CONTENTS. 23 CHAIRMAN S STATEMENT & DIRECTORS REVIEW 26 Chairman s statement 30 Directors review of operations

Transcription

1 ANNUAL REPORT 2007

2 CONTENTS 1 CORPORATE INFORMATION 4 Highlights of the year 5 Major transactions concluded 8 Directorate and administration 10 Profile of directors 12 Company profile and mission statement 13 Corporate governance 18 Sustainability 23 CHAIRMAN S STATEMENT & DIRECTORS REVIEW 26 Chairman s statement 30 Directors review of operations 39 FINANCIAL STATEMENTS 42 Directors responsibility 42 Declaration by company secretary 43 Independent auditor s report 44 Directors report 48 Income statements 49 Balance sheets 50 Statement of changes in equity 51 Cash flow statements 52 Notes to the financial statements 87 PROPERTY PORTFOLIO 90 Property portfolio 103 Development pipeline 117 GENERAL SHAREHOLDERS INFORMATION 120 Linked unitholders analysis 122 Members diary 123 Notice to members 127 Form of proxy

3 CORPORATE INFORMATION

4 Fredman Towers, Sandton

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6 Highlights of the year Rectron, high-tech industrial warehouse, Midrand Total distributions increased by 14.5% to 93,1 cents per linked unit 47.5% total return to unitholders (38.8 % capital growth and 8.7 % income yield) 24.3% increase in net asset value per linked unit to 1275 cents Property acquisitions and capital expenditure of R5,1 billion 48% increase in property assets to over R22,2 billion Market capitalisation of R16,0 billion Refinancing of R2,6 billion of debt via two securitisation issues Fixing of interest rates on R1,3 billion of debt Second BEE transaction - 22 million Growthpoint linked units issued Announced buy-in of property services business for R1,6 billion Exciting pipeline of acquisitions and developments exceeding R4 billion

7 Major Transactions concluded August 2006 Securitisation of Metboard debt R1 billion November 2006 Refinancing of existing debt R1,6 billion November 2006 Acquisition of BCX portfolio R325 million December 2006 Acquisition of Paramount portfolio R3,5 billion Diversified portfolio of 73 properties December 2006 Acquisition by Phatsima of 22 million (2.3%) R260 million Growthpoint linked units May 2007 Announced buy-in of property services businesses R1,6 billion June 2007 Securing additional fixed interest rate cover R1,3 billion

8 Brooklyn Mall, Pretoria

9 Corporate information

10 Directorate and administration Changes pursuant to the management buy-in In May 2007, Growthpoint announced that it had concluded a transaction to acquire the property services businesses from Investec Property Group (IPG). Following this transaction, which is subject to approval by the Competition Tribunal, Growthpoint will no longer have external management, but will employ its own staff. In terms of the previous arrangement, IPG carried out the property and asset management functions for Growthpoint. Investec also provided internal audit and risk management services to Growthpoint. Growthpoint will in future appoint its own staff or other third parties to carry out these functions. The information given below applies to the position prior to the management buy-in. Directors S Hackner (Chairman) J F Marais (Deputy Chairman) # M G Diliza # P H Fechter # J C Hayward # H S Herman S R Leon (resigned 26 October 2007) H S P Mashaba # R Moonsamy # B T Ngcuka # L N Sasse * (Chief Executive Officer) C G Steyn # J H N Strydom # F J Visser # * Executive # Independent Auditors KPMG Inc. (Registration No 1999/021543/21) 85 Empire Road, Parktown, 2193 Private Bag 9, Parkview, 2122 Transfer secretaries Computershare Investor Services 2004 (Pty) Limited (Registration No 2004/00364/07) 70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107 Sponsor Investec Bank Limited (Registration No 1969/004763/06) 100 Grayston Drive, Sandown, Sandton, 2196 PO Box , Sandton, 2146 Registered office Growthpoint Properties Limited (Registration No 1987/004988/06) 100 Grayston Drive, Sandown, Sandton, 2196 PO Box 78949, Sandton, 2146, South Africa Secretary R A Krabbenhöft 100 Grayston Drive, Sandown, Sandton, 2196 PO Box 78949, Sandton, 2146 Debenture Trustee Bell Dewar and Hall (Registration No 1995/004675/21) Landwell Place, 37 West Street Houghton, 2198 PO Box 1972, Houghton, 2041 Management Company Growthpoint Managers (Pty) Limited (Registration No 1987/004982/07) 100 Grayston Drive, Sandown, Sandton, 2196 PO Box 78949, Sandton, 2146

11 Audit Committee C G Steyn (Chairman) P H Fechter J C Hayward (appointed 7 November 2006) J H N Strydom Risk Management Committee J H N Strydom (Chairman) M G Diliza (appointed 7 November 2006) P H Fechter H S P Mashaba (appointed 7 November 2006) C G Steyn The Audit Committee and Risk Management Committee members are all non-executive directors. The following parties also attended or are represented at Audit Committee and Risk Management Committee meetings: Chief Executive Officer (L N Sasse) Fund Executive (E K de Klerk) Chief Financial Officer (S M Snowball) Fund Managers (N T Govender, S A le Roux, R G Pienaar) Investec Bank Limited Internal Audit and Risk Management divisions (until 31 October 2007) Investec Property Group Limited (property managers up until 31 October 2007) Transformation Committee M G Diliza (appointed as committee Chairman 7 November 2006) P H Fechter H S P Mashaba (appointed 7 November 2006) B T Ngcuka (appointed 7 November 2006) L N Sasse S M Snowball C G Steyn J H N Strydom Nomination Committee J F Marais (Chairman) M G Diliza P H Fechter J C Hayward H S P Mashaba R Moonsamy B T Ngcuka C G Steyn J H N Strydom F J Visser Remuneration Committee S Hackner (Chairman) L N Sasse S M Snowball The external auditors, KPMG Inc., attend all meetings of the Audit Committee Website Property Committee P H Fechter (Chairman) M G Diliza R Moonsamy (appointed 7 November 2006) L N Sasse C G Steyn J H N Strydom By invitation: S Hackner

12 PROFILE OF DIRECTORS SAM HACKNER (52) (Chairman) BCom (Hons) CA (SA) Chief Executive Officer of Investec Global Private Bank and Investec Property Group Limited. Appointed to the board in MZOLISI (ZOLI) DILIZA (58) BCom, Bachelor of Business Management and Administration (Hons) Chief Executive of Chamber of Mines of South Africa. Appointed to the board in FRANCOIS MARAIS (52) (Deputy Chairman) BCom, LLB, H. Dip (Company Law) One of the founding partners of Jowell Glyn Marais Inc. Director and Chairman of a number of listed companies. Formerly Chairman of Primegro Properties Limited. Appointed to the board in NORBERT SASSE (42) (Chief Executive Officer) BCom (Hons) CA (SA) Ten years experience in corporate finance, dealing with, among other things, listings, delistings, mergers, acquisitions and capital raising, prior to joining Growthpoint. Chairman of Property Loan Stock Association. Director of SAPOA and Sandton Business Improvement District. Appointed to the board in PETER FECHTER (61) BSc (Eng) More than 30 years experience in construction, property development, management and investment. Formerly a director of Primegro Properties Limited. Appointed to the board in JOHN HAYWARD (56) BSc (Hons), Fellow of Institute of Actuaries. 26 years experience in investment and investment related activities. Appointed to the board in HUGH HERMAN (66) BA LLB Chairman of Investec Bank (UK) Limited, Investec plc and Investec Bank Limited. Director of Pick n Pay Holdings Limited and Pick n Pay Stores Limited. Appointed to the board in HERMAN MASHABA (48) Founder of Black Like Me products in Nonexecutive director of Black Like Me (Pty) Limited. Chairman of Leswikeng Minerals and Energy (Pty) Limited, the Phatsima group of companies and Stocks Building Africa (Pty) Limited. Non-executive director of the IQ Business Group (Pty) Limited and P G Group (Pty) Limited. Appointed to the board in

13 RAGAVAN (RAGI) MOONSAMY (43) Founder of Kascara Financial Services (Pty) Limited. Chief Executive of UniPalm Investments (Pty) Limited. Director of Afripalm (Pty) Limited. Appointed to the board in BULELANI NGCUKA (53) BProc, LLB, MA (International Relations) (Webster University, Geneva) Director of STRB Attorneys, Transnet and Mutual & Federal. Appointed to the board in COLIN STEYN (66) FCIS, Senior Management Programme, Harvard University, Boston, USA. Retired. Formerly Chairman of Barprop Limited. Former President of SAPOA. Appointed to the board in JAN STRYDOM (68) MCom (Acc) CA (SA) Co-founder of Stydom s Incorporated, a firm of Chartered Accountants, specialising in business valuations, forensic investigations, litigation support and arbitrations. Director of MTN Group Limited, Director of the Public Investment Corporation Limited and senior member of the Special Income Tax Court. Formerly a director of Primegro Properties Limited. Appointed to the board in ERIC VISSER (55) BCom (Hons) (Ind. Psychology) Chief Executive Officer of Mines Pension Funds. Appointed to the board in

14 Company profile and mission statement COMPANY PROFILE Growthpoint Properties Limited (Growthpoint) is a property investment holding company, incorporated and registered as a public company on 12 October 1987, and is listed under the Financial - Real Estate sector of the JSE Limited (JSE). Growthpoint s capital structure comprises ordinary shares, which are linked to unsecured, subordinated, variable rate debentures in the ratio of one ordinary share of five cents linked to 10 debentures of 250 cents each. This linkage means that each share may only be issued and traded on the JSE as a linked unit together with the debentures to which it is linked. Growthpoint has a diversified portfolio of 419 properties, valued at R22 billion as at 30 June Retail properties comprised 39% of the value, office 38% and industrial 23%. The bulk of Growthpoint s gross lettable area is situated in Gauteng (62%), with the balance in the Western Cape (17%), KwaZulu Natal (15%), and other provinces throughout South Africa and Namibia (6%). Measured by market capitalisation and total assets, Growthpoint is the largest listed South African property company on the JSE, with a market capitalisation of R16 billion at 30 June MISSION STATEMENT To be the point of reference for listed property investment in South Africa, offering investors a highly liquid, tradeable instrument producing consistently growing income returns and longterm capital appreciation. In striving to achieve this mission, Growthpoint endeavours to: Offer low-risk, superior returns backed by premier assets Maintain an optimal balance of well-located, sectorally and geographically diversified property assets Maximise the letting of available space to financially sound tenants with long leases Preserve and enhance the value of properties owned through ongoing maintenance, upgrading and refurbishment Enhance long-term returns to linked unitholders through the use of conservative gearing and financing at the most competitive rates Limit exposure to interest rate risk by fixing interest rates over periods matching lease expiries 12

15 CORPORATE GOVERNANCE INTRODUCTION Growthpoint Properties Limited and its board of directors are committed to the Code of Corporate Practice and Conduct as set out in the King II Report. The directors recognise the need to conduct the business of the company with integrity and accountability, in accordance with sound corporate practices. CHANGES PURSUANT TO THE MANAGEMENT BUY-IN In May 2007, Growthpoint announced that it had concluded a transaction to acquire the property services businesses from Investec Property Group (IPG). Following this transaction, which is subject to approval by the Competition Tribunal, Growthpoint will no longer have external management, but will employ its own staff. In terms of the previous arrangement, IPG carried out the property and asset management functions for Growthpoint. Investec also provided internal audit and risk management services to Growthpoint. Growthpoint will in future appoint its own staff or other third parties to carry out these functions. The information given below applies to the position prior to the management buy-in. BOARD OF DIRECTORS The board of directors consists of 12 non-executive directors, including the Chairman, and one executive director. Details of the board s composition are set out on page 8 of this report. In addition to four quarterly board meetings held each year on preset dates, directors meetings are convened on an ad hoc basis as required. The non-executive directors remuneration is subject to the recommendations of the remuneration committee, and is approved by the board, as authorised from time to time at annual general meetings. Ten of the non-executive directors are independent of management and free from any relationship that could materially interfere with the execution of their independent judgement. Their business experience enables them to evaluate strategy and act in the company s best interests. The directors interest in the company s linked units is set out on page 45. Following the aquisition of the property services businesses from IPG, with effect from 1 November 2007, all of the non-executive directors will be independent. The board operates in terms of a written charter that sets out its terms of reference, overall purpose, responsibilities and authority, and governs matters such as board membership, meeting procedures and ethical conduct. A copy of the board charter is available from the Company Secretary. ETHICS The directors are bound by a written code of ethics that is part of the board charter. This ensures that the company and its agents conduct the business according to the highest ethical standards, in particular to comply with the laws of the country and any applicable regulatory bodies and to conduct all business activities in a manner that is beyond reproach. 13

16 CORPORATE GOVERNANCE DEALING IN THE COMPANY S LINKED UNITS In terms of policy, directors have to obtain written clearance from the Chairman of the company of any intention to buy or sell linked units in the company, whether directly or indirectly. Directors and company employees who become aware of sensitive financial information are barred from dealing directly or indirectly in the company s linked units until such information is in the public domain. ASSET MANAGEMENT AND PROPERTY ADMINISTRATION The management company is Growthpoint Managers (Pty) Limited which has in turn outsourced the property management to IPG. The Chief Executive Officer meets with senior fund and property management monthly and approves all major transactions within the authority levels framework approved by the board. INTERNAL AUDIT Investec s Internal Audit division performs certain internal audit functions as set out in a service level agreement. The functions include: Meeting with the Chairman of the audit committee to agree on the audit plan for the year Preparing an audit strategy for the year, for approval by the audit committee Attending the meetings of and reporting to the audit committee Meeting with the external auditors to co-ordinate planning and promote reliance on work performed Carrying out the audit work, including testing of controls, as agreed in the audit plan EXTERNAL AUDIT KPMG Inc is the external auditor of the company and its subsidiaries. The independence of the external auditor is recognised, and annually reviewed, by the audit committee with the auditors. The external auditors attend the audit committee meetings and have unrestricted access to the Chairman of the audit committee. AUDIT COMMITTEE The audit committee comprises four non-executive directors, including the Chairman of the risk management committee. The Chief Executive Officer, Fund Executive, Chief Financial Officer, internal and external auditors, and fund managers are present at meetings by standing invitation. The audit committee meets at least four times a year and operates according to written terms of reference approved by the board of directors. These include the review of the annual financial statements before they are presented to the board, the review of internal control systems with reference to the findings of the internal and external auditors, considering any changes in accounting policies and considering any recommendations of the internal and external auditors. RISK MANAGEMENT COMMITTEE The risk management committee comprises five non-executive directors, including the Chairman of the audit committee. The Chief Executive Officer, Fund Executive, Chief Financial Officer, fund managers and risk manager are present at meetings by standing invitation. 14

17 The risk management committee meets at least four times a year and operates according to written terms of reference approved by the board of directors. These include the review of the company s risk management function, internal control systems, the risk philosophy, strategies and policies, and risk-related performance measures and indicators. RISK MANAGEMENT A formalised enterprise risk assessment model is used to identify all material risks to which the company is exposed and to evaluate these risks in terms of severity of impact and likelihood of occurrence. Key risk indicators have been identified in order to monitor and manage these risks on an ongoing basis. Investec Property Group s risk management division attends and reports to the risk management committee at each quarterly meeting. PROPERTY COMMITTEE The committee comprises five non-executive directors and the Chief Executive Officer. This committee meets at least twice a year and, further, as often as might be required. The committee assists the board of directors in the discharge of its duties relating to transactions involving the company s property portfolio, and management of the portfolio. The committee s terms of reference are to: Review the annual net income budget, proposed capital expenditure budget and projected earnings for the linked units for next financial year Appraise proposed purchases and sales of property which exceed the levels of authority of the executive directors Evaluate proposed unbudgeted capital expenditure which exceeds the levels of authority of the executive directors Review the annual business and strategic plan of the company Review the annual valuation performed on the property portfolio REMUNERATION COMMITTEE The remuneration committee consists of the board s Chairman, the Chief Executive Officer and Chief Financial Officer. The terms of reference of the committee are to make recommendations to the board regarding the remuneration of non-executive directors. Prior to 1 November 2007, the effective date of the aquisition of the property services businesses from IPG, the company had no employees as the asset management and property management functions were outsourced to Growthpoint Managers (Pty) Limited. Directors of the company who are employed by Investec Bank Limited, or any of its subsidiaries, receive no fees or other remuneration from the company. NOMINATION COMMITTEE The nomination committee consists of the independent non-executive directors in office from time to time, and is chaired by the Deputy Chairman. The terms of reference of the committee are to make recommendations to the board regarding the appointment of new directors. The 15

18 CORPORATE GOVERNANCE committee is also responsible for ensuring that all new directors receive appropriate induction and adequate information on all aspects of the company s business. TRANSFORMATION COMMITTEE The transformation committee comprises six independent non-executive directors, the Chief Executive Officer and Chief Financial Officer. The company fully supports the principles of empowering previously disadvantaged groups in South Africa and was actively involved in the formulation of the property sector transformation charter. The company will continue to strive to achieve the charter s targets for procurement from black empowered entities, as well as invest in socially responsible projects and assist in the development of black owned enterprises. In August 2005 a black economic empowerment (BEE) consortium acquired a 14.2% direct share ownership in Growthpoint. This was facilitated through the provision by the company of R million of mezzanine financing on market related terms. Messrs B Ngcuka and R Moonsamy were appointed to the board of directors in terms of this BEE transaction. Mr Ngcuka ceased his involvement with the respective BEE partnership during the year but remains a director of the company. In December 2006, it was announced that a further 2.3% direct share ownership was acquired by a BEE consortium led by Mr H S P Mashaba, who was appointed as a director on 21 June As a result of linked unit issues to fund other transactions during the financial year, the total direct share ownership in Growthpoint by the BEE partners stood at 11.4%, as at 30 June EMPLOYMENT EQUITY Prior to the purchase of the property services businesses from Investec Property Group the company had no employees, having contracted out the asset management and property management functions. It therefore had neither employee share incentive schemes nor any other employee-targeted programmes. In terms of the management buy-in, Gowthpoint will implement a staff incentive scheme, which will align the interests of management and staff with those of linked unitholders. ATTENDANCE AT MEETINGS Details of directors attendance at meetings from 1 July 2006 to 30 June 2007 are set out on the following page. Four scheduled board meetings were held during the year. The remaining board meetings were arranged as necessary on an ad hoc basis, often at short notice, but with due regard to the quorum requirements of the company s articles of association, and the recusal where necessary of related-party directors or those presented with a conflict of interests. The nomination committee did not meet during the financial year. 16

19 Director Board Audit Risk management Property Transformation Remuneration A B C A B A B A B A B A B S Hackner J F Marais 9 8 M G Diliza P H Fechter J C Hayward H S Herman S R Leon H S P Mashaba R Moonsamy B Ngcuka L N Sasse C G Steyn J H N Strydom F J Visser 9 9 Column A is the number of meetings held during the year that the director was eligible to attend. Column B is the number of meetings attended by the director. Column C is the number of board meetings at which a director recused himself. Note: In all cases where directors were unable to attend a meeting, the board or the respective committee accepted their leave of absence. Mr Strydom was granted leave of absence from two board meetings due to ill health. Mr Fechter was unable to attend 5 ad-hoc property committee meetings held in October 2006 as he was overseas at the time. RELATIONS WITH UNITHOLDERS The board is also committed to transparency and disclosure of relevant and appropriate information in the annual report and through other communication channels. This is to enable all unitholders, potential unitholders and other stakeholders access to such information. 17

20 Sustainability Growthpoint contributes to sustainable development in South Africa, through the nature of its business, supporting the development and growth of small businesses, improving the environment by upgrading and redeveloping older properties, supporting local suppliers and contributing to corporate social investment projects in the communities in which it operates. Growthpoint s sustainability activities are channeled mainly through the Business Place and the Growth Foundation. These bodies operate to channel funding on enterprise development, training and skills development, procurement from black empowerment entities and social investment projects. Sustainable business Growthpoint s business is, by nature, highly sustainable. By improving, upgrading and investing in South African property, Growthpoint makes an important contribution to the country s socio-economic growth and welfare. The company is also continuously investigating and implementing ways to minimise its environmental footprint. Human resource management Transformation Committee Growthpoint s Transformation Committee consists of six independent non-executive directors, three of whom are black, the Chief Executive and the Chief Financial Officer. Through this committee and other structures and policies, Growthpoint fully supports the empowerment of previously disadvantaged groups in South Africa. A black consortium already has 11.4% direct share ownership in Growthpoint. The company will continue to seek to achieve the targets for procurement from black empowered entities as set out in the draft property sector charter, invest in socially responsible projects and assist in the development of black owned enterprises. Environmental commitment green building programme Growthpoint s philosophy for green building design aims to develop more effective buildings by using natural and more efficient resources. During the year, the company joined the South African Green Building Council and ran an employee awareness programme to instill this philosophy and improve green building development concepts and skills. Various refurbishments and developments were undertaken and, based on the new standard design criteria, focus on the following: Installing energy efficient light fittings and control equipment Concentrating on the design of buildings in terms of shape, dimension and orientation to direct sunlight Making better use of natural light Designing more thermal efficient buildings with zero toxicity and that reduce the use of air conditioning 18

