24
FY25
FY26+
1. Refers to Broadmeadows, Victoria property which may be removed if developed or sold.
Portfolio ReviewFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportAdditional Information 20 Growthpoint Properties Australia | 2019 Annual Report
Portfolio
summary.
As at 30 June 2019
Growthpoint owns the largest metropolitan office portfolio
in the A-REIT sector, together with CBD office assets
and a large industrial portfolio.
Total office
assets
Total industrial
assets
26
31
Portfolio
occupancy
98%
(30 June 2018: 26)
(30 June 2018: 31)
(30 June 2018: 98%)
Sector diversity (%)
by property value,
as at 30 June 2019
Geographic diversity (%)
by property value,
as at 30 June 2019
4
6
29
8
25
28
Queensland
Victoria
New South Wales
Western Australia
South Australia
Australian Capital Territory
31
57
69
Office
Industrial
Tenant type (%)
by income,
as at 30 June 2019
19
24
Listed company
Government owned
Private company & other
1
2
Western Australia
$316.1m
– Office $92.5m
– Industrial $223.6m
Growthpoint Properties Australia | 2019 Annual Report 21
Number of assets:
Office Metro properties (23 assets)
Office CBD properties (3 assets)
Industrial properties (31 assets)
86% of properties
located on Eastern
seaboard
7
1
4
Queensland
$1,172.8m
– Office $915.2m
– Industrial $257.6m
6
5
New South Wales
$971.4m
– Office $759.5m
– Industrial $211.9m
2
Australian Capital Territory
$175.3m
– Office $175.3m
1
4
South Australia
$236.7m
– Office $63.5m
– Industrial $173.2m
8 16
Victoria
$1,111.6m
– Office $749.2m
– Industrial $362.4m
Portfolio ReviewFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportAdditional Information 22 Growthpoint Properties Australia | 2019 Annual Report
Sustainability.
Committed to sustainable growth.
Renewable
energy
n Developing a renewable
energy purchasing
strategy
n On-site solar projects
under development at
Botanicca 3, Richmond,
VIC, Gepps Cross, SA
and Dorcas Street, South
Melbourne, VIC
Tenant
engagement
n Tenant experience survey
reported overall tenant
satisfaction at 70%.
Opportunities available
to continue to strengthen
tenant relationships
n Ongoing engagement
with tenants promoting
sustainability initiatives
Building
efficiency
n Average NABERS Energy
rating increased to 4.8
stars (FY18: 4.6 stars)
n Recent acquisitions
average in excess of
5.5 stars
Climate
change
n Tracking favourably
towards our 2021 target
of 10% GHG emissions
reduction, currently
at 4%
Sustainable
governance
n Improved efficiencies
in risk governance and
compliance through
adoption of a refreshed
Risk Management
framework
n Implementation of online
GRC monitoring platform
Further information can
be found in the 2019
Sustainability Report:
growthpoint.com.au/
sustainability/operating-
sustainably/
Growthpoint Properties Australia | 2019 Annual Report 23
5 Murray Rose Avenue, Sydney Olympic Park, NSW
Portfolio ReviewFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportAdditional Information 24 Growthpoint Properties Australia | 2019 Annual Report
Financial
management.
t Successful completion of $150 million
Institutional Placement, achieving
oversubscriptions, and $23.6 million
Security Purchase Plan (both settled in
early FY20)
t All-in cost of debt reduced from 4.4%
p.a. at 30 June 2018 to 4.1% p.a.1
Summary
FY19 provided strong returns for
Securityholders, with distributions
per security increasing 3.6% to
23.0 cents per security. The Group
was able to achieve this growth whilst
executing on key property transactions
and maintaining disciplined capital
management in line with strategy.
In December 2018, the Group raised
$135 million of equity to partially fund
the acquisition of 100 Skyring Terrace,
Newstead, Queensland. There was
significant appetite for new securities
resulting in oversubscriptions across both
the institutional and retail components.
This acquisition was also partially funded
by a $150 million short-term bridge
facility with the intention to repay this via
a debt market issuance.
In May 2019, Growthpoint once again
issued into the 10-year US Private
Placement market, raising AUD161
million. The proceeds of this raising
were used to repay the bridge facility
and increase the weighted average debt
maturity profile for the Group.
To bookend the year, the Group reset its
interest rate swap book and launched a
fully underwritten Institutional Placement
on 27 June 2019, raising $150 million.
The transaction settled on 2 July with
new securities first trading on 3 July (a
Security Purchase Plan raised a further
$23.6 million in July). The proceeds were
initially used to repay debt with gearing
reducing to 30.1%1 after the repayment.
Dion Andrews
Chief Financial Officer
Growthpoint has once again
delivered strong returns for
Securityholders. Accretive
acquisitions funded by
well supported equity
raisings and issuance of
long-term debt have seen
FFO per security increase
to 25.1 cents, up 2.0% on the
initial FY19 guidance given
of at least 24.6 cents.
Highlights for FY19
t FFO of 25.1 cents per security, a 0.4%
increase on FY18
t Distributions of 23.0 cents per security,
an increase of 3.6% on FY18, equating
to a payout ratio to FFO of 91.6%
t FY20 FFO guidance provided as ‘at
least’ 25.4 cents per security
t NTA per security of $3.521, 10.3%
above 30 June 2018
t Gearing of 30.1%1, 380 basis points
lower than 30 June 2018
t Successful completion of $135 million
Rights Offer in December 2018,
achieving oversubscriptions on both
the institutional and retail components
Funds From Operations
(FFO)
25.1cps
+0.4% on FY18
Distributions
23.0cps
+3.6% on FY18
Gearing below target
range of 35-45%
30.1%1
(30 June 2018: 33.9%)
NTA per security
Fixed debt %
Weighted average
debt maturity
(WADM)
FY20 FFO
Guidance
$3.521
76%1
4.6 years
at least
25.4cps
FY20 Distribution
Guidance
23.8cps
1. Pro forma for the settlement of the Institutional Placement and Security Purchase Plan launched in FY19 but settled in early FY20, raising $174 million for the issue
of 43.7 million securities and the repayment of debt from those proceeds
Growthpoint Properties Australia | 2019 Annual Report 25
Building 1, 572-576 Swan Street, Richmond, VIC
Stress Testing
Covenants
Growthpoint has
three main debt and
lending covenants
which are regularly
stress tested.
They are:
Loan to value
ratio (LVR) <60%
(currently 36.4%)
Interest coverage
ratio (ICR) >1.6x
(currently 4.1x)
Secured property
percentage >85%
(currently 97.9%)
To breach this covenant
the GOZ cap rate would
need to rise by
To breach this covenant,
Net Property Income
would need to fall by
Secured property
percentage must remain
above
392bps1
60.5%1
85%
1. For illustrative purposes only as at 30 June 2019 balance date and assumes no change to other inputs that could impact the calculation of this metric.
Items influencing gearing (%)
for the year ended 30 June 2019
+0.9%
+0.2%
+1.6%
+1.7%
+3.2%
33.9%
+0.8%
-1.2%
-2.1%
380bps
decrease since
30 June 2018
-3.0%
34.3%
-1.8%
30.1%
-4.2%
8
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Business OverviewBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio ReviewFinancial Management
26 Growthpoint Properties Australia | 2019 Annual Report
Financial management
continued
Key debt metrics and changes during FY19
Gross assets
Interest bearing liabilities
Total debt facilities
Undrawn debt
Gearing
Weighted average interest rate
Weighted average debt maturity
Annual Interest Coverage Ratio (ICR) / Covenant ICR
Actual Loan to Value Ratio (LVR) / Covenant LVR
Weighted average fixed debt maturity
% of debt fixed
Debt providers
$'000
$'000
$'000
$'000
%
%
years
times
%
years
%
no.
30 June 2019
Proforma
30 June 2018
4,117,860
1,262,5101
1,684,524
416,5251
30.11
4.1
4.6
4.1 / 1.6
36.2 / 60
5.6
761
17
3,474,569
1,197,555
1,523,482
320,000
33.9
4.4
5.0
3.9 / 1.6
36.1 / 60
5.5
82
17
Change
643,291
64,955
161,042
96,525
(3.8)
(0.3)
(0.4)
0.2 / –
(0.1) / –
0.1
(6)
–
Revaluation gains across both the office
and industrial portfolios supported strong
growth in NTA per security and helped
maintain gearing below the bottom of the
Group’s target range. The chart on the
previous page highlights the movements
impacting gearing.
Debt strategy1
Growthpoint retains good access to debt
through both local banking relationships
and offshore debt capital markets.
Following the settlement of the equity
raising launched in June 2019, the Group
held $417 million of undrawn debt to
help fund acquisitions and identified
office and industrial developments
with a potential end value of over $350
million. Growthpoint will continue to
target approximately $100 million as an
undrawn balance to allow for flexibility in
transactions, while aiming to keep the
cost of undrawn debt lines low.
Growthpoint’s fixed debt percentage
fell to 76%1 from 82% at 30 June 2018,
partly as a result of the reset of the
interest rate swap book in June 2019.
The various debt transactions over FY19
meant the Group’s weighted average
debt maturity was 4.6 years at 30 June
2019.
1. Pro forma for the settlement of the Institutional
Placement and Security Purchase Plan
launched in FY19 but settled in early FY20,
raising $174 million for the issue of 43.7 million
securities and the repayment of debt from those
proceeds
Movements in NTA ($)
per stapled security
+$0.277
+$0.010
+$0.004
-$0.002
+$0.021
$3.500
+$0.020
$3.520
$3.190
10.3%
increase since
30 June 2018
30 June
2018
Property
revaluations
Security
revaluations
Loss on
property sale
Financial
instruments
revaluations
Equity raising
& retained
earnings
30 June
2019
Equity raising
– Placement
& SPP
30 June
2019
Proforma
Long-term growth in FFO
and distributions (cps)
FFO per security
Distributions per security
22.9
20.5
21.8
19.7
20.2
19.0
25.5
21.5
25.0
25.1
23.0
22.2
At least
25.4 3.9%
CAGR
23.8
3.8%
CAGR
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Growthpoint Properties Australia | 2019 Annual Report 27
Funds From Operations (FFO)
FFO is the net profit available for distribution from the Group which excludes accounting adjustments such as fair value movements to
the value of investment property, investment in securities and interest rate swaps, depreciation, profits or losses on sale of investment
properties, deferred tax and amortisation of tenant incentives. FFO is non-IFRS financial information and has not been subject to review
by the Group’s external auditors.
FFO has been provided to allow Securityholders to identify that income which is available to distribute to them and will assist in the
assessment of relative performance of the Group.
Reconciliation from statutory profit to FFO
Profit after tax
Less non-FFO items:
FY19
$’000
FY18
$’000
375,292
357,709
- Straight line adjustment to property revenue
(6,237)
(5,962)
- Net changes in fair value of investment property
(201,581)
(166,958)
- (Profit)/ loss on sale of investment property
- Net change in fair value of investment in securities
- Net change in fair value of derivatives
- Depreciation
- Amortisation of incentives
- Deferred tax benefit
1,144
(7,109)
(3,147)
269
19,337
25
(24,419)
(10,368)
573
293
16,327
(117)
Change
% Change
%
4.9
$’000
17,583
(275)
(34,623)
25,563
3,259
(3,720)
(24)
3,010
142
FFO
177,993
167,078
10,915
6.5
The FY19 payout ratio, calculated as distributions on ordinary stapled securities divided by FFO, was 91.6% (FY18: 88.8%).
Details about distribution components under the attribution managed investment trust or “AMIT” regime (only relevant for the full year
distribution) and Fund Payment amounts (only relevant for foreign holders) will be made available on Growthpoint’s website on or before
the relevant distribution date.
For more information go to:
growthpoint.com.au/investor-centre/distributions/
Operating and capital expenses
Operating expenses
Total operating expenses
Average gross assets value
Operating expenses to average gross assets
Capital expenditure
Total portfolio capex
Average property asset value
Capital expenditure to average property portfolio value
FY19
FY18
13,943
13,362
3,821,142
3,377,737
0.36
0.40
FY19
FY18
12,869
10,315
3,637,775
3,236,038
0.35
0.32
$'000
$'000
%
$'000
$'000
%
Business OverviewBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio ReviewFinancial Management
28 Growthpoint Properties Australia | 2019 Annual Report
10 year financial
performance summary.
As at 30 June
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
Financial performance
Investment income
Profit for the period
Financial position
$m
$m
492.9
466.3
383.4
302.1
361.5
198.5
171.5
115.8
375.3
357.7
278.1
219.4
283.0
117.3
94.0
49.5
97.6
43.4
91.2
46.7
Total assets (at 30 June)
$m 4,117.9 3,474.6 3,328.4 2,879.6 2,407.1 2,128.8 1,680.4 1,607.1 1,190.1
774.8
Total equity (at 30 June)
$m 2,717.34 2,157.0 1,901.5 1,522.4 1,411.5 1,165.1
804.1
733.2
478.6
324.0
Securityholder value
Basic and diluted earnings per security
Funds From Operations per security
Distributions per security
Total Securityholder return2
Return on equity
Gearing (at 30 June)
NTA per security (at 30 June)
¢
¢
¢
%
%
%
$
52.9
25.1
23.0
21.0
16.9
30.14
3.524
53.5
25.0
22.2
22.3
18.5
33.9
3.19
42.7
25.5
21.5
6.3
18.6
38.5
38.1
22.9
20.5
7.4
13.5
41.2
50.4
21.8
19.7
36.4
23.9
36.3
25.7
20.2
19.0
10.8
17.5
40.3
2.88
2.61
2.48
2.16
23.7
N/A1
18.3
23.6
13.1
46.8
2.00
15.2
N/A1
17.6
21.6
4.8
45.6
1.93
21.5
N/A1
17.1
15.5
7.4
56.1
2.01
34.5
N/A1
14.0
N/A3
20.6
58.8
2.03
Market capitalisation (at 30 June)
$m 3,386.94,5 2,438.1 2,076.6 1,836.8 1,781.1 1,323.3
966.8
796.9
447.6
282.5
3,386.94,5
Market capitalisation
Free float
2,438.1
2,076.6
1,781.1
1,836.8
1,323.3
1,279.64,5
966.8
796.9
623.9
633.7
724.4
840.0
282.5
49.8
447.6
138.2
227.4
271.1
409.2
June 2010
June 2011
June 2012
June 2013
June 2014
June 2015
June 2016
June 2017
June 2018
June 2019
Market capitalisation and free float ($m)
1. Not applicable, no data available for these periods.
2. Source: UBS Investment Research.
3. Not applicable due to restructuring that occurred part way through the year.
4. Pro forma for the settlement of the Institutional Placement and Security Purchase Plan launched in FY19 but settled in early FY20, raising $174 million for the
issue of 43.7 million securities and the repayment of debt from those proceeds.
5. Pro forma, using the closing price of $4.39 on 31 July 2019, multiplied by 771.5 million securities on issue.
Growthpoint Properties Australia | 2019 Annual Report 29
70 Distribution Street, Larapinta, QLD
Business OverviewBoard & Remuneration ReportFinancial ReportAdditional InformationPortfolio ReviewFinancial Management 30 Growthpoint Properties Australia | 2019 Annual Report
Board of Directors.
1. Geoffrey Tomlinson (71)
BEC
5. Grant Jackson (53)
Assoc. Dip. Valuations, FAPI
Independent Chairman (since
1 July 2014) and Director (since
1 September 2013)
Over 46 years’ experience in the
financial services industry.
Committees: Audit, Risk &
Compliance and Nomination,
Remuneration & HR
Current Australian
directorships of listed public
companies4: IRESS Limited
4
2. Timothy Collyer (51)
B.Bus (Prop), Grad Dip Fin & Inv,
AAPI, F Fin, MAICD
Managing Director (since
12 July 2010)
Over 30 years’ experience in
A-REITs and unlisted property
funds, property investment,
development and valuations.
Current Australian
directorships of listed public
companies4: Nil
3. Maxine Brenner (57)
BA, LLB
Independent Director (since
19 March 2012)
Maxine has over 28 years’
experience in corporate
advisory, mergers and
acquisition, financial and legal
advisory work.
Committees: Audit, Risk &
Compliance (Chair)
Current Australian
directorships of listed public
companies4: Orica Limited,
Origin Energy Limited and
Qantas Airways Limited
4. Estienne de Klerk (50)
BCom (Industrial Psych), BCom
(Hons) (Marketing), BCom (Hons)
(Acc), CA (SA)
Director1 (since 5 August 2009)
Over 22 years’ experience in
banking and property finance
and over 16 years’ in the listed
property market.
Committees: Audit, Risk &
Compliance
Current Australian
directorships of listed public
companies: Nil
Board expertise matrix (no.)
Independence
Listed entity
Property industry
Property valuation
Accounting
Corporate finance
Financial Services
Corporate Governance
Legal
Compliance
Audit
Risk
1. Not deemed independent as South African CEO of Growthpoint Properties
Limited (GRT).
2. Not deemed independent as Chairman of GRT.
3. Not deemed independent as Group CEO of GRT.
4. In addition to Group entities.
Independent Director (since
5 August 2009)
Over 33 years’ experience in the
property industry, including 29
years as a qualified valuer.
Committees: Audit, Risk &
Compliance
Current Australian
directorships of listed public
companies4: Nil
6. Francois Marais (64)
BCom, LLB, H Dip (Company Law)
Director2 (since 5 August 2009)
Over 28 years’ experience in the
listed property market.
Committees: Nomination,
Remuneration & HR
Current Australian
directorships of listed public
companies: Nil
7. Norbert Sasse (54)
BCom (Hons) (Acc), CA (SA)
Director3 (since 5 August 2009)
Over 23 years’ experience in
corporate finance and over
16 years’ experience in the
listed property market.
Committees: Nomination,
Remuneration & HR (Chair)
Current Australian
directorships of listed public
companies: Nil
8. Josephine Sukkar AM (55)
BSc (Hons), Grad Dip Ed
Independent Director (since
1 October 2017)
Over 29 years’ experience in the
construction industry.
Committees: Nomination,
Remuneration & HR
Current Australian
directorships of listed public
companies: Nil
Full bios on all Directors
can be found online at
growthpoint.com.au/
about/board/
1256378 Growthpoint Properties Australia | 2019 Annual Report 31
Executive Management.
1. Timothy Collyer
B.Bus (Prop), Grad Dip Fin & Inv,
AAPI, F Fin, MAICD
Managing Director (since 12
July 2010)
Over 30 years’ experience in
A-REITs and unlisted property
funds, property investment,
development and valuations.
3. Dion Andrews
B.Bus, FCCA, GAICD
Chief Financial Officer,
Company Secretary (since 8
May 2014)
Over 17 years’ experience in
accounting roles in a corporate
capacity.
2. Michael Green
B.Bus (Prop)
Chief Investment Officer
Over 18 years’ experience in
listed and unlisted property
fund management, property
investment and development.
4. Yien Hong1
LLB (Hons), B.Comm, B.Arts, MAICD
General Counsel & Company
Secretary (since 13 April 2018)
Over 21 years’ experience
across debt finance, property,
funds, M&A, structured finance,
derivatives and project finance
as well as risk management and
governance.
Full bios on all Executive
Management can be found
online at growthpoint.
com.au/about/
executive-management/
1. Yien Hong has been appointed Company Secretary and General Counsel
on contract. A new Company Secretary and General Counsel has been
appointed and will start on 26 August 2019.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review1324 32 Growthpoint Properties Australia | 2019 Annual Report
Remuneration
report.
On behalf of the Board of
Growthpoint Properties
Australia (Group), I am
pleased to present our FY19
Remuneration Report.
The primary objective of the Group
remains to provide our Securityholders
with a growing income stream and long-
term capital appreciation. Remuneration
of the Key Management Personnel
(KMP) and staff at Growthpoint is tied
closely to the success in achieving these
objectives in a sustainable way, and the
Growthpoint remuneration framework is
based on both financial and non-financial
outcomes of the Group as they relate to
both strategy and performance.
The FY19 remuneration report reflects
another year of strong growth in
Securityholder returns. Declared
distributions over FY19 amounted to 23.0
cents per security, representing 3.6%
growth on FY18. During December 2018
and July 2019, the Group carried out two
capital raisings – one by way of a pro-
rata non-renounceable rights issue and
one by way of an Institutional Placement,
followed by a Security Purchase Plan.
These events were both well received by
the market and has meant that the Group
added to its index weighting in the ASX
A-REIT 200 Accumulation Index. As a
result, the performance measures under
the long-term incentive plan of Total
Shareholder Return (TSR) and Return On
Equity (ROE) will be measured against
the ASX A-REIT 200 Accumulation Index
as a more relevant index from FY20
onwards.
Norbert Sasse
Director
Growthpoint TSR
ASX 300 A-REIT index TSR
21.0
19.4
18.2
18.4
13.8
14.0
16.3
8.4
1 year
3 years
compound
5 years
compound
10 years
compound
Growthpoint returns continue
to outperform (%)1
Strong share price growth over the year
delivered Securityholders with TSR of
21.0% to 30 June 2019, exceeding the
ASX A-REIT 300 Accumulation Index
return of 19.4%1. This continues a long
period of outperformance on this metric
for the Group, as can be seen from the
graph on the left.
Funds from Operations (FFO) over the
year continued to grow, increasing by
0.4% to 25.1 cents per security following
upgrades to guidance during FY19. The
Group continues to grow its distributions
year on year and the Board recognises
the Group’s ability to continue growing
distributions for Securityholders relies
predominantly on its ability to continue
growing earnings. Growth in these
financial outcomes will continue to be
linked as they have been over the long-
term. The table below provides medium
to long-term growth rates for FFO and
distributions per security.
Compound annual growth rates (CAGR)
FY14
FY17
FY19
2 year
CAGR
5 year
CAGR
FFO per security (cents)
Distribution per security (cents)
20.2
19.0
25.5
21.5
25.1
23.0
(0.8%)
3.4%
4.4%
3.9%
NTA per security (cents)
216.0
288.0
350.0
10.2%
10.1%
1. Source: UBS Investment Research: Annual
compound returns to 30 June 2019.