21 Using advanced material to enhance ceiling insulation Re-using construction material (i.e. demolished material) for landfill / stabilizing Recycling materials and waste management Minimising wastage of water by using modern low-flow taps and toilet flush systems Using natural, excess ground water to irrigate landscapes Planting indigenous plants that require less water Saving electricity by using variable drive motors in lifts and air conditioning systems Undertaking environmental impact assessments on all newly zoned sites Running awareness programmes and training employees, contractors, consultants and tenants Development of small businesses To assist in the development of small black businesses in South Africa, in October 2006, Growthpoint entered an agreement with The Business Place, a network of youth-friendly, walk-in centres around the country that assist emerging entrepreneurs in business start-up and expansion. In terms of the agreement, Growthpoint has funded the establishment of a property focused initiative called the Growthpoint Enterprise Development Initiative. The initiative is a developmental programme to help entrepreneurs working in property related services to grow their businesses. It is Growthpoint s intention to spearhead enterprise development in the property sector by identifying clients (small, medium and micro enterprises) of The Business Place through a selection process and then developing them.the initiative will provide these clients with the necessary business skills development, funding, networking and other support to grow their businesses. Growthpoint will also use these individuals to service its buildings, thus providing further opportunities for business expansion. This will also form part of Growthpoint s commitment to procuring from black suppliers. The programme is being piloted at The Business Place, Johannesburg, with the intention to expand to other Business Place centres in South Africa. Procurement from black suppliers Growthpoint s commitment to sustainable procurement, and its link to black economic empowerment (BEE), is stated in the company s procurement philosophy: In pursuit of sustainable profits, we seek to be a positive influence in all our business activities, in each of the societies in which we operate. We do this by empowering communities through entrepreneurship and education, leveraging the value in our diversity, and addressing climate change and the use of natural resources. Prior to the management buy-in, Growthpoint outsourced the management of its procurement to Investec Property Group, which performed the preferential procurement procedures. Discretionary BEE procurement (procurement that Growthpoint has control over) compared to total procurement increased substantially during the year as a result of the following: 19

22 Sustainability Following a procurement policy that promotes discretionary procurement Using the subsidiaries of large companies that are BEE accredited to provide services Promoting the development of small, medium and micro enterprises Using established empowerment platforms to encourage transformation and skills development by existing vendors Categorising vendors according to empowerment credentials to monitor percentage spend All new vendors contracted by Growthpoint are vetted by B1SA, a provider of broad-based BEE management and technology services, to help manage preferential procurement for the company. In September 2006, Empowerdex (an empowerment rating agency) gave Growthpoint a BBB empowerment rating, equating to preferential procurement of 42%. As at the end of June 2007, Growthpoint s preferential procurement had risen to 46% and there is a concerted drive to exceed 50% through the above initiatives. Corporate social investment Growthpoint s Growth Foundation channels expenditure on corporate social investment projects in various communities in which Growthpoint operates. These projects are undertaken by various retail centres owned by Growthpoint countrywide. Examples of key projects in the current financial year are outlined below. Brooklyn Mall and Banareng Primary School Through the Growth Foundation, Brooklyn Mall in Pretoria is assisting Banareng Primary School, in nearby Atteridgeville, so as to assist the school and surrounding community. A key project has been the establishment of a thriving vegetable garden at the school, which feeds the children and brings in much-needed funds for the school. The project also empowers the learners, their parents and the community by teaching them sustainable food gardening to overcome malnutrition and hunger. Through the Growth Foundation, Growthpoint has also funded the installation of a bore hole and water pump system, the purchase of items such as stationery, cleaning products and printer cartridges and toner, as well as the installation of much needed hand wash basins in the kitchen/dining room. Jungle gyms have also been installed and a playground established at the school. The next phase of the project will be to fence the playground and fill the area below the jungle gyms with white sand. Longbeach Mall and Chaeli Campaign Longbeach Mall in Cape Town is partnering with the Chaeli Campaign, a non-profit organisation that assists children with disabilities, particularly in the in the Fish Hoek / Noordhoek area. The Chaeli Campaign helps these children through fund raising, providing assistive devices and therapy, and raising awareness of their plight. 20

23 Longbeach Mall is also supporting the Chaeli Campaign s project to provide therapy, counselling and other services for disabled children from a cottage in Plumstead. Constantia Village and South African Riding for the Disabled Association In another Cape Town-based project, Constantia Village runs a social responsibility programme called U Bunch U. The programme supports the South African Riding for the Disabled Association (SARDA), a registered non-profit organisation that provides free therapeutic horse riding lessons to more than 200 disabled children in Cape Town, 75% of whom are from previously disadvantaged backgrounds. 21

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25 23 CHAIRMAN S STATEMENT & DIRECTORS REVIEW

26 Maitland Industrial, Cape Town

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28 Chairman s statement INTRODUCTION It is pleasing to be able to report on a year in which Growthpoint once again delivered outstanding results. Property assets grew by R7,2 billion, mainly due to the acquisition of the R3,5 billion, well-diversified Paramount portfolio, other acquisitions and capital expenditure of R1,5 billion and the revaluation of the portfolio by R2,2 billion. Distributions, based on sustainable, core earnings derived from property rentals, grew by 14.5 %. The value of a Growthpoint linked unit increased from R10.70 at 30 June 2006 to R14.85 at 30 June 2007, giving a total return to investors of 47.5% for the year. In May 2007 Growthpoint announced that it had entered into an agreement with Investec Property Group and other minority shareholders to acquire the property services businesses, comprising property management and property asset management, in a transaction valued at R1,6 billion. This transaction, which is still subject to approval by the Competition Tribunal, will change the business model from an out-sourced management model to one with internal management and staff. Growthpoint s rationale for entering into the proposed acquisition includes the following: Perceived conflicts of interest arising from the external management model will be eliminated International and local investors tend to favour internally managed property funds over externally managed property funds Economies of scale will be achieved by employing own staff versus paying a management fee in a growing asset portfolio Management and staff s interests will be aligned with those of Growthpoint linked unitholders Growthpoint is preparing itself for the introduction of a REIT structure in South Africa. Internationally, most property funds in a REIT environment are internally managed. Removal of the asset management fee will allow Growthpoint to be more competitive in pricing new acquisitions The transaction will be earnings enhancing for Growthpoint. The acquisition of the property services businesses and the creation of a staff share scheme were approved by more than 90% of shareholders eligible to vote at a meeting held in August STATE OF THE PROPERTY MARKET The graph below shows the total capital appreciation plus income returns for South African property for the year ended 31 December 2006 and the annualised total returns for the previous three years and 12 years. SOUTH AFRICAN PROPERTY TOTAL RETURNS % Retail Office Industrial 1 year 3 years 12 years 26 (Source: IPD South Africa)

29 The industrial sector is currently the strongest performing sector of the commercial property market with low vacancies and strong demand giving rise to upward pressure on rentals. Retail continues to perform well and vacancies remain low. Growth in this sector has slowed somewhat, possibly as a result of higher interest rates and the proliferation of new retail developments over the last few years. Growthpoint s retail portfolio consists largely of dominant regional shopping centres which are less likely to be affected by a slow-down in consumer spending. Vacancies in the office sector have decreased significantly over the last few years and in certain nodes there is a scarcity of top grade office space. It is expected that the office sector will follow the industrial sector in the next year or two as the sector showing the strongest growth. A scarcity of suitably zoned land, constraints on the ability of municipalities to provide electricity and other services and rapidly increasing construction costs are all contributing to limit the supply of new commercial property developments, especially those of a speculative nature. This bodes well for Growthpoint s portfolio. THE SOUTH AFRICAN ECONOMY After two decades of relatively high interest rates and inflation in the eighties and nineties, the South African economy enjoyed a period from 2003 until 2006 of steadily declining interest rates, inflation well controlled within the Reserve Bank s target range of 3% to 6%, growing foreign reserves, budget surpluses and real GDP growth of between 4.5% and 5.5%. These favourable factors also contributed to a stable and relatively strong Rand, which led to increased imports and put pressure on exporters. At the same time, economic growth has put strain on existing capacity. Government and parastatals will be spending over R400 billion over the next five years on infrastructure including electricity generation, rail transport, roads, harbours and telecommunications. This is also contributing to increased imports of capital equipment. The above factors have led to the deficit on the current account growing to 6.9% of GDP in the first quarter of 2007, the highest level since The deficit has subsequently narrowed to 6.5% in the second quarter. Concerns have been raised that the size of the deficit could be regarded as a risk to the Rand and ultimately to inflation and interest rates. Although the Rand did weaken to R7.80 to the Dollar in October 2006, it subsequently strengthened to below R7.00 at the end of December 2006 and has remained mostly between R7.00 and R7.40 until 30 June Perhaps the most significant economic event of the last year has been the increase in CPIX inflation, which breached the 6% upper limit of the Reserve Bank s target range in April 2007 and has since stayed between 6.3% and 6.5%. The governor of the Reserve Bank has been uncompromising in his statements on keeping inflation below 6% and has increased the repo rate by 50 basis points six times since June There are indications in the economy that this policy is starting to have some impact, particularly on retail spending. Although short-term interest rates have increased by 3% in the last year, the current inverse shape of the yield curve indicates that the market is still expecting rates to decrease in the longer term. 27

30 Chairman s statement SWAP CUrves AT JUNE 2006 AND JUNE 2007 % Years 30 June June 2006 The favourable fundamentals over the last few years have supported the physical and listed property market, as well as equities and bonds. This has allowed a re-rating of listed property as capitalization yields have declined and distribution yields have benefited from stronger growth. LISted PROPERTY YIELDS Vs. LONG BONDS % Jun 04 Aug 04 Oct 04 Dec 04 Feb 05 Apr 05 Jun 05 Aug 05 Oct 05 Dec 05 Feb 06 Apr 06 Jun 06 Aug 06 Oct 06 Dec 06 Feb 07 Apr 07 Jun 07 SA Listed Property (earnings yield) SA 10 year bond yield Historically there is a strong correlation between long-term interest rates and listed property yields. Listed property is currently trading at lower yields than bonds because of current strong property fundamentals and expected growth in distributions. GROWTH PROSPECTS The 14.5% growth in distributions experienced for the year ended 30 June 2007 was an exceptional performance achieved on the back of refinancing a substantial portion of the company s debt through securitisation and letting of previously vacant space. Vacancy levels are now so low, that there is not much opportunity to reduce them further. Likewise there is limited scope to achieve further savings on debt refinancing. 28 At 30 June 2007, 94% of Growthpoint s debt was at fixed rates. This largely protects the company from the adverse effects of recent interest rate hikes and any further increases that might occur in the next year.

31 Borrowing costs on new debt will be higher and the acquisition of quality properties at initial yields which are lower than borrowing costs will result in these transactions being slightly dilutionary in the first year. Certain of the new developments will also not be fully occupied on the dates of final completion and may take a number of months to be fully occupied. This again will be dilutive in the first year of these properties trading. Nevertheless, the fundamentals in respect of demand for space and availability of space across all sectors remain strong, as witnessed by the declining vacancy levels. The high and rapidly increasing costs of building new properties as a result of the huge infrastructure expenditure in progress and planned for the next few years, will also act as a constraint on new developments being brought to the market. The Growthpoint board anticipates that, subject to market conditions remaining stable, Growthpoint s distributions for the year ending 30 June 2008, should grow at a rate substantially in excess of the current CPIX inflation rate. This profit forecast has not been reviewed or reported on by Growthpoint s auditors. ACKNOWLEDGEMENTS Once again, the year passed has been one of tremendous growth and commendable achievement. From a strategic perspective Growthpoint s buy-in of management was a fundamental change and one which was neither lightly considered nor entered into without an immense amount of time and effort. In this regard I need to single out the deputy chairman, Francois Marais and the sub-committee of independent directors consisting of Francois, Peter Fechter, Jan Strydom and Colin Steyn. Many long meetings were held, often at short notice, to conclude the negotiation of the transaction with Investec. On behalf of the board, I wish to express our appreciation and congratulate them for successfully concluding the transaction. I would also like to thank the other members of the board, who all play an important role, especially those who sit on the various sub-committees through which the board fulfills its duties. Congratulations are also due to Norbert Sasse, our Chief Executive Officer, for another great year and to all the staff of Investec Property Group dedicated to the management of Growthpoint s portfolio, ably led by Stephan Le Roux (retail), Rudolf Pienaar (commercial), Tyrone Govender (industrial), Stuart Snowball (financial), Estienne de Klerk (corporate actions) and Andrew Cox (property management). Growthpoint is well-positioned to continue achieving its mission of providing investors a highly liquid, tradeable instrument producing consistently growing income returns and long-term capital appreciation. S Hackner 21 August 2007 Sandton 29

32 directors review of operations Financial results The year ended 30 June 2007 was once again a year of excellent returns for investors and a year of continued growth in asset value. Distributions to linked unitholders grew by 14.5% compared to the previous year. This growth was substantially in line with market expectations and the prospects indicated at the time of publishing the interim results, as well as the company s budgets. The increase in Growthpoint s linked unit price from R10.70 at 30 June 2006 to R14.85 at 30 June 2007, together with the 93,1 cents per linked unit distribution for the year ended 30 June 2007, amounted to a total return for the year of 47.5%. The growth in distributions is based on sustainable earnings derived from property net rental income and investment income. In keeping with the terms of its debenture trust deed, Growthpoint does not distribute capital profits. Where properties no longer meet the company s investment criteria and are sold, the proceeds are reinvested or used to settle debt. Distributions are based on core, sustainable net rental income after financing costs and administration expenses. Apart from normal rental escalations, the large increase in revenue and property expenses was mainly due to the following: Inclusion in the current year of income from the 163 properties acquired from Metboard Properties Limited (Metboard), with effect from 30 June 2006, which was not included in the prior year Inclusion from 31 December 2006 of income from the 73 properties acquired from Paramount Property Fund Limited (Paramount) Income from 24 properties acquired from Tresso Trading 119 (Pty) Limited, included in the 2006 year for one month whereas 12 months were accounted for in the current year Excluding the impact of acquisitions and disposals, like for like property net income increased by 11.9% from 2006 to This growth, which was in excess of contractual rental escalations, was possible mainly as a result of the decrease in office vacancies from 5.2% to 4.2% and retail vacancies from 2.7% to 2.1%. The property expense ratio decreased from 27% of revenue to 25%, which also contributed to the strong growth in property net income. The increase in other operating expenses from R66 million to R120 million was largely due to the higher asset management fees paid, as a result of the increased market capitalisation and debt following the acquisitions made over the last year and the higher prices at which Growthpoint linked units traded in the year to 30 June On the balance sheet, investment property grew by R7,2 billion as a result of the acquisition of the Paramount portfolio (R3,5 bn.), other acquisitions and capital expenditure (R1,5 bn.) and the revaluation of the portfolio (R2,2 bn.). Non-current financial liabilities increased by R2,6 billion, of which R1,6 billion of debt related to the Paramount portfolio and the balance was mainly the funding of other acquisitions and capital expenditure. 30

33 Paramount acquisition On 29 September 2006, Growthpoint acquired 37,3 million Paramount linked units for a cash consideration of approximately R244 million. On 17 October, Growthpoint acquired a further 65,5 million Paramount linked units in exchange for 45,5 million new Growthpoint linked units. As this resulted in Growthpoint owning more than 35% of the issued linked units in Paramount, an offer was extended to all remaining Paramount linked unitholders to acquire their Paramount linked units in exchange for cash or 1 new Growthpoint linked unit for every 1,44 Paramount linked units. By 26 January 2007, the closing date for the offer, Growthpoint had received acceptances from more than 90% of Paramount linked unitholders and therefore invoked section 440K of the Companies Act in order to compulsorily acquire the remaining Paramount linked units. The Paramount portfolio at 31 December 2006 consisted of 73 properties made up of 42% retail, 39% office and 19% industrial. By value, 44% were located in the Western Cape, 26% in KwaZulu Natal, 25% in Gauteng and the remaining 5% in Pretoria, Witbank and Eastern Cape. Other acquisitions and developments Besides the Paramount acquisition, the following further acquisitions were made: Property cost Sector Initial yield R rm % Business Connexion Group (BCX) (7 buildings) 326 Office 8.5 Longbeach Mall (balance of 49,9% not previously owned) 138 Retail 7.5 Richard Carte Road 72 Industrial Brakpan Road 102 Industrial 11.8 Ditsela 29 Office 10.0 Kulingile 108 Industrial Adderley Street and Golden Acre (balance of 25% Retail & not previously owned) 93 Office 9.0 Gustav Voigts (Namibia) 190 Retail 9.0 Total 1,058 During the period under review, R327 million was spent on new developments, refurbishing and upgrading the property portfolio. Major projects included: Property cost Sector Initial yield R rm % Waterfall Mall Value Centre (new centre) 45 Retail 10.0 Sandton Close 1 (redevelopment) 56 Office 11.0 Constantia Office Park (additional buildings) 81 Office 11.7 Hatfield Gardens (additional building) 30 Office 9.5 Hilltop Industrial Park (additional units) 37 Industrial 10.5 Central Park (additional building and upgrade) 28 Office 11.0 Other 50 Total

34 directors review of operations geographical spread at 30 june 2007 By value 4% 6% By gross lettable area 3% 3% 10% 15% 46% 53% 20% 17% 14% 9% Greater Jhb Pretoria Western Cape KwaZulu Natal Eastern Cape Other segmental spread at 30 june 2007 By value By gross lettable area 23% 55% 21% 39% 24% 38% Retail Office Industrial Acquisitions and developments in progress At 30 June 2007 Growthpoint had entered into agreements to acquire a number of properties in various transactions totalling more than R1,4 billion. In addition over R2,3 billion of developments are in progress. 32

35 Major acquisitions in progress are: P projected Property cost Sector initial yield R rm % BCX Faerie Glen (office) 53 Office 8.5 Lakeside Mall (additional 20.7%) 120 Retail 7.5 TA Bank, Rosebank 73 Office 11.5 The Estuaries, Century City (office development for 2008) 90 Office 9.8 The Estuaries, Phase 2 62 Office 9.3 The District, Woodstock 260 Office 8.2 Die Hoewes, Centurion 55 Office 9.5 Telkom building, Centurion 45 Office 9.4 Aventis 64 Office Sturdee Ave, Rosebank 50 Office 8.8 Deloitte and Fiat 85 Office 9.1 IDCS 35 Office 8.3 IBM 196 Office 7.8 Ogilvy, Bryanston 94 Office 8.5 Growthpoint Industrial Estate (serviced land) 44 Industrial Total 1,326 Major developments in progress include: projected Property cost Sector initial yield R rm when fully let % 100 Grayston (Investec) extensions 475 Office Sandton Drive (premier m² office block) 494 Office 10.5 Woodmead Retail Park (new regional shopping centre) 498 Retail 8.0 Justine, Growthpoint Industrial Park (new building) 55 Industrial 9.7 Constantia Office Park (additional m² office block) 165 Office 11.5 City Mall Klerksdorp (structured parking) 47 Retail 9.0 Altech Autopage, Midrand (new office block) 35 Office 10.0 Grand Parade ( m² offices) 147 Office 9.5 Ebony (new industrial facility) 51 Industrial 10.0 Middestad Mall (upgrade and m² extensions) 80 Retail 10.0 Pick n Pay, Claremont (complete redevelopment, retail and office) 319 Office 9.2 Total 2,366 33

36 directors review of operations Disposals In line with Growthpoint s strategy to dispose of properties which no longer meet its investment criteria, 17 properties were disposed of for R167 million at a profit of R52 million on cost. lease expiry profile from july to june each year % Vacant Monthly July 07 - June 08 July 08 - June 09 July 09 - June 10 July 10 - June 11 July 11 - June 12 July 12- beyond GLA Revenue Vacancy levels Property fundamentals remain strong, with vacancy levels for the whole country, as reported by Investment Property Databank South Africa (Pty) Limited (IPD) declining across all sectors with industrial property showing the largest decline in vacancies. At 30 June 2007 Growthpoint s vacancy levels, as a percentage of gross lettable area (GLA) were: Retail 2.1% (2006: 2.7%) Office 4.2% (2006: 5.2%) Industrial 2.0% (2006: 1.9%) Total 2.5% (2006: 2.9%) 34

37 growthpoint vacancy by sector % Jun 06 Jul 06 Aug 06 Sept 06 Oct 06 Nov 06 Dec 06 Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Office Retail Industrial The low vacancy figures, together with the high increases in construction costs, which will limit new supply, point to upward pressure on rentals. The industrial sector which has historically had very low average rentals is likely to lead the way with substantial upward reversions as leases are renewed. The office sector is likely to follow as existing available space is taken up in the next year or two. Liquidity and tradeability Growthpoint s linked units continue to enjoy high levels of liquidity and tradeability. During the year ended 30 June 2007, R5,9 billion of Growthpoint linked units traded on the JSE Securities Exchange, representing 47.6% of the weighted average linked units in issue. Borrowings and cash balances At 30 June 2007, the loan to value ratio, determined by dividing the total fair value of all debt (excluding debentures) by the sum of investment property and listed property investments was 37.4%. 94% of interest-bearing debt was fixed at a weighted average rate of 9.4% for a weighted average of 9,2 years at 30 June As can be seen from the following graph, Growthpoint has very little exposure to interest rate risk for the next three years and thereafter the exposure is well spread from 2011 to

38 directors review of operations fixed interest rate expiry profile Rm Floating Securitisation In August 2006, R1 billion of commercial mortgage backed securitisation (CMBS) five-year notes were issued under the Growthpoint securitisation programme to refinance existing borrowings of Metboard at cheaper rates. A further R1,6 billion of three-year CMBS notes were issued in November 2006 to refinance existing more expensive debt, which resulted in interest savings of approximately R9 million to June Including these two issues, R4,3 billion of CMBS notes were issued under Growthpoint s CMBS programme in the last 20 months. There is limited scope to refinance the remaining debt apart from approximately R1,6 billion of borrowings in Paramount where there is potential to reduce interest costs by approximately R10 million a year. Black empowerment In December 2006, the company concluded its second black economic empowerment shareholding transaction. In terms of this transaction, Phatsima Properties, a consortium led by Growthpoint director, Herman Mashaba, acquired 22 million Growthpoint linked units, or 2.3% of the total linked units in issue at the time, for a consideration of R260 million. Growthpoint advanced mezzanine funding of R57 million with the balance of the funding being provided by ABSA Group Limited. Management buy-in Details of the proposed buy-in of the property services businesses from Investec Property Group and the rationale for the transaction are set out in the Chairman s statement. The principle of having in-house management has received overwhelming support from the company s linked unitholders. As management have interacted with international fund managers over the last few years they have received strong feedback that the external management structure was not the preferred structure. 36

39 As South Africa follows the international trend to move towards an easily understood REIT structure similar to that in other major economies, Growthpoint, as the largest, most liquid, South African listed property entity will be well placed to attract funds from emerging market investors. The company s board, executive team and staff who will be moving from Investec Property Group to Growthpoint look forward to achieving the company s vision of being in the top 40 index of companies on the JSE Limited in the near future. Inclusion in this index will result in various tracker funds adding Growthpoint to their portfolios, increasing the demand for Growthpoint linked units. This could potentially lead to a positive re-rating of Growthpoint, as was experienced after Growthpoint was included in the FINDI 15 index in February The transition to in-house management is expected to be smooth as the skills and experience of management and staff will be retained and the Staff Incentive Scheme should ensure the interests of management and staff are aligned with those of linked unitholders. At the same time, the core values and ethics of the Investec group are well entrenched as part of the corporate culture. These values include being focussed on the client, being distinctive and operating with utmost integrity. L N Sasse Chief Executive Officer 21 August 2007 Sandton S Hackner Chairman 37

40

41 39 FINANCIAL STATEMENTS

42 40 Investec, Sandton

43 ANNUAL FINANCIAL STATEMENTS 41

44 DIRECTORS REsponsibility for the annual financial statements The directors are responsible for the preparation and fair presentation of the group and company annual financial statements of Growthpoint Properties Limited, comprising the balance sheet at 30 June 2007, the income statement, the statement of changes in equity and cash flow statement for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors report, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. The directors responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The directors responsibility also includes maintaining adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedules included in these financial statements. Nothing has come to the attention of the directors to indicate that any breakdown in the functioning of these controls, resulting in material loss to the group and company, has occurred during the year and up to the date of this report. The directors have made an assessment of the ability of the group and company to continue as a going concern. The directors have a reasonable expectation that the group and company have adequate resources to continue in operational existence for the foreseeable future and have no reason to believe the business will not be a going concern in the year ahead. For this reason, they continue to adopt the going concern basis in preparing the financial statements. The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework. Approval of the annual financial statements The group and company annual financial statements of Growthpoint Properties Limited, as identified in the first paragraph, were approved by the board of directors on 21 August 2007 and are signed on its behalf by: L N Sasse Chief Executive Officer 21 August 2007 Sandton S Hackner Chairman Declaration by company secretary In terms of section 268G(d) of the Companies Act, 1973, as amended, I hereby certify that, to the best of my knowledge and belief, the company has lodged with the Registrar of Companies, for the financial year ended 30 June 2007, all such returns as are required of a public company in terms of this Act and that such returns are true, correct and up to date. R A Krabbenhöft 21 August 2007 Sandton 42

45 INDEPENDENT AUDITOR S REPORT To the members of Growthpoint Properties Limited Report on the financial statements We have audited the group and company annual financial statements of Growthpoint Properties Limited, which comprise the balance sheet at 30 June 2007, the income statement, the statement of changes in equity and cash flow statement for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors report as set out on pages 44 to 85. Directors responsibility for the financial statements The company s directors are responsible for the preparation and fair presentation of these financial statements, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the group and company financial position of Growthpoint Properties Limited at 30 June 2007, and their financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. KPMG Inc. Registered Auditor Per C Ngorima Chartered Accountant (SA) Registered Auditor Director 21 August Empire Road Parktown Johannesburg 43

46 DIRECTORS REPORT The directors have pleasure in submitting their 19th Annual Report, which forms part of the audited financial statements of the company and the group for the year ended 30 June Nature of business Growthpoint Properties Limited is a variable rate property loan stock company with a portfolio of 419 properties valued at R22,2 billion. (2006: 350 properties valued at R15,0 billion). The business of the company is to invest in quality rental generating properties as long-term investments. The properties will be maintained, upgraded and refurbished where necessary so as to maintain and improve the value of the investment in the long-term. Growthpoint Properties Limited is listed on the JSE Securities Exchange South Africa (JSE) under the Financial Real Estate sector. Share Code: GRT ISIN: ZAE (Growthpoint) Share and debenture capital The authorised share capital is R divided into one and a half billion ordinary shares of five cents each. Each ordinary share is linked to ten variable rate debentures of 250 cents each. The ordinary shares and debentures trade as linked units on the JSE. In terms of the debenture trust deed, the interest payable on the debenture component of the linked unit is always times greater than the dividend payable per ordinary share. During the year to 30 June 2007, the company issued new linked units, as consideration or part-consideration, for Growthpoint s acquisitions of Metboard Properties Limited, Paramount Properties Limited (Paramount), certain properties from Business Connexion Group, and Zenprop and certain other individual property transactions in Growthpoint and Paramount. Interest in subsidiaries Interest Investment Investment 2006 Issued in net Linked Loan Linked Loan Subsidiary capital profit/ (loss) units units Rm Rm Rm Rm Rm Rm Changing Tides 5 (Pty) Limited Claremain Properties (Pty) Limited 7 Growthpoint Finance Company (Pty) Limited Growthpoint Finance Company Security SPV (Pty) Limited Lighthouse Mall (Pty) Limited 3 Majorshelf 184 (Pty) Limited Metboard Properties Limited 3 1,914 (318) 1, Metboard Finance Company (Pty) Limited Metboard Finance Company Security SPV (Pty) Limited Michael and Michael Properties (Pty) Limited New Heights 344 (Pty) Limited Ovbel Finance Limited Ovbel Registrars (Pty) Limited Paramount Property Fund Limited 25 1, Scopeful 157 (Pty) Limited Skilfull 82 (Pty) Limited Skilfull 115 (Pty) limited Tresso Trading 337 (Pty) Limited Tuinweg Property Investments (Pty) Limited TOTAL , ,

47 Interest as vested beneficiary of a trust On 30 September 2005, the Master of the High Court approved the appointment of Steinway Trustees (Pty) Limited, an independent company, as trustee of the Growthpoint Securitisation Warehouse Trust and the adoption of a new Trust Deed by the Trust. The purpose of the Trust is to hold various properties in a ring fenced, insolvency remote vehicle for the purposes of raising funds through Commercial Mortgage Backed Securitisation (CMBS) issues of debt notes to the bond market. In terms of the Trust Deed, Growthpoint is the sole, vested beneficiary of the Trust in respect of income and capital gains. Accordingly the balance sheet and income statement of the trust are consolidated in the group financial statements. The net income from operations of the Trust is included in Growthpoint s company income statement and the assets are likewise included in Growthpoint s company balance sheet. Following are the salient financial results of the Trust for the period ended 30 June 2007: Rm Rm Net operating profit Investment property at cost plus improvements 4,321 3,375 Fair value adjustment of Investment Property (before straight line lease income accrual) Capital commitments as at 30 June 2007 Capital commitments in respect of major building projects authorised and contracted for but not yet paid at 30 June 2007 amounted to R2,366 million (2006: R128 million). In addition, the company has entered into agreements to purchase properties to a value of R1,326 million (2006: R408 million). Details of these acquisitions are given in the directors review of operations. Directors and secretary Details of the directors and secretary can be found on page 8. Messrs M G Diliza, S Hackner, J F Marais and J H N Strydom retire by rotation in terms of article 13.1 of the company s articles of association but, being eligible, offer themselves for re election. At 30 June 2007 the directors interest in linked units of the company was as follows: Director Beneficial Non beneficial Total Direct Indirect S Hackner 1,125, ,211 1,549,211 M G Diliza 12,748,725 12,748,725 P H Fechter 2,871,428 2,871,428 H S P Mashaba 8,800,000 8,800,000 R Moonsamy 3,500,000 3,500,000 J H N Strydom 100, ,000 During the year ended 30 June 2007, Mr S Hackner purchased 1,125,000 Growthpoint linked units at prices varying from R10,80 to R15,85. In addition, he aquired 184,211 Growthpoint linked units in August 2006 as a result of the Metboard Scheme of Arrangement. Mr J H N Strydom purchased 100,000 Growthpoint linked units during the year at prices varying from R14,65 to R15,33. 45

48 DIRECTORS REPORT Through phase 1 of the BEE ownership in Growthpoint, effective 31 August 2005, Messrs. Moonsamy and Diliza hold indirectly and beneficially 3,500,000 and 12,748,725 linked units in the company respectively. Through phase 2 of the BEE ownership in Growthpoint effective 8 December 2006, Mr Mashaba holds indirectly and beneficially 8,800,000 linked units in the company. Fees earned for services as directors (non executive): Director R R M G Diliza 205, , 000 P H Fechter 290, , 000 J C Hayward 158, , 000 J F Marais 167, , 000 H S P Mashaba (appointed 21 June 2006) 160, 500 J Molobela (resigned 31 December 2005) 39, 000 R Moonsamy (appointed 31 August 2005) 155, , 000 B Ngcuka (appointed 31 August 2005) 103, , 000 C G Steyn 318, , 000 J H N Strydom 273, , 000 F J Visser 143, , 000 1, 974, 250 1, 244, 000 The fees paid to directors for the year ended 30 June 2007 were paid on the following basis as approved by the remuneration committee: Basic fee R20 000p.a. Meeting fee R per meeting attended (Deputy Chairman is paid R per meeting) Audit committee R per meeting attended (Chairman R per meeting) Risk management committee R6 250 per meeting attended (Chairman R8 000 per meeting) Property committee R6 250 per meeting attended (Chairman R8 000 per meeting) Transformation committee R5 000 per meeting attended (Chairman R6 000 per meeting) Management and administration For the year ended 30 June 2007, the business of Growthpoint and its subsidiaries was managed by Growthpoint Managers (Pty) Limited in terms of a management agreement dated 12 October The shareholders of Growthpoint Managers (Pty) Limited are: AMU Trust (Growthpoint s BEE partners) 11,9% Phatsima Trust (Growthpoint s BEE partners) 2,3% Investec Property Group Limited 85,8% Investec Property Group Limited were sub contracted to perform the property fund management and property administration functions. In terms of the contracts a monthly asset management fee is payable by Growthpoint based on one twelfth of 0,5% of the sum of Growthpoint s average market capitalisation on the JSE for the last five business days of the relevant month plus debt. Details of these and other fees including property management and letting commissions are shown in note 35 of the annual financial statements. 46

49 Subsequent events At a meeting held on 21 August 2007, the requisite majority of linked unitholders of Growthpoint approved the resolutions necessary to give effect to the acquisition by Growthpoint or its nominee of the Property Services Businesses of Investec Property Group and the adoption of the Proposed Executive and Staff Incentive Scheme. The acquisition will be paid for by the issue of new linked units. A further linked units will be issued in terms of an executive and staff share incentive scheme. This transaction is subject to approval by the Competition Tribunal. The rationale for the transactions is set out in the Chairman s statement. 47

50 income statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Notes Rm Rm 1,189 1,106 Revenue, excluding straight-line lease income adjustment 2,152 1, Straight-line lease income adjustment ,307 1,187 Revenue 2 2,362 1,380 (291) (292) Property expenses 3 (539) (351) 1, Net property income 1,823 1,029 (111) (66) Other operating expenses 4 (120) (66) Net property income after other operating expenses 1, Investment income (96) (48) Fair value adjustments 6 (186) (49) 1, Operating profit 1, (320) (316) Finance costs 7 (615) (361) (16) (10) Non-cash financing charges 8 (16) (10) (5) Other capital items 9 (6) Finance income Profit before debenture interest (966) (602) Debenture interest 12.2 (966) (602) 1 24 Profit before taxation 3 24 (23) Taxation charge 11 (2) (23) 1 Normal and secondary tax on companies (1) (23) Capital gains taxation (2) (23) 1 1 Profit for the year 1 1 cents cents cents cents Distribution per linked unit Basic earnings per share

51 balance sheets as at 30 june 2007 Restated Company Company Group Group Rm Rm Notes Rm Rm ASSETS 18,366 13,683 Non-current assets 22,632 15,353 10,964 8,793 Fair value of investment property for accounting purposes ,545 14, Straight-line lease income adjustment ,478 9,188 Fair value of property assets 22,173 15,017 Listed property investments Long-term loans granted to BEE consortia Derivative asset ,440 4,159 Other investments Current assets Trade and other receivables Cash and cash equivalents ,533 13,822 Total assets 22,957 15,544 EQUITY AND LIABILITIES Ordinary share capital ,646 7,943 Non-current liabilities - debentures 21 13,646 7,943 13,700 7,982 Linked unitholders interest 13,700 7,982 4,073 4,097 Other non-current financial liabilities ,293 5, ,743 Current liabilities 964 1, Trade and other payables ,251 Liability for the acquisition of properties 39 1, Current portion of non-current liabilities Taxation payable Linked unitholders for interest and dividends ,533 13,822 Total equity and liabilities 22,957 15,544 1,074,126, ,186,044 Linked units in issue 1,074,126, ,186,044 cents cents cents cents Net asset value per linked unit

52 statement of changes in equity for the year ended 30 june 2007 Ordinary Reserves Total share share capital and capital reserves Group and Company Rm Rm Rm Balance at 30 June Shares issued 6 6 Profit for the year 1 1 Dividends (1) (1) Balance at 30 June Shares issued Profit for the year 1 1 Dividends (1) (1) Balance at 30 June

53 cash flow statements for the year ended 30 june 2007 Restated Company Company Group Group Rm Rm Notes Rm Rm Cash flows from operating activities 1,164 1,065 Cash received from tenants 2,087 1,238 (354) (365) Cash paid to suppliers (603) (435) Cash generated from operations 25 1, Investment income Finance income, excluding accrued interest on long-term loans (320) (316) Finance costs 7 (615) (361) (21) (25) Taxation paid 26 (22) (25) (5) Other capital items 9 (6) (778) (523) Distribution to unitholders 27 (804) (497) Net cash inflow from operating activities 99 3 Cash flows from investing activities (660) (782) Investment in investment property (1,274) (1,289) (57) (222) Long-term loans (57) (222) (78) (89) Investment in listed property companies (79) (89) Proceeds on sale of investment property Proceeds on sale of listed property investments Cash from property portfolio acquisition (130) Decrease/(increase) in loans to subsidiaries and joint ventures Acquisition of property portfolio (259) (142) (318) Net cash (outflow) from investing activities 28 (1,339) (1,135) Cash flows from financing activities 1, Non-current loans raised 3,083 2,080 (1,834) (168) Repayment of non-current financial liabilities (1,840) (978) (314) Increase in amount owing to subsidiaries (13) 276 Net cash inflow/(outflow) from financing activities 1,243 1,102 4 (35) Net increase/(decrease ) in cash and cash equivalents 3 (30) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year

54 notes to the financial statements for the year ended 30 june Accounting policies and basis of preparation The financial statements and group financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the South African Companies Act and incorporate the following principal accounting policies set out below Joint Ventures Joint ventures are those assets over which the group exercises joint control in terms of a contractual agreement. Joint ventures are accounted for by including the group s share of the jointly controlled assets, liabilities, income, expenses and cash flow on a line by line basis in the financial statements. The policies set out below have been consistently applied to all the years presented and to years prior to transition to IFRS, unless stated otherwise. Issued but not yet effective IFRS amendments as at 21 August 2007 are not expected to have a material impact on the group (refer 1.12). The financial statements are prepared on the fair value basis for investment properties, as set out in note 1.3, and financial instruments as set out in 1.2. Other assets, liabilities and equity are stated at historic cost. Fair value adjustments (where applicable) do not affect the calculation of distributable earnings but do affect the net asset value per linked unit to the extent that adjustments are made to the carrying values of assets and liabilities. 1.1 Basis of consolidation The consolidated financial statements include the financial statements of Growthpoint Properties Limited and its subsidiary companies, controlled trusts and the group s share of the assets, liabilities, income, expenses and cash flows of joint ventures Subsidiaries and controlled trusts Subsidiaries are those entities, including special purpose entities, controlled by the company. Control exists when the company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Contolled trusts are trusts of which Growthpoint is the sole, vested beneficiary in respect of profits and capital gains. The financial statements of subsidiaries and controlled trusts are included in the consolidated financial statements from the date that control commences until the date that control ceases. In the financial statements of the company, investments in subsidiaries and controlled trusts are carried at fair value. A list of the group s subsidiaries is set out in note 17. Adjustments are made to bring the accounting policies of jointly controlled entities in line with the group, where appropriate Transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 1.2 Financial instruments Financial instruments are contracts that give rise to a financial asset of one entity, and a financial liability or equity instrument of another entity. All transaction costs relating to these instruments are immediately expensed. Any gains or losses on these instruments arising from fair value adjustments, where appropriate, do not affect distributable earnings. The company recognises financial instruments on the date it commits to purchase or sell such instruments. From this date any gains and losses in the fair value of the assets and liabilities are recorded Listed property investments Listed property investments are designated as held at fair value through profit and loss financial assets. These assets are initially recognised and subsequently stated at fair value, with gains or losses being recognised in the income statement. The fair value of these assets is their quoted bid price at the close of business on the balance sheet date Trade and other receivables Trade and other receivables are initially recognised and subsequently stated at fair value. An estimate is made for impairment losses based on a review of all outstanding amounts at the year-end. Bad debts are written off to profit or loss during the year in which they are identified. 52

55 1.2.3 Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in fair value. Cash and cash equivalents are stated at fair value Debentures Debentures are designated as held at fair value through profit or loss financial liabilities. These instruments are measured initially at fair value, which is nominal value less debenture discount, and subsequently stated at fair value. Fair value represents the net asset value attributable to debenture holders after adjusting all other assets and liabilities to fair value. Until such time as the debenture discount is fully utilised, the net change in fair value of the assets and liabilities will increase or decrease the carrying amount of the debentures. Once the debenture discount has been fully utilised, any increase in net asset value will increase the reserves attributable to shareholders Trade and other payables Trade and other payables are initially recognised and subsequently stated at fair value Derivative financial instruments The group uses derivative financial instruments to hedge its exposure to interest rate risk arising from its financing activities. In accordance with its treasury policy, the group does not hold or issue derivative financial instruments for trading purposes. However, as the hedge relationship is not designated as a hedge for accounting purposes, the derivatives are accounted for as trading instruments. the future cash payments using the market rate applicable at balance sheet date Offset Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when the company has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. 1.3 Investment property Investment property consists of land and buildings, installed equipment and vacant land held to earn rental income for the long-term. Properties are stated initially at cost on acquisition and subsequent additions that enhance the value of the property are capitalised. Investment property under construction is valued at fair value. Direct expenses relating to major capital projects are capitalised until the properties are brought into commercial operation. Subsequent to initial recognition, investment properties are stated at their fair value. Investment property is maintained, upgraded and refurbished where necessary, in order to preserve or improve the capital value as far as is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives are charged against income. Independent valuations are obtained on a rotational basis, ensuring that every property is valued every three years. The directors value the remaining properties annually on an open market basis. Derivative financial instruments are initially recognised and subsequently stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. The only derivative instruments held by the entity are interest rate swaps. The fair value of interest rate swaps is the estimated amount that the group would receive or pay to terminate the swap at balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties Other financial liabilities Non-derivative financial liabilities other than debentures are measured initially and subsequently at fair value by discounting The calculations are prepared by considering the aggregate of the net annual rents receivable from the properties and where relevant, associated costs, using the discounted cash flow method. This method takes projected cash flows and discounts them at a rate which is consistent with comparable market transactions. The discount rates reflect the risks inherent in the net cash flows and are constantly monitored by reference to comparable market transactions. Surpluses and deficits on revaluation or disposals of investment properties are recognised in net profit and loss. Such surpluses or deficits are excluded from the calculation of distributable earnings. 53