Growthpoint Properties Australia | 2019 Annual Report 33
100 Skyring Terrace, Newstead, QLD
The only change implemented to FY20
Remuneration structures is that the LTI
comparator group will change from the
S&P ASX300 REIT Index to the S&P
ASX200 REIT Index. This comparator
group is judged to be more relevant given
the market capitalisation of Growthpoint.
There are also TFR market adjustments
for Executive KMP and Non-executive
Directors for FY20.
The Committee and the Board remain
committed to implementing remuneration
policies that incentivise KMP and staff to
execute and deliver on the strategy of the
Group in the best long-term interests of
Securityholders.
Norbert Sasse
Chair - Nomination, Remuneration and
HR Committee
3. Introduced a Minimum
Securityholding Requirement (MSR)
where Non-Executive Directors
are required to hold 100% of base
fees, the Managing Director is
required to hold 100% of Total Fixed
Remuneration (TFR) and other KMP
are required to hold 50% of their TFR
in Growthpoint securities by the end
of FY22.
The Committee believes these changes
will further align compensation of KMP
with the interests of Securityholders.
The Group continues to receive positive
feedback on its remuneration structures
and received a 99.4% vote “for” the FY18
Remuneration Report at the AGM held in
November 2018.
The Committee maintained an ongoing
engagement with PWC in FY19 to
benchmark KMP remuneration packages
and Director and Committee fees against
the A-REIT sector and other ASX listed
companies. This allowed the Committee
to ensure consistency and to be assured
of being within market ranges for
remuneration and benefits.
The Board is also pleased to report
strong sustainability outcomes over the
year, especially the commencement of
the review of climate related financial
disclosures, risk and governance
frameworks and tenant engagement.
Our GRESB score for the calendar year
2017 continues to show improvement,
increasing by 3.1% over the prior
year. The Group also maintained an
above-average CDP score of B. More
information on the Group’s performance
on sustainability can be found in the
FY19 Sustainability Report.
What’s changed
There were three key changes
implemented for FY19 to ensure the
Group was maintaining best practice
across the sector and more broadly
the ASX 200. These changes were
highlighted in the FY18 Remuneration
Report. The key changes were:
1. Changed the backward-looking
LTI structure to a forward-looking
structure to align more closely with
market practice;
2. Introduced deferral for part of the
STI awarded to KMP, with two thirds
paid as cash and one third paid
in performance rights (Short-term
Performance Rights) which vest over
two years and;
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 34 Growthpoint Properties Australia
What’s
inside.
Who this report covers
FY19 Executive KMP
remuneration policy and
framework
FY19 short-term
incentives (STI)
FY19 long-term
incentives (LTI)
Executive KMP
remuneration in detail
FY20 Executive KMP
remuneration
Non-executive KMP
arrangements
Executive and Non-Executive
KMP shareholdings
Remuneration policy and
role of the Nomination,
Remuneration & HR
Committee
34
34
37
39
45
46
48
49
50
About the
Remuneration Report
The Directors present this
“Remuneration Report” for the
Group for the year ended 30 June
2019. This report summarises
key compensation policies and
provides detailed information on
the compensation for Directors
and other KMP.
The specific remuneration
arrangements described in the
report apply to the Managing
Director and the KMP as defined
in AASB 124 and to the Company
Secretaries as defined in section
300A of the Corporations Act
2001 (Cth).
Growthpoint’s remuneration
practices substantially comply
with best practice governance
guidelines, as per ASX corporate
governance principles and
recommendations, as outlined in
the 2019 Corporate Governance
Statement.
Who this report
covers.
This report covers Key Management Personnel (KMP),
comprising Executive Key Management Personnel (Executive
KMP) and Non-executive Directors.
Executive KMP
t Timothy Collyer - Managing Director
t Dion Andrews - Chief Financial Officer
t Michael Green - Chief Investment Officer
In the prior period, Aaron Hockly was disclosed as a KMP in the position of Chief
Operating Officer. In April 2018 he went on parental leave and was expected to return
in April 2019. However, he did not return and instead signed a termination deed with
the Group. As he did not participate in the planning, directing and controlling of the
activities of Growthpoint at any stage during FY19, he was not a KMP for any portion
of FY19. Yien Hong has been performing the role of Company Secretary and General
Counsel ever since Mr Hockly first went on leave on a contract basis. As announced
to the market on 23 May 2019, Jacquee Jovanovski will be joining Growthpoint in early
FY20 as Chief Operating Officer and will be added as a KMP for that financial year.
Non-Executive Directors
t Geoffrey Tomlinson - Independent
Chairman and Director
t Maxine Brenner - Independent Director
t Estienne de Klerk - Director
t Grant Jackson - Independent Director
t Francois Marais - Director
t Norbert Sasse - Director
t Josephine Sukkar - Independent
Director
FY19 Executive KMP remuneration policy
and framework.
Components of remuneration
Total Fixed Remuneration (TFR)
(including applicable superannuation and other benefits)
Set at a level to attract and retain suitably qualified and experienced persons
in each respective role and tailored to encourage overall performance of the
Group which is in the best interests of all Securityholders.
Short-term incentives (STI)
If specified performance criteria are met, eligibility of
each KMP to receive a STI bonus payable as two thirds
cash and one third as deferred short-term performance
rights (Short-term Performance Rights) in respect of
each financial year as determined by the Committee up
to a maximum amount set by the Board.
Current Year
(FY19)
Next Year
(FY20)
Long term incentives (LTI)
LTI bonus payable under which, upon meeting specified
performance criteria, each Executive KMP is eligible to
receive securities in the Group that vest over time to help
ensure alignment of each Executive KMP’s interests with
those of Securityholders.
Current Year
(FY19)
Next Year
(FY20)
37
46
39
47
Growthpoint Properties Australia | 2019 Annual Report 35
FY19 Executive KMP remuneration policy
and framework continued
Executive KMP Remuneration delivery FY19
Executive KMP remuneration is structured to link rewards to individual performance and the execution of the Group’s strategy to
sustainably grow distributions and longer term capital growth. This leads to the creation of Securityholder value.
Fixed
Remuneration
100%
Base Salary,
Superannuation
and Other
Benefits1
STI
66.6% paid in
Cash
Cash STI
33.3% deferred
Short-term
Performance Rights
16.65% deferred for one year
16.65% deferred for two years
LTI2
delivered as
long-term
performance
rights (Long-term
Performance Rights)
100% subject
to a 3 year
performance
period with any
vesting occurring
in year four
50% subject to Relative Total Securityholder returns (TSR) growth
50% subject to Relative Return on Equity (ROE) growth
FY19
FY20
FY21
FY22
1. Other Benefits comprise wellbeing and insurance arrangements provided to all Executive KMP.
2. Transitional plan in place. See page 39 for further detail.
Executive KMP Remuneration mix FY19
The remuneration components for each Executive KMP are expressed as at percentage of total remuneration, with the STI and LTI
value varied to reflect performance. The following diagram sets out the structure for remuneration paid to Executive KMP for FY19.
Managing Director
Performance dependent
44%
22%
5%
30%
Other Executive KMP
Performance dependent
49%
17%
4%
31%
Total Fixed Remuneration
STI - Cash
STI - Deferred
LTI
45
See page 45 for detailed
information on Executive
KMP remuneration
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 36 Growthpoint Properties Australia | 2019 Annual Report
FY19 Executive KMP remuneration policy
and framework continued
Principles of remuneration for Executive KMP
1. Executive KMP should receive total remuneration which is competitive with rates for similar roles within the ASX A-REIT sector and ASX listed
companies of similar size (measured by market capitalisation), complexity, workload and the relative profit and expenses versus the Group.
2. The total remuneration for Executive KMP should be set at a level to attract and retain suitably qualified and experienced persons in each
respective role and tailored to encourage overall performance of the Group which is in the best interests of all Securityholders.
3. Executive KMP are not eligible for any additional fees for additional roles within the Group such as acting as an officer of the Company or
being a responsible manager under the Company’s AFSL.
4. From 1 July 2018, the Committee implemented a Minimum Securityholding Requirement (MSR) for KMP (refer to page 49 for details of KMP’s
current holdings and details of the MSR).
5. Executive KMP are entitled to receive certain payments including the vesting of all unvested securities under the LTI if the Company decides to
terminate a position without cause including through redundancy.
Total Executive KMP remuneration FY19 and FY18
Short-term
Post
employment
Share based
payments
Period
Base salary
STI cash
award
Non-
monetary
benefits
Super-
annuation
benefits
Other
long term
Termination
benefits
Deferred
STI Plan
accrual
$
$
$
$
Timothy Collyer - Managing Director
FY19
FY18
932,543
474,583
-
25,000
909,189 1,035,909
1,431
25,000
Dion Andrews - Chief Financial Officer
FY19
FY18
380,993
140,854
347,930
289,476
Michael Green - Chief Investment Officer
380,993
140,854
353,334
293,671
–
–
–
–
25,000
25,000
25,000
25,000
1,694,529
756,292
–
75,000
1,610,453 1,619,056
1,431
75,000
FY19
FY18
Total
FY19
FY18
LTI Plan
accrual
$
Total
$
98,857
644,144 2,175,127
–
464,706 2,436,235
29,340
256,853
833,040
-
148,590
810,996
29,340
257,854
834,041
–
150,232
822,237
157,537 1,158,851 3,842,208
–
763,528 4,069,468
$
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
S300A (1) (e) (i)
proportion of
remuneration
performance
related
%
51%
62%
48%
54%
48%
54%
50%
59%
Growthpoint Properties Australia | 2019 Annual Report 37
FY19 short-term
incentives (STI).
Performance criteria for Executive KMP STI for current year (FY19)
The STI provides Executive KMP with the opportunity to receive cash and equity based on a one-
year performance period following an assessment against specified financial and non-financial
performance conditions. Performance criteria for FY19 are set out below.
Weighting Strategic objectives
Result (%) Result
Performance detail
70% FFO per Security
73%
– Budget 24.7 cps = 50%
– Stretch 26.0 cps = 125%
Funds From
Operations
25.1cps
+0.4% on FY18
70%
Financial
30%
Non-
Financial
7.5% Execution of Business Strategy
81%
– Delivery of development pipeline
of Botanicca, Gepps Cross and
Broadmeadows
– Undertake strategic acquisition and
disposition of property assets to maximise
income and capital growth opportunities
– Maintain the quality of property portfolio
whilst operating within the framework of
the Group’s gearing range, cost of capital
and yields available in the property market
7.5% Organisational Performance
73%
– Maintain a high employee alignment and
engagement score
– Delivery of IT, compliance and risk
management business excellence
projects
– Retain talented individuals in roles and
provide for advancement within the Group
7.5% Environmental, Social and
Governance (ESG) Improvement
and Initiatives
– Promote and achieve diversity targets
86%
– Maintain average high NABERS ratings,
undertake budgeted property specific
energy reduction projects and develop
long-term energy reduction strategy
– Maintain investment grade credit rating
7.5% Individual Performance of
Executive
– Execution of key strategies to achieve
85%
annual budget/guidance and longer-term
earnings growth
– Role model values, leadership behaviours,
collaboration and inclusiveness
– Embedding strong governance, risk and
compliance culture
Totals
100%
75%
Strategic
acquisitions
$341m
+$295m on FY18
Strategic
divestments
$45m
FY18: $91m
Development
pipeline
$353m
+$150m on FY18
_ Successfully
raised $285m
in equity and
$161m in long
term debt
Employee
alignment
53%
(FY18: 63%)
Employee
engagement
75%
(FY18: 81%)
_ Slightly lower employee alignment
and engagement scores and higher
turnover offset by strong tenant
engagement scores and robust delivery
of business excellence projects
Investment
grade rating
Baa2
since August
2014
Average NABERS
energy rating
4.8
4.6 stars FY18
Female
employees
54%
FY18: 50%
Key performance outcomes included:
_ execution of strategy regarding
acquisitions, divestments,
development along with debt and
equity capital management
_ positive reviews of culture, values,
governance and risk mitigation
See page 45 for detailed
information on Executive
KMP remuneration
45
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 38 Growthpoint Properties Australia | 2019 Annual Report
FY19 short-term incentives
continued
STI Plan overview for Executive KMP
In advance of each financial year the Committee, in consultation with the Managing Director, and with assistance from remuneration
consultants, establish performance targets and reward levels for STIs in respect of the year ahead.
A performance review is undertaken near the end of each financial year to determine if any STI should be payable to an Executive
KMP, respectively, including the Managing Director, based on performance targets set at the start of the financial year. Any award of
STI to the Managing Director requires Board approval. STI payments are made in August following the financial year in which they were
earned.
Changes for FY19
From FY19 onwards, the Executive KMP STI will change, from 100% payment in cash to 66.6% payment in cash, with the
remainder deferred and awarded as Short-term Performance Rights to receive Growthpoint securities. Half of these Short-term
Performance Rights will vest after one year and half after two years following the date of issue. If the Executive KMP resigns before
a vesting period ends, the relevant Short-term Performance Rights do not vest and are forfeited. The Short-term Performance
Rights will receive distributions paid by the Group equivalent to the distribution that would have been received if holding a security.
Such payment is to be made in cash on the same date such distribution is payable.
This change has been made to further align Executive KMP and Securityholder interests.
STI Criteria
The STI is divided into two criteria, namely;
a) Financial criteria – 70% of total
The financial criteria is based upon achieving budgeted FFO per security (24.7cps for FY19 providing a 50% score) with the opportunity
for outperformance, up to 125% achievement, of criteria via a “stretch target” for FFO per security in excess of budget (up to 26.0 cps
which is 5.3% above the budgeted figure). If FFO per security is below budget, the Board has discretion whether to grant achievement
under the financial criteria. For FY19 the achievement was 73% for the financial criteria due to achievement of 25.1 cps.
b) Non-financial criteria – 30% of total
37
The non-financial criteria are based upon the performance criteria in the table on page 37. The criteria are reviewed and approved
by the Committee before the start of the financial year and then reviewed on a half yearly basis, with an overall assessment
approved by the Committee following the end of the financial year. The half year review involves the Chairman of the Group and
the Managing Director jointly analysing actual performance against the criteria and preparation of a report to the Committee.
Results of FY19 STI
The table below shows the maximum in cash and Short-term Performance Rights that each Executive KMP could earn for FY19 and
the actual results based on overall achievement for the year:
Names
Total
Cash
Short-term
Performance Rights
Total
Cash
Short-term
Performance Rights
Maximum for FY19
Result for FY19
$
$
$
No.
$
$
$
No.
Timothy Collyer (Managing Director)
Dion Andrews (Chief Financial Officer)
1,108,507
738,931
369,576
100,977
711,839
474,583
237,256
64,824
329,000
219,311
109,689
29,970
211,271
140,854
70,417
19,239
Michael Green (Chief Investment Officer)
329,000
219,311
109,689
29,970
211,271
140,854
70,417
19,239
Total
1,766,507 1,177,553
588,953
160,917 1,134,381
756,292
378,089
103,303
Note that the maximums in the table above are based on the financial component, representing 70% of the total STI, containing a
stretch target that means up to 125% of this portion of the STI is able to be earned.
The number of Short-term Performance Rights is derived by dividing the maximum dollar value by the Volume Weighted Average Price
of Growthpoint securities over the first 10 trading days of FY19, being $3.66. The actual number of Short-term Performance Rights
earned by Executive KMP will be split into two equal tranches with the first tranche converting to stapled securities on 30 June 2020
and the second tranche converting on 30 June 2021, as long as the individual is still employed and has not submitted their resignation
prior to conversion date.
Growthpoint Properties Australia | 2019 Annual Report 39
FY19 long-term
incentives (LTI).
The Group has had an Employee Securities Plan (“the Plan”) in place for all Employees and
the Managing Director since 2011. The Plan is designed to link Employees’ remuneration with
the long-term goals and performance of the Group with the aim of consistently increasing total
Securityholder return.
All securities or Long-term Performance Rights issued under the LTI are issued on a zero-cost basis. In other words, the Executive KMP
are issued securities or Long-term Performance Rights as part of their remuneration without having to pay any amounts for them.
LTI performance measures
The performance measures for the LTI are reviewed in advance of each financial year by the Committee and/or the Board.
Changes for FY19
Following the PwC review of the Group’s remuneration structures the Committee decided to move the current LTI structure from
a “backward looking” measurement period to a “forward looking” structure. For FY19, instead of measuring the 3-year period
from 1 July 2016 to 30 June 2019 and determining relative TSR and ROE for that period, the assessment period will instead be
from 1 July 2018 to 30 June 2021. The same relative TSR and ROE measures will be used with the same hurdle rates. Once the
assessment of performance is complete, a performance percentage is determined which will be applied to the maximum potential
Long-term Performance Rights with the resulting Performance Rights vesting at that time (i.e. in three years time).
There will be a transition period between when the current plans cease and the new plans become fully effective (no vesting under
the new plan can occur until after the measurement of the first three-year performance period ending 30 June 2021 is complete).
The Group will continue to operate “backward looking” LTI plans in the transition period with steadily reducing opportunities under
each plan until they are phased out completely with the first vesting under the new structure. The Committee asked PwC to review
these transitional arrangements and they found that there is no advantage/disadvantage of the transitioned arrangements to either
the Group or the Executive KMP.
The reason for this change is simply to bring the structure of the LTI measurement into line with general market practice.
Types of LTI plans now in operation
There are currently three types of LTI plans in operation for Executive KMP:
t Historical backward-looking plans from FY16, FY17, FY18.
The performance measures of these plans have been tested and any rights have vested. As these plans convert from rights to issue
of stapled securities over time, there are still tranches to be converted into stapled securities in future periods.
t FY19 transitional plan.
This plan is also backward looking, with the performance measurement period being the three years to 30 June 2019. However, only
50% of the maximum opportunity under this plan can convert to the issuing of stapled securities. This is because the transitional
plans are designed to run down until the first forward looking plan comes into effect. The results of this plan will be determined
around 30 September 2019 and any stapled securities to be converted will be issued in two equal tranches, one in FY20 and one in
FY21.
t FY19 forward looking plan.
The performance measurement period for this plan is the three years to 30 June 2021. For this plan, only 75% of the maximum
opportunity can convert to the issuing of stapled securities. This is to dovetail with the final 25% tranche of the FY18 plan that may
have converted to securities in the same year.
The table on the next page shows the different plans in operation and when rights under each plan could convert.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 40 Growthpoint Properties Australia | 2019 Annual Report
FY19 Long-term incentives
continued
Types of LTI plans now in operation
30 Sept 2018
30 Sept 2019
30 Sept 2020
30 Sept 2021
30 Sept 2022
Vesting date
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
25%
Historical,
backward
looking
plans
Transitional,
backward
looking
plans
Forward
looking
plans
FY15
FY16
FY17
FY18
FY19
FY20
FY19
FY20
25%
75%
100%
100%
Opportunity
100%
Opportunity
100%
Opportunity
100%
Opportunity
100%
Opportunity
Performance measures for the LTIs for FY16, FY17, FY18, transitional FY19
and forward looking FY19
50%
Total
Securityholder
return (TSR)
TSR reflects the amount of
dividends or distributions paid/
payable by the Group plus the
change in the trading price of
the Group’s securities over the
financial year.
50%
Return
on Equity
(ROE)
ROE reflects the amount of
dividends or distributions paid/
payable by the Group plus the
change in the Group’s net tangible
assets per security over the
financial year.
TSR is calculated as a percentage return on the opening
trading price of the Group’s securities on the first day of
the financial year.
ROE is calculated as a percentage return on the Group’s
net tangible assets per security as at the first day of the
financial year.
TSR is benchmarked relative to the S&P/ASX A-REIT 300
Accumulation Index1 over a rolling 3-year period2. At or
below 50% performance, nil rights vest, 50% of rights vest
at the 51st percentile, up to 100% at the 75th percentile
(pro rata vesting in between).
ROE is benchmarked relative to the ROEs of constituents
of the S&P/ASX A-REIT 300 Index1 over a rolling 3-year
period2 using the following methodology:
t Below the benchmark return - 0%.
t At the benchmark - 50%.
t 0.1% - 1.9% above the benchmark – 51.25% - 75%
in increments of 1.125% for each 0.1% above the
benchmark
t 2% or more above the benchmark - 100%.
1. The benchmark only includes those constituents of the ASX REIT 300 that have a comparable trading history. For example, if they have listed, merged or demerged
within three years they are excluded.
2. For the backward looking plans, this is 3 years up to 30 June in the current FY. For forward looking plans, this is 30 June in three yeas from 1 July of the current FY.
For example, the FY18 Plan will be measured at 30 June 2021.
Growthpoint Properties Australia | 2019 Annual Report 41
FY19 Long-term incentives
continued
Changes for FY19
From FY20 onwards, the comparator group for LTI will be the ASX A-REIT 200, replacing the ASX A-REIT 300. Due to the Group’s
market capitalisation, this is judged to be a more relevant comparator group.
LTI Maximum
In advance of each financial year, the Board and/or the Committee will establish an LTI pool in respect of the upcoming financial year
and determine the maximum incentive which can be achieved by each Executive KMP (“LTI Maximum”). Under the terms of his
employment contract, the Managing Director’s LTI Maximum is 80% of total fixed remuneration (“TFR”). The LTI Maximum for other
Executive KMP is 70% of TFR.
LTI Minimum
There is no minimum grant under the LTI. Accordingly, if minimum performance measures are not achieved, no grant will be made
under the LTI.
LTI Achievement
The LTI results are independently calculated with results provided directly to the Committee.
In early October of each year, the Committee assesses the achievement of the performance measures listed above to determine a
percentage achieved for the previous financial year (“LTI Achievement”).
LTI Awards for backwards looking plans (transitional plans)
The LTI Maximum multiplied by the LTI Achievement provides the “LTI Award” for each Executive KMP for the relevant financial year.
The LTI Award is translated into an equivalent value of the Group’s securities through dividing the LTI Award by the volume weighted
average price of the securities over the 20 trading days prior to 30 September following the financial year to which the LTI relates. This
gives a total number of securities to be issued to each Executive KMP for each subsequent vesting.