56 notes to the financial statements for the year ended 30 june Leases The company is party to numerous leasing contracts as the lessor of property. All leases are operating leases, which are those leases where the group retains a significant portion of risks and rewards of ownership. An adjustment is made to contractual rental income earned to bring to account in the current period the difference between the rental income that the company is currently entitled to and the rental for the period calculated on a smoothed, straightline basis over the period of the lease term. The company is party to leasing contracts as the lessee of certain properties. Leases are classified as operating leases, where substantially all the risks and rewards associated with ownership of the asset are not transferred from the lessor to the lessee. Operating lease rentals with fixed escalation clauses are recognised in the income statement on a straight-line basis over the lease term. The resulting difference arising from the straight-line basis and contractual cash flows is recognised as an operating lease asset or operating lease liability. 1.5 Revenue recognition Rental income Revenue from the letting of investment property comprises gross rental income and recoveries of fixed operating costs. Recoveries of costs from lessees, where the company merely acts as agent and makes payment of these costs on behalf of lessees, are offset against the relevant costs Investment income Interest from the company s listed property investments is recognised on the accrual basis. Dividends from the company s listed property investments are recognised on the record date. Interest earned on cash invested with financial institutions is recognised on an accrual basis using the effective yield method. 1.6 Property letting commissions When considered material, letting commissions are written off over the period of the lease. Letting commissions, in respect of new developments, are capitalised to the cost of the property. 1.7 Provisions Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation and in addition a reliable estimate of the amount can be made. 1.8 Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at balance sheet date, and any adjustments to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for when they arise on initial recognition of assets or liabilities, and the initial recognition affects neither accounting profit nor taxable income. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Secondary tax on companies is recognised at the same time as the liability to pay the related dividend. 1.9 Borrowing costs All borrowing costs are recognised in the period in which they are incurred using the effective interest rate method. In the event that borrowing costs are incurred prior to the qualifying assets being ready for its intended use, such costs will be capitalised until such time as the asset is substantially ready for its intended use. Qualifying assets are those that necessarily take a substantial period of time to prepare for their intended use. Capitalisation is suspended during extended periods in which active development is interrupted. All other borrowing costs are expensed upon recognition Segment Reporting The risks and rewards faced by the entity relate primarily to the business segments and therefore these form the primary business segments. The major business segments are retail, office and industrial. Properties are classified as retail, office and industrial according to the nature of their tenants and income and expenses for all of the properties comprising the various segments are consolidated accordingly. 54

57 The geographical split is a secondary segment, the major geographical segments are Gauteng, Western Cape, Kwa-Zulu Natal, Eastern Cape and Other. The geographic breakdown of the value and gross lettable area of the property portfolio is disclosed in the Directors review of operations Key judgments and sources of estimation uncertainty Information regarding judgments that have the most significant effect on the amounts recognised in the financial statements as well as the key sources of estimation uncertainty are set out in notes 1.2, 1.3, 1.8, 24 and Other matters requiring key judgment Other matters that required key judgment in the preparation of these financial statements are: 1.12 Standards and interpretations applicable to the group not yet effective: IFRS 7 Financial Instruments: Disclosures (including amendments to IAS 1, Presentation of Financial Statements Capital Disclosures) IFRS 7 and the amendments to IAS 1 deal mainly with the disclosure of financial instruments, the related qualitative and quantitative risks associated with financial instruments and objectives, processes and policies for managing capital. To a large extent these disclosure requirements were previously covered in terms of IAS 30 and IAS32. The standard and amendments will therefore not impact the results of the group but will result in increased disclosure relating to financial instruments in particular. a) Accounting treatment of BEE transaction The company has provided funding to two Special Purpose Entities (SPE s) that were created for purposes of the Black Economic Empowerment (BEE) transactions by way of a subordinated fixed-rate loan of R million and R57,35 million respectively. The capital and interest on these loans are repayable in 2015 and 2016 respectively. Senior and junior funding by other financiers to the transaction totals R million and R million respectively. The directors have considered whether or not the company and group bear the majority of the residual risk of the funding structure. They have concluded, based on assumptions and market conditions as at 30 June 2007, that this is not the case. This conclusion was reached after taking into account the following key assumptions: Growth in distributions in line with the company s budget, but reducing to 5% for the period 2011 to 2015; A return of 7% per annum on the assets held by the SPE s; and Market price of Growthpoint linked units of at least R5.38 in 2015 and Consequently the SPE s have not been consolidated in the group financial statements IFRS 8 Operating segments IFRS 8 replaces IAS 14 Segment Reporting and aligns segment reporting with the requirements of SFAS 131 (US Standard). This standard requires an entity to adopt the management approach when reporting on the financial performance of its operating segments. The reporting would be based on the information that management uses internally for evaluating segment performance and when deciding how to allocate resources to operating segments. The statement will not impact the results and disclosures by the group as the format of disclosure and measurement of the results of reportable segments, in these financial statements, is already in line with that of management Circular 8/2007 In terms of Circular 8/2007 the debenture fair value adjustment will be added back in the calculation of headline earnings in future reporting periods (refer note 13). b) Accounting treatment of major property acquisitions During the year the group acquired Paramount Property Fund Limited. In order to determine the appropriate accounting treatment for the transaction, the directors have concluded that the acquisition represents an acquisition of investment properties by the group. Consequently, the transaction has not been accounted for as a business combination. 55

58 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 2 Revenue Assessment rates recovered Casual parking Contracted operating cost recoveries Contracted rental 1,815 1, Other income Turnover rental ,189 1,106 Revenue, excluding straight-line lease income adjustment 2,152 1, Straight-line lease income adjustment ,307 1,187 2,362 1,380 3 Property expenses Assessment rates Bad debts written off Cleaning Consulting fees Electricity - net cost (98) (91) recovery (168) (104) Insurance Letting commissions Other property expenses Promotions and marketing costs - net cost (8) (8) recovery (11) (9) Property management fee Repairs and maintenance Security Tenant installation costs Water and other municipal charges - net cost (20) (18) recovery (45) (21) Other operating expenses 2 2 Administration costs Asset management fees Auditor s remuneration Audit fee for current year Directors fees Legal fees Other fund expenses

59 Company Company Group Group Rm Rm Rm Rm 5 Investment income Distributions from listed investments interest Income from controlled Trust as vested beneficiary 210 Income from subsidiaries Fair value adjustments 1,707 1,265 Gross investment property fair value adjustment 2,802 1,582 Paramount initial recognition adjustment (579) (118) (81) Less: straight-line income adjustment (210) (82) 1,589 1,184 Net investment property revaluation 2,013 1, Investment in subsidiaries and interest in controlled trust 5 33 Listed investment portfolio Interest bearing borrowings profit Derivatives profit (58) (9) Derivatives loss (40) (9) 34 Long-term loan asset Zero coupon loans 7 11 (2,364) (1,899) Debentures (2,365) (1,870) (96) (48) (186) (49) 6.1 Debenture fair value adjustment Debentures are adjusted to fair value, which represents the net asset value attributable to debenture holders The adjustment consists of: Fair value adjustments for other assets and liabilities, (2,268) (1,851) excluding fair value adjustment on debentures (Note 6) (2,179) (1,821) (118) (81) Straight-line lease income adjustment (210) (82) 1 23 Capital gains taxation Notional interest on zero coupon loan (4) Interest adjustment on stepped rate loan (4) 5 Trading profit and other capital items 6 (2,364) (1,899) (2,365) (1,870) 57

60 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 7 Finance costs 1 Occupational interest Interest paid on long-term loans Borrowings costs capitalised to investment property 11 7 developments (at an average rate of 10.8%) Non-cash financing charges Notional interest on zero coupon loans (4) Interest adjustment on stepped rate loan (4) Other capital items 5 Other capital items Finance income 2 3 Interest received from bank Interest received from antecedent divestiture of distribution ** Interest received from long-term loans (BEE loans) Interest received from other Interest received from subsidiary and controlled trust ** Where Growthpoint issued linked units as part payment for properties acquired, the recipients of these linked units agreed to divest themselves of that portion of the following Growthpoint distributions that accrued prior to Growthpoint becoming entitled to income from the properties. 11 Taxation charge South African taxation Normal current year 1 (1) prior year over provision (1) 1 23 Capital gains taxation on realised capital profits

61 Company Company Group Group Rm Rm Rm Rm The taxation rate is reconciled as follows: 29.0% 29.0% Statutory taxation rate 29.0% 29.0% (19.2%) (0.1%) Exempt income (71.3%) (0.1%) 16.0% 1.1% Disallowable expenses and deductible income 11.3% 1.5% (51.0%) 0.1% Current and prior year taxation (over)/under provision (27.4%) 0.1% 251.1% 132.5% Deferred taxation asset not raised 166.7% 207.2% (203.7%) (65.4%) Effect of capital gains taxation payable at a lower rate (45.3%) (140.5%) 7.4% 0.3% Secondary tax on companies 4.1% 0.3% 29.6% 97.5% Effective tax rate 67.1% 97.5% Debentures are adjusted to fair value, which represents the net asset value attributable to debenture holders.the deferred tax asset not raised arises from the net revaluation of debentures, other financial liabilities, investment property, listed property investments, and other provisions and prepayments. 12 Distribution to linked unitholders 12.1 Calculation of distributable earnings Net property income after operating expenses 1, (118) (81) Less: straight-line lease income adjustment (210) (82) Investment income (320) (316) Finance costs (615) (361) Finance income Taxation Distributable earnings Distribution comprises: Debenture interest Ordinary dividend Total distribution Retained distributable earnings cents cents cents cents Distribution per linked unit Interest on debentures Dividend Distribution for the year Interim six months ended 31 December Period to 31 October Period to 31 December Final six months ended 30 June

62 notes to the financial statements for the year ended 30 june Earnings per share The disclosure of earnings per share and headline earnings per share set out below, while obligatory in terms of accounting standards, is not meaningful to investors as the shares are traded as part of a linked unit and practically all the revenue earnings are distributed in the form of debenture interest plus dividends in the ratio of to 1. In addition, headline earnings include fair value adjustments for listed property investments and for financial liabilities as well as notional interest on non-interest bearing long-term loans and accounting adjustments required to account for lease income on a smoothed, straight-line basis. These adjustments do not affect distributable earnings. The calculation of distributable earnings and the distribution per linked unit as shown on page 59 are more meaningful. Number of Number of Number of Number of Shares Shares Shares Shares 1,074,126, ,186,044 Shares in issue at end of year 1,074,126, ,186,044 1,030,639, ,248,004 Weighted average number of shares in issue 1,030,639, ,248,004 cents cents cents cents Basic earnings per share (130.94) (119.11) Headline (loss) per share (165.95) (150.95) (37.22) (33.57) Headline (loss) per linked unit (72.23) (65.50) Rm Rm Rm Rm Basic earnings are reconciled to headline earnings as follows: 1 1 Profit after taxation 1 1 (1,589) (1,184) Add back - fair value adjustment - investment property (2,013) (1,500) Less - applicable taxation (1,127) (840) Headline loss attributable to shareholders (1,710) (1,064) Add back debenture interest paid (161) (238) Headline (loss) attributable to linked unitholders (744) (462) The fair value adjustment for debentures has not been added back in the calculation of headline earnings. In terms of Circular 8 issued by the South African Institute of Chartered Accountants in July 2007, the debenture fair value adjustment will be added back in future reporting periods. 60

63 Company Company Group Group Rm Rm Rm Rm 14 Property assets (refer to property portfolio schedule on page 90) Fair value of investment property for accounting purposes 9,188 8,167 Opening fair value of property assets 15,017 9,119 Acquisition of Paramount (2006: Metboard) 3,494 2, Additions at cost acquisitions 1,071 1, capital expenditure (77) (657) Disposals at fair value (166) (214) 1,707 1,265 Gross fair value adjustment on investment property 2,224 1,582 11,478 9,188 Property valuation 22,173 15,017 (514) (395) less: straight-line lease income adjustment (note 14.2) (628) (418) 10,964 8,793 Fair value of investment property for accounting purposes 21,545 14, Straight-line lease income adjustment ,478 9,188 Closing fair value of property assets 22,173 15,017 6,876 6,263 cost 16,727 11,744 4,602 2,925 cumulative fair value surplus 5,446 3,273 Mortgage bonds have been registered over investment property with a value of R million (2006: R million) as security for long-term interest bearing liabilities amounting to R8 091 million (2006: R4 550 million). The properties were valued at 30 June 2007 using the discounted cash flow of future income streams method by the following valuers, who are all registered valuers in terms of Section 19 of the Property Valuers Profession Act (Act No 47 of 2000): Mills Fitchett P G Mitchell N Dip (Prop Val), MIV (SA), CIEA Mills Fitchett KZN T Bate MSc BSc Land Econ (UK) MRICS, MIV (SA) Mills Fitchett Magnus Penny M Gibbons N Dip (Prop Val), MIV (SA) Professional valuer Glenross A G Rostovsky MIV (SA), Professional valuer, Appraiser Old Mutual Properties T King BSc, DipSurv, MRICS, Valuer (SA) Valuation Alliance S Crous Dip Real Estate (Prop Val), MIV (SA) CB Richard Ellis R Hunting MRICS, MIV (SA) Röde and Associates K Scott B Com (Hons), Registered valuer (SA Council for property valuers) Investec Property Group K Bourhill N Dip (Prop Val), MIV (SA) Professional valuer 61

64 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 14 Property assets (continued) Investec Property Group Benchmark J Halwala BSc Land Economy, Professional associated valuer S Levinson B Com (Real Estate Valuation), Professional valuer There have been no material changes in the assumptions or information used by the valuers compared to the prior year Straight-line lease income adjustment Opening balance Arising during the year Listed property investments 391 Opening valuation Additions at cost (83) (248) Disposals at carrying value (83) (248) 5 33 Fair value adjustment on listed investments 7 33 (722) (265) Transfer to investment in subsidiaries (723) (265) Long-term loans granted to BEE consortia Amount advanced Opening balance Additions Accrued interest Opening balance Arising during the year Nominal value of long-term loans Fair value adjustment BEE 1 consortium Amount advanced R 203,750,000 Date advanced 2 September 2005 Repayment date (capital and interest) 30 September 2015 Fixed interest rate 10.25% The loan was advanced to aquire 100,000,000 Growthpoint linked units. The rights to repayment are subordinated to the rights of the senior lenders (R565,000,000) and junior lenders 62

65 Company Company Group Group Rm Rm Rm Rm (R130,500,000). Should the growth in Growthpoint s distributions and linked unit price be sufficient, an additional 2% interest may be charged at the end of the loan period, as well as a participation in equity, limited to an internal rate of return on the loan of 15% compounded 3 monthly. In order to protect its interest, Growthpoint is entitled but not obligated to provide guarantees to the senior and junior lenders, should there be a breach of any of their loan covenants at any time. BEE 2 consortium Amount advanced R 57,350,000 Date advanced 8 December 2006 Repayment date (capital and interest) 30 September 2016 Fixed interest rate 10.35% The loan was advanced to aquire 22,000,000 Growthpoint linked units. The rights to repayment are subordinated to the rights of the senior lenders (R164,450,000) and junior lenders (R37,950,000). Should the growth in Growthpoint s distributions and linked unit price be sufficient, an additional 2% interest may be charged at the end of the loan period, as well as a participation in equity, limited to an internal rate of return on the loan of 15% compounded 3 monthly. In order to protect its interest, Growthpoint is entitled but not obligated to provide guarantees to the senior and junior lenders, should there be a breach of any of their loan covenants at any time. 17 Balances with controlled entities 17.1 Other investments Investments in subsidiaries 3,562 1,516 Shares and interest in linked units at cost Fair value adjustment 810 Long-term loan Amounts due by subsidiaries 3,826 2,413 The company owns 100% of the shares in : Changing Tides 5 (Pty) Limited Growthpoint Finance Company (Pty) Limited Growthpoint Finance Company Security SPV (Pty) Limited Majorshelf 184 (Pty) Limited Metboard Properties Limited New Heights 344 (Pty) Limited Paramount Property Fund Limited Scopeful 157 (Pty) Limited Skillful 115 (Pty) Limited Skillful 82 (Pty) Limited Tresso Trading 337 (Pty) Limited Tuinweg Property Investments (Pty) Limited All the subsidiaries are incorporated in South Africa, except for Tuinweg Property Investments (Pty) Limited, which is incorporated in Namibia. 63

66 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 17.1 Other investments (continued) Paramount Property Fund Limited owns 100% of the shares in: Claremain Properties (Pty) Limited Lighthouse Mall (Pty) Limited Michael & Michael Properties (Pty) Limited Ovbel Finance Limited Ovbel Registrars (Pty) Limited Metboard Properties Limited owns 100% of the shares in: Metboard Finance Company (Pty) Limited Metboard Finance Company Security SPV (Pty) Limited 1,631 1,451 Contribution Fair value adjustment 2,614 1,746 6,440 4,159 Investments in the Growthpoint Securitisation Warehouse Trust 18 Trade and other receivables 8 12 Rental debtors (3) (4) Impairment of debtors (7) (7) 1 3 Prepaid expenses Deferred expenditure (including letting commissions and tenant installations) Value added tax Sundry debtors (including deposits for future acquisitions) Cash and cash equivalents Cash held on call account as security for municipal and other guarantees Other call accounts Ordinary share capital Authorised (2006: ) ordinary shares with a nominal value of 5 cents each Issued (2006: ) ordinary shares of 5 cents each In issue at beginning of the year ( shares) Issued during the year ( shares)

67 Company Company Group Group Rm Rm Rm Rm In terms of the memorandum of association and the debenture trust deed, the shares are linked with unsecured, subordinated, variable rate debentures of 250 cents (2006: 250 cents), each in the ratio of one ordinary share to 10 debentures. This linkage means that each share may only be issued and traded together with the debentures with which it is linked, until such time as it is de-linked in accordance with the terms of the memorandum of association and the debenture trust deed. The unissued shares are under the control of the directors of the company, subject to the provisions of the Companies Act, 1973 and the requirements of the JSE Limited. 21 Debentures (2006: ) unsecured variable rate subordinated debentures 7,944 4,805 Fair value at beginning of the year 7,943 4,834 3,338 1,239 Issued during the year 3,338 1,239 11,282 6,044 11,281 6,073 2,364 1,899 Fair value adjustment 2,365 1,870 13,646 7,943 13,646 7,943 13,646 7,943 13,646 7,943 26,853 19,455 Nominal value 26,853 19,455 (19,009) (14,949) Discount on issue (19,009) (14,949) 7,844 4,506 Issue value 7,844 4,506 3,438 1,538 Fair value adjustment - previous years 3,437 1,567 2,364 1,899 Fair value adjustment - current year 2,365 1,870 The rights of the debenture holders to repayment of capital are subordinated to the claims of all other secured and unsecured creditors. The interest payable on 10 debentures in each linked unit will be a multiple of times the dividend payable on each share. Subject to the subordination provisions, the debentures will be repayable if a final court order is granted or an effective special resolution is passed for the winding up of the company or if the company, among other things, commits a material breach of a material obligation under the trust deed. The debentures are redeemable at the instance of the debenture holders at any time after 25 years from the date of incorporation. 65

68 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 21 Debentures (continued) This right must be exercised by special resolution of the debenture holders. On passing of the said special resolution, the debentures shall be redeemed on the last Friday in December of the fifth year after the year in which the special resolution is passed. The yield on the debentures is dependent on the dividend paid on ordinary shares. For this reason, limitations have been placed on the company in that it may not change its share capital if such a change results in a change in the equity to debenture ratio. 22 Other non-current financial liabilities Variable rate loan - unsecured 810 The loan is an unsecured bridging facility and was settled on 7 September 2006 from the proceeds of a R1 billion CMBS issue. Interest was charged at the prime overdraft rate less 1.82% 22.2 Variable rate loans - secured by investment property Variable rate mortgage loan Interest is charged at a rate of Jibar % per annum. The capital is repayable on 28 February Variable rate mortgage loan Interest is charged at a rate of Jibar % per annum. The capital is repayable on 28 February Variable rate mortgage loan 164 Interest is charged at the prime overdraft rate less 2.00% per annum. The capital is repayable on 28 February Variable rate mortgage loan - R172 million facility (Paramount) 167 Interest is charged at the prime overdraft rate less 1.50% per annum. Only interest is payable to October 2009 and thereafter capital is repayable in annual instalments to September Variable rate mortgage loan - Development accounts (Paramount) 112 Interest is charged at the prime overdraft rate less 1.50% per annum. Only interest is payable to October 2009 and thereafter capital is repayable in annual instalments to September Variable rate mortgage loan - Standard Bank (Paramount) 38 Interest is charged at various rates between the prime overdraft rate less 1.00% to less 1.50% per annum. Only interest is payable to October 2009 and thereafter capital is repayable in annual instalments to September

69 Company Company Group Group Rm Rm Rm Rm Variable rate mortgage loan - Nedbank (Paramount) 54 Interest is charged at the prime overdraft rate less 2.00% per annum. Only interest is payable to October 2009 and thereafter capital is repayable in annual instalments to September Variable rate mortgage loan - RMB (Paramount) 71 Interest is charged at the prime overdraft rate less 1.50% per annum. Only interest is payable to 2010 and thereafter capital is repayable in annual instalments to Variable rate mortgage loan - RMB (Paramount) 290 Interest is charged at a rate of Jibar % per annum. Only interest is payable to 2010 and thereafter capital is repayable in annual instalments to Variable rate mortgage loan - ABSA R250 million (Paramount) 250 Interest is charged at a rate of Jibar % per annum. Only interest is payable to 2010 and thereafter capital is repayable in equal tranches to Interest for R200 million is fixed to 3 March 2009 at 8.51% Variable rate mortgage loan - R50 million facility (Paramount) 50 Only interest is payable to August 2010 and thereafter capital is repayable in equal tranches to Interest is fixed to 27 July 2011 at 10.13% per annum Variable rate mortgage loan - R36,175 million facility (Paramount) 36 Only interest is payable to August 2010 and thereafter capital is repayable in equal tranches to Interest is fixed to 23 March 2010 at 12.50% per annum Variable rate mortgage loan - R51 million facility (Paramount) 51 Only interest is payable to August 2010 and thereafter capital is repayable in equal tranches to Interest is fixed to November 2009 at 10.18% per annum Variable rate mortgage loan - R70 million facility (Paramount) 70 Only interest is payable to August 2010 and thereafter capital is repayable in equal tranches to Interest is fixed to 18 December 2007 at 9.27% per annum Variable rate mortgage loan - INDWA R250 million (Paramount) 250 Interest is charged a rate of Jibar % per quarter. Only interest is payable to 2010 and thereafter capital is repayable in equal tranches to Fixed rate mortgage loans secured by investment property Fixed rate mortgage loan - Tranche 6a 212 Interest is charged at a rate of 11.21% per annum Fixed rate mortgage loan - Tranche 6b 212 Interest is charged at a rate of 11.48% per annum. 67

70 notes to the financial statements for the year ended 30 june 2007 Restated Company Company Group Group Rm Rm Rm Rm 22.3 Fixed rate mortgage loans secured by investment property (continued) Fixed rate mortgage loan - Tranche 6c 212 Interest is charged at a rate of 11.62% per annum Fixed rate mortgage loan - Tranche 6d 212 Interest is charged at a rate of 11.67% per annum Fixed rate mortgage loan - Tranche 7a Interest is charged at a rate of 10.26% per annum. The capital is repayable on 15 October Fixed rate mortgage loan - Tranche 7b Interest is charged at a rate of 10.51% per annum. The capital is repayable on 13 October Fixed rate mortgage loan - Tranche 7c Interest is charged at a rate of 10.61% per annum. The capital is repayable on 13 October Fixed rate mortgage loan - Tranche 7d Interest is charged at a rate of 10.66% per annum. The capital is repayable on 14 October Fixed rate mortgage loan - Investec Interest is charged at a rate of 9.01% per annum. The capital is repayable on 28 February Fixed rate mortgage loan - Securitisation issue Interest is charged at a rate of 9.32% per annum. The scheduled repayment date is 2 August Fixed rate mortgage loan - Securitisation issue Interest is charged at a rate of 8.48% per annum. The scheduled repayment date is 1 August , Fixed rate mortgage loan - Securitisation issue 3 1,566 Interest is charged at a rate of 9.88% per annum. The scheduled repayment date is 1 November Fixed rate mortgage loan - Securitisation (Metboard) 1,000 Interest is charged at a rate of 8.96% per annum. The scheduled repayment date is 1 September Fixed rate mortgage loan - Nedbank R155 million facility (Paramount) 155 Interest is charged at a rate of 11.55% per annum. Only interest is payable to January 2012 and thereafter capital is repayable in monthly instalments to December Loans listed from to are secured by first mortgage bonds over investment property with a value of R million (2006: R million). 68

71 Company Company Group Group Rm Rm Rm Rm 22.4 Finance lease liability 14 Finance leases over leasehold properties with a market value of R31,796,000. 3,723 3,723 Total nominal value of long-term interest bearing loans 8,091 5, Fair value adjustment: fixed interest rate loans - loss 9 38 (82) (96) fixed interest rate loans - profit (244) (96) interest rate swaps (derivatives) - loss ,998 3,978 Fair value of long-term interest bearing loans and derivatives 8,211 5, Non-interest bearing long-term liabilities Non-interest bearing long-term loan Nominal value (55) (69) Unamortised discount (55) (69) Book value prior to revaluation The balance is payable as follows : R November 2009 R November 2010 The loan is secured by second covering mortgage bonds over investment property with a value of R2 312 million Non- interest bearing loan Nominal value (9) (11) Unamortised discount (9) (11) Book value prior to revaluation Non- interest bearing loan The loan is unsecured and will be discharged as follows: to the extent that any portion of the vacant land acquired in terms of this arrangement is sold or developed, from the proceeds of the sale or on completion of the development to the extent that any portion of the land remains unsold or undeveloped at 31 October 2009, the unpaid amount will become due and payable at that date B debentures 7 The Class B debentures are zero coupon subordinated unlisted Class B debentures with a nominal value of 500 cents each. The debentures are compulsorily convertible into linked units. In terms of the Paramount acquisition transaction, the B debentures will convert on 3 January 2008 and Growthpoint will issue 1 new linked unit for every 1.58 B debentures. 69

72 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 22.5 Non-interest bearing long-term liabilities (continued) Total book value of long-term non-interest bearing loans Fair value adjustment of non-interest bearing loans Fair value of non-interest bearing loans , 126 4,094 Total financial liabilities 8, (53) 22.6 Portion repayable within the next 12 months (53) (53) interest bearing (53) non-interest bearing 4, 073 4, Total non-current financial liabilities 8, 293 5, 748 3, 718 3,784 loans 7, 938 5, derivatives Loan covenants Interest times cover - 2,7 times Loan to value ratio for Growthpoint in total % 23 Trade and other payables Accrued expenses Accrued interest Tenant deposits Trade creditors Value added tax 1 Income received in advance Deferred taxation 24.1 Defered tax asset arising from deductible temporary differences 1, Fair value adjustment - debentures 1, Fair value adjustment - non-current liabilities Listed investment Impairment of trade receivables 2 1 Income received in advance 1 1, 797 1,103 Deferred taxation asset partially recognised 1, 754 1,104 Recovery of this deferred tax asset is dependent on the generation of sufficient future taxable income. In order to recognise an asset, it must be probable that deductible temporary differences in excess of existing taxable temporary differences will be used. 70

73 Company Company Group Group Rm Rm Rm Rm In practice, all taxable income (excluding capital gains) is distributed to unit holders primarily in the form of tax deductible debenture interest. While the debentures (representing the most significant of the above deductible temporary differences) are carried at fair value and remain unredeemed, future tax deductions are likely to equal or exceed any tax liability which may arise (excluding capital gains tax). As a result, the deferred tax asset is limited to the amount of any deferred tax liability raised, being that portion of the deferred tax asset that is recoverable. The net effect of nil is therefore reflected on the consolidated balance sheet Taxable temporary differences The recognition of a deferred tax liability is dependent on the manner in which Growthpoint will recover the carrying value of the related assets. The most significant asset in this case is investment property, which is expected to be recovered through a combination of use (rental to third parties) and ultimately by sale. In determining the amount of deferred tax to be raised, accounting standards require: a) the revaluation of land to be separated from that of the buildings and deferred tax to be computed using the consequences of sale; and b) in respect of the buildings, management is required to estimate the expected period of use until sale and an estimated sales value (residual). The fair value adjustment is then split between a use and sale component and the respective tax consequences applied to each component. In view of the size of the property portfolio, the complexity of determining the residual value and anticipated sale date of these properties, and the fact that any deferred tax liability raised will be offset by deferred tax assets, management believes that an exercise to determine the requisite amounts would require expenditure well in excess of any expected benefit. The effective rate will be between 14,5% and 29%. The factors that would reduce the effective rate to less than 29% are that: a) the tax effect on revaluation of land must be provided for using the sales consequences; and 71

74 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 24.2 Taxable temporary differences (continued) b) Growthpoint has historically sold investment properties for a significant amount in relation to the carrying value and therefore a large component of the carrying value is recoverable through sale. The following analysis of deferred tax has been provided for illustrative purposes, presuming that the effective tax rate calculated is 15% (2006: 29%) for investment properties: Company Company Group Group Temporary Temporary Temporary Temporary differences differences differences differences Rm Rm Rm Rm Deferred tax liability arising from taxable temporary differences Investment property component 4,602 2,920 Fair value adjustment - investment property assets 5,464 3,267 Other assets/liabilities Fair value adjustment - listed investments Fair value adjustment - gain on fair value of derivatives , Fair value adjustment other investments 34 Long term loans 34 _ 3 6 Interest accrued on linked debentures 3 6 5,853 3,444 5,610 3,388 Company Company Rate used Group Group Rm Rm % Rm Rm Investment property component Fair value adjustment - investment property assets 15.0% Other assets/liabilities 2 25 Fair value adjustment - listed property investments 14.5% Fair value adjustment - gain on fair value of derivatives 29.0% Fair value adjustment - other investments 14.5% 10 Long term loans 29.0% 10 _ 1 2 Interest accrued on linked debentures 29.0% Deferred tax liability The excess of the deferred tax asset over the deferred tax liability is not recognised for the reason stated in note 24.1 above. Movement in deferred tax relates to: 72

75 Company Company Group Group Illustrative Company Illustrative Company Illustrative Group Illustrative Group deferred 2007 tax deferred 2006 tax deferred 2007 tax deferred 2006 tax Rm Rm Rm Rm Rm Rm Rm Rm Balance at beginning of the year (unrecognised) Change in estimate * 398 Temporary differences reversed on disposal of assets 4 7 investment property listed property investments (9) Temporary differences arising during the year Balance at the end of the year (unrecognised) * The change in estimate is as a result of applying a blended rate of 15% to investment property temporary differences (2006: 29%) and the capital gains tax rate of 14.5% to listed property investments temporary differences (2006: 29%). This has had no impact on the balance sheet or the results of the group, as the overall effect was to increase the unrecognised deferred tax asset. Company Company Group Group Rm Rm Rm Rm 25 Cash generated from operations Net property income after other operating expenses 1, (118) (81) Straight-line lease income adjustment (210) (82) (25) (41) Increase in trade and other receivables (131) (87) 48 (7) Increase / (decrease) in trade and other payables Non-cash movements relating to Paramount/Metboard transaction: trade and other receivables trade and other payables (147) (56) , Taxation paid Amounts unpaid at beginning of the year Acquisition of Paramount 2 23 Amounts charged to the income statement 2 23 (2) (23) Amounts unpaid at end of the year (5) (23) Distribution to unitholders Amounts unpaid at beginning of the year Interest Dividends 1 1 (521) (332) Amounts unpaid at end of the year (521) (358)

76 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 28 Net cash utilised by investing activities 15,320 9,499 Opening balance of non-current assets 15,353 9,528 2,904 5,503 Non-cash movements 5,859 4,687 1,589 1,184 Fair value adjustment of investment property 2,013 1, Straight-line lease income adjustment (368) Amount owing for purchase of investment property (368) 5 33 Fair value adjustment of listed investments 7 33 (6) 96 Fair value adjustment on derivatives (6) Fair value adjustment on long-term loans Fair value on investment in subsidiaries and interest in Trust 317 1,245 Properties acquired by issue of linked units 317 1, ,886 Net movement as a result of the Metboard/Paramount transaction 3,284 2,099 (18,366) (15,320) Closing balance of non-current assets (22,632) (15,353) Cash from acquisition of additional linked units in Paramount/ Metboard 81 3 (142) (318) (1,339) (1,135) 74

77 Retail Office Industrial Investments Corporate Total Rm Rm Rm Rm Rm Rm 29 Segmental analysis Income Statement 2007 Revenue excluding straight-line lease income adjustment ,152 Straight-line lease income adjustment Revenue ,362 Property expenses (222) (200) (117) (539) Net property income ,823 Other operating expenses (120) (120) Investment income Fair value adjustments (2,206) (186) Segment result 1,478 1, (2,326) 1,562 Finance costs (615) (615) Non-cash financing charges (16) (16) Trading profit and other capital items (6) (6) Finance income Profit before debenture interest 1,478 1, (2,919) 969 Debenture interest (966) (966) Profit before taxation 1,478 1, (3,885) 3 Income Statement 2006 Revenue excluding straight-line lease income adjustment ,298 Straight-line lease income adjustment (1) 82 Revenue ,380 Property expenses (163) (158) (30) (351) Net property income ,029 Other operating expenses (66) (66) Investment income Fair value adjustments (1,582) (49) Segment result 1,290 1, (1,648) 948 Finance costs (361) (361) Non-cash financing charges (10) (10) Finance income Profit before debenture interest 1,290 1, (1,970) 626 Debenture interest (602) (602) Profit before taxation 1,290 1, (2,572) 24 75

78 notes to the financial statements for the year ended 30 june 2007 Retail Office Industrial Investments Corporate Total Rm Rm Rm Rm Rm Rm 29 Segmental analysis Balance sheet 2007 Non-current assets Investment property Opening balance 6,062 5,563 3,392 15,017 Acquisition Paramount 1,126 1, ,494 Acquisitions other ,071 Capital expenditure Disposals (57) (8) (101) (166) Reclassification (147) 147 Net fair value ,014 Straight-line lease income adjustment Closing balance 8,573 8,499 5,101 22,173 Listed investment Long term loans Gain on fair value of derivatives Trade and other receivables Cash and cash equivalents Segment assets 8,617 8,579 5, ,957 Linked unitholders interest 13,700 13,700 Other non-current financial liabilities 8,293 8,293 Current portion of non-current liabilities Trade and other payables Taxation 5 5 Linked unitholders for interest and dividends Segment equity and liabilities ,643 22,957 76

79 Retail Office Industrial Investments Corporate Total Rm Rm Rm Rm Rm Rm Balance sheet 2006 Non-current assets Investment property Opening balance 4,383 4, ,119 Reclassification (59) 59 Acquisitions ,674 4,276 Capital expenditure Disposals (76) (117) (21) (214) Net fair value adjustments ,500 Straight-line lease income adjustment (1) 82 Closing balance 6,062 5,563 3,392 15,017 Long term loans Gain on fair value of derivatives Trade and other receivables Cash and cash equivalents Segment assets 6,097 5,616 3, ,544 Linked unitholders interest 7,982 7,982 Other non-current financial liabilities 5,748 5,748 Liability for acquisition of Metboard 1,251 1,251 Trade and other payables Taxation Linked unitholders for interest and dividends Segment equity and liabilities ,476 15,544 77

80 notes to the financial statements for the year ended 30 june 2007 Greater Western KwaZulu Eastern JHB Pretoria Cape Natal Cape Other Total Rm Rm Rm Rm Rm Rm Rm 29 Segmental analysis Income Statement extract 2007 Net property income excluding straight-line lease income adjustment , Net property income excluding straight-line lease income adjustment Balance sheet extract 2007 Investment property Opening balance 7,478 2,550 2,256 1, ,017 Acquisition - Paramount , ,495 Acquisitions ,071 Capital expenditure Disposals (82) (57) (27) (166) Fair value adjustments 1, ,223 Closing balance 10,168 3,016 4,522 2, ,218 22,173 Company Company Group Group Rm Rm Rm Rm 30 Joint ventures Income statement Revenue Property operating profit Fair value adjustments Operating profit Balance sheet Non-current assets Property assets Opening balance 1, Acquisitions 437 Transfer to investment properties (128) Capital expenditure 4 25 Net fair value adjustments Less: straight-line lease income adjustment (35) (9) Closing balance 1,582 1,487 Straight-line lease income adjustment ,617 1,496 Current assets 17 9 Total assets 1,634 1,505 Current liabilities 14 4 Owner s equity 1,620 1,501 Total liabilities 1,634 1,505 78

81 Company Company Group Group Rm Rm Rm Rm Joint ventures comprise the following properties: Northgate Shopping Centre (50.0%) Kolonnade Shopping Centre (50.0%) Alberton City (35,71%) Westgate (50.0%) Eagle Industrial Park (50.0%) Lakeside Mall (66,7%) The remaining 49.9% of Longbeach Mall was acquired during the year from Toontjiesrivier Landgoed (Edms) Bpk. 31 Borrowing powers The borrowing capacity of the company and its subsidiaries, in terms of their articles of association, is unlimited. 32 Capital commitments 3, Authorised and contracted 3, The capital expenditure will be financed from existing funding facilities. 33 Contingent liabilities Certain wholly owned subsidiaries of the company have guaranteed the income of their wholly owned subsidiary companies to certain financial institutions. The total value of this income over the next seven years amounts to approximately R232 million (2006: R257 million) and is due, in terms of lease agreements, by the following tenants: Centre for Diabetes and Endocrinology (Pty) Limited R21 million (2006: R23 million) Ernst and Young South Africa R181 million (2006: R201 million) Merck (Pty) Limited R30 million (2006: R33 million) Growthpoint Properties Limited has a total investment in these long-lease subsidiaries of approximately R22,2 million. (2006: R22,2 million) Minimum contracted rental income Contractual amounts due in terms of operating lease agreements: 1, Less than one year 2,116 1,563 2,541 2,260 Between one and five years 4,794 3,732 3,084 2,943 More than five years 3,904 3,460 6,803 6,124 10,814 8,755 79

82 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 35 Related party transactions Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party making financial or operational decisions. Details of the transactions with directors are set out in the directors report. Balances with controlled entities are disclosed in note 17. Balances with BEE consortia are disclosed in note 16. In view of the fact that Investec Bank Limited (Investec) is a shareholder of Growthpoint and a controlling shareholder of the asset management company, Growthpoint Managers (Pty) Limited, and Investec Property Group Limited (IPG) is responsible for property management of the properties, the following additional disclosure is given in the interests of greater transparency and good corporate governance: Acquisition of a portfolio of 24 properties from Tresso Trading 119 (Pty) Limited, an unlisted fund, 70% owned by 1,430 Investec and managed by IPG. 1,430 Rental income from Investec per lease agreement straight-line lease income accrual Interest paid on loan from Investec (note ) Interest paid on loan from Investec (variable) Interest paid on loan from Investec (bridging loan) Interest paid on loan from Investec (swaps) Interest paid to Investec as part of lending consortium of banks Secretarial/valuation fees Corporate finance fees paid to Investec ,877 4,103 Swap contracts entered into with Investec (note 36.5) 6,877 4, Direct loans from Investec Letting commission paid to IPG Property management fee paid to IPG Asset management fees paid to Growthpoint Managers (Pty) Limited Other balances as at 30 June 9 6 fees payable included in trade and other payables loan included in trade and other receivables cash and cash equivalents

83 Company Company Group Group Rm Rm Rm Rm 36 Financial risk management The financial instruments of the group consist mainly of deposits with banks, long-term borrowings, derivative instruments, accounts receivable and accounts payable. The group purchases or issues financial instruments in order to finance operations and to manage the interest rate risks that arise from these operations and the source of finance Credit Risk Exposure to credit risk in respect of trade receivables is spread over a wide client base. The group monitors the financial position of its tenants on an on-going basis. Impairment losses have been recorded for those debts whose recovery was not reasonably assured at year-end. The maximum credit exposure at balance sheet date was R28 million (2006: R21 million) Interest Rate Risk It is estimated that for the year to 30 June 2008 a 1% increase in interest rates will decrease the company s profit before debenture interest by approximately R8.6 million. The expiry profile of fixed interest rate contracts is shown in the Directors review of operations Liquidity Risk Cash flows are monitored on a monthly basis to ensure that cash resources are adequate to meet the funding requirements of the group. In terms of covenants with certain banks, the nominal value of long- term interest- bearing borrowings may not exceed 50% of the value of non-current assets Value of property assets and investments 22,632 15,353 50% thereof 11,316 7,677 Nominal value of borrowings utilised at year end 8,091 5,374 Potential borrowing capacity 3,225 2,134 Facilities available in terms of existing agreements