25% of the securities to be issued to each Executive KMP based on the LTI Award are issued to each Executive KMP in October or
November of each of the following four years. Each such vesting is subject to the Executive KMP remaining employed by Growthpoint
at the relevant date subject to certain contractual exceptions such as a redundancy and in the discretion of the Board (e.g. in the case
of a “good leaver”).
As each grant is on the basis of a fixed number of securities rather than a fixed value, Executive KMP are exposed to variations in the
Group’s security price for securities which are yet to vest (as well as for any securities they already hold).
The LTI is cumulative meaning that Executive KMP can receive up to four issues of securities in a particular year in respect of four prior
financial years. Subject to some exceptions, securities immediately vest in the case of a takeover of the Group or an Executive KMP
being made redundant.
The opportunity under transitional plans steadily reduces until the first Long-term Performance Rights under the new forward looking
plans vest.
LTI Awards for forward looking plans
LTI Awards for forward looking plans are similar to the backward looking plans except:
t The number of Long-term Performance Rights granted is based on the volume weighted average price of securities over the first 10
trading days of the relevant performance period.
t Once the LTI Achievement is determined following the end of the performance period, this percentage is multiplied by the Long-term
Performance Rights to determine how many Long-term Performance Rights will actually vest and convert to issued securities.
ASX Listing Rules
In accordance with ASX Listing Rule 10.14, the issue of any stapled securities or performance rights to the Managing Director is subject
to Securityholder approval. It is intended that such approval be obtained at the Group’s annual general meeting each year and, if
approved, stapled securities or performance rights will be issued shortly after the relevant meeting.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 42 Growthpoint Properties Australia | 2019 Annual Report
FY19 Long-term incentives
continued
FY18 Achievement
LTI Achievement – TSR
For the three years to 30 June 2018, the Group’s TSR was calculated as 35.8%, ranking at the 50th percentile meaning 0% vesting
under this measure.
LTI Achievement – ROE
For the three years to 30 June 2018, the Group’s ROE was calculated as 54.5%, below the benchmark of 54.9%, meaning 0% vesting
under this measure.
Performance rights to vest from historical backward looking plans (FY16 - FY18)
The number of performance rights to convert from historical plans has already been determined. The table below indicates the number
of performance rights still to convert and the financial year in which the conversion will take place:
Plan
participants
Plan
identification
No. of securities
to vest in FY20
No. of securities
to vest in FY21
Total securities
still to issue
Timothy Collyer
(Managing Director)
Dion Andrews
(Chief Financial Officer)
Michael Green
(Chief Investment Officer)
Total to issue
FY16
FY17
FY18
Total
FY16
FY17
FY18
Total
FY16
FY17
FY18
Total
26,235
55,104
–
81,339
7,408
18,796
–
26,204
7,408
19,069
–
26,477
134,020
–
55,104
–
55,104
–
18,796
–
18,796
–
19,069
–
19,069
92,969
26,235
110,208
–
136,443
7,408
37,592
–
45,000
7,408
38,138
–
45,546
226,989
FY19 Transitional Plan (backward looking)
The table below shows LTI grants made during FY19 with respect to the transitional plan, subject to performance conditions over the
three-year performance period ending 30 June 2019. Accounting standards require the estimated valuation of the grants be recognised
over the performance period. The minimum value of the grant is nil if the vesting conditions are not met. The maximum value is based
on the estimated fair value calculated at the time of the grant and amortised in accordance with the accounting standard requirements.
LTI max as a % of
remuneration1
Performance
measure
Number of
performance
rights granted
Fair value per
performance right
Total estimated
fair value
%
40
35
35
TSR
ROE
TSR
ROE
TSR
ROE
No.
52,379
52,379
104,758
18,640
18,640
37,280
18,640
18,640
37,280
$
1.937
3.414
2.906
3.723
2.906
3.723
$
101,458
178,822
280,280
54,168
69,397
123,565
54,168
69,397
123,565
Timothy Collyer
(Managing Director)
Dion Andrews
(Chief Financial Officer)
Michael Green
(Chief Investment Officer)
Total
Total
Total
1. This includes the restriction to 50% opportunity for this plan. For example, Timothy Collyer’s max is calculated as 80% * 50% = 40%.
Growthpoint Properties Australia | 2019 Annual Report 43
FY19 Long-term incentives
continued
Key inputs used in valuing Long-term Performance Rights were as follows:
Key inputs:
Grant date
TSR performance start date
TSR expiry date
Share price at issue date ($)
Exercise price
Expected life (years)
Volatility
Risk free interest rate
Distribution yield
Timothy Collyer
21 November 2018
1 July 2016
30 June 2019
3.54
0.00
0.61
14%
1.50%
6%
Other Executive KMP
20 September 2018
1 July 2016
30 June 2019
3.90
0.00
0.78
13%
1.52%
6%
The fair value is determined by Grant Thornton using a Monte-Carlo simulation for the relative TSR component and a Binomial
methodology for the relative ROE component.
FY19 Forward Looking Plan
The table below shows LTI grants made during FY19 with respect to the Forward Looking Plans, subject to performance conditions
over the three-year performance period ending 30 June 2021. Accounting standards require the estimated valuation of the grants be
recognised over the performance period. The minimum value of the grant is nil if the vesting conditions are not met. The maximum
value is based on the estimated fair value calculated at the time of the grant and amortised in accordance with the accounting standard
requirements.
LTI max as a % of
remuneration1
Performance
measure
Number of
performance
rights granted
Fair value per
performance right
Total estimated
fair value
%
60
53
53
TSR
ROE
TSR
ROE
TSR
ROE
No.
77,329
77,329
154,658
28,689
28,689
57,378
28,689
28,689
57,378
$
1.427
3.027
2.014
3.301
2.014
3.301
$
110,348
234,075
344,423
57,780
94,702
152,482
57,780
94,702
152,482
Timothy Collyer
(Managing Director)
Dion Andrews
(Chief Financial Officer)
Michael Green
(Chief Investment Officer)
Total
Total
Total
1. This includes the restriction to 75% opportunity for this plan. For example, Timothy Collyer’s max is calculated as 80% * 75% = 60%.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review
44 Growthpoint Properties Australia | 2019 Annual Report
FY19 Long-term incentives
continued
Key inputs used in valuing Long-term Performance Rights were as follows:
Key inputs:
Grant date
TSR performance start date
TSR expiry date
Share price at issue date ($)
Exercise price
Expected life (years)
Volatility
Risk free interest rate
Distribution yield
Timothy Collyer
21 November 2018
1 July 2018
30 June 2021
3.54
0.00
2.61
15%
2.09%
6%
Other Executive KMP
20 September 2018
1 July 2018
30 June 2021
3.90
0.00
2.78
16%
2.14%
6%
The fair value is determined by Grant Thornton using a Monte-Carlo simulation for the relative TSR component and a Binomial
methodology for the relative ROE component.
Hedging of issues by Executive KMP
Under the Group’s “Securities Trading Policy” persons eligible to be granted securities as part of their remuneration are prohibited
from entering a transaction if the transaction effectively operates to hedge or limit the economic risk of securities allocated under the
incentive plan during the period those securities remain unvested or subject to restrictions under the terms of the plan.
Growthpoint Properties Australia | 2019 Annual Report 45
Executive KMP
remuneration in detail.
Details of Performance Rights that vested to Executive KMP in FY19
Plan
participants
Plan
identification Issue date
Value of securities
issued on conversion of
performance rights
Number of securities
issued on conversion of
performance rights
Value of
performance
rights still to vest
Percentage of
plan that vested
during FY19
Timothy Collyer
(Managing Director)
Dion Andrews
(Chief Financial Officer)
Michael Green
(Chief Investment Officer)
FY17 Plan
FY16 Plan
FY15 Plan
FY17 Plan
FY16 Plan
FY15 Plan
FY17 Plan
FY16 Plan
FY15 Plan
$
211,506
100,698
156,357
72,145
28,434
33,839
73,193
28,434
33,839
No.
55,104
26,235
40,736
18,796
7,408
8,816
19,069
7,408
8,816
$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
%
25%
25%
25%
25%
25%
25%
25%
25%
25%
Total
738,444
192,388
Number of performance rights held by Executive KMP at 30 June 2019
Names
Timothy Collyer (Managing Director)
Dion Andrews (Chief Financial Officer)
Michael Green (Chief Investment Officer)
Names
Timothy Collyer (Managing Director)
Dion Andrews (Chief Financial Officer)
Michael Green (Chief Investment Officer)
STI
Balance at
1 July 2018 Rights granted
Rights vested/
forfeited
Balance at
30 June 2019
–
–
–
Balance at
1 July 2018
100,977
29,970
29,970
LTI
Rights
granted
–
–
–
100,977
29,970
29,970
Rights
vested
Balance at
30 June 2019
258,518
259,416
(122,075)
80,020
80,839
94,658
94,658
(35,020)
(35,293)
395,859
139,658
140,204
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 46 Growthpoint Properties Australia | 2019 Annual Report
FY20 Executive KMP
remuneration.
Proposed performance criteria for STI for next year (FY20) (unaudited)
Strategic objectives
Weighting Reason chosen
70%
Financial
30%
Non-
Financial
FFO per Security
– Budget = 50%
– Stretch = 125%
Execution of Business Strategy
– Delivery of development pipeline of Botanicca, Gepps
Cross and Broadmeadows
– Lease up of Botanicca by end of FY20
– Undertake strategic acquisition and disposition of assets
to maximise longer term income and capital growth
opportunities
– Maintain the quality of property portfolio
– Financing growth of portfolio and maintaining appropriate
capital structure
– Strategic review of new property sector or operating
business to diversify sources of revenue and grow asset
base
Organisational Performance
– Maintain a high employee engagement and alignment score
– Retain talented individuals in key roles and provide for
advancement within the Group
– Maintain high tenant satisfaction
– Maintain high levels of Securityholder engagement and
confidence
Environmental, Social and Governance (ESG)
Improvement and Initiatives
– Promote and achieve diversity targets
– Maintain average high NABERS ratings, undertake
budgeted property specific energy reduction projects and
develop long-term energy reduction strategy
– Maintain investment grade credit rating
Individual Performance of Executive
– Execution of key strategies to achieve annual budget/
guidance and longer-term earnings growth
– Role model values, leadership behaviours, collaboration
and inclusion
– Embedding strong governance, risk and compliance culture
70% Increasing FFO per security may allow
distributions to be increased each
year, the key strategic objective of the
business.
12.0% Development and delivery of key strategic
initiatives will deliver long term and
sustainable growth.
6.0% Creating a talented and engaged team
and providing them with the right
functionality to support Growthpoint will
underpin ongoing high performance.
7.5% Environmental, Social and Governance
goals form foundation for Growthpoint’s
guiding principles.
4.5% Having a focussed Executive Team with
clear targets, displaying strong leadership
and governance is important to the
Group’s success.
Growthpoint Properties Australia | 2019 Annual Report 47
FY20 Executive KMP remuneration
continued
Executive KMP FY20 remuneration (unaudited)
To assist readers of this Report to understand how Executive KMP are remunerated for the year ahead and to understand the
performance the board and the Committee are trying to encourage through remuneration, FY20 remuneration has been provided
below.
This information is in addition to that required by the Corporations Act 2001 (Cth) and, as a result, has not been audited. Remuneration
listed below is subject to a range of factors including persons remaining employed by the Company in their current role for all of FY20.
Total fixed remuneration
including superannuation ("TFR")
Short-term Incentive
(maximum)
Long-term Incentive
(maximum)
Timothy Collyer1 - Managing Director
$1,000,000 (6.0% increase from FY19)
117.5% of TFR
Dion Andrews2 - Chief Financial Officer
$500,000 (25.0% increase from FY19)
82.3% of TFR
Michael Green2 - Chief Investment Officer
$500,000 (25.0% increase from FY19)
82.3% of TFR
Jacquee Jovanovski2 - Chief Operating Officer
$350,000 (pro-rated from start date)
82.3% of TFR
80% of TFR
70% of TFR
70% of TFR
70% of TFR
1. Other benefits include: Gym membership; payment of up to 1.5% of TFR in lieu of premium for Life, TPD and Income Protection Cover. Termination notice (without
cause) of six months. Termination payments (without cause for redundancy or similar by the Company) – Nine months’ notice and Redundancy Policy benefits.
Unvested LTI grants remain on foot. Restraint of trade period is 12 months.
2. Other benefits include payment of up to 1.5% of TFR in lieu of premium for Life, TPD and Income Protection Cover. Termination notice (without cause) of six
months. Termination payments (without cause for redundancy or similar by the Company) – Redundancy Policy benefits plus vesting of any granted but unvested
options under LTI. Restraint of trade period is 6 months.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 48 Growthpoint Properties Australia | 2019 Annual Report
Non-executive KMP
arrangements.
There are currently seven Non-Executive KMP. An aggregate pool of $1,200,000 available for the
remuneration of Non-Executive KMP was approved by Securityholders at the Company’s Annual
General Meeting in November 2017.
Remuneration paid and payable
The total remuneration paid to Non-Executive Directors for FY19 is listed below and the proposed FY20 remuneration is on page 47.
Principles of remuneration for Non-Executive KMP
The principles of non-executive director remuneration are:
1. Non-Executive Directors should receive total remuneration at market rates for equivalent positions at listed Australian entities of
similar size (measured by market capitalisation), complexity and Non-Executive Director workload having regard to the industry in
which the Group operates.
2. Fees are set at a level to attract and retain suitably qualified and experienced persons to the Board.
3. The Chairman is entitled to a base annual fee and is not eligible for any additional fees for chairing or being a member of any Board
committees.
4. All Non-Executive Directors other than the Chair are entitled to a base annual fee plus additional fees for being a Chairman or a
member of a committee.
5. All Non-Executive Directors’ fees are paid on a base fee basis rather than per meeting.
6. All Non-Executive Directors’ fees are to be paid in cash and include superannuation where applicable. Where Australian GST is
applicable, this is paid in addition to the relevant director’s fees.
7. From 1 July 2018, the Committee implemented a Minimum Securityholding Requirement (MSR) for Non-Executive KMP (refer to
page 49 for details of current holdings and details of the MSR).
8. Non-Executive Directors are not entitled to any termination or similar payments upon retirement or other departure from office.
9. In addition to remuneration, Non-Executive Directors may claim expenses such as travel and accommodation costs reasonably
incurred in fulfilling their duties.
10. With the prior approval of the Chairman, Non-Executive Directors may obtain independent advice at the Company’s cost.
FY19 Non-Executive KMP Remuneration
Short-term
Post employment
Geoff Tomlinson, Chair
(appointed 1 September 2013)
Grant Jackson
(appointed 5 August 2009)
Francois Marais
(appointed 5 August 2009)
Norbert Sasse
(appointed 5 August 2009)
Estienne de Klerk
(appointed 5 August 2009)
Maxine Brenner
(appointed 19 March 2012)
Josephine Sukkar
(appointed 1 October 2017)
Total
Period
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
FY19
FY18
Fees
$
186,184
179,027
95,283
91,618
104,335
100,322
104,335
100,322
104,335
100,322
95,283
91,618
95,283
68,714
785,039
731,944
Committee
Fees
Superannuation
benefits
$
–
–
12,003
10,911
11,670
10,609
18,354
15,960
13,143
11,948
20,177
18,342
10,658
7,266
86,004
75,037
$
17,688
17,008
10,192
9,740
–
–
–
–
–
–
10,969
10,446
10,064
7,218
48,913
44,412
Total
$
203,872
196,035
117,478
112,270
116,005
110,931
122,689
116,282
117,478
112,270
126,429
120,407
116,005
83,198
919,956
851,393
Growthpoint Properties Australia | 2019 Annual Report 49
Non-executive KMP arrangements
continued
Non-Executive KMP FY20 remuneration (unaudited)
To assist readers of this Report to understand how Non-executive KMP are remunerated for the year ahead and to understand the
performance the board and the Committee are trying to encourage through remuneration, FY20 remuneration has been provided
below.
This information is in addition to that required by the Corporations Act 2001 (Cth) and, as a result, has not been audited. Remuneration
listed below is subject to a range of factors including persons remaining employed by the Company in their current role for all of FY20.
Non-Executive KMP remuneration FY20 (unaudited)
Chair fee1
Member fee
Board
$213,100 (4.5% increase from FY19)
$109,000 (4.5% increase from FY19)
Audit, Risk & Compliance Committee
$22,900 (3.7% increase from FY19)
$13,600 (3.5% increase from FY19)
Nomination, Remuneration & HR Committee
$19,400 (5.7% increase from FY19)
$12,300 (5.4% increase from FY19)
1. The Chairman of the Board does not receive Committee fees.
Executive and non-executive
KMP shareholdings.
Key change
From 1 July 2018, the Committee implemented a Minimum Securityholding Requirement (MSR) for Executive KMP and
Non-Executive KMP who must comply with the MSR by 30 June 2022 or four years from their employment or Directorship
commencement, whichever is later. The MSR is as follows:
t Non-Executive Directors – 100% of base Directors fees in equivalent value of Growthpoint securities;
t Managing Director – 100% of TFR in equivalent value of Growthpoint securities; and
t Other Executive KMP – 50% of TFR in equivalent value of Growthpoint securities.
The table below provides holdings as at the date of this report and indicates the current percentage holdings.
Executive and Non-Executive KMP holdings of Growthpoint securities
Name
Position
Geoff Tomlinson
Chairman
Grant Jackson
Non-Executive Director
Francois Marais
Non-Executive Director
Norbert Sasse
Non-Executive Director
Estienne de Klerk
Non-Executive Director
Maxine Brenner
Non-Executive Director
Josephine Sukkar
Non-Executive Director
Timothy Collyer
Managing Director
Dion Andrews
Chief Financial Officer
Michael Green
Chief Investment Officer
Holding as at
30 June 2019
No.
88,776
190,087
169,284
1,656,460
1,752,857
7,245
14,000
886,507
127,682
4,561
Current equivalent
value in
Growthpoint
securities1
%
172%
718%
640%
6261%
6626%
27%
53%
365%
210%
8%
MSR
%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
1. Current equivalent value takes the closing price of Growthpoint securities on 30 June 2019 ($4.12), multiplied by the holding and compares this to the relevant
FY19 measure (100% of base fees for Non-Executive Directors, for example). This is provided for information only at this time as compliance with the MSR is not
required until 30 June 2022 at the earliest.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review
50 Growthpoint Properties Australia | 2019 Annual Report
Remuneration policy and role of the Nomination,
Remuneration and HR Committee.
The Committee advises the Board on compensation policies and practices generally, and makes
specific recommendations on compensation packages and other terms of engagement for
non-executive directors, executive directors and other senior executives. The Committee also
periodically reviews the compensation arrangements for other Employees.
How Governance and remuneration decisions are made
Board of Directors: oversees remuneration
Nomination,
Remuneration
and HR committee
Advises on policy and
practices and makes
recommendation to
the board.
:
s
e
v
i
t
c
e
b
O
j
Provide
competitive
rewards to
attract, motivate
and retain highly
skilled directors
and management.
Set challenging
but achievable
objectives for
short and long-
term incentive
plans.
Link rewards
to the creation
of value for
Securityholders.
Limit severance payments
on termination to pre-
established contractual
arrangements that do
not commit the Group
to making unjustified
payments in the event of
non-performance.
Recommendations made to the board using advice from:
Managing
Director
External
Advisors
Committee members
The members of the Committee during the year and at the date of this Report are:
t Norbert Sasse (Chairman) – non-executive director
t Francois Marais – non-executive director
t Geoff Tomlinson – independent, non-executive director
t Josephine Sukkar – independent, non-executive director
Delegated authority
The Committee operates under delegated authority from the Board. The duties of the Committee in relation to remuneration are to:
a) Recommend, for adoption by the Board, a remuneration package for the Chairman of the Board and the other Directors on a not
less than annual basis.
b) Recommend, for adoption by the Board, a remuneration package, including bonus incentives and related key performance
indicators, for the most senior executive officer of the Group both on appointment and on a not less than annual basis.
c) Review the most senior executive officer’s recommendations for the remuneration packages, including bonus incentives and related
key performance indicators, of other Group Employees both on appointment and on a not less than annual basis.
d) Review the most senior executive officer’s recommendations for any bonus payments which are in excess of that delegated to the
most senior executive officer under the Group’s “Delegations of Authority Policy”. The Committee cannot approve payments which
exceed the bonus pool approved by the Board without Board approval.
e) Make recommendations to the Board in relation to the introduction of, and amendments to, any employee share plan established by
the Group.
Growthpoint Properties Australia | 2019 Annual Report 51
Remuneration policy and role of the Nomination,
Remuneration and HR Committee continued
Impact of performance on Securityholders’ wealth
In considering the Group’s performance and benefits for Securityholders’ wealth, the Committee has regard to the financial measures in
the below in respect of the five financial years ended 30 June 2019.
Profit attributable to the owners of the Group
Dividends and distributions paid
Distribution per stapled security
Closing stapled security price
Change in stapled security price
Total Securityholder return¹
Return on equity
1. Source UBS Investment Research.
Independent consultants
2019
2018
2017
2016
2015
$'000
$'000
$
$
$
%
%
375,292
167,387
0.230
4.12
0.51
21.0
16.9
357,709
148,432
0.222
3.61
0.470
22.3
18.5
278,090
140,077
0.215
3.14
-0.010
6.3
18.6
219,377
118,134
283,004
110,685
0.205
3.15
0.020
7.4
13.5
0.197
3.13
0.680
36.4
23.9
During the year, the Committee engaged PwC as an independent consultant. PwC was paid a total of $44,000 for providing these
services.
The Committee is satisfied on behalf of the Board that PwC remained free from undue influence from those Executive KMP in respect
of whom it was making recommendations. The Committee received the report directly from PwC and reviewed and discussed the
report with PwC when it was received. The Company did not engage PwC for any other work during FY19.
The Committee also had regard to additional third-party industry remuneration benchmarking surveys.