84 notes to the financial statements for the year ended 30 june 2007 Company Company Group Group Rm Rm Rm Rm 36.4 Estimation of Fair Value The following summarises the major methods and assumptions used in estimating the fair values of financial instruments: Listed property investments Listed property investments are designated as held at fair value through profit and loss financial assets on the basis that these investments are managed and their performance is evaluated on a fair value basis and the quarterly reports presented to the board are prepared on this basis. These assets are valued at the closing quoted market prices of the listed units on the balance sheet date. Trade and other receivables These are valued at their nominal value (less cumulative impairment losses) as the time value of money is immaterial for these current assets. Impairment losses are estimated at the year end by reviewing amounts outstanding and assessing the likelihood of recoverability. Non-current liabilities (excluding debentures) at fair value In line with its business model as a property loan stock entity, the company relies on long-term debt to fund the acquisition of investment properties. The company adopts the fair value model to measure investment properties, with fair value adjustments being recorded through profit and loss. In order to eliminate any mismatch that would otherwise arise from measuring the non-current liabilities on a different basis, the non-current liabilities are also measured at fair value through profit and loss. The value of these liabilities is estimated using a discounted cash flow analysis. Each future cash flow is discounted using the market rate indicated on the interest rate curve (see definition below) at the dates when the cash flows will take place. Debentures Debentures are designated as held at fair value through profit and loss financial liabilities. It is believed that this method results in the most relevant measure of the debenture liability as it represents the net asset value attributable to debenture holders after all other liabilities and assets are reflected at fair values. 82

85 Company Company Group Group Rm Rm Rm Rm In addition, this method eliminates possible measurement inconsistencies that may arise by valuing the debenture liability on some other basis. This is so because the debenture discount would have to be amortised based on unknown and uncertain future profits and increases in net asset values. These instruments are measured initially at issue price, which is nominal value less debenture discount, and subsequently at fair value. Fair value represents the net asset value attributable to debenture holders after adjusting all other assets and liabilities to fair value. Until such time as the debenture discount is fully amortised, the net change in fair value of the assets and liabilities will increase or decrease the carrying amount of the debentures. Once the debenture discount has been fully utilised, any increase in net asset value will increase the reserves attributable to ordinary shareholders. Derivative financial instruments Derivative financial instruments consist of interest rate swaps and are valued by discounting future cash flows using the market rate indicated on the interest rate curve at the dates when the cash flows will take place. Trade and other payables Trade and other payables are valued at their nominal value as the time value of money is immaterial for these current liabilities. Definition of the interest rate curve The interest rate curve is the SA swap curve which represents a benchmark interest rate curve for for all JIBAR-related transactions in the market. JIBAR itself is a benchmark short-term interest rate and as such, the swap curve gives a representation of future expectations of JIBAR. It is constructed using both short-dated financial instruments (such as FRA s) as well as longer dated instruments (such as swaps) where the movements in the curve are reflected through price changes of the underlying instruments Derivatives Derivative instruments are used to hedge the company s exposure to any increases in interest rates on variable rate loans. Swap contracts are entered into whereby the company swaps its variable rate obligation for a fixed rate obligation. 83

86 notes to the financial statements for the year ended 30 june Derivatives (continued) Details of the interrest rate swap contracts are as follows: Amount Start date End Date pay Receive Rm Swap Mar Feb % Jibar Swap Mar Feb-11 Jibar 10.21% Swap Aug-10 2-Aug % Jibar Swap Aug-10 3-Aug % Jibar Swap Sep Sep % Jibar Swap Sep Sep % Jibar Swap Aug Aug % Jibar Swap Aug Nov % Jibar Swap Aug Oct % Jibar Swap Aug-11 3-Jul % Jibar Swap Sep-11 1-Sep % Jibar Swap Sep-11 3-Sep % Jibar Swap Nov Nov % Jibar Swap Nov Nov % Jibar Swap Nov Nov % Jibar Swap Nov Nov % Jibar Swap Jan Sep % Jibar Swap Jan Sep % Jibar Swap May May % Jibar Swap Dec Dec % Jibar Swap Mar May % Jibar Swap Nov May % Jibar Swap Mar-06 3-Mar % Jibar Swap Feb-06 3-Mar % Jibar Swan Jul Jul % Jibar Swap Jul Mar % Jibar Swap Jul-07 6-Nov % Jibar Swap May Dec % Jibar 37 Restatement of 2006 company figures The 2006 company figures have been restated to show the effect of an offsetting arrangement that existed between the company and its investment in a consolidated trust, Growthpoint Securitisation Wharehouse Trust. Whilst the effect of this restatement does not have any effect in the group consolidated figures, this has had the following effect in the company s separate balance sheet: 1) Decrease in other investments, amount due by trust R1 637 million; and 2) Decrease in other non-current liabilties R1 637 million. 84

87 Company Company Group Group Rm Rm Rm Rm 38 Acquisition of properties via the issue of linked units During the year to 30 June 2007, the company issued new linked units as part of the purchase consideration for the following acquisitions: 1) Metboard portfolio On 30 June 2006, the group acquired the remainder of the Metboard Properties Limited linked units that it did not already own. The purchase consideration of R1 251 million was paid for by the issue of linked units at R10.28 per linked unit. 2) Paramount portfolio This acquisition was effective from 31 December The total purchase consideration of R1 951 million (excluding cash acquired) was paid for in cash to the extent of R259 million and R1 773 million was settled by the issue of linked units at R11.34 per linked unit as well as a futher linked units at R12.35 per linked unit. 39 Liability for the acquisition of property portfolio On 31 December 2006, the group acquired the property portfolio of Paramount Property Fund Limited (30 june 2006: Metboard). The linked units were acquired from the unitholders and Growthpoint issued 1 new Growthpoint linked unit for every 1.44 Paramount linked units (2006: Metboard exchange ratio of 1 Growthpoint linked unit for every 1.9 Metboard linked units). The fair value of the assets and liabilities of Paramount (2006: Metboard) at the effective date, being 31 December 2006 (2006: 30 June 2006), were as follows: Investment property 3,495 2,364 Listed investment 9 Trade and other receivables Debentures (7) Interest bearing borrowings (1,463) (823) Taxation (2) Current liabilities (147) (56) Cash and cash acquired 81 3 Purchase consideration due by the group 2,032 1,516 Less value of linked units already owned (265) 2,032 1,251 Cash flow on acquisition purchase consideration due by the group (2,032) (1,251) cash and cash equivalents acquired 81 3 net purchase consideration due by the group (1,951) (1,248) unit issued for the acquisition (1,778) (1,248) cash outflow on the acquisition, net of cash acquired (173) 85

88

89 87 PROPERTY PORTFOLIO

90 88 Central Park, Midrand

91 PROPERTY PORTFOLIO 89

92 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand RETAIL Regional Shopping Centres 380,443 4, , Brooklyn Mall Brooklyn, Pretoria 53, , Waterfall Mall Rustenburg 49, , Kolonnade (50%) Montana Park, Pretoria 34, , La Lucia Mall La Lucia, Durban 30, , Northgate (50%) North Riding, Randburg 41, , River Square Centre Three Rivers, Vereeniging 38, , Lakeside Mall (66,6%) Benoni 38, , The Avenues Springs 37, , Alberton City (35.7%) Alberton 13, , Game City Greyville, Durban 41, , Community Shopping Centres 361,424 3, , Constantia Village Constantia, Cape Town 20, , Walmer Park Shopping Centre Walmer Park, Port Elizabeth 34, , Golden Acre (100%) C.B.D., Cape Town 33, , Longbeach Mall (100%) Noordhoek, Cape Town 30, , Beacon Bay Beacon Bay, East London 26, , Hatfield Plaza Hatfield, Pretoria 19, , Gustav Voigts Windhoek 24, , Middestad Mall Bellville, Cape Town 13, , Picbel C.B.D., Cape Town 14, , City Mall Klerksdorp C.B.D., Klerksdorp 18, , Mark Park Vereeniging 21, , Meadowdale Value Centre Meadowdale, Germiston 18, , The Paddocks Milnerton, Cape Town 9, , Centurion South Lake 1 & 2 Centurion 13, , Arcadia Centre Arcadia, Pretoria 25, , Palm Springs Springs 14, , Goodwood Mall Goodwood, Cape Town 13, , OK Empangeni Empangeni 10, , Neighbourhood Shopping Centre 107, , Heritage Market Hillcrest, Durban 12, , Lighthouse Mall Umhlanga, Durban 8, , The Bridge C.B.D., Johannesburg 8, , Ruimsig Boulevard Roodepoort 11, , Norkem Mall Norkem Park, Kempton Park 9, , Atlasville Atlasville, Boksburg 9, , Hatfield Mall Hatfield, Pretoria 5, , The Gallery Milnerton, Cape Town 5, , Northcliff Square Shopping Centre Northcliff, Johannesburg 5, , Blackheath Blackheath, Randburg 4, ,

93 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 11 Bronkhorstspruit Bronkhorstspruit 6, , Sportsmans Warehouse Tygervalley Bellville, Cape Town 3, , Campus Building Hatfield, Pretoria 3, , Otjiwarongo Otjiwarongo, Namibia 5, , Stanger Stanger, Durban 3, , Standard Plaza Hatfield, Pretoria 3, , Welkom Retail Welkom 2, , Retail Warehouse 3, , Amrel Alberton Alberton 3, , Speciality Centres 13, , Waterfall Value Mart Cashane Extention 12, Rustenburg 10, , Virgin Active Three Rivers, Vereeniging 3, , SUB TOTAL RETAIL 866,386 8, , REDEVELOPMENTS 1 Grand Parade Centre (100%) C.B.D., Cape Town 10, VACANT LAND Tsogo Sun Lakeside Benoni Erlank Brooklyn, Pretoria VACANT LAND 14.6 BARE DOMINIUMS 1 Edgars Bloemfontein Bloemfontein 2 Jet Bloemfontein Bloemfontein 53 TOTAL RETAIL 876,622 8, ,

94 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand OFFICE Offices High Rise 248,040 2, , Investec Sandton Sandton 46,945 1, , Investec Cape Town Foreshore, Cape Town 12, , Fredman Towers Sandton 13, , Bree Street C.B.D., Cape Town 12, , Paramount Place Claremont, Cape Town 11, , The Terraces C.B.D., Cape Town 11, , Forum Building C.B.D., Pretoria 35, , Newlands on Main Claremont, Cape Town 12, , Fairview Office Park Newton Park, Port Elizabeth 16, , Metropark C.B.D., Pretoria 18, , De Waterkant Greenpoint, Cape Town 5, , Meersig Centurion 9, , Infotech Hatfield, Pretoria 10, , Visagie Street C.B.D., Pretoria 13, , Rosebank College (Boston House) C.B.D., Cape Town 5, , Braamfontein 4410 Braamfontein, Johannesburg 5, , Paul Kruger C.B.D., Pretoria 3, , St Georges C.B.D., Cape Town 1, , Offices Low Rise 238,933 1, , ABSA Midrand Midrand 11, , HP Autumn Road Rivonia, Sandton 10, , Longkloof Studios Gardens, Cape Town 11, , Grosvenor Corner Parktown North, Johannesburg 9, , MTN Mount Edgecombe Mount Edgecombe, Durban 7, , Greenacres Office Park Newton Park, Port Elizabeth 12, , Auditor General Brooklyn, Pretoria 4, , Brookfield Office Park Brooklyn, Pretoria 7, , Engen House Parktown, Johannesburg 7, , Sovereign Greenpoint, Cape Town 7, , , 7 & 9 St Davids Parktown, Johannesburg 11, , Gestetner Bedfordview 4, , Cradock Heights Rosebank, Johannesburg 4, , Sunset Boulevard George 10, , Grayston Sandown, Sandton 3, , N1 Medical Chambers Goodwood, Cape Town 4, , Cowey Park C.B.D., Durban 7, , Homechoice Claremont, Cape Town 4, , Primegro Place Illovo, Johannesburg 3, , Meerlus Centurion 5, , Autopage Waterfall Park, Midrand 5, , EDS Bedfordview Bedfordview 4, , The Boulevard Westville, Durban 2, ,

95 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 24 ADT House Goodwood, Cape Town 4, , J Walter Thompson Rivonia, Sandton 3, , Central Houghton, Johannesburg 3, , The Avalon Gardens, Cape Town 4, , Honeywell Vorna Valley, Midrand 3, , Devcon Place Rivonia, Sandton 3, , Daisy Street C.B.D., Sandton 2, , ABSA Cash Centre, Westway Westville, Durban 2, , Peter Place Lyme Park, Sandton 2, , Rudd Illovo, Johannesburg 3, , BCX Port Elizabeth Port Elizabeth 2, , Sturdee Rosebank, Johannesburg 3, , Lumley House Parktown North, Johannesburg 2, , Florida Road Morningside, Durban 2, , Endemol Productions Lonehill, Sandton 1, , The Ridge Parktown, Johannesburg 3, , Jan Smuts Rosebank, Johannesburg 3, , Central Street Houghton, Johannesburg 2, , ABSA Bruma Bruma Lake, Johannesburg 2, , M & R Bedfordview Bedfordview 1, , Varsity College Gardens, Cape Town 1, , PWC Paarl Paarl 1, , Dunkeld Office Park Dunkeld West, Johannesburg 2, , Fedics Rosebank, Johannesburg 2, , Sony House Dunkeld West, Johannesburg 1, , Emerson Energy Systems Sunninghill, Sandton 1, , ABSA Goodwood Goodwood, Cape Town 1, , Nu Payment Solutions Meyersdal, Alberton 1, , Andries Street Wynberg, Sandton 2, , Shift Interactive Bryanston, Sandton , MLT House Gardens, Cape Town 1, , Office Parks 393,637 3, , Constantia Office Park Weltevreden Park, Roodepoort 55, , Hatfield Gardens Hatfield, Pretoria 22, , Central Park Midrand 34, , Sunnyside Ridge Office Park Parktown, Johannesburg 27, , Riverpark Mowbray, Cape Town 12, , Grayston Office Park Sandown, Sandton 13, , Gillooly s View Bedfordview 19, , BCX Century City Montague Gardens, Cape Town 11, , Sandton Close 1 Sandton 12, , Belmont Towers Rondebosch, Cape Town 14, , The Oval (Newlands) Newlands, Cape Town 7, , Healthcare Park Woodmead, Sandton 13, ,

96 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 13 BCX Midrand DQE Randjespark, Midrand 12, , The Oval Bryanston East, Sandton 9, , Sandton Close 2 Sandton 11, , Montgomery Mount Edgecombe, Umhlanga 9, , Tulbach Park Colbyn, Pretoria 16, , BCX Durban 2 La Lucia Ridge, Umhlanga 4, , Belvedere Office Park Bellville, Cape Town 5, , Pinewood Office Park Woodmead, Sandton 6, , ABSA Frosterley (4) La Lucia Estate, Durban 3, , Homestead Park Rivonia, Sandton 7, , Adcock Ingram Bryanston, Sandton 4, , BCX Midrand ABC Randjespark, Midrand 5, , Standard Bank U.R. Umhlanga Ridge, Durban 3, , Morningside Close Morningside, Sandton 4, , Edgecombe Office Park La Lucia Ridge, Umhlanga 4, , Ditsela Hatfield, Pretoria 2, , LTA House Sunninghill, Sandton 3, , Rosebank Office Park Parktown North, Johannesburg 3, , Eton Office Park Bryanston, Sandton 4, , Chiselhurston Chiselhurston, Sandton 2, , BCX Durban 1 La Lucia Ridge, Umhlanga 2, , La Rocca Bryanston, Sandton 2, , Pavilion Office Park Rivonia, Sandton 3, , Oxford Rd Illovo, Johannesburg 2, , Galileo House Bruma Lake, Johannesburg 1, , BCX Durban 3 La Lucia Ridge, Umhlanga , Fourways Golf Park (Oakhill) Fourways, Sandton 1, , St. Peters Square Fourways, Sandton 1, , Fountain Grove Hyde Park, Johannesburg 1, , Sandhurst B & C Sandton 3, , Frosterley, La Lucia La Lucia, Umhlanga 1, , Office / Warehouse 62, , Growthpoint Business Park Halfway House, Midrand 62, , Mixed use : Office and Retail 6, , Menlyn Piazza Menlyn, Pretoria 6, , Hotels 19, , Holiday Inn Durban C.B.D., Durban 19, , Hospitals 11, , N1 City Hospital Goodwood, Cape Town 11, ,

97 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand Long lease office properties 15, , Ernst & Young Illovo, Johannesburg 11, , CDE Houghton Houghton, Johannesburg 2, , Merck Modderfontein, Edenvale 2, , SUB TOTAL OFFICE 995,566 8, , REDEVELOPMENTs 1 Pick N Pay, Claremont Claremont, Cape Town Altech Autopage Waterfall Park, Midrand REDEVELOPMENTS VACANT LAND 1 Tresso Trading 337 vacant land Rivonia, Sandton 3.6 BARE DOMINIUMS Pretorius St Arcadia, Pretoria 6, BARE DOMINIUMS 6, TOTAL OFFICE 1,001,897 8, ,

98 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand INDUSTRIAL Warehousing 781,246 1, , Midas Meadowdale Meadowdale, Germiston 18, , Kulingile Isando, Germiston 49, , Brakpan Road (Clover) Industria, Boksburg East 47, , Pine Industrial Park New Germany, Durban 40, , Richard Carte Road Mobeni, Durban 19, , Fitzmaurice Epping Industria, Cape Town 37, , Nestle Bellville, Cape Town 14, , Runway Park Mobeni, Durban 36, , Pick & Pay Distribution centre Mahogany Ridge, Durban 29, , Gundle Meadowbrook, Edenvale 14, , OK Zandfontein Zandfontein, Pretoria 18, , Bunkers Hill Isipingo, Durban 10, , DCD Dorbyl Boksburg Boksburg 39, Gateway Alberton South, Alberton 5, , Gillits Road Industrial Park Pinetown, Durban 19, , Meadowbrook Meadowbrook, Germiston 13, , Moorsom Epping, Cape Town 16, , Baker Street Milnerton, Cape Town 7, , Laser Isipingo Erf 3686 Isipingo, Durban 6, , Laser Clayville Erf 1007 Clayville, Midrand 9, , J DG Trading Roodekop, Germiston 33, Foreshore Maydon Wharf, Durban 13, , Boston Circle Airport Industria, Cape Town 7, , Laser Cape Town Erf Epping 2, Cape Town 7, , Ilnov Eastgate, Port Elizabeth 9, , African Gabions Mahogany Ridge, Durban 7, , Independence Square Ottery, Cape Town 10, , Trador Witbank 9, , Chelsea Road Industrial Park New Germany, Durban 11, , DCD Dorbyl Duncanville Vereeniging 32, Metro Cash & Carry (East London) East London 6, , Osram Randjespark, Midrand 6, , Herron Booysens Reserve, Johannesburg 2, , GKN Chep Glen Anil, Durban 14, , Wasteman Airport Airport Industria, Cape Town 4, , Neon Fulcram, Springs 10, , Wingfield Jet Park, Kempton Park 6, , Ormonde Ormonde, Johannesburg 2, , Luxor Paints Boksburg 8, , DCD Dorbyl Newcastle Newcastle 22, Goodrich Prospecton, Durban 5, , Herman Road (Volvo) Meadowdale, Germiston 3, , ADT Styline Pinetown, Durban 4, ,

99 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 44 Laser Commercial Erf 65 Commercia, Midrand 5, , Vinimark Bldg. Linbro Park Linbro Park, Edenvale 2, , Westmead Fctory Westmead, Durban 4, , Metro Cash and Carry Krugersdorp Krugersdorp 4, , Kuhne & Nagel Airport Industria, Cape Town 2, , Dominic Corner Boksburg 7, , Laser Commercial Erf 64 Commercia, Midrand 5, , Greystone Heliport Glen Anil, Durban 6, , Rittel City Deep, Johannesburg 4, , PS Props Boksburg North, Boksburg 6, , Laser Commercial Erf 2 & 3 Commercia, Midrand 2, , Laser New Brighton 66 Epping Industria, Cape Town 4, , Propower Parow, Cape Town 2, , Metro Cash and Carry Van der Bijl Vanderbijlpark 3, , Whitworth Heriotdale, Johannesburg 3, , Afship Isando, Kempton Park 1, , Witdrich Witbank 2, , Clarens Eastgate, Sandton 1, , Laser Silvertondale Erf 203 Silvertondale, Pretoria 2, , Sky Park Airport Airport Industria, Cape Town 2, , Gersident Germiston 6, Laser Kimberley Erf Kimberley , Retail Warehouses 1, , Greenhills Centre Elandsfontein, Germiston 1, , Motor Related Outlets 56, , Commercial City Strijdom Park, Randburg 13, , Fountains Motown C.B.D., Pretoria 12, , Ellenby Motors Hatfield, Pretoria 5, , Pasteur Northcliff, Johannesburg 3, , Kentyre Randburg 2, , Norbertville Robertville, Roodepoort 5, , Cornick Midrand 3, , Bonanza Fordsburg, Johannesburg 2, , N1 Tyre N1 City, Cape Town 1, , Snowy Owl Arcadia, Pretoria 1, , Bardene Bardene, Boksburg 1, , Middelbeek Middelburg 3, , Newton Park Newton Park, Port Elizabeth , Mini Units 158, , Meadowdale Meadowdale, Germiston 15, , Scientia Scientia, Pretoria 11, , Eastgate Business Park Eastgate, Sandton 13, , Kya North Village Kya Sands, Randburg 13, ,

100 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 5 Gallagher Place Halfway House, Midrand 8, , Friedlander Stormill, Roodepoort 18, , Glen Murray Redhill, Durban 8, , Fern Towers Ferndale Extention 20, Randburg 4, , Knightsgate Driehoek, Germiston 8, , Ferndale Commercial Park Strijdom Park, Randburg 7, , Trafford Park Pinetown, Durban 12, , Palm River Pinetown, Durban 8, , Asetileen Silvertondale, Pretoria 4, , Strijdom Park 347 Strydom Park, Randburg 4, , Allen Road Elandsfontein, Germiston 3, Isando Industrial Isando, Kempton Park 4, , Devro Park Pinetown, Durban 3, , Equitable Development Robertville, Roodepoort 2, , Greystone Industrial Glen Anil, Durban 3, , Midi Units 137, , Galaxy Business park Linbro Park, Edenvale 11, , Route 24 Meadowdale, Germiston 23, , Westgate (50%) Pinetown, Durban 15, , Amalgam South Crown Ext. 4, Johannesburg 16, , Anchor Industrial Boksburg 14, , City Deep Industrial Park City Deep, Johannesburg 10, , Isando Industrial Park Isando, Kempton Park 11, , Route 41 Robertville, Roodepoort 12, , Eagle Industrial Park (50%) Richards Bay 7, , Janhope Duncanville, Vereeniging 7, , North Reef Elandsfontein, Germiston 5, , Maxi Units 165, , Hilltop Industrial Park Elandsfontein, Germiston 69, , Maitland Industrial Maitland, Cape Town 27, , Omni Park Aeroton, Johannesburg 39, , Western Province Park Goodwood, Cape Town 10, , Lanner Place Pinetown 14, , Novex Kramerville, Johannesburg 3, , Other Industrial 478, , Newmarket Ind Alrode, Alberton 27, , Gunners Epping, Cape Town 33, , Monteer Isando, Kempton Park 29, , African Products Meadowdale, Germiston 4, , Chamberlain Jacobs, Durban 12, , Bofors 2 Epping, Cape Town 13, , Olympic Parow, Cape Town 10, ,

101 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 8 Mandy Road Reuven, Johannesburg 15, , Avnett Kopp Kramerville, Sandton 4, , Maitland Maitland, Cape Town 9, , Corobrick Meadowdale, Germiston 2, , Kelsteel Spartan, Kempton Park 9, , Metprop Cape Epping Industria, Cape Town 12, , Seaview Durban 8, , Eskom Road New Germany, Pinetown 6, , Kew Park Kew, Johannesburg 22, Loper Spartan Ext. 2, Kempton Park 3, , Portion 35 Alrode Alrode, Alberton 10, , Epping 2 Epping Industria, Cape Town 7, , Montani Wynberg, Sandton 12, , New Germany New Germany, Pinetown 10, , Garfield Alrode, Alberton 7, , Kwaford New Brighton, Port Elizabeth 9, Vintonia Nelspruit 2, , Nuffield Springs 10, , Isipingo 2257 Prospecton, Durban 5, , Regina Pinetown 6, , Westmead Pinetown 5, , Grenville Epping Industria 1, Cape Town 9, , Sofia Spartan Ext. 2, Kempton Park 2, , Hewitt Epping, Cape Town 7, , Italcraft Reuven, Johannesburg 6, , Alrode 706 Alrode, Alberton 7, , Altergen Wadeville, Germiston 5, , Kinghall 1 Epping, Cape Town 4, , Elevation Aeroport, Kempton Park 2, , Maskew Isando, Kempton Park 5, , Isando 103 Isando, Kempton Park 3, , Sarmcol Amalgam, Johannesburg 2, , Denmaree Denver, Johannesburg 5, , Romatile Jet Park, Kempton Park 4, , Industry Isando Extention 2, Kempton Park 5, , Serenade Elandsfontein, Germiston 3, , Stormain Stormill, Roodepoort 2, , Chamroy Chamdor, Roodepoort 10, Burghers Eastgate, Port Elizabeth 3, , Vereenigingweg Vyf Alrode, Alberton 5, , Rojolea Lea Glen, Roodepoort 4, , Bison Pretoria West, Pretoria 4, , Dacres Epping, Cape Town 4, , Sebenza 137 Sebenza, Edenvale 2, , Vereeniging St 36 Alrode, Alberton 4, ,

102 property portfolio AT 30 June 2007 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 53 Airrand Wadeville, Germiston 3, , Alrode Erf 34 Alrode, Alberton 7, Aeroton 7 of 17 Aeroton, Johannesburg 3, , Epping 5 Epping Industria, Cape Town 2, , Stormill 51 Stormill, Roodepoort 1, , Engine Avenue Montague Gardens, Cape Town 1, , Salmart Alrode, Alberton 3, , Sheidan Watloo, Pretoria 4, Isando 104 Isando, Kempton Park 2, , Epping 4 Epping Industria, Cape Town 2, , Epping 3 Epping Industria, Cape Town 2, , Kinghall 2 Epping, Cape Town 2, , Isando 107 Isando, Kempton Park 1, , Epping 6 Epping Industria, Cape Town 1, , Epping 1 Epping Industria, Cape Town 1, , High Tech Industrial 127, , Rectron Midrand Erand Gardens, Midrand 19, , Eagle Freight Meadowdale, Germiston 6, , Cummings Eastgate, Sandton 7, , Racetrack Midrand 5, , National Data Systems Selby, Johannesburg 13, , M1 Place Eastgate, Sandton 12, , Tripark Eastgate, Sandton 13, , Gazelle Corporate Park, Midrand 6, , Global Isando, Kempton Park 8, , Electron Isando, Kempton Park 6, , Isowrench Isando, Kempton Park 4, , Linbro Linbro Park, Edenvale 4, , Hawland Midrand 5, , Impala Road Eastgate, Sandton 6, , Pretzel Cape Airport City, Cape Town 2, , Alcom Center Wynberg, Sandton 5, , Gemini Frankenwald, Edenvale 1, , High Grade Industrial 405, , Central Park (MB) Elsiesriver, Cape Town 49, , Imperial Germiston South, Germiston 27, , Metkor Umbilo, Durban 21, , Elvan Fishers Hill, Germiston 16, , Aeroport Spartan Ext. 2, Kempton Park 12, , Gold Reef Park Booysens Reserve, Johannesburg 19, , Chemserve Randjespark, Midrand 9, , Gillets Pinetown, Durban 19, , Chain Avenue Montague Gardens, Cape Town 12, , Redwood Roodekop, Alberton 16, ,

103 Property Name Location Gross Lettable Jun 07 Value Gross rental Area m² Value per m² per m² Rm Rands Rand 11 Oude Moulen Maitland, Cape Town 10, , Rushair Aeroton, Johannesburg 9, , Mount Joy Elandsfontein, Germiston 10, , Penraz Industria, Johannesburg 19, , Astron Denver, Johannesburg 12, , Prolecon Prolecon, Johannesburg 19, , Alternator Montague Gardens, Cape Town 8, , Premier Equipment Atlasville, Boksburg 12, , Protec Park Chloorkop, Modderfontein 5, , Fifers Spartan Ext. 2, Kempton Park 5, , Belgrade Spartan, Kempton Park 6, , Inanda Road Springfield Springfield, Durban 5, , Triangle Wilbart, Kempton Park 3, , Highland Meadowdale, Germiston 3, , Goodenough Epping, Cape Town 8, , Highway Wilbart, Kempton Park 3, , Linus Beaconvale, Parow 6, , Protrans Jet Park, Kempton Park 5, , Rectron Umhlanga Umhlanga, Durban 2, , Fourwinds Montague Gardens, Cape Town 4, , Hillclimb Road Pinetown 4, , Millennium Park Meadowdale, Germiston 3, , Hulley Isando, Kempton Park 3, , Low Cost Marketing Sunnyrock, Germiston 3, , Watt Meadowdale, Germiston 2, , Covora Jet Park, Kempton Park 5, , Chadwick Wynberg, Sandton 5, , Gewel Isando, Kempton Park 2, , Flemming Meadowdale, Germiston 1, , Alrode 242 Alrode, Alberton 3, , INDUSTRIAL 2,313,254 5, , VACANT LAND 1 Ebony Meadowdale, Germiston VACANT LAND TOTAL INDUSTRIAL 2,313,254 5, , TOTAL GROWTHPOINT 4,191,773 22, , Rental escalations Average contractual rental escalations in force at 30 June 2007 were: Retail 8.3% Office 7.7% Industrial 8.8% 101

104 property portfolio AT 30 June 2007 Retail portfolio Number of Gross rental Properties GLA Vacancy Vacancy Value Value /m² (per m2 / Forward m² m² % Rm Rands month) Yield Rands % Regional Shopping Centres ,443 2, % 4, , % Community Shopping Centres ,424 10, % 3, , % Neighbourhood Shopping Centres ,345 5, % , % Retail Warehouses 1 3, % 8.2 2, % Speciality Centres 2 13, % , % Other 5 10, % ,727 Total retail portfolio ,622 18, % 8, , % Office portfolio High Rise Offices ,040 12, % 2, , % Low Rise Offices ,933 8, % 1, , % Office Parks ,637 19, % 3, , % Office / Warehouse 1 62,209 1, % , % Mixed use : Office and Retail 1 6, % , % Hotels 1 19, % , % Hospitals 1 11, % , % Other 7 22, % Total office portfolio 126 1,001,897 41, % 8, , % Industrial portfolio Warehousing ,246 8, % 1, , % Retail Warehouses 1 1, % 8.1 4, % Motor-related Outlets 13 56,980 2, % , % Mini Units ,061 4, % , % Midi Units ,714 2, % , % Maxi Units 6 165,237 14, % , % Other Industrial ,696 3, % , % High Tech Industrial ,913 4, % , % High Grade Industrial ,566 5, % , % Other Total industrial portfolio 240 2,313,254 45, % 5, , % Total Growthpoint 419 4,191, , % 22, , % TENANT PROFILE Retail Office Industrial % of No of % of No of % of No of GLA tenants GLA tenants GLA tenants A Large national tenants, listed tenants, government and major franchisees 49% 12 33% 14 46% 48 B Other national tenants, other listed tenants, franchisees and medium to large professional firms 24% 58 43% % 312 C Other 27% % 848 8% 437 Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between m² and m² of space. Category C consists of tenant groups occupying less than m² of space. 102

105 RETAIL DEVELOPMENT PIPELINE City Mall City Mall, situated in the Klerksdorp CBD (North West), combines a selection of 45 retailers with a movie theatre. Area: m² (before extension) m² (after extension) Attractions Ample parking, with 648 parking bays (1 066 parking bays after extension) Major tenants include Pick n Pay, Nu Metro, Woolworths, Jet, Mr Price, Ackermans, Clicks and Incredible Connection (Foschini, Truworths, A + D Spitz and Wimpy to be accommodated in extension) In a snapshot 2007 value: R % of Retail portfolio by value: 1.5% Gross lettable area: m² (24 996m² after extension) Expected completion date: End October

106 Game City Centre Located in Morningside, KwaZulu-Natal, Game City is a community centre conveniently facing onto Umgeni Road and Stamfordhill Road and in close proximity to the CBD. Area: m² Attractions Conveniently located: Stamfordhill Road is a suburban, office/retail node, with a key taxi rank, while Umgeni Road is near a train station and is the main taxi and bus route from the CBD Strong national tenants (Shoprite and Game) In a snapshot 2007 value: R % of Retail portfolio by value: 1.75% Gross lettable area: m² Expected completion date: May

107 Woodmead Retail Park Woodmead Retail Park is a contemporary shopping centre located at the convergence of the M1 and N1 highways in Woodmead, Gauteng. It combines a selection of food, fashion and home stores, while an additional phase of the development is a motor retail development. Area: m² Attractions An upmarket retail development, with first grade finishes and oversized shop fronts (6m high) Easily accessible from the M1 and Woodmead, facilitating the expanding Woodmead and Midrand nodes Excellent visibility from the M1 highway with ample parking for more than cars Anchor tenants are Pick n Pay and Woolworths. Other tenants include Dion Wired, Dischem, Toys R Us, Mr Price and Rochester Green Features Hardy and low maintenance indigenous landscaping Green zones with avenues of trees placed on the perimeter of the parking area. Solar control has been paramount to the design process In a snapshot Value on completion: R % of Retail portfolio by value: 6% Gross lettable area: m² Expected completion date: April

108 OFFICE development Pipeline Altech Autopage Altech Autopage is an office development measuring 2 200m 2, located in Waterfall Park, on the N1 Highway in Midrand, Gauteng. Area: 2 699m² Attractions Designed using the latest architectural style, materials and finishes A bridge with a central open air canteen will link the new building to the existing Altech Autopage building Building has been let to Altech Autopage for 5 years GreEn Features Design features prevent excessive heat build-up in the building, reducing the air-conditioning demand Basement has been designed with natural ventilation In a snapshot Total development cost: R % of Office portfolio by value: 0.4% Gross lettable area: 2 699m² Expected completion date: 31 October

109 Constantia Office Park Constantia Office Park Phase 5, part of the landmark Constantia Office Park, is a development located on 14th Avenue, Roodepoort, Gauteng. Area: m 2 Attractions Situated in one of the fastest growing nodes in the country Part of Constantia Office Park, an established office park set in an exceptional landscaped environment Good accessibility, off the N1 Highway Comprises m² (five floors) of office space and catering for tenants specific requirements Building design incorporates a prominent exhibition space for advertising Established site amenities include Virgin Active Gym, Days Inn Hotel, Spur and the Keg Tenants include Primedia, Wesbank, ABSA, First National Bank, Metropolitan Life, Holcim, Open Learning Group and Prosperity In a snapshot Total development cost: R % of Office portfolio by value: 1.8% Gross lettable area: m² Expected completion date: Last quarter

110 Montclare place MontClare Place is a Grade A+ mixed use property, currently under construction, consisting of offices, retail and 62 luxury apartments, situated in Claremont, Cape Town. Area: m 2 Attractions One of the largest mixed use developments in the Claremont area Strategically located at the gateway to the Claremont business node, at the intersection of Main and Campground roads Ample parking, with more than parking bays Major tenants include a new age Pick n Pay concept store, a premier Virgin Active, Coronation Asset Management, Kagiso Asset Management and Citadel Investment Services In a snapshot Total development cost: R (office); R (residential) % of Office portfolio by value: 4.77% Gross lettable area: m² Expected completion date: End August

111 The District The District, overlooking Table Mountain, Signal Hill and the Harbour in Cape Town, is a office development comprising office, retail and restaurant areas. It is ideally located for tenants wanting to be part of this dynamic location. Area: m² Attractions Strategically positioned on the Cape Town CBD periphery and bordered by Sir Lowry Road, Russell Street and New Market Street Convenient access to all major transport nodes and close to major transport systems Offers m² of A-grade office space and 2 600m² of retail space Ample parking, with 416 basement parking bays and 260 open bays adjacent to the building The major tenant is Ogilvy In a snapshot Total development cost: R % of Office portfolio by value: 3.06% (office only) Gross lettable area: m² Expected completion date: 1 May

112 The Estuaries The Estuaries Office Park is located on Century Avenue, Century City in Cape Town, comprising 18 sites and m² of office space in landscaped gardens of which Growthpoint bought 5 sites. Area: 9 169m² Attractions Attractive setting maximises garden frontage and water features Located in a thriving mixed use development, with residential and retail opportunities and wideranging amenities Centrally located in a significant growth node in greater Cape Town Ample parking, with four bays / 100m² of offices Conveniently located near a planned new transport interchange system, with overflow parking In a snapshot Total development cost: R % of Office portfolio by value: 1.06% Gross lettable area: 9 169m² Expected completion date: August

113 1 Sandton Drive, Sandton 1 Sandton Drive, set in the heart of the Sandton CBD in Gauteng, is an exclusive, premier, multi-tenanted business hub. Area: m 2 Attractions Ideally located for offices wanting to operate within the Sandton CBD Building design allows for flexibility to suit smaller and larger tenants A sky-walk bridge over Sandton Drive conveniently links 1 Sandton Drive directly to Sandton City Key tenants include Growthpoint Properties and AON insurance company GreEn Feature The building has been designed to be thermal efficient, and environmentally friendly finishes and equipment have been used to reduce energy consumption and maintenance costs In a snapshot Total development cost: Approximately R % of Office portfolio by value: 5.81% Gross lettable area: m² Expected completion date: Last quarter

114 INDUSTRIAL DEVELOPMENT PIPELINE Ebony Place Ebony Place, located in Corobrick Street, Meadowdale, Gauteng, will, on completion, comprise a warehouse and offices measuring approximately m². SITE Area: m² Attractions Located on more than m² of prime industrial land Strategically situated in the popular Route 24/Meadowdale area Good access to the R24 motorway as it is serviced by the Edenvale and Barbara Road interchanges In a snapshot 2007 value: R % of Industrial portfolio by value: 1% Gross lettable area: m² Expected completion date: End March

115 Growthpoint Industrial Estate Once developed, Growthpoint Industrial Estate will be an upmarket, secure industrial warehousing and distribution estate, situated on the Route 24 node in Meadowdale, Gauteng. It is one of the largest industrial sites owned by Growthpoint and on completion of development, GLA will be m 2. SITE Area: m² Attractions The only site of its size and quality still available along this stretch of the R24 motorway between Johannesburg and OR Tambo International Airport Excellent accessibility, with access to the motorway and serviced by two interchanges on the R24 and two on the N12. OR Tambo International Airport is only 5km to the east. Secure with 24-hour controlled access and state of the art security Accommodates a full range of users, with units ranging from 500m² to more than m² In a snapshot (JUstine avon FIRST PHASE) 2007 value: R (Property transferred July 2007) % of Industrial portfolio by value: 1.09% Gross lettable area: m² Expected completion date: April

116 Knightsgate Mini Units Phase 2 Knightsgate, in Germiston, Gauteng, forms part of the existing Knightsgate Mini Unit Park. SITE Area: m² Attractions Well located in the Knightsgate, Germiston area Easy access to the major motorways in the Germiston area Situated in an area with a high demand for facilities of this size and nature In a snapshot 2007 value: R Inc. Land (Phase 2 Development) % of Industrial portfolio by value: 0.73% Gross lettable area: 9 281m² Expected completion date: August

117 NEWMARKET INDUSTRIAL ESTATE Located in the industrial node of Alrode, near Alberton in Gauteng, Newmarket Industrial Estate lies in the heart of an area that has attracted heavy manufacturing businesses and large space users such as Sasol, Petronet and Imperial Trucks. The site will be redeveloped to maximise its full potential. SITE Area: m² Attractions Good access to the highway network through the R59 and N3 Situated near the townships of Katlehong and Tokoza and supported by railway links,thus providing convenient access for staff Strong demand has led to various refurbishments and new developments, boosting rentals in the area Main services are connected to the property, including water, electricity and drainage Large yard areas allow for sufficient turning space for big trucks In a snapshot (FIRST DEVELOPMENT SCANIA) 2007 value: R ( Inc. land for Scania development) % of Industrial portfolio by value: 0.56% Gross lettable area: 4 384m² Expected completion date: Dependent on phases, anticipated at 14 months 115

118

119 GENERAL SHAREHOLDERS INFORMATION 117

120 118 Walmer Park, Port Elizabeth

121 general shareholders information 119

122 linked unitholders analysis AT 30 June 2007 No of unit- Unitholder classification holders % No of units % units % 131, % 501-1,000 units % 340, % 1,001-5,000 units 2, % 6,239, % 5,001-10,000 units 1, % 9,975, % 10,001-20,000 units % 13,287, % 20,001-50,000 units % 19,589, % 50, ,000 units % 17,558, % 100, ,000 units % 25,169, % 200,001-1,000,000 units % 105,198, % 1,000,001-10,000,000 units % 320,691, % 10,000,001 units and more % 555,944, % TOTAL 7, % 1,074,126, % No of unit- Unitholder profile holders % No of units % Banks % 9,489, % Close corporation % 4,288, % Endowment funds % 6,016, % Individuals 5, % 60,364, % Insurance company % 172,896, % Investment company % 11,232, % Medical aid schemes % 2,819, % Mutual funds % 365,114, % Nominees and trusts 1, % 98,186, % Other corporations % 6,866, % Empowerment holding 2 0.0% 122,000, % Pension funds % 178,882, % Private companies % 34,736, % Public companies % 1,231, % TOTAL 7, % 1,074,126, % 120