Remuneration reviews
The Committee reviews the appropriate levels of remuneration for all Directors and Employees based on:
1. Remuneration advice and benchmarking from PwC.
2. Remuneration surveys.
3. Benchmarking against peers.
4. Recommendations from the Managing Director (excluding in relation to his own remuneration).
Executive Director Remuneration and Service Contract
There is currently only one executive director being the Managing Director, Timothy Collyer.
Remuneration paid and payable
The total remuneration paid or payable to the Managing Director for FY19 is listed on page 45 of this report and the proposed
remuneration parameters for FY20 are on page 47.
Service contract
The Managing Director has a contract of employment dated 22 August 2016 with the Group that specifies the duties and obligations to
be fulfilled by the Managing Director and provides that the Board and the Managing Director will, early in each financial year, consult to
agree objectives for achievement during that year. Changes to the Managing Directors’ remuneration requires full Board approval and,
in certain circumstances, Securityholder approval.
The Managing Director can resign by providing six months’ written notice. The Group can terminate his employment immediately for
serious misconduct, bankruptcy, material breach of his employment agreement, failure to comply with a reasonable and lawful direction
by the Board, committing an act which brings the Group into disrepute or conviction of an offence punishable by imprisonment. In
addition, the Group can terminate the Managing Director’s employment without cause with not less than nine months’ severance pay.
On termination as Managing Director, he must resign as a director of any Group entity and he is restrained from a number of activities in
competition with or to the detriment of the Group for a period of 12 months from the date of termination.
Principles of remuneration for the Managing Director
The principles of remuneration for the Managing Director are included as part of the Executive KMP principles listed on page 36.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 52 Growthpoint Properties Australia | 2019 Annual Report
Remuneration policy and role of the Nomination,
Remuneration and HR Committee continued
Other service contracts
It is the Group’s policy that service contracts are unlimited in term but capable of termination on six months’ notice or less and that the
Group retains the right to terminate the contract immediately, by making payment equal to a payment in lieu of notice. Employees are
also entitled to receive certain statutory entitlements on termination of employment including accrued annual and long service leave,
together with any superannuation benefits and, if applicable, redundancy payments in accordance with a redundancy policy approved
by the Committee. Service contracts outline the components of compensation paid to each Employee (including all key management
persons) but does not prescribe how compensation levels may be modified each year.
Non-Executive and Executive KMP Reviews
Non-Executive KMP reviews
The performance of the Board and individual Directors is regularly considered by the Chairman who, from time to time, arranges
Board meetings to specifically consider the function of the Board, the strategy of the Group and to hear any concerns/feedback
from directors. The Chairman typically meets with each individual Director not less than once per year. A relevant Board meeting and
individual meetings all occurred in FY19.
The Chair of each Board sub-committee also regularly considers the performance of the committee they chair.
Board composition
The Board currently comprises Directors with extensive experience and expertise in property, finance, law, investment banking,
accounting and corporate governance. Refer to the Growthpoint website for full profiles of each Director:
growthpoint.com.au/about/board/
Being a property company, the Board has expressed a particular desire to ensure it comprises directors with extensive Australian
commercial property knowledge. The Managing Director, Grant Jackson and Josephine Sukkar have had, and continue to have,
extensive careers in Australian commercial property and have held, and continue to hold, senior positions in the property industry. The
Board is eager to ensure that where Board members are replaced, the Board’s property experience is not diminished.
Succession planning for directors
The Committee has developed plans for the succession and/or temporary replacement of the Chairman and the Managing Director.
Director training
To ensure the Board has sufficient knowledge to discharge its duties, the Company Secretary co-ordinates an annual training program
which includes presentations (verbal and written) from the Group’s lawyers, auditors and property managers as well as from investment
banks, real estate service providers and leading governance and training organisations.
Executive KMP Reviews
The Managing Director’s performance is formally considered annually by the Committee and, based on this formal assessment, the
Committee makes remuneration recommendations to the Board. In making its assessment, the Committee considers, among
other things, the STI performance measures listed on page 37.
37
37
The Managing Director reviews the performance of the other Executive KMP and makes recommendations to the Committee on
their remuneration based, in part, on the STI performance measures listed on page 37.
Growthpoint Properties Australia | 2019 Annual Report 53
Remuneration policy and role of the Nomination,
Remuneration and HR Committee continued
Meetings of Directors (FY19)
Board member
G. Tomlinson (Chairman)
M. Brenner
T. Collyer (Managing Director)1,2
E. de Klerk
G. Jackson
F. Marais
J. Sukkar
N. Sasse
Growthpoint Board
Audit, Risk & Compliance
Committee
Nomination, Remuneration
& HR Committee
eligible
to attend
attended
eligible
to attend
attended
eligible
to attend
attended
4
4
4
4
4
4
4
4
4
12
12
12
12
12
12
12
12
12
11
12
11
12
11
11
11
6
6
6
6
5
6
6
6
6
1. As Managing Director, Timothy Collyer, has a standing invitation to all committee meetings, unless its members determine otherwise, but is not a member of the
Audit, Risk & Compliance Committee.
2. As Managing Director, Timothy Collyer, has a standing invitation to all committee meetings, unless its members determine otherwise, but is not a member of the
Nomination, Remuneration & HR Committee. Mr Collyer is not present for any part of meetings which consider his remuneration except to answer questions from
the Committee.
Board & Remuneration ReportFinancial ManagementBusiness OverviewFinancial ReportAdditional InformationPortfolio Review 54 Growthpoint Properties Australia | 2019 Annual Report
Additional
information.
Indemnification and
Insurance of Directors,
Officers and Auditor
The Company has entered into a Deed
of Indemnity, Insurance and Access
with each of its directors, Dion Andrews
(Chief Financial Officer) and Michael
Green (Chief Investment Officer) providing
these persons with an indemnity, to the
fullest extent permitted by law, against
all losses and liabilities incurred in their
respective role for the Company. The
Deeds also require the Company to grant
the indemnified person with access to
certain Company documents and insure
the indemnified persons.
In compliance with the Deeds referred to
above, the Company insured its Directors
and officers against liability to third parties
and for costs incurred in defending
any legal proceedings that may be
brought against them in their capacity
as Directors or officers of the Group.
This excludes a liability which arises out
of a wilful breach of duty or improper
use of inside information. The premium
also insures the entity for any indemnity
payments it may make to its Officers in
respect of costs and liabilities incurred.
Disclosure of the premium payable is
prohibited under the conditions of the
policy.
The Auditor is indemnified by the
Group against claims from third parties
arising from the provision of audit
services except where prohibited by
the Corporations Act 2001 (Cth) or
due to negligence, fraudulent conduct,
dishonesty or breach of trust by the
auditor.
Non-Audit services
Environmental Regulations
As a Trustee of a property owner,
the Group is subject to the normal
environmental regulations of landowners
within Australia. The Directors are not
aware of any significant breaches during
the year.
Auditors’ Independence
Declaration
97
A copy of the auditor’s
independence declaration as
required under section 307C of the
Corporations Act 2001 (Cth) is set out on
page 97.
Rounding
The Group is of a kind referred to
in ASIC Corporations (Rounding
in Directors' / Financial Reports)
Instrument 2016/191 and in
accordance with that Instrument,
all financial information presented in
Australian dollars has been rounded
to the nearest thousand unless
otherwise stated.
During the year KPMG, the Group’s
auditor, has performed certain other
services in addition to the audit and
review of the financial statements.
The Board has considered the non-
audit services providing during the
year by the auditor and are satisfied
that the provision of those non-audit
services during the year by the auditor is
compatible with and did not compromise,
the auditor independence requirements
of the Corporations Act 2001 (Cth) for the
following reasons:
t all non-audit services were subject to
the corporate governance procedures
adopted by the Group and have
been reviewed by the Audit, Risk &
Compliance Committee to ensure
they do not impact the integrity and
objectivity of the auditor; and
t the non-audit services provided do
not undermine the general principals
relating to auditor independence as
set out in APES 110 Code of Ethics
for Professional Accountants, as they
did not involve reviewing or auditing
the auditor’s own work, acting in a
management or decision making
capacity for the Group, acting as
an advocate for the Group or jointly
sharing risks and rewards.
Details of the amounts paid to the auditor
of the Group, KPMG, and its network
firms for audit and non-audit services
provided during the year are set out
below.
2019
$
Services other than audit and
review of financial statements:
Other regulatory audit services
72,344
Audit and review of financial
statements
Total paid to KPMG
171,656
244,000
Financial report
What’s inside.
Financial Statements
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Section 1: Basis of preparation
56
57
58
60
61
Section 2: Operating results, assets and liabilities
63
2.1 Revenue and segmental information
2.2 Investment properties
2.3 Investment in securities
2.4 Non-current assets held for sale
2.5 Trade and other assets
2.6 Trade and other liabilities
2.7 Cash flow information
Section 3: Capital structure and financing costs
3.1 Interest bearing liabilities
3.2 Borrowing cost
3.3 Derivative financial instruments
3.4 Financial risk management
3.5 Contributed equity and reserves
3.6 Distributions to Securityholders
3.7 Earnings per stapled security (“EPS”)
3.8 Share-based payment arrangements
Section 4: Other notes
4.1 Key Management Personnel compensation
4.2 Related party transactions
4.3 Taxation
4.4 Contingent liabilities
4.5 Commitments
4.6 Controlled entities
4.7 Parent entity disclosures
4.8 Remuneration of auditors
4.9 Subsequent events
Declarations / Reports
Directors’ declaration
Auditor’s independence declaration
Independent Auditor’s report
63
64
71
72
72
73
74
75
75
76
77
79
84
86
86
87
88
88
90
90
92
92
93
94
94
95
96
97
98
About the Financial Report
This report covers Growthpoint Properties
Australia Limited and its controlled
entities, Growthpoint Properties Australia
Trust and its controlled entities, together
being a stapled group. Growthpoint
Properties Australia Limited is the
Responsible Entity for Growthpoint
Properties Australia Trust. The financial
report is presented in Australian dollars.
Growthpoint Properties Australia Trust
and its Responsible Entity, Growthpoint
Properties Australia Limited, are both
domiciled in Australia. The Responsible
Entity’s registered office and principal
place of business is Level 31, 35 Collins
Street, Melbourne, Victoria, 3000,
Australia.
A description of the nature of the
stapled group’s operations and its
principal activities is included in the
Directors’ Report which is not part of
the financial report.
The financial report was authorised for
issue by the Directors on 22 August
2019. The Directors have the power to
amend and reissue the financial report.
References to “the year” or “FY19” in
this report refer to the year ended 30
June 2019 unless the context requires
otherwise. References to “FY20” and
“FY21” relate to the twelve months
ending 30 June in the year listed.
References to “balance date” in this
report refer to 30 June 2019 unless the
context requires otherwise.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 56 Growthpoint Properties Australia | 2019 Annual Report
Consolidated Statement of Profit or Loss
and Other Comprehensive Income.
For the year ended 30 June 2019
Notes
2019
$’000
2018
$’000
Revenue
Property revenue
Distributions from investment in securities
Straight line adjustment to property revenue
Net changes in fair value of investment properties
Profit/ (loss) on sale of investment properties
Net change in fair value of investment in securities
Net change in fair value of derivatives
Loss on settlement of derivatives
Net investment income
Expenses
Property expenses
Other expenses from ordinary activities
Total expenses
Profit from operating activities
Interest income
Borrowing costs
Net finance costs
Profit before income tax
Income tax expense
Profit for the period
Profit attributable to:
Owners of the Trust
Owners of the Company
Distribution to Securityholders
Change in net assets attributable to Securityholders / Total Comprehensive Income
Basic and diluted earnings per stapled security (cents)
2.1
270,957
254,239
2.2
2.3
2.1
3.2
5,036
6,237
4,886
5,962
201,581
166,958
(1,144)
7,109
16,973
(13,826)
492,923
(45,604)
(13,943)
(59,547)
24,419
10,368
(573)
–
466,259
(40,614)
(13,362)
(53,976)
433,376
412,283
529
(56,139)
(55,610)
316
(54,797)
(54,481)
377,766
357,802
4.3
(2,474)
(93)
375,292
357,709
370,514
4,778
375,292
358,762
(1,053)
357,709
(167,387)
207,905
(148,432)
209,277
52.9
53.5
3.6
3.7
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
Growthpoint Properties Australia | 2019 Annual Report 57
Consolidated Statement
of Financial Position.
As at 30 June 2019
Notes
Current assets
Cash and cash equivalents
Trade and other assets
Assets held for sale
Total current assets
Non-current assets
Plant & equipment
Investment properties
Investment in securities
Derivative financial instruments
Net deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other liabilities
Distribution to Securityholders
Current tax payable
Total current liabilities
Non-current liabilities
Trade and other liabilities
Interest bearing liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Securityholders’ funds
Contributed equity
Reserves
Accumulated profits
Total Securityholders’ funds
2.5
2.4
2.2
2.3
3.3
4.3
2.6
3.6
2.6
3.1
3.3
2019
$’000
30,172
5,364
–
2018
$’000
31,463
6,583
64,250
35,536
102,296
692
930
3,983,750
3,291,800
85,606
11,246
1,030
78,497
–
1,046
4,082,324
3,372,273
4,117,860
3,474,569
50,108
84,424
2,296
37,370
75,643
67
136,828
113,080
67
69
1,433,335
1,197,555
1,164
6,892
1,434,566
1,204,516
1,571,394
1,317,596
2,546,466
2,156,973
3.5
1,879,366
1,698,702
8,541
658,559
2,546,466
7,616
450,655
2,156,973
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 58 Growthpoint Properties Australia | 2019 Annual Report
Consolidated Statement
of Changes in Equity.
For the year ended 30 June 2019
Share-
based
payments
reserve
Deferred tax
expenses
charged to
equity
Contributed
equity
Profits
reserve
Accumulated
profits
$’000
$’000
$’000
$’000
$’000
Total
$’000
Balance at 30 June 2018
1,698,702
7,054
555
Total comprehensive income for the year
Profit after tax for the year
Total other comprehensive income
Total comprehensive income for the year
–
–
–
Transactions with Securityholders in their
capacity as Securityholders:
Contributions of equity, net of transaction costs
180,664
Distributions provided or paid
Share-based payment transactions
Deferred tax expense charged to equity
–
–
–
Total transactions with Securityholders
180,664
–
–
–
–
–
916
–
916
–
–
–
–
–
–
8
8
Balance at 30 June 2019
1,879,366
7,970
564
7
–
–
–
–
–
–
–
–
7
Total recognised income and expense for the
year is attributable to:
– Trust
– Company
Growthpoint Properties Australia
450,655
2,156,973
375,292
375,292
–
–
375,292
375,292
–
180,664
(167,387)
(167,387)
–
–
916
8
(167,387)
14,201
658,560
2,546,466
370,514
4,778
375,292
Growthpoint Properties Australia | 2019 Annual Report 59
Consolidated Statement
of Changes in Equity continued
For the year ended 30 June 2018
Share-
based
payments
reserve
Deferred tax
expenses
charged to
equity
Contributed
equity
Profits
reserve
Accumulated
profits
$’000
$’000
$’000
$’000
$’000
Total
$’000
Balance at 30 June 2017
1,653,735
5,825
537
Total comprehensive income for the year
Profit after tax for the year
Total other comprehensive income
Total comprehensive income for the year
–
–
–
Transactions with Securityholders in their
capacity as Securityholders:
Contributions of equity, net of transaction costs
44,967
Distributions provided or paid
Share-based payment transactions
Deferred tax expense charged to equity
–
–
–
–
–
–
–
–
1,229
–
Total transactions with Securityholders
44,967
1,229
–
–
–
–
–
–
18
18
Balance at 30 June 2018
1,698,702
7,054
555
7
–
–
–
–
–
–
–
–
7
241,377
1,901,481
357,709
357,709
–
–
357,709
357,709
–
44,967
(148,432)
(148,432)
–
–
1,229
18
(148,432)
(102,218)
450,655
2,156,973
Total recognised income and expense for the
year is attributable to:
– Trust
– Company
Growthpoint Properties Australia
358,762
(1,053)
357,709
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 60 Growthpoint Properties Australia | 2019 Annual Report
Consolidated
Cash Flow Statement.
For the year ended 30 June 2019
Notes
Cash flows from operating activities
Cash receipts from customers
Cash payments to suppliers
Cash generated from operating activities
Interest paid
Taxes paid
Net cash inflow from operating activities
2.7 (b)
Cash flows from investing activities
Interest received
Distributions received from investment in securities
Receipts from sale of investment properties
Payments for investment properties
Payments for investment in securities
Payments for plant & equipment
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from external borrowings
Repayment of external borrowings
Proceeds from equity raising
Equity raising costs
Payment for settlement of derivatives
Distributions paid to Securityholders
Net cash inflow/(outflow) from financing activities
Net inflow in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
2.7 (a)
2019
$’000
251,323
(61,049)
190,274
(54,001)
(220)
136,053
529
3,777
43,674
(428,867)
–
(31)
(380,918)
618,742
(383,400)
181,728
(1,064)
(13,826)
(158,606)
243,574
(1,291)
31,463
30,172
2018
$’000
247,928
(52,604)
195,324
(56,568)
(360)
138,396
317
3,673
194,766
(66,943)
(68,129)
(25)
63,659
322,547
(424,691)
44,968
–
–
(144,875)
(202,051)
4
31,459
31,463
The above Consolidated Cash Flow Statement should be read in conjunction with the accompanying notes.
Growthpoint Properties Australia | 2019 Annual Report 61
Notes to the
Financial Statements.
Section 1: Basis of preparation
in this section ...
This section shows the basis of reporting for the Group and relevant new accounting standards, amendments and
interpretations, whether these are effective in FY19 or later years. We explain how these changes are expected to impact
the financial position and performance of the Group.
Reporting entity
Growthpoint Properties Australia was formed by the stapling of two entities: Growthpoint Properties Australia Limited (“the Company”)
and Growthpoint Properties Australia Trust (“the Trust”). In this report, the Company and the Trust include all of their controlled entities.
The Company is the Responsible Entity for the Trust. Growthpoint Properties Australia is also referred to as “the Group”.
The Group was established for the purpose of facilitating a joint quotation of the Company and the Trust and their controlled entities
on the Australian Securities Exchange (ASX Code: GOZ). The constitutions of the Company and the Trust ensure that, for so long as
the two entities remain jointly quoted, the number of shares in the Company and the number of units in the Trust shall be equal and
the shareholders of the Company and the unitholders in the Trust are identical. The Company, both in its personal capacity and in its
capacity as the Responsible Entity of the Trust, must at all times act in the best interests of the Group. The Group is a for profit entity.
The consolidated financial report includes financial statements for Growthpoint Properties Australia, the stapled consolidated Group,
which is domiciled in Australia as at, and for the twelve months ended, 30 June 2019. The Group’s registered address is Level 31,
35 Collins Street, Melbourne, Victoria 3000, Australia.
The ultimate parent entity of the Group is Growthpoint Properties Limited.
Working capital deficiency
The Group has unutilised debt facilities of $245.7 million and sufficient working capital and cashflows in order to fund all requirements
arising from the net current asset deficiency of $101.2 million as at 30 June 2019. The deficiency is largely driven by the provision for
the 30 June 2019 distribution.
Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (AASB’s) adopted by the Australian Accounting Standards Board (AASB) and the Corporations
Act 2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRS) adopted by the
International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board on 22 August 2019.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the
consolidated statement of financial position:
t derivative financial instruments measured at fair value;
t assets held for sale are measured at fair value;
t investment property is measured at fair value; and
t share-based payment arrangements are measured at fair value.
Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Group’s functional currency.
The Group is of a kind referred to in ASIC Corporations (Rounding in Directors’ / Financial Reports) Instrument 2016/191 and in
accordance with that Instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand
dollars unless otherwise stated.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 62 Growthpoint Properties Australia | 2019 Annual Report
Use of estimates, assumptions and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised
in the consolidated financial statements and information about assumptions and estimation uncertainties that have a significant risk of
resulting in a material adjustment within the next financial year are included in the following notes:
t Note 2.2 – Investment properties;
t Note 2.4 – Assets held for sale;
t Note 3.3 – Derivative financial instruments; and
t Note 3.8 – Share-based payment arrangements.
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial
assets and liabilities. When applicable, information regarding the method of determining fair value and about the assumptions made in
determining fair value is disclosed in the note specific to that asset or liability.
New accounting standards amendments adopted by the Group
The Group applied the following accounting standards amendments that became mandatory for the first time during the reporting
period:
IFRS 9 Financial Instruments addresses the classification, measurement, recognition and derecognition of financial assets and financial
liabilities. It has also introduced revised rules for hedge accounting and impairment. IFRS 9 has been applied retrospectively by the
Group and did not result in a change to the classification or measurement of the Group’s financial instruments. Consequently, the
application of IFRS 9 has no material impact on the Group’s consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers sets out the requirements for recognising revenue that applies to most contracts
with customers, with some exceptions. The Group’s main source of income includes rental income, interest and gains on financial
instruments held at fair value through profit or loss, which are all excepted from the scope of IFRS 15. The application of IFRS 15 has
no material impact on the Group’s consolidated financial statements.
New Standards and interpretations not yet adopted
IFRS 16 Leases (effective from 1 January 2019) contains requirements about lease classification and recognition, measurement and
presentation and disclosures of leases for lessees and lessors.
Based on the Group’s assessment, it is expected that the adoption of IFRS 16 for the year ending 30 June 2020, will have a material
impact on the transactions and balances recognised in the financial statements, in particular:
t Lease liabilities arising from leasehold arrangements which are currently recognised as a component of Investment Properties will
be separately disclosed in the Statement of Financial Position. As a result on the balance sheet, the total increase to the related
investment property assets and lease liabilities to be approximately $100 million respectively (based on the facts at the date of the
assessment).
t An operating lease arrangement where the total increase in the lease assets and financial liabilities on the balance sheet to be less
than $2 million respectively (based on the facts at the date of the assessment).
t Profit before income tax for the 12 months to 30 June to decrease by less than $1.25 million.
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 63
Section 2: Operating results, assets and liabilities
in this section ...
This section shows the assets used to generate the Group’s trading performance and provides information on the
office and industrial property segments that make up that performance. It also shows the liabilities incurred as a result.
Liabilities relating to the Group’s financing activities are addressed in Section 3.
On the following pages there are sections covering investment properties, other non-current assets, acquisitions and
disposals and other payables.
2.1 Revenue and segment information
Accounting policies
Revenue recognition
Revenue is recognised at the fair value of the consideration received or receivable as detailed below for each category of revenue. All
revenue is stated net of the amount of goods and services tax (GST). Revenue from investment properties is recognised on a straight-
line basis over the life of the lease for leases where the revenue under the lease terms is fixed and determinable. For leases where the
revenue is determined with reference to market reviews, inflationary measures or other variables, revenue is not straight-lined and is
recognised in accordance with the lease terms applicable for the period.
Segment results
Segment results that are reported to the Group’s Managing Director (the chief operating decision maker) include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly head office
expenses, interest expense and income tax assets and liabilities.
Segmental information
The Group operates wholly within Australia and derives rental income solely from property investments. The Group segments net
property income and property revaluations into Office and Industrial segments and those results are shown below:
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2019
Revenue, excluding straight line lease adjustment
Property expenses
Net Property Income Segment results
Loss on sale of investment properties
Net changes in fair value of investment properties
Segment results
Income not assigned to segments
Expenses not assigned to segments
Net profit before income tax
Office
Industrial
$’000
$’000
Total
$’000
173,852
(29,079)
144,773
(1,144)
138,763
282,392
97,105
(16,525)
80,580
–
62,818
143,398
270,957
(45,604)
225,353
(1,144)
201,581
425,790
22,058
(70,082)
377,766
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
64 Growthpoint Properties Australia | 2019 Annual Report
2.1 Revenue and segment information (continued)
Segmental information (continued)
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2018
Revenue, excluding straight line lease adjustment
Property expenses
Net Property Income Segment results
Profit on sale of investment properties
Net changes in fair value of investment properties
Segment results
Income not assigned to segments
Expenses not assigned to segments
Net profit before income tax
Office
Industrial
$’000
$’000
Total
$’000
158,030
(25,471)
132,559
–
76,461
209,020
96,209
(15,143)
81,066
24,419
90,497
195,982
254,239
(40,614)
213,625
24,419
166,958
405,002
20,959
(68,159)
357,802
Property values are also reported by segment and this information is reported in note 2.2.
Major customer
Revenues from one customer, Woolworths Limited, in the Group’s Industrial segment represents $40,090,959 (2018: $41,400,000) of
the Group’s total revenues.
2.2 Investment properties
Accounting policies
Investment property
Investment property is property held either to earn rental income or for capital appreciation or both, but not for sale in the ordinary
course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are
initially measured at cost including transaction costs. Costs incurred subsequent to initial acquisition are capitalised when it is probable
that future economic benefits in excess of the originally assessed performance of the asset will flow to the entity and the cost of that
capital expenditure can be measured reliably. All other costs are expensed in the profit and loss in the period incurred.
Subsequent to initial recognition as assets, investment properties are revalued to fair value. Directors revalue the property investments
on the basis of valuations determined by them or independent valuers on a periodic basis. The Group assesses at each balance date
whether these valuations appropriately reflect the fair value of investment properties.
Any gains or losses arising from changes in fair value of the properties are recognised in the consolidated statement of profit or loss and
other comprehensive income in the period in which they arise.
Lease incentives and commissions
Any lease incentives provided to a tenant under the terms of a lease such as fit-outs or rent free periods are recognised as a reduction
of revenue on a straight-line basis over the term of the lease.
Leasing commissions paid to agents on signing of lease agreements are recognised as a reduction of revenue on a straight-line basis
over the term of the lease.
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 65
2.2 Investment properties (continued)
Determination of fair value
An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the
location and category of property being valued generally, typically values the Group’s entire investment property portfolio each financial
year. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date
of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing where the parties had
each acted knowledgeably and willingly.
In the absence of current prices in an active market, the valuations are prepared by considering the net present value of the estimated
cash flows expected from ownership of the property, being a discounted cash flow valuation. A discount rate or target internal rate of
return that reflects the specific risks inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property
valuation.
Valuations reflect, where appropriate, the types of tenants actually in occupation or responsible for meeting lease commitments or
likely to be in occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities between
the Group and the lessee, and the remaining economic life of the property. When rent reviews or lease renewals are pending with
anticipated reversionary increases, it is assumed that all notices and, when appropriate, counter-notices, have been served validly and
within the appropriate time.
Investment Properties Value
Industrial Properties
Date
Valuation
30-Jun-19
30-Jun-18
Latest External Valuation Consolidated Book Value
Victoria
120 Northcorp Boulevard
Broadmeadows
1500 Ferntree Gully Road & 8 Henderson Road Knoxfield
9-11 Drake Boulevard
40 Annandale Road
Lots 2, 3 & 4, 34-44 Raglan Street
120-132 Atlantic Drive
130 Sharps Road
120 Link Road
20 Southern Court
6 Kingston Park Court
31 Garden Street
60 Annandale Road
3 Millennium Court
101-111 South Centre Road
19 Southern Court
75 Annandale Road
Queensland
70 Distribution Street
13 Business Street
5 Viola Place
3 Viola Place
$’000
$’000
$’000
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
30-Jun-19
30-Jun-19
31-Dec-18
30-Jun-19
31-Dec-18
31-Dec-18
31-Dec-18
31-Dec-18
30-Jun-19
30-Jun-19
31-Dec-18
30-Jun-19
31-Dec-18
31-Dec-18
30-Jun-19
30-Jun-19
56,500
46,000
35,000
33,000
29,000
26,900
25,500
17,800
15,800
12,700
12,150
12,300
12,300
9,000
8,200
7,900
56,500
46,000
35,250
33,000
30,000
28,000
24,750
18,000
15,800
12,700
12,600
12,300
12,300
9,100
8,200
7,900
77,400
44,000
34,500
34,800
24,500
25,250
25,100
17,000
15,800
12,300
11,200
11,700
11,500
8,800
8,100
7,650
Altona
Melbourne Airport
Preston
Keysborough
Melbourne Airport
Melbourne Airport
Keysborough
Knoxfield
Kilsyth
Melbourne Airport
Knoxfield
Melbourne Airport
Keysborough
Melbourne Airport
Larapinta
Yatala
Brisbane Airport
Brisbane Airport
QLD
QLD
QLD
QLD
31-Dec-18
228,000
232,500
220,000
31-Dec-18
31-Dec-18
31-Dec-18
13,100
9,900
2,500
13,100
9,500
2,500
13,750
8,700
2,450
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
66 Growthpoint Properties Australia | 2019 Annual Report
2.2 Investment properties (continued)
Investment Properties Value (continued)
Industrial Properties
Date
Valuation
30-Jun-19
30-Jun-18
Latest External Valuation Consolidated Book Value
Western Australia
20 Colquhoun Road
2 Hugh Edwards Drive
58 Tarlton Crescent
10 Hugh Edwards Drive
36 Tarlton Crescent
New South Wales
27-49 Lenore Drive
6-7 John Morphett Place
51-65 Lenore Drive
34 Reddalls Road
81 Derby Street
South Australia
599 Main North Road
1-3 Pope Court
12-16 Butler Boulevard
10 Butler Boulevard
$’000
$’000
$’000
31-Dec-18
171,000
175,000
163,750
Perth Airport
Perth Airport
Perth Airport
Perth Airport
Perth Airport
Erskine Park
Erskine Park
Erskine Park
WA
WA
WA
WA
WA
30-Jun-19
30-Jun-19
30-Jun-19
30-Jun-19
NSW 30-Jun-19
NSW 31-Dec-18
NSW 31-Dec-18
Kembla Grange
NSW 30-Jun-19
Silverwater
NSW 31-Dec-18
17,200
13,700
9,150
8,500
74,750
49,100
36,650
27,000
20,400
17,200
13,700
9,150
8,500
74,750
51,750
38,000
27,000
20,400
Gepps Cross
Beverley
Adelaide Airport
Adelaide Airport
SA
SA
SA
SA
30-Jun-19
126,000
126,000
30-Jun-19
31-Dec-18
31-Dec-18
21,900
16,100
9,400
21,900
15,850
9,400
17,150
13,350
8,900
8,500
68,750
46,500
34,500
26,000
18,500
79,000
22,500
15,800
9,100
Total Industrial Properties
1,214,400
1,228,600
1,146,800
Office Properties
Victoria
75 Dorcas Street
Building 2, 572-576 Swan Street
109 Burwood Road
Building 3, 570 Swan Street1
Building B, 211 Wellington Road
Building 1, 572-576 Swan Street1
Building C, 211 Wellington Road
Car Park, 572-576 Swan Street
Latest External Valuation Consolidated Book Value
Date
Valuation
30-Jun-19
30-Jun-18
$’000
$’000
$’000
South Melbourne
Richmond
Hawthorn
Richmond
Mulgrave
Richmond
Mulgrave
Richmond
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
30-Jun-19
212,500
212,500
190,000
30-Jun-19
115,000
115,000
90,600
30-Jun-19
113,500
113,500
106,000
30-Jun-19
111,000
111,000
31-Dec-18
31-Dec-18
31-Dec-18
30-Jun-19
73,500
62,500
60,000
1,200
73,500
62,500
60,000
1,200
23,000
74,000
59,750
57,250
1,200
1. These properties were split into separate titles during the period (previously presented as a combined property).
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 67
2.2 Investment properties (continued)
Investment Properties Value (continued)
Office Properties
Queensland
100 Skyring Terrace1
15 Green Square Close
333 Ann Street
CB1, 22 Cordelia Street
A1, 32 Cordelia Street
A4, 52 Merivale Street
CB2, 42 Merivale Street
Newstead
Fortitude Valley
Brisbane
South Brisbane
South Brisbane
South Brisbane
South Brisbane
Car Park, 32 Cordelia Street & 52 Merivale Street South Brisbane
South Australia
33-39 Richmond Road
7 Laffer Drive2
New South Wales
1 Charles Street
Building C, 219-247 Pacific Highway
Keswick
Bedford Park
Parramatta
Artarmon
Latest External Valuation Consolidated Book Value
Date
Valuation
30-Jun-19
30-Jun-18
$’000
$’000
$’000
QLD
QLD
QLD
QLD
QLD
QLD
QLD
QLD
SA
SA
31-Oct-18
250,000
251,000
–
30-Jun-19
153,000
153,000
144,000
30-Jun-19
137,000
137,000
130,000
30-Jun-19
103,200
103,200
104,500
31-Dec-18
30-Jun-19
31-Dec-18
31-Dec-18
92,000
86,500
61,500
28,000
93,750
86,500
61,500
29,250
30-Jun-19
63,500
63,500
31-Dec-17
19,500 –
84,000
82,500
60,000
27,000
62,000
20,000
NSW 31-Dec-18
346,000
353,000
310,000
NSW 31-Dec-18
130,000
132,000
123,500
5 Murray Rose Avenue
3 Murray Rose Avenue
102 Bennelong Parkway3
6 Parkview Drive3
Tasmania
89 Cambridge Park Drive2
Australian Capital Territory
10-12 Mort Street
255 London Circuit
Western Australia
836 Wellington Road4
Total Office Properties
Total investment properties
Sydney Olympic Park NSW 31-Dec-18
103,000
104,000
100,500
Sydney Olympic Park NSW 30-Jun-19
103,000
103,000
101,000
Sydney Olympic Park NSW 30-Jun-19
Sydney Olympic Park NSW 30-Jun-19
34,000
33,500
34,000 –
33,500 –
Cambridge
TAS
31-Dec-17
27,000 –
26,700
Canberra
Canberra
ACT
ACT
30-Jun-19
31-Dec-18
99,250
74,000
99,250
76,000
93,500
74,000
West Perth
WA
30-Jun-19
92,500
92,500 –
2,785,650
2,755,150
2,145,000
4,000,050
3,983,750
3,291,800
1. This property was acquired on 7 December 2018.
2. These properties were sold in April 2019
3. These properties have been transferred from assets available for sale.
4. This property was acquired on 31 October 2018
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
68 Growthpoint Properties Australia | 2019 Annual Report
2.2 Investment properties (continued)
Valuation basis
The basis of the valuation of investment properties is fair value being the amounts for which the properties could be exchanged
between willing parties in an arm’s length transaction, based on current prices in an active market for comparable properties in similar
location and condition and subject to similar leases.
External valuations were conducted by JLL, Savills, Urbis, CBRE, Knight Frank, Colliers and m3property. The fair value of properties
not externally valued as at 30 June 2019 were based solely on Director valuations.
At each reporting date, the Directors update their assessment of the fair value of each property in accordance with the Group’s
accounting and valuation policies.
The Group determines a property’s value within a range of reasonable fair value estimates and, in making that assessment, considers
information from a variety of sources including:
t Current prices for comparable investment properties, as adjusted to reflect differences for location, building quality, tenancy profile
and other factors.
t Discounted cash flow projections based on estimates of future cash flows.
t Capitalised income projections based upon a property’s estimated net market income, and a capitalisation rate derived from analysis
of market evidence.
At reporting date, the key assumptions used by the Group in determining fair value were in the following ranges for the Group’s portfolio
of industrial properties:
Discount rate
Terminal yield
Capitalisation rate
Expected vacancy period
Rental growth rate
For the office portfolio the following ranges were used:
Discount rate
Terminal yield
Capitalisation rate
Expected vacancy period
Rental growth rate
Commentary on Discount Rates
Date of Valuation
Weighted average 10-year discount rate used to value the Group’s properties
10-year Australian Government bond rate
Implied property risk premium
2019
2018
6.5%-8.3%
6.8%-8.8%
5.5%-9.8%
6.0%-10.0%
5.3%-8.4%
5.8%-8.8%
3-18 months
3-12 months
2.5%-3.5%
2.5%-4.0%
2019
2018
6.5%-8.0%
6.8%-9.0%
5.5%-7.5%
6.0%-8.5%
5.0%-7.5%
5.3%-14.4%
6-12 months
6-12 months
3.0%-4.5%
3.0%–4.5%
30-Jun-19
30-Jun-18
6.79%
1.32%
5.47%
7.11%
2.63%
4.48%
As the above table shows, over the 12 months to 30 June 2019, discount rates utilised in the valuation of the Group’s property portfolio
have tightened (ie. lowered). Over the same period, the implied property risk premium has increased by approximately 99 basis
points. The implied property risk premium is the difference between the weighted average discount rate and the 10-year Australian
Government bond rate. The increase in the implied property risk premium is in part due to a greater fall in the government bond yield
(131 basis points) relative to the reduction in the Group’s weighted average discount rate (32 basis points) over the 12 months to 30
June 2019.
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 69
2.2 Investment properties (continued)
Commentary on Capitalisation Rates
Office
Transaction volumes within Australian office markets reached historic highs in 2018 and have remained at healthy levels through the first
6 months of 2019 ($12.1 billion)1. National markets continue to be characterised by high levels of liquidity, emanating from a diverse
range of local and global institutional capital. Return expectations continued to adjust down over the year to 30 June 2019, largely
due to persistently low inflation and downward pressure on fixed-income returns. Yield compression was evident in most major office
markets, including Melbourne, Sydney, Brisbane and Canberra. Transactional evidence over the past 12 months has demonstrated
yield compression of between 12.5 and 50 basis points in most major markets. The weighted average capitalisation rate used in valuing
the Group’s office portfolio has firmed from 6.0% to 5.7% over the year to 30 June 2019.
Industrial
Industrial yields continued to tighten over the 12 months to 30 June 2019, as domestic and offshore purchasers sought to increase
their exposure to the sector given ongoing structural tailwinds (which include infrastructure and supply chain investment including
e-commerce). National markets continue to be characterised by strong investment demand, with limited stock available, particularly
portfolio opportunities. Eastern seaboard states, particularly NSW and VIC, continue to be the focal point of investor interest, largely
due to the extent of investment in new infrastructure projects and rent growth prospects in the medium term. Prime yields are now
generally placed between 5.50% and 6.25% for modern, well leased assets with long-term leases, while assets considered ‘super
prime’ (modern assets with lease terms longer than 10 years) are now generally priced at or below 5.00%. Transactional evidence over
the past 12 months has provided good evidence for the Group’s industrial properties. The weighted average capitalisation rate used to
value the Group’s industrial portfolio firmed from 6.6% to 6.3% over the year to 30 June 2019.
Uncertainty around property valuations
Fair value of investment property is the price at which the property could be exchanged between knowledgeable, willing parties in an
arm’s length transaction. A “willing seller” is not a forced seller prepared to sell at any price. The best evidence of fair value is given by
current prices in an active market for comparable property in terms of investment characteristics such as location, lettable area and
land area, building characteristics, property condition, lease terms and rental income potential, amongst others.
The fair value of investment property has been assessed to reflect market conditions at the end of the reporting period. While this
represents the best estimates of fair value as at the balance sheet date, the current market uncertainty means that if an investment
property is sold in future the price achieved may be higher or lower than the most recent valuation, or higher or lower than the fair value
recorded in the financial statements.
An increase in discount rates, terminal yields, capitalisation rates and expected vacancy periods would decrease the value of
investment property. Conversely, a decrease in these inputs would increase the value of investment property.
An increase in rental growth rates would increase the value of investment property, where as a decrease would decrease the value of
investment property.
Contractual obligations
At 30 June 2019, the following contractual obligations relating to expansions at existing investment property were in place:
t Under an expansion clause in the current lease to Symbion at 120-132 Atlantic Drive, Keysborough, Victoria, the tenant can request
a 3,000 sqm expansion at any point during the term of the lease (which currently expires on 20 December 2028). The Group would
be responsible for funding this expansion. Upon completion of such expansion works, the lease would be reset so that at least seven
years remained and rent would be charged on the additional lettable area constructed under the expansion clause.
t Under a warehouse expansion clause in the current lease to Brown & Watson International at 1500 Ferntree Gully Road, Knoxfield,
Victoria, the tenant can request an expansion of the warehouse over the vacant land at any point during the initial term prior to the
latest date for exercising the first option (which is 13 August 2024). The Group would be responsible for funding this expansion.
Upon completion, the lease would be reset so that at least seven years remained and rent would be charged on a formula utilising
the construction costs under the warehouse expansion clause.
The two property expansions detailed above have an estimated aggregate cost of not more than $5.0 million.
The Group also has an obligation in June 2019 to make available $6.0 million to the tenant at 1 Charles Street, Parramatta, New South
Wales to spend on capital expenditure or refurbishment at the property. As at 30 June 2019, the total amount was held as restricted
cash and the value spent was nil (see note 2.7).
The Group has entered a building contract with the Hacer Group for the construction of an office building a Building 3, 570 Swan
Street, Richmond, Victoria for a contracted sum of $79.3 million. As at 30 June 2019 progress payments had totalled $38.8 million. The
project is due for completion in the first quarter of 2020.
1. JLL Research.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 70 Growthpoint Properties Australia | 2019 Annual Report
2.2 Investment properties (continued)
The Group has entered into contracts with Woolworths Limited to fund the expansion of 599 Main North Road, Gepps Cross, South
Australia for approximately $54 million. As at 30 June 2019 progress payments had totalled approximately $11.4 million. The project is
due for completion mid-2020. The lease will be reset for 15 years at practical completion.
Amounts recognised in profit and loss for investment properties
Rental income
Straight line adjustment to rental income
Net gain from fair value adjustment
Loss on sale of investment properties
Direct operating expenses from property that generated rental income
2019
$’000
2018
$’000
270,957
254,239
6,237
201,581
(1,144)
(45,604)
432,027
5,962
166,958
24,419
(40,614)
410,964
Leasing arrangements
The majority of the investment properties are leased to tenants under non-cancellable, long-term operating leases with rent payable
monthly. The minimum lease payments under these leases are receivable as follows:
Within one year
Later than one year but not later than five years
Later than five years
2019
$’000
249,872
723,330
283,959
2018
$’000
226,109
747,117
345,803
1,257,161
1,319,029
10 (2018: 10) of the investment properties are held on a leasehold basis with non-cancellable, long-term operating leases with ground
rent payable monthly. The minimum lease payments under these leases payable by the Trust are as follows:
Within one year
Later than one year but not later than five years
Later than five years
2019
$’000
3,723
7,294
13
11,030
2018
$’000
3,646
8,551
930
13,127
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 71
2019
$’000
2018
$’000
3,291,800
3,180,275
361,852
12,869
72,942
38,429
(19,337)
(1,685)
(45,188)
64,250
6,237
201,581
48,847
10,315
–
25,934
(16,327)
–
(65,914)
(64,250)
5,962
166,958
3,983,750
3,291,800
2.2 Investment properties (continued)
Reconciliation of value of investment properties
At fair value
Opening balance
Acquisitions
Capital expenditure
Construction and expansion costs
Lease incentives and leasing costs
Amortisation of lease incentives and leasing costs
Provision for amortised lease incentives
Disposals
Reclassification (to) / from held for sale
Straight lining of revenue adjustment
Net gain from fair value adjustment
Closing balance at 30 June
2.3 Investment in securities
Determination of fair value
Investment in securities contains a financial asset designated at fair value through profit or loss at inception. The fair value of investment
in securities is the price that would be received to sell this asset in an orderly transaction between market participants at the
measurement date. This fair value is based on the last traded market price from the Australian Securities Exchange (ASX) of the relating
security at reporting date.
The following table represents the fair value movement in investment in securities for the year ended 30 June 2019.
Opening balance
Purchases
Sales
Closing balance
Gain in the net change in fair value of investment in securities
Fair value of APN Industria REIT
stapled securities
$’000
78,497
–
–
85,606
7,109
The last traded market price of an APN Industria REIT stapled security on the ASX for 30 June 2019 was $2.89 (30 June 2018: $2.65).
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 72 Growthpoint Properties Australia | 2019 Annual Report
2.4 Non-current assets held for sale
Accounting policy
Non-current assets that are expected to be recovered primarily through sale rather than through continuing use are classified as held
for sale. Immediately before classification as held for sale, the assets are re-measured in accordance with the Group’s accounting
policies. Thereafter the assets are measured at the lower of their carrying amount and fair value with the exception of investment
property which continues to be measured in accordance with accounting policy note 2.2.
As at 30 June 2019, there were no properties classed as held for sale (2018: 2) and their value is shown on the table below:
6 Parkview Drive, Sydney Olympic Park, NSW
102 Bennelong Parkway, Sydney Olympic Park, NSW
Total
2.5 Trade and other assets
Accounting policy
2019
$’000
–
–
–
2018
$’000
31,750
32,500
64,250
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate
method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade and other assets is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off.
A provision for impairment of receivables is established when there is objective evidence that all amounts due will not be able to be
collected according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or significant delinquency in payments are considered indicators that the trade
receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present
value of the estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
within property revenue. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a
subsequent period, it is written off. Subsequent recoveries of amounts previously written off are credited against property revenue in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Impairment
A financial asset not carried at fair value through profit or loss (meaning the asset value has not been increased or decreased to accord
with its assessed market value) is assessed at each reporting date to determine whether there is objective evidence that it is impaired.
A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and
that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor,
restructuring of an amount due to the Group on terms that the Group would not otherwise normally consider, indications that a debtor
or issuer will enter bankruptcy and the disappearance of an active market for a security. In addition, for an investment in an equity
security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
The Group considers evidence of impairment for receivables at both a specific asset and collective level. All individually significant
receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then
collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individually significant are
collectively assessed for impairment by grouping together receivables with similar risk characteristics.
In assessing collectively for impairment, the Group uses historical trends of the probability of default, timing of recoveries and the
amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the
actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are
recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and reflected in an allowance account
against receivables.
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 73
2.5 Trade and other assets (continued)
Determination of fair value
The fair value of trade and other assets is estimated as the present value of future cash flows, discounted at the market rate of interest
at the reporting date. This fair value is determined for disclosure purposes.
Trade and other assets can be analysed as follows:
Current
Rent receivables
Distribution receivables
Prepayments
Impaired rent receivables
As at 30 June 2019, there were no impaired rent receivables (2018: nil).
2.6 Trade and other liabilities
Accounting policies
2019
$’000
629
1,259
3,476
5,364
2018
$’000
538
1,244
4,801
6,583
These amounts represent liabilities for goods and services provided to the Group prior to the end of the reporting period and which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other liabilities are initially recognised
at fair value, net of transaction costs incurred and are subsequently measured at amortised cost.
Trade and other liabilities can be analysed as follows:
Current
Trade payables
Non-trade payables2
GST payable
Accrued expenses - other
Accrued expenses - development charges
Unearned income
Other liabilities1
Non-current
Non-trade payables2
2019
$’000
1,358
863
1,375
15,825
15,045
14,318
1,324
50,108
67
67
2018
$’000
2,340
865
1,881
12,378
–
18,052
1,854
37,370
69
69
1. Other liabilities represents an obligation to fund capital expenditure by the Company as the custodian of the Charles Street Property Trust. An equal amount was
received and is held as part of restricted cash (see Note 2.7).
2. Current and non-current non-trade payables relate to employee entitlements.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
74 Growthpoint Properties Australia | 2019 Annual Report
2.7 Cash flow information
Accounting policies
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date
that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the management of its short-term
commitments.
Restricted cash
The table below summarises a balance, included in cash and cash equivalents, held in restricted cash by the Company as the
custodian of the Charles Street Property Trust. These funds are not available for general use by the Group.
Cash received from the tenant
Cash made available to the tenant
Cash flow information
(a) Reconciliation of cash at end of year
Cash and cash equivalents balance
(b) Reconciliation of net operating profit to net cash inflow from operating activities
Net profit for the period
Income relating to investment property disposals
Distributions from investment in securities
Fair value adjustment to investment properties
(Profit)/ loss on sale of investment properties
Fair value adjustment to investment in securities
Fair value adjustment to derivatives
Loss on settlement of derivatives
Amortisation of borrowing costs
Interest received
Depreciation
Change in operating assets and liabilities, net of effects from purchase of controlled entity:
– Increase in Lease incentives and leasing costs
– Decrease/ (Increase) in receivables
– Increase in prepayments
– Increase in deferred tax asset
– Increase/ (decrease) in payables
Net cash inflow from operating activities
2019
$’000
1,324
6,000
7,324
2019
$’000
2018
$’000
1,854
–
1,854
2018
$’000
30,172
31,463
375,292
357,709
185
(5,036)
–
(4,886)
(201,581)
(166,958)
1,144
(7,109)
(16,974)
13,826
1,369
(529)
269
(17,238)
1,154
393
26
(9,138)
136,053
(24,419)
(10,368)
573
–
1,583
(317)
293
(9,607)
5,568
(1,308)
(104)
(9,363)
138,396
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 75
Section 3: Capital structure and financing costs
in this section ...
This section outlines how the Group manages its capital and related financing costs.
3.1 Interest bearing liabilities
Accounting policies
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the date of the Consolidated Statement of Financial Position.
Interest bearing liabilities
The table below summarises the movements in the Group’s interest bearing liabilities during the year.
Secured loans
Syndicated bank facility
– Facility B
– Facility C
– Facility D
– Facility E
– Facility G
– Facility H
– Facility I
Loan note 1
Loan note 2
Loan note 3
Fixed bank facility 1
USPP 1
USPP 2
USPP 3
USPP 4
Total loans
Less unamortised upfront costs
Total interest bearing liabilities
Opening
balance
1 July 2018
Movement
during period
Balance as at
30 June 2019
Facility limit
Maturity
$’000
$’000
$’000
$’000
100,000
245,000
70,000
100,000
30,000
–
–
200,000
100,000
60,000
90,000
130,344
52,138
26,000
–
1,203,482
(5,927)
1,197,555
–
–
–
50,000
24,300
–
–
–
–
–
–
–
–
–
161,042
235,342
438
100,000
245,000
70,000
150,000
54,300
–
–
200,000
100,000
60,000
90,000
130,344
52,138
26,000
161,042
100,000
245,000
70,000
150,000
150,000
75,000
75,000
200,000
100,000
60,000
90,000
130,344
52,138
26,000
161,042
1,438,824
1,684,524
(5,489)
235,780
1,433,335
Mar-23
Dec-21
Dec-21
Jun-23
Sep-21
Sep-20
Nov-20
Mar-25
Dec-22
Dec-22
Dec-22
Jun-27
Jun-29
Jun-29
May-29
The weighted average all-in interest rate on interest bearing liabilities (including bank margin and amortisation of upfront fees paid)
at 30 June 2019 was 3.87% per annum (2018: 4.44% per annum). Refer to note 3.3 for details on interest rate and cross currency
swaps.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 76 Growthpoint Properties Australia | 2019 Annual Report
3.1 Interest bearing liabilities (continued)
Interest bearing liabilities (continued)
Fair value
The carrying amounts are not materially different to the fair values of borrowings at balance sheet date since the interest payable on
those borrowings is close to current market rates.
Assets pledged as security
The bank loans, Loan Notes and USPP payable by the Group are secured by first ranking mortgages over the Group’s real property
interests, including those classified as investment properties.
The carrying amounts of assets pledged as security for current and non-current borrowings are:
Current
Floating charge
Cash and cash equivalents
Receivables
Assets held for sale
Non-current
First mortgage
Investment properties
Floating charge
Plant and equipment
Deferred tax assets
Total non-current assets pledged as security
Total assets pledged as security
3.2 Borrowing costs
Accounting policies
2019
$’000
30,172
5,364
–
2018
$’000
31,463
6,583
64,250
35,536
102,296
3,983,750
3,291,800
692
1,030
930
1,046
3,985,472
4,021,008
3,293,776
3,396,072
Borrowing costs are interest and other costs incurred in connection with interest bearing liabilities including derivatives and recognised
as expenses in the period in which they are incurred, except where they are incurred for the construction of any qualifying asset where
they are capitalised during the period of time that is required to complete and prepare the asset for its intended use.
Borrowing costs can be analysed as follows:
Bank interest expense and charges
Amortisation of borrowing costs
2019
$’000
54,770
1,369
56,139
2018
$’000
53,215
1,582
54,797
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 77
3.3 Derivative financial instruments
Accounting policies
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to
their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument. The Group takes out certain derivative contracts as part of its financial risk management, however, it has elected not to
designate these to qualify for hedge accounting under AASB 9.
Interest rate and cross currency swaps
Changes in fair value of such derivative instruments that do not qualify for hedge accounting are recognised immediately in the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
Determination of fair value
The fair value of interest rate and cross currency swaps are based on broker quotes. Those quotes are tested for reasonableness
by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a
substitute instrument at the measurement date.
Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and
counterparty when appropriate.
Derivative financial instruments
Derivative financial instruments can be analysed as follows:
Interest rate swap contracts – carried at fair value through profit and loss:
Total non-current derivative financial instrument assets
Total non-current derivative financial instrument liabilities
2019
$’000
11,246
(1,164)
10,082
2018
$’000
–
(6,892)
(6,892)
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 78 Growthpoint Properties Australia | 2019 Annual Report
3.3 Derivative financial instruments (continued)
Derivative financial instruments (continued)
Instruments used by the Group
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in
interest and currency rates in accordance with the Group’s financial risk management policies (refer to note 3.4). The gain or loss from
re-measuring the interest rate and cross currency swaps at fair value is recognised in the Consolidated Statement of Profit or Loss and
Other Comprehensive Income immediately.
Interest rate swap contracts – carried at fair value through profit and loss
Interest rate swaps in effect at 30 June 2019 covered 21% (30 June 2018: 27%) of the loan principal outstanding. With total fixed
interest rate debt of $958 million outstanding (30 June 2018: $984 million), the total fixed interest rate coverage of outstanding principal
is 67% (30 June 2018: 82%).
The average fixed interest rate of interest rate swaps at 30 June 2019 was 1.21% per annum (2018: 2.30% per annum) and the
variable interest rate (excluding bank margin) is 1.29% per annum (30 June 18: 1.97% per annum) at balance date. See table below for
further details of interest rate swaps in effect at 30 June 2019:
Counter Party
Amount of Swap
Swap Expiry
Fixed Rate
Term to Maturity
Interest rate swaps
WBC
NAB
ANZ
ANZ
Total / Weighted average
$’000
75,000
25,000
100,000
100,000
300,000
%
Years
Jun-2023
Jun-2023
Jun-2024
Jun-2025
1.15%
1.15%
1.21%
1.29%
1.21%
4.0
4.0
5.0
6.0
5.0
These contracts require settlement of net interest receivable or payable each 30 days. The settlement dates generally coincide with the
dates on which interest is payable on the underlying debt. These contracts are settled on a net basis.
At balance date these contracts were a total liabilities with a fair value of $1,074,000 (30 June 18: liabilities of $6,892,000) for the
Group. For the year ended 30 June 2019 there was a profit from the increase in fair value of $1,479,000 for the Group (2018: loss of
$573,000).
Cross currency swap contracts – carried at fair value through profit and loss
Counter Party
Amount of Swap
Swap Expiry
Fixed Rate
BBSW+ Term to Maturity
3 months
Cross Currency Swaps
NAB
Westpac
ANZ
CBA
NAB
Westpac
ANZ
CBA
Westpac
Total / Weighted average
$'000
32,586
32,586
32,586
32,586
13,034
13,034
13,034
13,034
161,042
343,522
Jun-2027
Jun-2027
Jun-2027
Jun-2027
Jun-2029
Jun-2029
Jun-2029
Jun-2029
May-2029
%
5.29%
5.29%
5.27%
5.26%
5.47%
5.47%
5.45%
5.44%
–
5.33%
%
–
–
–
–
–
–
–
–
2.22%
2.22%
Years
8.0
8.0
8.0
8.0
10.0
10.0
10.0
10.0
9.9
9.2
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 79
3.3 Derivative financial instruments (continued)
Derivative financial instruments (continued)
Fair value hierarchy
The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as
follows:
t Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
t Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices).
t Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of investment properties has been categorised as Level 3 in the fair value hierarchy based on the significant unobservable
inputs into the valuation techniques used.
30 June 2019
Derivative financial assets
Derivative financial liabilities
30 June 2018
Derivative financial assets
Derivative financial liabilities
Level 1
Level 2
Level 3
$’000
$’000
$’000
–
–
–
–
–
–
(11,246)
1,164
(10,082)
–
6,892
6,892
–
–
–
–
–
–
Total
$’000
(11,246)
1,164
(10,082)
–
6,892
6,892
3.4 Financial risk management
Overview
The Group has exposure to the following risks from their use of financial instruments:
t credit risk;
t liquidity risk; and
t market risk (including interest rate risk).
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for
measuring and managing risk, and the management of capital as well as relevant quantitative disclosure on risks.
Risk management framework
The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board has established
an Audit, Risk and Compliance Committee, which is responsible for oversight of the Framework and monitoring risk management
policies and making appropriate recommendations to the Board. The Committee reports regularly to the Board on its activities. In
addition, the Managing Director provides a regular report to the Board in relation to risks facing the Group.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes
in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to
develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Audit, Risk and Compliance Committee oversees how management monitor compliance with the Group’s risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
Refer to page 8 of the Group’s 2019 Corporate Governance Statement for more details.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
80 Growthpoint Properties Australia | 2019 Annual Report
3.4 Financial risk management (continued)
Financial instruments used by the Group
The Group’s principal financial instruments, other than derivatives, comprise bank loans and Loan Notes (including USPP Notes).
The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial
assets and liabilities such as other receivables and payables, which arise directly from its operations. The Group also enters into
derivative transactions (interest rate and cross currency swaps) to manage the interest rate risks arising from the Group’s operations.
It is the Group’s policy that no speculative trading in financial instruments shall be undertaken. The main risks arising from the Group’s
financial instruments are cash flow interest rate risk and foreign exchange risk. The Board of Directors reviews and agrees policies for
managing these risks and these are summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in the relevant note to the financial statements.
Derivative financial instruments – interest rate swaps
The Group is exposed to financial risk from movement in interest rates. To reduce its exposure to adverse fluctuations in interest rates,
the Group has employed the use of interest rate swaps whereby the Group agrees with a bank to exchange at specified intervals, the
difference between fixed rate and floating rate interest amounts calculated by reference to an agreed notional principal amount. Any
amounts paid or received relating to interest rate swaps are recognised as adjustments to interest expense over the life of each swap
contract, thereby adjusting the effective interest rate on the underlying obligations.
The gain or loss from re-measuring the interest rate swaps at fair value is recognised in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income immediately, as hedge accounting under AASB 9 has not been adopted.
Derivative financial instruments – cross currency swaps
The Group is exposed to financial risk from the movement in foreign exchange rates based on its USD denominated debt. To remove
its exposure to adverse fluctuations in foreign exchange rates, the Group has employed the use of cross currency swaps which convert
foreign currency exposures into AUD exposures and convert all future payments of interest in USD to AUD. Sensitivity to foreign
exchange fluctuations is therefore removed.
Credit risk
Credit risk is the risk that counterparties to a financial asset will fail to discharge their obligations, causing the Group to incur a financial
loss.
For cash and current receivables, the maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivable.
The Group has significant derivative financial instruments held with four major Australian banks, NAB, Westpac, ANZ and CBA,
counterparties which are considered to be high quality financial institutions. At balance sheet date, the fair value of the financial
instruments is in a liability position (refer to Note 3.3).
The Group manages credit risk and the losses which could arise from default by ensuring that parties to contractual arrangements are
of an appropriate credit rating, or do not show a history of defaults. Cash at bank is held with a major Australian bank.
Tenants for each of the properties held by the Group are assessed for creditworthiness before a new lease commences. This
assessment is also undertaken where the Group acquires a tenanted property. If necessary, a new tenant will be required to provide
lease security (such as personal, director or bank guarantees, a security deposit, letter of credit or some other form of security) before
the tenancy is approved. Tenant receivables are monitored by property managers and the Group’s asset managers on a monthly basis.
If any amounts owing under a lease are overdue these are followed up for payment. Where payments are outstanding for a longer
period than allowed under the lease, action to remedy the breach of the lease can be pursued, including legal action or the calling of
security held by the Group under the lease. Where it is assessed it is not likely that the amount outstanding will be received by the
Group an allowance is made for the debt being doubtful.
For developers from whom coupon interest is receivable by the Group over the course of a development, the Group assesses the
creditworthiness of a developer counterparty prior to entering into a binding contractual relationship.
Net fair values
The carrying values of the Group’s financial assets and liabilities included in the Statement of Financial Position approximate their fair
values. Refer to the individual notes to these accounts regarding these assets and liabilities for the methods and assumptions adopted
in determining net fair values.
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 81
3.4 Financial risk management (continued)
Financial instruments used by the Group (continued)
Market risk
Market risk is the risk that changes in market prices (such as foreign exchange rates, interest rates and equity prices) will affect the
Group’s income or the value of its holding of financial instruments.
A potential market risk to the Group arises from changes in interest rates relating to its Syndicated Facility with a principal amount
outstanding of $619,300,000 at balance sheet date (2018: $545,000,000).
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in
interest rates.
The following table sets out the carrying amount of the financial instruments that are exposed to interest rate risk.
Financial assets
Cash and cash equivalents
Derivative financial instruments
Financial liabilities
Derivative financial instruments
Interest bearing liabilities – fixed debt
Interest bearing liabilities – hedged1
Interest bearing liabilities – unhedged
1. Note – hedge accounting has not been adopted.
Fixed/Floating
Floating
Floating
Floating
Fixed
Fixed
Floating
2019
$’000
30,172
11,246
41,418
1,164
658,482
300,000
480,342
2018
$’000
31,463
–
31,463
6,892
658,482
325,000
220,000
1,439,988
1,210,374
The following sensitivity analysis is based on the interest rate risk exposures in existence at balance sheet date. At 30 June 2019, if
interest rates had moved, as illustrated in the table below, with all other variables held constant, net profit and equity would have been
affected as follows:
Post Tax Profit Higher/(Lower)
+100 bps
Cash and borrowings
Interest rate derivatives
Cross currency derivatives
-100 bps
Cash and borrowings
Interest rate derivatives
Cross currency derivatives
2019
$’000
(4,502)
(12,251)
(43,539)
(58,092)
4,502
16,660
(4,311)
16,851
2018
$’000
(1,885)
(8,933)
(2,178)
(12,996)
1,885
13,188
16,566
31,639
As can be seen from the table above, the movements in profit are primarily due to fair value gains or losses on financial derivatives from
an interest rate increase or decrease. These fair value gains or losses would be unrealised and non-cash in nature unless the interest
rate swaps were closed or sold.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
82 Growthpoint Properties Australia | 2019 Annual Report
3.4 Financial risk management (continued)
Financial instruments used by the Group (continued)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its obligations in relation to investment activities or other operations of the
Group. The Group manages its liquidity risk by ensuring that on a daily basis there is sufficient cash on hand or available loan facilities
to meet the contractual obligations of financial liabilities as they fall due. The Board sets budgets to monitor cash flows. In addition,
the Company, as an Australian Financial Services Licensee, is required to prepare a rolling 12 month cashflow projection approved by
the Directors. As at the balance sheet date, the Group had cash and cash equivalents totalling $30,172,000 (2018: $31,463,000).
Financing arrangements
The Group had access to the following borrowing facilities as at the balance sheet date:
Syndicated bank facility
Total facility
Used at balance date
Unused at balance date
Fixed debt
Total facility
Used at balance date
Unused at balance date
Total unused bank facilities
2019
$’000
865,000
619,300
245,700
2018
$’000
865,000
545,000
320,000
819,524
819,524
–
658,482
658,482
–
245,700
320,000
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 83
3.4 Financial risk management (continued)
Financial instruments used by the Group (continued)
Maturities of financial liabilities
The maturity of financial liabilities (including trade and other payables, provision for distribution, provision for current tax payable,
derivative financial instruments and interest bearing liabilities) at reporting date is shown below, based on the contractual terms of each
liability in place at reporting date. The amounts disclosed are based on undiscounted cash flows, including interest payments based on
variable rates at 30 June 2019.
Carrying
amount
Total
contractual
cashflows
6 months
or less
6 to 12
months
1 to
5 years
More than
5 years
$’000
$’000
$’000
$’000
$’000
$’000
2019
Non-derivative financial liabilities
Bank loans and Loan Notes
1,438,824
2,068,217
Trade and other liabilities
122,256
122,322
1,561,080
2,190,539
53,991
119,170
173,161
79,806
2,763
82,569
354,896
1,579,524
389
–
355,285
1,579,524
Derivative financial liabilities
Interest rate swaps used for hedging
2018
Non-derivative financial liabilities
Bank loans
Trade and other liabilities
Derivative financial liabilities
Interest rate swaps used for hedging
1,164
1,164
100
100
(35)
(35)
135
135
–
–
–
–
1,203,482
1,903,320
(16,029)
80,935
293,832
1,544,582
94,731
94,799
1,298,213
1,998,119
93,533
77,504
721
545
–
81,656
294,377
1,544,582
6,892
6,892
1,713
1,713
873
873
736
736
104
104
–
–
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 84 Growthpoint Properties Australia | 2019 Annual Report
3.5 Contributed Equity and reserves
Accounting policies
Share capital
Stapled securities are classified as equity. Incremental costs directly attributable to the issue of stapled securities are recognised as a
deduction from equity, net of any tax effects.
Distributions and dividends
Provision is made for the amount of any distribution or dividend declared, determined or publicly recommended by the Directors on or
before the end of the period but not distributed at the balance sheet date.
Contributed Equity
Contributed equity can be analysed as follows:
2019
No. (‘000)
2019
$’000
2018
No. (‘000)
2018
$’000
Opening balance at 1 July
675,385
1,698,702
661,341
1,653,735
Issue of ordinary stapled securities during the year:
Distribution reinvestment plans
Securities issued through Employee Incentive Plans
Rights Offer
Costs of raising capital
13,047
339
39,023
–
52,409
46,708
–
135,020
(1,064)
180,664
13,668
376
–
–
44,967
–
–
–
14,044
44,967
Closing balance at 30 June
727,794
1,879,366
675,385
1,698,702
Ordinary stapled securities
Ordinary stapled securities entitle the holder to participate in dividends and distributions and the proceeds on winding up of the Group
in proportion to the number of and the amounts paid on the stapled securities held.
On a show of hands every holder of ordinary stapled securities present at a meeting in person or by proxy, is entitled to one vote, and
upon a poll each unit is entitled to one vote.
Distribution reinvestment plan
The Distribution Reinvestment Plan was not operative for the 31 December 2018 and 30 June 2019 distributions of the Group.
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 85
3.5 Contributed Equity and reserves (continued)
Capital risk management
The Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so that the Group can continue
to provide returns for Securityholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends and distributions paid to
Securityholders, return capital to Securityholders, vary the level of borrowings, issue new securities or sell assets.
During the year, the Group implemented several capital management initiatives, namely:
t The Distribution Reinvestment Plan was in operation for the 30 June 2018 distribution, raising a total of $46,708,000 for the issue of
13,046,823 new stapled securities.
t In November 2018, the Group entered into a new bridging bank debt facility with a limit of $150,000,000 and a maturity date of
February 2020.
t In November and December 2018, the Group conducted a rights offer and raised $135,020,000 for the issue of 39,023,227 new
stapled securities.
t In May 2019, the Group raised $161,042,000 via the USPP market with the loan notes carrying a maturity date of May 2029. The
proceeds were used partially to repay and cancel the $150,000,000 bridging loan that had been entered into in November 2018.
t In June 2019 the Group launched an Institutional Placement and a follow-on Security Purchase Plan. The proceeds and issue
of securities were post balance date events (refer to Note 4.9) but raised $173,600,000 for the issue of 43,717,000 new stapled
securities.
The Group also holds an independent credit rating to aid it accessing debt capital markets. In April 2019, Moody’s confirmed the
Group’s independent credit rating of Baa2 on senior secured debt with a stable outlook.
The Group maintains undrawn debt facilities to aid in capital management. As at 30 June 2019, the Group had total debt facilities of
$1,684,524,000 of which $245,700,000 was undrawn at balance date.
The Group monitors capital by using a number of measures, such as gearing, interest cover and loan to valuation ratio. The gearing
ratio is calculated by dividing interest bearing liabilities less cash by total assets less cash.
The Group has a target gearing range of 35% to 45%. At 30 June 2019, the gearing ratio was 34.3% (30 June 18: 33.9%). The gearing
ratios at 30 June 2019 and 30 June 2018 were calculated as follows:
Total interest bearing liabilities less cash
Total assets less cash
Gearing ratio
Nature and purpose of reserves
Share-based payments reserve
2019
$’000
1,403,163
4,087,688
34.3%
2018
$’000
1,166,092
3,443,415
33.9%
The share-based payments reserve comprises the transfer of the portion of the fair value of the total cost recognised under the
Employee Incentive Plans in operation and is the portion of the fair value of the total cost recognised of the unissued securities, which
remain conditional on employment with the Group at the relevant vesting date. Refer to Note 3.8 for more information.
Deferred tax expense charged to equity
This reserve comprises deferred tax balances attributable to amounts that are also recognised directly in equity. Refer to Note 4.3 for
further information.
Profits reserve
The profits reserve comprises the transfer of net profit in the Company for the year (if any) and contains profits available for distribution
as dividends in future years. There were no dividends distributed from the profits reserve during the year (2018: nil).
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 86 Growthpoint Properties Australia | 2019 Annual Report
3.6 Distributions to Securityholders
Period for distribution
Half year to 31 December 2018
Half year to 30 June 2019
Total distribution for FY19
Half year to 31 December 2017
Half year to 30 June 2018
Total distribution for FY18
Total
distribution
Total stapled
securities
Distributions
per stapled
security
$’000
(’000)
82,963
84,424
167,387
72,789
75,643
148,432
727,749
727,794
661,716
675,384
(cents)
11.40
11.60
23.00
11.00
11.20
22.20
3.7 Earnings per stapled security (“EPS”)
Earnings per stapled security
Basic EPS is determined by dividing the profit or loss attributable to Securityholders of the Group by the weighted average number of
equivalent securities outstanding during the financial year.
Diluted EPS adjusts the figures used in the determination of basic EPS by taking into account amounts unpaid on securities and the
effect of all dilutive potential ordinary securities.
Profit attributable to equity holders of the Group
Weighted average number of stapled securities on issue for the year
Basic & diluted earnings per stapled security
2019
2018
$
No.
Cents
375,292,000
357,709,000
709,028,481
668,456,752
52.9
53.5
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 87
3.8 Share-based payment arrangements
Accounting policies
Share-based payment transactions
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that
meet the related service and non-market performance conditions at the vesting date.
Share-based payment arrangements
At 30 June 2019, the Group has two share-based payment schemes being:
(a) Short-term Performance Rights
The Group introduced a plan applicable to FY19 and each year thereafter where any Short-term Incentive (STI) payable to Executive
KMP would be paid as 66.6% cash with the remainder deferred and awarded as Short-term Performance Rights. Half of these rights
will vest after one year and half after two years following the date of issue. The operation of this plan, the performance measures
and the achievement against those measure are described in full on pages 37-38 (in the remuneration report section of the
Directors’ report).
37
(b) Long-term Employee Incentive Plans FY16, FY17, FY18 and FY19
The Group has introduced Long-term Employee Incentive Plans for all employees (including the Managing Director). The plans are
designed to link employees’ remuneration with the long-term goals and performance of the Group and the maximisation of wealth
for its Securityholders. The measures for the plans are reviewed regularly by the Nomination, Remuneration & HR Committee and/
39
or the Board. The various types of Long-term Employee Incentive Plans in place, how they operate, the applicable performance
measures and how fair values are calculated are described in full on pages 39-44 (in the remuneration report section of the
Directors’ report).
The table below shows the movement in rights under each type of share-based payment scheme:
Rights outstanding 1 July 2017
Rights granted during FY18
Rights forfeited during FY18
Rights converted to GOZ stapled securities in FY181
Rights outstanding at 30 June 2018
Rights outstanding 1 July 2018
Rights granted during FY19
Rights forfeited during FY19
Rights converted to GOZ stapled securities in FY192
Rights outstanding at 30 June 2019
Short-term
Performance
Rights
Long-term
Performance
Rights
No.
No.
Total
No.
–
–
–
–
–
–
160,917
–
–
160,917
1,032,214
1,032,214
–
(4,580)
(375,894)
651,740
651,740
470,306
(24,865)
(294,125)
803,056
–
(4,580)
(375,894)
651,740
651,740
631,223
(24,865)
(294,125)
963,973
During the year, $916,000 was recognised in the share-based payments reserve (June 18: $1,229,000). This represents the amounts
recognised under the plans in operation and is the portion of the fair value of the total cost recognised of the unissued securities, which
remain conditional on employment with the Group at the relevant vesting date.
1. 320,793 rights under the FY14, FY15, FY16 and FY17 Long-term Employee Incentive Plans were converted to Growthpoint stapled securities on 4 October 2017
with a total value of $1,020,113. A further 55,104 rights under the FY17 Long-term Employee Incentive Plan were converted to Growthpoint stapled securities on
23 November 2017 with a total value of $175,230
2. Rights under the FY15, FY16 and FY17 Long-term Employee Incentive Plans were converted to Growthpoint stapled securities on 30 October 2018 with a total
value of $1,128,941
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 88 Growthpoint Properties Australia | 2019 Annual Report
Section 4: Other notes
4.1 Key management personnel compensation
Accounting policies
Employee benefits - Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are
recognised as an employee benefit expense in the Consolidated Statement of Profit or Loss and Other Comprehensive Income in the
periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash
refund or a reduction in future payments is available. Contributions to a defined contribution plan that are due more than 12 months
after the end of the period in which the employees render the service are discounted to their present value.
Employee benefits - Termination benefits
Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary redundancy,
it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more
than 12 months after the reporting period, they are discounted to their present value.
Employee benefits - Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a
present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can
be estimated reliably.
Compensation
The key management personnel compensation comprised:
Short-term employee benefits
Other long-term employee benefits
Post-employment benefits
Share-based payments
2019
$
2018
$
3,321,863
4,530,409
-
123,913
1,316,388
4,762,164
9,368
144,412
913,548
5,597,737
Individual directors’ and executives’ compensation disclosures
Information regarding individual directors’ and executives’ compensation and equity instruments disclosure as required by Corporations
Regulation 2M.3.03 is provided in the remuneration report section of the Directors Report.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Group since the end of the
previous financial year and there were no material contracts involving Directors’ interests existing at year-end.
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 89
4.1 Key management personnel compensation (continued)
Compensation (continued)
Movements in securities
The movement in the number of ordinary stapled securities in the Group held, directly, indirectly or beneficially, by each key
management person, including their related parties, is as follows:
2019
Securityholder
G. Jackson
N. Sasse
E. de Klerk
T. Collyer
F. Marais
D. Andrews
M. Green
G. Tomlinson
M. Brenner
J. Sukkar
Opening
securities
1 July
Securities
granted as
compensation
Acquired
securities
Disposed
securities
No.
170,309
1,520,087
1,601,804
953,492
150,322
85,815
45,201
81,467
7,245
–
No.
–
–
–
122,075
–
35,020
35,293
–
–
–
No.
19,778
136,373
151,053
60,940
18,962
6,847
4,561
7,309
–
14,000
No.
–
–
–
(250,000)
-
-
(80,494)
–
–
–
Closing
securities
30 June
No.
190,087
1,656,460
1,752,857
886,507
169,284
127,682
4,561
88,776
7,245
14,000
During the year to 30 June 2019, a total of 192,388 stapled securities with a total value of $611,794 were issued to key management
personnel upon vesting of performance rights under Employee Incentive Plans.
2018
Securityholder
G. Jackson
N. Sasse
E. de Klerk
T. Collyer
F. Marais
A. Hockly1
D. Andrews
M. Green
G. Tomlinson
M. Brenner
J. Sukkar
Opening
securities
1 July
Securities
granted as
compensation
Acquired
securities
Disposed
securities
No.
164,799
1,470,908
1,549,983
790,960
150,322
–
42,257
47,370
78,831
7,245
–
No.
–
–
–
162,532
–
45,005
43,558
43,831
–
–
–
No.
5,510
49,179
51,821
–
–
–
–
–
2,636
–
–
No.
–
–
–
–
–
–
–
(46,000)
–
–
–
Closing
securities
30 June
No.
170,309
1,520,087
1,601,804
953,492
150,322
45,005
85,815
45,201
81,467
7,245
–
1. A. Hockly was not considered a KMP in FY19.
During the year to 30 June 2018, a total of 294,926 stapled securities with a total value of $937,865 were issued to key management
personnel upon vesting of performance rights under Employee Incentive Plans.
Key management personnel loan disclosures
The Group has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personally
related entities at any time during the reporting period.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 90 Growthpoint Properties Australia | 2019 Annual Report
4.2 Related party transactions
Responsible Entity
The current Responsible Entity of Growthpoint Properties Australia Trust is Growthpoint Properties Australia Limited. It has acted in that
role since its appointment on 5 August 2009.
Responsible Entity’s/manager’s fees and other transactions
Under the current stapled structure, the management of the Trust is internalised and no Responsible Entity or management fees are
paid to external parties. No performance fee or other fees were paid or payable during the year.
Director transactions
A number of Directors, or their related parties, hold positions in other entities that result in them having control or significant influence
over the financial or operating policies of those entities.
One of these entities transacted with the Group in the reporting period. The terms and conditions of the transaction were no more
favourable than those available, or which might reasonably be expected to be available, on similar transactions with non-related parties
on an arm’s length basis.
The aggregate value of transactions and outstanding balances relating to directors and entities over which they have significant control
or significant influence were as follows:
Director
Transaction
G. Jackson1
G. Jackson1
Investment property valuation
Statutory valuation
Aggregate amounts payable at the reporting date
2019
2018
$
$
85,525
15,010
68,720
–
30,525
26,500
1. The Group used the valuation services of m3property, a company that Mr Jackson is a director of, to independently value 12 properties (2018: 12). The Group
has also used m3property for statutory valuations reviews during the year. Amounts were billed based on normal market rates for such services and were due and
payable under normal payment terms and Mr Jackson was not directly involved in the Group’s engagement of m3property.
Transactions with significant shareholders
During the year there were no transactions with significant shareholders.
There were no balances outstanding from transactions with significant shareholders as at 30 June 2019 (2018: nil).
4.3 Taxation
Accounting policies
Income Tax
Under current income tax legislation, no income tax is payable by the Trust provided taxable income is fully distributed to
Securityholders or the Securityholders become presently entitled to all the taxable income.
For the Company and its controlled entities, income tax expense comprises current and deferred tax. Current and deferred tax are
recognised in profit or loss except to the extent that they relate to a business combination, or items recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences:
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss, and taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the
tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. Deferred tax assets are reviewed each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 91
4.3 Taxation (continued)
Accounting policies (continued)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Income tax expense
The tables below relate to income tax for the Company and its controlled entities only.
Income tax expense:
Current tax expense
Deferred tax benefit
Numerical reconciliation of income tax expense to prima facie tax payable:
Profit / (loss) before income tax expense
Income tax (benefit) / expense using the Company’s domestic rate of 30%
Increase in income tax due to:
Non-deductible expenses
Opening balance adjustment - Provision
2019
$’000
2,449
25
2,474
2019
$’000
7,264
2,179
292
3
2,474
2018
$’000
210
(117)
93
2018
$’000
(960)
(288)
381
–
93
The weighted average tax rate for FY19 was 34%. (FY18 is not meaningful as there was a loss before tax expenses but for tax
purposes there was a profit).
As at 30 June 2019, the Company had franking credits of $2,478,279 available to it (30 June 2018: $2,256,486).
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued
92 Growthpoint Properties Australia | 2019 Annual Report
4.3 Taxation (continued)
Income tax expense (continued)
Movement in temporary differences during the year
Opening
balance
1 July 2018
Charged to
profit and loss
Charged to
equity
Balance
30 June 2019
$’000
$’000
$’000
$’000
Non-current assets:
Property, plant and equipment
Equity raising costs
Total
Current liabilities:
Accrued expenses
Employee benefits
Prepayments
Total
35
53
88
228
711
19
958
Total movement in temporary differences
1,046
37
(21)
16
(58)
4
13
(41)
(25)
–
8
8
–
–
–
–
8
72
41
113
170
715
32
917
1,030
Opening
balance
1 July 2017
Charged to
profit and loss
Charged to
equity
Balance
30 June 2018
$’000
$’000
$’000
$’000
–
83
83
164
663
19
846
929
35
(31)
4
64
48
–
112
116
–
–
–
–
–
–
–
35
53
88
228
711
19
958
1,046
Non-current assets:
Property, plant and equipment
Equity raising costs
Total
Current liabilities:
Accrued expenses
Employee benefits
Prepayments
Total
Total movement in temporary differences
4.4 Contingent liabilities
The Group has no contingent liabilities as at the date of this report (2018: nil).
4.5 Commitments
For details of commitments on properties to be expanded see Note 2.2.
The Group has no other significant capital, lease or remuneration commitments in existence at reporting date, which have not been
recognised as liabilities in these financial statements (2018: nil).
Notes to the Financial Statements continued
Growthpoint Properties Australia | 2019 Annual Report 93
4.6 Controlled entities
Accounting policies
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Where control of an entity is obtained during a period, its results are included in the
consolidated income statement from the date on which control commences. Where control of an entity ceases during a period its
results are included only for that part of the period during which control existed. The accounting policies of subsidiaries have been
changed when necessary to align them with the policies adopted by the Group.
Transaction eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expense arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of impairment.
Controlled entities
The controlled entities of the Group listed below were all domiciled in Australia and were wholly owned during the current year and prior
year, unless otherwise stated:
Ann Street Property Trust
Atlantic Drive Property Trust
Broadmeadows Leasehold Trust
New South Wales Property Trust
Newstead Property Trust1
Nundah Property Trust
Building 2 Richmond Property Trust
Pope Street Property Trust
Building C, 211 Wellington Road Property Trust
Preston 2 Property Trust
CB Property Trust
Charles Street Property Trust
Coolaroo Property Trust
Dandenong South Property Trust
Derrimut Property Trust
Drake Boulevard Property Trust
Eagle Farm Property Trust
Erskine Park Pharmaceutical Trust
Erskine Park Truck Trust
Erskine Park Warehouse Trust
Goulburn Property Trust
Queensland Property Trust
Rabinov Property Trust
Rabinov Property Trust No. 2
Rabinov Property Trust No. 3
Ravenhall Property Trust
Richmond Car Park Trust
South Brisbane 1 Property Trust
South Brisbane 2 Property Trust
SW1 Car Park Trust
Wellington Road Property Trust
Wellington Street Property Trust1
Growthpoint Developments Pty Ltd
Wholesale Industrial Property Fund
Growthpoint Finance Pty Ltd1
Growthpoint Metro Office Fund
William Angliss Drive Trust
World Park Property Trust
Growthpoint Nominees (Aust) 2 Pty Limited
Yatala 1 Property Trust
Growthpoint Nominees (Aust) Pty Limited
Growthpoint Properties Australia Limited
Yatala 2 Property Trust
Yatala 3 Property Trust
Kembla Grange Property Trust
1500 Ferntree Gully Road Property Trust
Kewlink East Trust
Kilsyth 1 Property Trust
Kilsyth 2 Property Trust
Laverton Property Trust
Lot S5 Property Trust
Mort Street Property Trust
19 Southern Court Property Trust
20 Southern Court Property Trust
211 Wellington Road Property Trust
255 London Circuit Trust
3 Millennium Court Property Trust
6 Kingston Park Court Property Trust
New South Wales 2 Property Trust
75 Dorcas Street Trust
1. Indicates entities established or purchased during the financial year ended 30 June 2019.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 94 Growthpoint Properties Australia | 2019 Annual Report
4.7 Parent entity disclosures
As at, and throughout, the financial year ended 30 June 2019 the parent of the Group was Growthpoint Properties Australia Trust.
Result of the parent entity
Profit for the period
Other comprehensive expense
Total comprehensive income for the period
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising:
Contributed equity
Retained profits/ (losses)
Total equity
2019
$’000
2018
$’000
378,392
(167,387)
211,005
358,762
(148,432)
210,330
19,634
86,322
4,096,869
3,456,619
194,498
1,617,751
2,479,118
159,547
1,363,995
2,092,624
1,814,503
1,639,014
664,615
453,610
2,479,118
2,092,624
The contractual obligations of the parent entity are identical to those disclosed on Note 2.2
4.8 Remuneration of auditors
During the year to 30 June 2019, the following fees were paid or payable for services provided by the auditor of the Group:
Audit services - KPMG
Audit and review of financial statements
Other regulatory audit services
Non-audit services - KPMG
Other assurance and due diligence services
2019
$
2018
$
171,656
72,344
140,966
59,410
–
244,000
9,000
209,376
Notes to the Financial Statements continued Growthpoint Properties Australia | 2019 Annual Report 95
4.9 Subsequent events
On 27 June 2019 the Group announced a fully-underwritten Institutional Placement to raise approximately $150.0 million and non-
underwritten Security Purchase Plan to raise up to $15.0 million (with the Group able to accept applications to raise more than this) at
an issue price of $3.97 per security.
28 June 2019 the Group announced it had successfully completed an Institutional Placement raising $150.0 million (with net proceeds
of $147.3 million after transaction costs) for the issue of approximately 37.8 million new securities. The settlement of placement
occurred on 2 July 2019 with allotment of the new securities occurring on 3 July 2019.
On 29 July 2019 the Group announced it had successfully completed the Security Purchase Plan raising approximately $23.6 million
for the issue of approximately 5.9 million new securities (using its discretion to raise more than the $15.0 million originally planned). The
settlement of Security Purchase Plan occurred on 31 July 2019 with allotment of the new securities occurring on 1 August 2019.
Other than noted above, there has not arisen a transaction or event of an unusual nature likely to affect significantly the operations of
the business, the results of those operations or the state of affairs of the entity in future financial years from the end of the interim period
to the date of this report.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio ReviewNotes to the Financial Statements continued 96 Growthpoint Properties Australia | 2019 Annual Report
Directors’
declaration.
In the opinion of the Directors:
(a) the attached Financial Statements and notes, and the Remuneration Report in the Directors’ Report set out on pages 32 to 53 are
in accordance with the Corporations Act 2001 (Cth), including:
(i) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the financial year
ended on that date; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1; and
(c) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 (Cth) from the Managing
Director and Chief Financial Officer for the financial year ended 30 June 2019.
This declaration is made in accordance with a resolution of the Directors of the Group.
Timothy Collyer
Managing Director
Growthpoint Properties Australia Limited
Melbourne, 22 August 2019
Growthpoint Properties Australia | 2019 Annual Report 97
Auditor’s independence
declaration.
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 98 Growthpoint Properties Australia | 2019 Annual Report
Independent
Auditor’s report.
Growthpoint Properties Australia | 2019 Annual Report 99
Independent Auditor’s report
continued
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 100 Growthpoint Properties Australia | 2019 Annual Report
Independent Auditor’s report
continued
Growthpoint Properties Australia | 2019 Annual Report 101
Independent Auditor’s report
continued
Financial ReportFinancial ManagementBusiness OverviewBoard & Remuneration ReportAdditional InformationPortfolio Review 102 Growthpoint Properties Australia | 2019 Annual Report
Detailed portfolio
information.
Office Portfolio
Address
Book Value
Valuer
Cap
rate
Discount
rate
Major tenant WALE
Lettable
area
Site
area
$’000
%
%
years
sqm
sqm
75 Dorcas St
South Melbourne
VIC
212,500
Savills
5.5
6.5
Bldg 2, 572-576 Swan St
Richmond
109 Burwood Rd
Hawthorn
Bldg 3, 570 Swan St
Richmond
Bldg B, 211 Wellington Rd Mulgrave
VIC
VIC
VIC
VIC
115,000
113,500
JLL
JLL
111,000
Savills
73,500
Directors
5.0
5.5
6.0
6.3
6.5
6.8
7.0
ANZ
Banking Group
Country Road
Group
5.3 23,811
9,632
13.0 14,602
7,201
Orora
4.9 12,388
3,529
–
–
–
8,557
7.0 Monash University
1.5 12,780 11,040
Bldg 1, 572-576 Swan St
Richmond
VIC
62,500
Directors
5.0
6.5
Bldg C, 211 Wellington Rd Mulgrave
VIC
60,000
Directors
6.0
7.0
Car Park, 572-576 Swan St Richmond
VIC
1,200
JLL
-
7.0
100 Skyring Tce
Newstead
QLD
251,000
Directors
5.8
6.5
15 Green Square Cl
Fortitude Valley
QLD
153,000
Urbis
5.8
6.8
Country Road
Group
BMW Australia
Finance
GE Capital Finance
Australasia
Bank of
Queensland
Queensland Urban
Utilities
13.0
8,554
8,262
3.5 10,289 11,070
7.9
–
3,756
6.9 24,665
5,157
2.7 16,442
2,519
333 Ann St
Brisbane
CB1, 22 Cordelia St
South Brisbane
A1, 32 Cordelia St
South Brisbane
A4, 52 Merivale St
South Brisbane
CB2, 42 Merivale St
South Brisbane
QLD
QLD
QLD
QLD
QLD
137,000
Urbis
103,200
Colliers
93,750
Directors
86,500
Urbis
61,500
Directors
5.8
6.0
5.8
5.9
5.8
6.8
Federation
University
3.5 16,341
1,563
7.0 Downer EDI Mining
3.1 11,529
5,772
6.8
Jacobs Group
6.6 10,003
2,667
University of the
Sunshine Coast
Peabody Energy
7.0
6.8
4.2
5.6
9,405
2,331
6,598
3,158
Car Park, 32 Cordelia St
& 52 Merivale St
South Brisbane
QLD
29,250
Directors
6.0
7.5
Secure Parking
0.4
–
9,319
33-39 Richmond Rd
Keswick
SA
63,500
Knight
Frank
1 Charles St
Parramatta
NSW 353,000
Directors
Bldg C, 219-247 Pacific Hwy Artarmon
NSW 132,000
Directors
5 Murray Rose Ave
Sydney Olympic Park NSW 104,000
Directors
3 Murray Rose Ave
Sydney Olympic Park NSW 103,000 m3property
7.5
5.3
5.8
5.8
6.0
8.0 Coffey Corporate
4.1 11,835
4,169
6.5
6.8
6.8
6.8
NSW Police
4.9 32,356
6,460
Fox Sports
3.8 14,375
4,212
Lion
4.8 12,386
3,826
Samsung
2.7 13,423
3,980
102 Bennelong Pkwy
Sydney Olympic Park NSW
34,000 m3property
6.3
6.8
6 Parkview Dr
Sydney Olympic Park NSW
33,500 m3property
6.3
6.8
10-12 Mort St
Canberra
ACT
99,250
CBRE
6.1
6.8
255 London Cct
Canberra
ACT
76,000
Directors
5.8
6.8
836 Wellington St
West Perth
WA
92,500
Savills
6.3
7.0
Suzanne Grae
Corporation
Universities
Admissions Centre
Commonwealth of
Australia
Commonwealth of
Australia
Commonwealth of
Australia
1.8
5,243
6,635
2.1
5,033
7,788
5.7 15,398
3,064
8.2
8,972
2,945
7.6 11,973
4,304
Total / Weighted Average
2,755,150
5.7
6.7
5.1 308,401 142,916
Growthpoint Properties Australia | 2019 Annual Report 103
Detailed portfolio
information continued
Industrial Portfolio
Address
Book Value
Valuer
Cap
rate
Discount
rate
Major
tenant WALE
Lettable
area
Site
area
$’000
%
%
years
sqm
sqm
120 Northcorp Blvd
Broadmeadows
VIC
56,500
Savills
7.3
7.5
Woolworths
0.6
58,320
250,000
1500 Ferntree Gully Rd
& 8 Henderson Rd
Knoxfield
VIC
46,000
CBRE
5.8
6.8
9-11 Drake Blvd
Altona
VIC
35,250
Directors
6.3
7.0
40 Annandale Rd
Melbourne Airport VIC
33,000
Savills
8.0
6.8
Brown & Watson
International
Peter Stevens
Motorcycles
Australian Postal
Corporation
6.4
22,009
40,844
4.3
25,743
41,730
5.0
44,424
75,325
Lots 2, 3 & 4,
34-44 Raglan St
Preston
120-132 Atlantic Dr
Keysborough
VIC
VIC
130 Sharps Rd
Melbourne Airport VIC
120 Link Rd
Melbourne Airport VIC
20 Southern Crt
Keysborough
6 Kingston Park Crt
Knoxfield
31 Garden St
Kilsyth
VIC
VIC
VIC
30,000
28,000
24,750
18,000
15,800
12,700
12,600
Directors
Directors
Directors
Directors
Colliers
CBRE
Directors
60 Annandale Rd
Melbourne Airport VIC
12,300 m3property
3 Millennium Crt
Knoxfield
VIC
12,300
Directors
101-111 South
Centre Rd
Melbourne Airport VIC
19 Southern Crt
Keysborough
VIC
9,100
8,200
Directors
Colliers
75 Annandale Rd
Melbourne Airport VIC
7,900 m3property
70 Distribution St
Larapinta
QLD
232,500
Directors
13 Business St
Yatala
QLD
13,100
Directors
5 Viola Pl
Brisbane Airport QLD
9,500
Directors
3 Viola Pl
Brisbane Airport QLD
2,500
Directors
20 Colquhoun Rd
Perth Airport
WA
175,000
Directors
Hugh Edwards Dr
& Tarlton Cr
Perth Airport
WA
48,550
Directors
27-49 Lenore Dr
Erskine Park
NSW 74,750
JLL
6-7 John Morphett Pl
Erskine Park
NSW 51,750
Directors
51-65 Lenore Dr
Erskine Park
NSW 38,000
Directors
34 Reddalls Rd
Kembla Grange
NSW 27,000
JLL
81 Derby St
Silverwater
NSW 20,400
Directors
599 Main North Rd
Gepps Cross
SA
126,000
Urbis
1-3 Pope Crt
Beverley
12-16 Butler Blvd
Adelaide Airport
10 Butler Blvd
Adelaide Airport
SA
SA
SA
21,900 Knight Frank
15,850
Directors
9,400
Directors
6.5
5.3
8.0
8.3
6.3
6.3
6.0
8.3
6.0
7.8
6.3
8.0
6.5
6.8
7.5
7.5
6.0
7.6
5.5
5.5
5.3
6.0
5.5
5.3
7.5
8.0
8.4
7.0
6.5
6.8
Paper Australia
Symbion
Laminex Group
7.0 The Workwear Group
7.0
6.8
6.8
Sales Force National
NGK Spark Plug
Cummins Filtration
7.0 Garden City Planters
Orora
Direct Couriers
Vacant
Neovia Logistics
Services
Woolworths
Reward Supply Co.
CEVA Logistics
Cargo Transport
Systems
Woolworths
Mainfreight
Linfox
Linfox
Linfox
2.7
9.5
3.0
8.0
3.5
2.9
4.4
8.9
1.7
8.4
0.0
0.3
2.7
0.2
0.4
3.7
6.3
5.4
4.2
0.8
8.7
27,978
42,280
12,864
26,181
28,100
47,446
26,517
51,434
11,430
19,210
7,645
12,795
8,919
17,610
16,276
34,726
8,040
14,750
14,082
24,799
6,455
11,650
10,280
16,930
76,109
250,900
8,951
18,630
14,726
35,166
3,431
12,483
80,374
193,936
32,018
57,617
29,476
76,490
24,881
82,280
3,720
36,720
Autocare Services 11.3
355
141,100
IVE Group Australia
3.2
7,984
13,490
Woolworths 16.0
67,238
233,500
Aluminium Specialties
Group
Cheap as Chips
Toll Transport
1.9
1.4
2.6
14,459
25,660
16,800
30,621
8,461
16,100
7.0
7.8
7.3
7.0
6.5
7.3
7.8
7.5
6.8
8.0
6.5
6.8
6.8
7.3
6.8
6.8
8.0
8.3
8.0
Total / Weighted Average
1,228,600
6.3
6.9
4.8 718,065 1,952,403
Additional InformationFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportPortfolio Review 104 Growthpoint Properties Australia | 2019 Annual Report
10 years
of growth.
Property portfolio
key metrics summary
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Growthpoint Properties Australia | 2019 Annual Report 105
About Growthpoint
South Africa.1
135.1
Tangible Assets
Market Cap
122.3
116.1
103.8
82.0
56.5
71.5
71.5
70.7
208.6
195.8
183.8
173.3
79.3
161.3
FY14
FY15
FY16
FY17
FY18
FY14
FY15
FY16
FY17
FY18
Growth in tangible assets and
market capitalisation (Rbn)
as at 31 December 2018
Growth in
distributions (R¢)
per share, as at
31 December 2018
Growthpoint Properties
Limited of South Africa
(“GRT”) owns 62.22% of the
securities of Growthpoint (at 1
August 2019) and is its major
Securityholder.
Other information about GRT
t Included in the JSE Top 40 Index
t Top ten constituent of FTSE EPRA /
NAREIT Emerging Index
t Included in the FTSE/JSE Responsible
Investment Index, FTSE4Good Index
and the Dow Jones Sustainability
Index
t Underpinned by high-quality, physical
property assets, diversified across
sectors (Retail, Office and Industrial)
and geography (South Africa, Australia,
Poland and Romania)
t 15-year track record of uninterrupted
dividend growth
t Sustainable quality of earnings that
can be projected with a high degree of
accuracy
t Well capitalised and conservatively
geared
t Best Practice corporate governance
t Transparent reporting
t Dynamic and proven management
track record
t Recipient of multiple sustainability,
governance and reporting awards
t Baa3 global scale rating from Moody’s
As of 31 December 2018
Growthpoint represents:
t 27.7% of GRT’s gross property assets
t 22.9% of GRT’s net property income
t 16.7% of GRT’s total distributable
income
Gross assets (R)2
$138.7bn
(AUD: $13.7bn)
Gearing (SA only)
35.9%
Market
capitalisation (R)2
$69.2bn
(AUD: $6.8bn)
Listing
Ranking on JSE
(by market cap)
Net assets2
Distributable
income3
ICR (SA only)
No. of employees
(SA only)
Properties4
JSE
21
R84.8bn /
AU$8.3bn
R3.1bn /
AU$303m
3.6x
601
478
1. As at 31 December 2018
2. Closing exchange rate used AUD:ZAR=10.12.
3. For the 6-months using an average exchange rate of R10.27/AUD.
4. 478 properties in South Africa, including 50% ownership of the prestigious V&A Waterfront. 52 Properties in Eastern Europe, 22 in Romania and 30 in Poland,
through its 29% holding of AIM listed Globalworth Real Estate Investments Ltd and its 21.6% holding of Warsaw listed Globalworth Poland Real Estate N.V.
Additional InformationFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportPortfolio Review No. of Securities % of Securities
480,025,424
62.22
76,770,657
50,098,430
44,017,701
25,082,752
14,409,692
6,453,768
4,717,286
4,388,552
2,739,861
2,255,779
2,053,979
1,561,414
1,249,071
1,230,195
1,041,211
987,442
973,672
938,991
783,779
721,779,658
49,731,119
9.95
6.49
5.71
3.25
1.87
0.84
0.61
0.57
0.36
0.29
0.27
0.20
0.16
0.16
0.13
0.13
0.13
0.12
0.10
93.55
6.45
106 Growthpoint Properties Australia | 2019 Annual Report
Securityholder
information.
Top 20 Legal Securityholders as at 1 August 2019
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
GROWTHPOINT PROPERTIES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
EMIRA PROPERTY FUND
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
BRISPOT NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
SHARON INVESTMENTS PTY LTD
RABINOV HOLDINGS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
BNP PARIBAS NOMINEES PTY LTD
CS FOURTH NOMINEES PTY LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
SANDHURST TRUSTEES LTD
WARBONT NOMINEES PTY LTD
AMP LIFE LIMITED
JONAERE PTY LTD
Total Top 20 legal holders of fully paid stapled securities
Total Remaining Holders Balance
Location of Growthpoint
Securityholders* (%)
as at 1 August 2019
Growthpoint
Securityholders* (%)
as at 1 August 2019
16
18
1
9
28
66
South Africa
Australia
Rest of World
* Figures are approximate and based on
beneficial ownership.
62
GRT
Institutional
Retail and Other
Directors and Employees
Growthpoint Properties Australia | 2019 Annual Report 107
Securityholder information
continued
Distribution of Securityholders as at 1 August 2019
There is currently only one class of Growthpoint securities, being ordinary securities, and there are no securities currently held in
escrow. All of Growthpoint’s securities are quoted on the ASX and no other stock exchanges. Growthpoint does not currently have any
share buy-back plans in place.
The number of Securityholders holding less than a marketable parcel of 114 securities (based on the 1 August 2019 closing price of
$4.42) is 200 and they hold 2,200 Growthpoint securities. In accordance with the ASX Listing Rules, a “marketable parcel” is “…a
parcel of securities of not less than $500…”
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Rounding
Total
Total holders
Securities
% of Issued Capital
844
1,471
722
945
94
4,076
382,445
4,134,859
5,246,616
22,941,181
738,805,674
771,510,775
0.05
0.54
0.68
2.97
95.76
0.00
100.00
As at 1 August 2019, there were 771,510,775 fully-paid stapled securities held by 4,076 individual Securityholders.
Substantial holders as at 1 August 2019
Name
Growthpoint Properties Limited
No. of Securities
% of issued capital
480,025,424
62.22
Additional InformationFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportPortfolio Review Contact us:
Web: growthpoint.com.au
Phone: 1800 260 453
Email: info@growthpoint.com.au
Connect with us:
Growthpoint Properties
Australia
108 Growthpoint Properties Australia | 2019 Annual Report
Frequently
asked questions.
How do I update my contact
details?
Please update your details via
Computershare. Please note you will
require your holder identification number.
How do I buy or sell
Growthpoint securities?
Growthpoint securities trade on the ASX
under the code ‘GOZ’. To buy or sell
securities directly you must transact via
an ASX approved broker (including on-
line brokers such as NAB, E-Trade and
Commsec). More details are available at
asx.com.au/products/shares/buying-
selling-shares.htm.
Growthpoint cannot sell direct to you
other than via the DRP or, in certain
limited circumstances, additional equity
raisings.
Why does Growthpoint
outsource its registry
function to Computershare?
Most ASX-listed entities outsource this
function to a third party registry provider.
Growthpoint does not have the scale or
in-house resources (including technology)
to in-source this function. Computershare
is one of the largest registry providers
in Australia and is included in the
ASX’s top 100 companies with a
market capitalisation of approximately
$8.0 billion. Growthpoint has chosen
Computershare on the basis of its
price and service offering. Growthpoint
regularly considers Computershare’s
performance (including any complaints or
feedback received from Securityholders),
pricing and services versus other
providers to determine if it should
continue to outsource this function to
Computershare.
I have lost or not received
a tax statement, holding
statement or report. How can
I obtain a replacement?
Contact Computershare in the first
instance. Details are supplied below.
Contacting Computershare
For direct holders for Growthpoint
securities, most matters can be dealt with
on-line at: www-au.computershare.
com/Investor/
Note that you will require your holder
identification number.
If you cannot resolve matters on-line,
contact details for Computershare are:
• Address: Computershare Investor
Services Pty Limited, Yarra Falls,
452 Johnston Street, Abbotsford, VIC
3067 Australia
• Telephone: 1300 850 505 (within
Australia) or +61(0) 3 9415 4000 (from
outside of Australia)
• Facsimile: +61(0) 3 9473 2500
• Email: webqueries@computershare.
com.au
For indirect holders, i.e. holders that
hold securities via fund, custodian or
other third party, you should contact that
party. Computershare will only be able
to assist those with holdings directly on
Growthpoint’s Securityholder register.
Complaints
Growthpoint Properties Australia aims
to provide each Securityholder with
a professional and high level of client
service in managing the Stapled Group.
If you have a complaint, you may contact
us in writing to our registered address or
by email to complaints@growthpoint.
com.au, detailing the complaint. A
response will normally be provided
within 15 working days. All complaints
should be addressed to the Complaints
Manager.
The Responsible Entity is a member
of the Australian Financial Complaints
Authority (AFCA), an external,
independent complaints handling
organisation. AFCA can be contacted on
1800 931 678, should your complaint not
be resolved by Growthpoint Properties
Australia.
Growthpoint Properties Australia | 2019 Annual Report 109
Notes.
Additional InformationFinancial ManagementBusiness OverviewBoard & Remuneration ReportFinancial ReportPortfolio Review 110 Growthpoint Properties Australia | 2019 Annual Report
Gearing interest bearing liabilities less cash
divided by total assets less cash
GOZ the ASX trading code that
Growthpoint trades under
GRC platform governance, risk and
compliance monitoring and reporting
platform
gross assets the total value of assets
Growthpoint or the Group Growthpoint
Properties Australia comprising the
Company, the Trust and their controlled
entities
Growthpoint SA or GRT Growthpoint
Properties Limited of South Africa
(Growthpoint’s majority Securityholder)
which trades on the JSE under the code
“GRT”
IFRS International Financial Reporting
Standards
JLL the Australian arm of Jones Lang
LaSalle, an international professional
services and investment management firm
JSE Johannesburg Stock Exchange
m million
NABERS National Australian Built
Environment Rating System (a national
system for measuring environmental
performance of buildings)
NPI Net Property Income plus distributions
from equity related investments
NTA net tangible assets
REIT real estate investment trust
Securityholder an owner of Growthpoint
securities
S&P Standard & Poor’s
sqm square metres
sustainability a process for ensuring
activities are able to be continued and
assets and resources are able to endure for
the medium to long-term
Syndicated Facility syndicated loan facility
from CBA, NAB, WBC and ANZ
Trust Growthpoint Properties Australia Trust
WALE weighted average lease expiry
WARR weighted average rent review
2019
Securityholder
calendar*
22 August 2019
• Results for the full year ended
30 June 2019 announced to ASX
30 August 2019
• Distribution paid for the half year
ending 30 June 2019
• FY19 Annual Report sent to
Securityholders
31 October 2019
• Investor Update released to ASX
21 November 2019
• Annual General Meeting
* Dates indicative and subject to
change by the Board.
This report was printed on ecoStar+,
an environmentally responsible
paper made carbon neutral, the fibre
source is FSC Recycled certified.
ecoStar+ is manufactured from 100%
post consumer recycled paper in a
process chlorine free environment
under the ISO 14001 environmental
management system.
Glossary
of terms.
$ or dollar refers to Australian currency
unless otherwise indicated
AFSL Australian Financial Services Licence
A-REIT Australian Real Estate Investment
Trust
AUD Australian Dollars
ASX Australian Securities Exchange
bn billion
Board the board of directors of the
Company
CAGR compound annual growth rate
Capex capital expenditure
Cap rate or capitalisation rate refers to
the market income produced by an asset
divided by its value or cost
CBD central business district
Company or responsible
entity Growthpoint Properties Australia
Limited
cps cents per security
CY16, CY17, CY18 the calendar year
ended 31 December in the year listed i.e.
“CY18” means the calender year ended
31 December 2018
discount rate the interest rate used in
a discounted cash flow (DCF) analysis
to determine the net present value of an
asset’s future cash flows
distributions the amount Securityholders
receive by way of income in their hand
(before any tax or brokerage costs). It is
similar to a dividend by a company but it is
payable by the Trust
dps distributions per security
DRP Distribution Reinvestment Plan
Funds From Operations (FFO) refer to
explanation at the top of page 27
FYXX the 12 months ending/ended on 30
June in the year listed i.e. “FY19” means the
12 months ended 30 June 2019
Free float securities considered available
for trading on the ASX. For Growthpoint,
this is the market capitalisation less
securities held by GRT in accordance with
S&Ps released guidelines
HYXX the six months ending/ended on 31
December in the prior calendar year listed
i.e. “HY19” means the six months ended
31 December 2018
ICR Interest coverage ratio
Contact
details.
Retail Investors:
Computershare Investor Services Pty Limited
GPO Box 2975, Melbourne VIC 3001 Australia
Phone (within Australia): 1300 850 505
Phone (outside Australia): +61 (0)3 9415 4000
Fax: +61 (0)3 9473 2500
Email: webqueries@computershare.com.au
Institutional Investors:
Email: info@growthpoint.com.au
Investor Services Line: 1800 260 453
www.growthpoint.com.au
Corporate
directory.
Growthpoint Properties Australia Limited
ABN 33 124 093 901; AFSL No 316409
Growthpoint Properties Australia Trust
ARSN 120 121 002
Registered Office
Level 31, 35 Collins Street,
Melbourne VIC 3000 Australia
Phone: (03) 8681 2900
Fax: (03) 8681 2910
www.growthpoint.com.au
Directors
Geoffrey Tomlinson, Timothy Collyer, Maxine
Brenner, Estienne de Klerk, Grant Jackson,
Francois Marais, Norbert Sasse, Josephine Sukkar
Company Secretaries
Dion Andrews, Yien Hong1
Auditor
KPMG
Tower 2, 727 Collins Street
Melbourne VIC 3008 Australia
ASX Code
Growthpoint Properties Australia securities are
listed on the Australian Securities Exchange (Code
GOZ).
1. Yien Hong has been appointed Company Secretary and
General Counsel on a fixed term contract until 23 August 2019.
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2019 Annual Report
Growthpoint Properties Australia
Level 31, 35 Collins Street, Melbourne VIC Australia
Investor Services Line: 1800 260 453
www.growthpoint.com.au