123 AT 30 June 2007 No of unit- Unitholder spread holders % No of units % Non-public unitholders 7 0.1% 126,520, % Directors 6 0.1% 42,769, % Empowerment holding 2 0.0% 122,000, % Public unitholders 7, % 782,836, % 7, % 1,074,126, % Beneficial unitholders holding 3% or more No of units % Old Mutual Group 128,137, % Investec 126,124, % BEE Consortium 122,000, % Stanlib 80,081, % Public Investment Corporation 48,957, % Transnet Funds 41,091, % Liberty Group 36,266, % TOTAL 582,658, % 121

124 MEMBERS DIARY Financial year end 30 June Annual financial statements November Annual general meeting 4 December 2007 Dividends and debenture interest Declared Paid Interim February March Final August September 122

125 NOTICE TO MEMBERs Notice is hereby given that the 19th annual general meeting of members of Growthpoint Properties Limited will be held at Investec Bank Limited, 100 Grayston Drive, Sandton 2196, on Tuesday 4 December 2007 at 09:00 for the following purposes: 1. To receive, consider and adopt the annual financial statements of the Company and the Group for the year ended 30 June 2007, together with the reports of the directors and the auditor thereon. 2. To re-elect, individually, M G Diliza, S Hackner, J F Marais and J H N Strydom who retire by rotation but, being eligible, offer themselves for re-election. 3. To authorise the directors to determine the remuneration of the auditor for the past audit. 4. To approve the payment of directors remuneration as reflected in the annual financial statements for the year ended 30 June 2007 and to authorise the directors to determine their remuneration payable in respect of the financial year ending 30 June To consider and, if deemed fit, pass with or without modification, the following ordinary resolutions: 5.1. Ordinary resolution No 1 Resolved that the unissued shares in the authorised capital of the Company be and are hereby placed under the control of the directors of the Company who are authorised to allot or issue any such shares at their discretion, subject at all times to the provisions of the Companies Act, 1973, as amended, the Company s Articles of Association and the requirements of the JSE Limited, provided that each ordinary share of five cents be issued together with 10 (ten) unsecured variable-rate subordinated debentures of 250 cents each, as a linked unit. However, no issue of linked units is contemplated at the present time and no issue will be made that could effectively transfer control of the Company without the prior approval of unitholders in general meeting Ordinary resolution No 2 Resolved that, subject to the Listings Requirements of the JSE Limited, the directors be and they are hereby authorised by way of a general authority, to issue ordinary shares of five cents each ( ordinary shares ) together with unsecured variable rate subordinated debentures of 250 cents each ( debentures ) for cash as and when suitable situations arise, subject to the following limitations: that each ordinary share be linked to 10 debentures to form linked units ( the linked units ); this authority shall not extend beyond 15 months from the date of this general meeting; a paid press announcement giving full details, including the impact on net asset value and earnings per linked unit, will be published at the time of an issue representing, on a cumulative basis within one year, 5% or more of the number of linked units in issue prior to such issues; that issues in aggregate in any one financial year will not exceed 10% of the number of securities of any class in issue, including instruments which are compulsorily convertible into securities of that class; that, in determining the price at which an issue of linked units may be made in terms of this authority, the maximum discount permitted will be 5% of the weighted average traded price of the linked units in question, measured over the 30 business days prior to the date on which the price of such issue is determined or agreed by the directors; that issues of linked units shall be made to public subscribers only and not to related parties; and that this authority shall be restricted to the issue of linked units to finance the acquisition of property assets or at any time to settle debt in respect of any of the Company s property assets, and further, provided that any such issues for cash may be made prior to the registration of transfer of any property assets to be acquired. At least 75% of the votes held by linked unitholders present or represented by proxy at the meeting need to be cast in favour of this resolution in order to give effect thereto. 6. To consider and, if deemed fit, to pass, with or without modification, the following special resolution: Special resolution No 1: Amendment of Articles of Association Resolved that the Company s articles of association be and they are hereby amended by the addition of the following new article as article 35: 35. USE OF ELECTRONIC COMMUNICATIONS Subject to the Companies Act and the Listings Requirements of the JSE Limited ( JSE ), this article 35 shall apply notwithstanding any contrary provisions in the company s memorandum and articles of association. 123

126 NOTICE TO MEMBERs 35.1 Definitions In this article 35 the following terms shall have the following meanings: Company information means any and all statements, reports, announcements or updates, notices and forms, circulars and any other communication required by the Companies Act, the company s articles of association and the JSE Listings Requirements to be sent or distributed to the members; Electronic communication means communication by means of data messages, as defined in the Electronic Communications and Transactions Act, No. 25 of 2002, as amended from time to time; Electronic proxies means a proxy or proxies received by the company by means of the proxy system; Proxy system means the electronic system, approved by the board of directors, which enables a member to appoint a proxy electronically Electronic communication Company information may be disseminated by the company by electronic communication without effecting the same communication by any other means, to those members who have furnished express written consent in a format that meets the JSE s guldelines to receive such electronic communication Notwithstanding the provisions of article , any member who has furnished the consent referred to therein may, by written notification to the company, request company information in paper based hard copy format in addition to electronic communication or, at any time and unconditionally, withdraw such consent whereupon such member shall be reinstated to receive company information in paper based hard copy format, provided that where a member has requested both electronic and paper based hard copy communication, the electronic communication shall have discharged the company s obligations to deliver such company information in compliance with its articles of association, the Companies act and the JSE Listings Requirements; Any reference elsewhere in the company s memorandum and articles of association to deliver, mail, post and words with a similar implication shall be deemed to include electronic communication Company information transmitted or made available to a member by electronic communication shall be deemed to have been received by such member on the day immediately following the day that the electronic communication containing the company information or advising the member that the company information is available shall have been sent to the member, to the address furnished for that purpose to the company or its agent or its transfer secretary, as evidenced by the electronic communication logs of the company or its agent or its transfer secretary, as the case may be Electronic Proxies The acceptance and recording of electronic proxies from members shall be in accordance with the proxy system and any such submitted electronic proxy shall be treated in the same manner as a paper based proxy submitted in accordance with the remainder of the provisions of the articles of association; The board of directors may from time to time prescribe conditions or criteria with which a member must comply in order to be eligible for use of electronic proxies; Insofar as the company s articles of association or the Statutes require members to sign forms of proxy, that requirement shall be have been met if the member shall have utilised an electronic communication in a format approved by the board of directors which identifies the member concerned and indicates the member s approval for consent Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require a signature of a member, that requirement shall be met in relation to electronic communication if a method is used to identify the member concerned and to indicate the member s approval of the information contained in the electronic communication and if, in the sole discretion of the board of directors, that method is as reliable as is considered appropriate for the purposes of the electronic communication Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require information to be in writing, that requirement shall be discharged if the information contained in electronic communication is accessible and usable for purposes of subsequent reference. 124

127 35.6 Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require information to be presented in its original form, that requirement shall be met in relation to electronic communication if the integrity of the information from the time of its generation in final form can be assured and is capable of display to anyone to whom it is to be presented, provided further that any such electronic information shall be deemed to have remained unaltered if it has been endorsed and signed by any director or official of the company for purposes of authentication Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require any information or records to be retained in its original form for any period, that requirement shall be met by the retention of the original electronic communication so as to ensure its accessibility for subsequent reference in the format in which it was generated in its final form and that it is capable of identification as to its authenticity. the aforesaid 3% threshold is reached, and for each 3% in aggregate acquired thereafter, containing full details of such acquisitions; acquisitions of linked units in aggregate in any one financial year may not exceed 20% of the Company s issued ordinary share capital as at the date of passing of this special resolution; in determining the price at which ordinary linked units issued by the Company are acquired by it or any of its subsidiaries in terms of this general authority, the maximum premium at which such linked units may be acquired will be 10% of the weighted average of the market value at which such linked units are traded on the JSE over the five business days immediately preceding the date of repurchase of such linked units; the Company is duly authorised by its Articles of Association to acquire linked units issued by it; The reason for and the effect of this special resolution number 1 is to amend the Company s articles of association in order to permit it to disseminate company information to members by electronic means in electronic format and to enable the Company s members by electronic means to exercise their votes at general meetings. 7. To consider and, if deemed fit, to pass, with or without modification, the following special resolution: Special resolution No 2: Repurchase of linked units Resolved that the Company or any of its subsidiaries be and are hereby authorised, by way of a general approval, to acquire ordinary shares and debentures issued as linked units by the Company, in terms of Sections 85 (2) and 85 (3) of the Companies Act No. 61 of 1973, as amended, and in terms of the rules and requirements of the JSE Limited ( the JSE ), being that: any such acquisition of linked units shall be implemented on the open order book of the JSE and without any prior arrangement; this general authority shall be valid until the Company s next annual general meeting, provided that it shall not extend beyond 15 months from the date of registration of this special resolution; an announcement will be published as soon as the Company or any of its subsidiaries has acquired linked units constituting, on a cumulative basis, 3% of the number of linked units in issue prior to the acquisition pursuant to which at any point in time, the Company may only appoint one agent to effect any repurchase on the Company s behalf; the Company s sponsor must confirm the adequacy of the Company s working capital for purposes of undertaking the repurchase of linked units in writing to the JSE before entering the market to proceed with the repurchase; the Company shall remain in compliance with the minimum shareholder spread requirements of the JSE, and the Company and/or its subsidiaries may not repurchase any linked units during a prohibited period as defined by the JSE Listings Requirements. The reason for and the effect of this special resolution number 2 is to permit the Company or any of its subsidiaries, by way of a general approval, to acquire ordinary shares and debentures issued as linked units by the Company as and when suitable opportunities do so arise. Although no repurchase of linked units is contemplated at the present time, the directors, having considered the effects of a repurchase of the maximum number of ordinary shares and debentures issued as linked units in terms of the aforegoing general authority, are of the opinion that for a period of 12 (twelve) months after the date of the notice of annual general meeting: the Company and the Group will be able, in the ordinary course of business, to pay its debts; 125

128 NOTICE TO MEMBERs the assets of the Company and the Group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the Company and the group; the Company and the Group s ordinary share capital, reserves and working capital will be adequate for ordinary business purposes. The following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of the general authority: Directors and management pages 8 and 9; Major beneficial shareholders page 121; Directors interests in linked units page 45; and Share capital of the Company page 64. Litigation statement In terms of section of the JSE Listings Requirements, the directors, whose names appear on page 8 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 (twelve) months, a material effect on the Company s or group s financial position. Directors responsibility statement The directors, whose names appear on page 8 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information. Material changes Other than the facts and developments reported on in the annual report, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the date of signature of the audit report and up to the date of this notice. Notes: A member entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company. All proxy forms or other instruments of authority must be deposited with the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) so as to be received not less than 48 hours before the appointed time for the holding of the meeting (excluding Saturdays, Sundays and public holidays). If you are a certificated Growthpoint linked unitholder or an own name dematerialised Growthpoint linked unitholder and are unable to attend the annual general meeting of Growthpoint linked unitholders to be held at 09:00 on Tuesday, 4 December 2007 ( the Growthpoint annual general meeting ), but wish to be represented thereat, you must complete the form of proxy attached hereto in accordance with the instructions therein and return it to the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) so as to be received by no later than 09:00 on Friday, 30 November If you are a dematerialised Growthpoint linked unitholder and are not an own name dematerialised Growthpoint linked unitholder then you must instruct your CSDP or broker as to how you wish to cast your vote at the Growthpoint annual general meeting in order for them to vote in accordance with your instructions. If you wish to attend the Growthpoint annual general meeting in person, please request your CSDP or broker to issue the necessary letter of representation to you. This must be done in terms of the agreement entered into between the dematerialised Growthpoint linked unitholder (who is not an own name dematerialised Growthpoint linked unitholder) and the CSDP or broker. By order of the Board The directors have no specific intention, at present, for the Company to repurchase any of its shares but consider that such a general authority should be put in place should an opportunity present itself to do so during the year which is in the best interests of the Company and its shareholders. The reason for and effect of the special resolution is to grant the directors of the Company a general authority in terms of the Companies Act and the JSE Listings Requirements for the repurchase by the Company, or a subsidiary of the Company, of the Company s linked units. R A Krabbenhöft Company Secretary 21 August

129 FORM OF PROXY TO BE COMPLETED BY CERTIFICATED AND OWN NAME DEMATERIALISED LINKED UNITHOLDERS OF GROWTHPOINT PROPERTIES LIMITED ( Growthpoint ) ONLY I/We (Name in block letters) of (Address in block capitals) being the registered holder of linked units in Growthpoint, hereby appoint of of of or failing him or failing him or failing him the chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the annual general meeting of the company to be held at 100 Grayston Drive, Sandton, 2196 on Tuesday, 4 December 2007 at 09:00 or any adjournment as follows: RESOLUTIONS IN FAVOUR OF AGAINST ABSTAIN 1. Adoption of annual financial statements 2. Re-election of the following directors who are to retire at the meeting: 2.1 M G Diliza 2.2 S Hackner 2.3 J F Marais 2.4 J H N Strydom 3. Auditor s remuneration 4. To approve payment of remuneration to the directors 5.1 To place the unissued shares in the authorised capital under the control of the directors 5.2 General authority to issue linked units for cash 6. Special resolution 1: Amendment of Articles of Association 7. Special resolution 2: Authority to repurchase linked units My/Our proxy has been instructed to vote in accordance with my/our wishes as indicated by the placing of a cross in the appropriate space above. Unless so instructed, my/our proxy may vote as he/she thinks fit. Signed at: this: day of: 2007 Signature/s of member/s: Telephone: ( ) Cell: Fax: ( ) 127

130 FORM OF PROXY Notes A member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the company. All proxy forms or other instruments of authority must be deposited with the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (P O Box 61051, Marshalltown 2107) so as to be received not less than 48 hours before the appointed time for the holding of the meeting (excluding Saturdays, Sundays and public holidays). If you are a certificated Growthpoint linked unitholder or an own name dematerialised Growthpoint linked unitholder and are unable to attend the Annual General Meeting of Growthpoint linked unitholders to be held at 09:00 on Tuesday, 4 December 2007 ( the Growthpoint Annual General Meeting ) but wish to be represented at thereat, you must complete the form of proxy attached hereto in accordance with the instructions therein and return it to the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (P O Box 61051, Marshalltown, 2107) so as to be received by them not later than 09:00 on Friday, 30 November If you are a dematerialised Growthpoint linked unitholder and are not an own name dematerialised Growthpoint linked unitholder then you must instruct your CSDP or broker as to how you wish to cast your vote at the Growthpoint Annual General Meeting in order for them to vote in accordance with your instructions. If you wish to attend the Growthpoint Annual General Meeting in person, please request your CSDP or broker to issue the necessary letter of representation to you. This must be done in terms of the agreement entered into between the dematerialised Growthpoint linked unitholder (who is not an own name dematerialised Growthpoint linked unitholder) and the CSDP or broker. 128

131

132 GENERAL SHAREHOLDERS INFORMATION 117

133 118 Walmer Park, Port Elizabeth

134 general shareholders information 119

135 linked unitholders analysis AT 30 June 2007 No of unit- Unitholder classification holders % No of units % units % 131, % 501-1,000 units % 340, % 1,001-5,000 units 2, % 6,239, % 5,001-10,000 units 1, % 9,975, % 10,001-20,000 units % 13,287, % 20,001-50,000 units % 19,589, % 50, ,000 units % 17,558, % 100, ,000 units % 25,169, % 200,001-1,000,000 units % 105,198, % 1,000,001-10,000,000 units % 320,691, % 10,000,001 units and more % 555,944, % TOTAL 7, % 1,074,126, % No of unit- Unitholder profile holders % No of units % Banks % 9,489, % Close corporation % 4,288, % Endowment funds % 6,016, % Individuals 5, % 60,364, % Insurance company % 172,896, % Investment company % 11,232, % Medical aid schemes % 2,819, % Mutual funds % 365,114, % Nominees and trusts 1, % 98,186, % Other corporations % 6,866, % Empowerment holding 2 0.0% 122,000, % Pension funds % 178,882, % Private companies % 34,736, % Public companies % 1,231, % TOTAL 7, % 1,074,126, % 120

136 AT 30 June 2007 No of unit- Unitholder spread holders % No of units % Non-public unitholders 7 0.1% 126,520, % Directors 6 0.1% 42,769, % Empowerment holding 2 0.0% 122,000, % Public unitholders 7, % 782,836, % 7, % 1,074,126, % Beneficial unitholders holding 3% or more No of units % Old Mutual Group 128,137, % Investec 126,124, % BEE Consortium 122,000, % Stanlib 80,081, % Public Investment Corporation 48,957, % Transnet Funds 41,091, % Liberty Group 36,266, % TOTAL 582,658, % 121

137 MEMBERS DIARY Financial year end 30 June Annual financial statements November Annual general meeting 4 December 2007 Dividends and debenture interest Declared Paid Interim February March Final August September 122

138 NOTICE TO MEMBERs Notice is hereby given that the 19th annual general meeting of members of Growthpoint Properties Limited will be held at Investec Bank Limited, 100 Grayston Drive, Sandton 2196, on Tuesday 4 December 2007 at 09:00 for the following purposes: 1. To receive, consider and adopt the annual financial statements of the Company and the Group for the year ended 30 June 2007, together with the reports of the directors and the auditor thereon. 2. To re-elect, individually, M G Diliza, S Hackner, J F Marais and J H N Strydom who retire by rotation but, being eligible, offer themselves for re-election. 3. To authorise the directors to determine the remuneration of the auditor for the past audit. 4. To approve the payment of directors remuneration as reflected in the annual financial statements for the year ended 30 June 2007 and to authorise the directors to determine their remuneration payable in respect of the financial year ending 30 June To consider and, if deemed fit, pass with or without modification, the following ordinary resolutions: 5.1. Ordinary resolution No 1 Resolved that the unissued shares in the authorised capital of the Company be and are hereby placed under the control of the directors of the Company who are authorised to allot or issue any such shares at their discretion, subject at all times to the provisions of the Companies Act, 1973, as amended, the Company s Articles of Association and the requirements of the JSE Limited, provided that each ordinary share of five cents be issued together with 10 (ten) unsecured variable-rate subordinated debentures of 250 cents each, as a linked unit. However, no issue of linked units is contemplated at the present time and no issue will be made that could effectively transfer control of the Company without the prior approval of unitholders in general meeting Ordinary resolution No 2 Resolved that, subject to the Listings Requirements of the JSE Limited, the directors be and they are hereby authorised by way of a general authority, to issue ordinary shares of five cents each ( ordinary shares ) together with unsecured variable rate subordinated debentures of 250 cents each ( debentures ) for cash as and when suitable situations arise, subject to the following limitations: that each ordinary share be linked to 10 debentures to form linked units ( the linked units ); this authority shall not extend beyond 15 months from the date of this general meeting; a paid press announcement giving full details, including the impact on net asset value and earnings per linked unit, will be published at the time of an issue representing, on a cumulative basis within one year, 5% or more of the number of linked units in issue prior to such issues; that issues in aggregate in any one financial year will not exceed 10% of the number of securities of any class in issue, including instruments which are compulsorily convertible into securities of that class; that, in determining the price at which an issue of linked units may be made in terms of this authority, the maximum discount permitted will be 5% of the weighted average traded price of the linked units in question, measured over the 30 business days prior to the date on which the price of such issue is determined or agreed by the directors; that issues of linked units shall be made to public subscribers only and not to related parties; and that this authority shall be restricted to the issue of linked units to finance the acquisition of property assets or at any time to settle debt in respect of any of the Company s property assets, and further, provided that any such issues for cash may be made prior to the registration of transfer of any property assets to be acquired. At least 75% of the votes held by linked unitholders present or represented by proxy at the meeting need to be cast in favour of this resolution in order to give effect thereto. 6. To consider and, if deemed fit, to pass, with or without modification, the following special resolution: Special resolution No 1: Amendment of Articles of Association Resolved that the Company s articles of association be and they are hereby amended by the addition of the following new article as article 35: 35. USE OF ELECTRONIC COMMUNICATIONS Subject to the Companies Act and the Listings Requirements of the JSE Limited ( JSE ), this article 35 shall apply notwithstanding any contrary provisions in the company s memorandum and articles of association. 123

139 NOTICE TO MEMBERs 35.1 Definitions In this article 35 the following terms shall have the following meanings: Company information means any and all statements, reports, announcements or updates, notices and forms, circulars and any other communication required by the Companies Act, the company s articles of association and the JSE Listings Requirements to be sent or distributed to the members; Electronic communication means communication by means of data messages, as defined in the Electronic Communications and Transactions Act, No. 25 of 2002, as amended from time to time; Electronic proxies means a proxy or proxies received by the company by means of the proxy system; Proxy system means the electronic system, approved by the board of directors, which enables a member to appoint a proxy electronically Electronic communication Company information may be disseminated by the company by electronic communication without effecting the same communication by any other means, to those members who have furnished express written consent in a format that meets the JSE s guldelines to receive such electronic communication Notwithstanding the provisions of article , any member who has furnished the consent referred to therein may, by written notification to the company, request company information in paper based hard copy format in addition to electronic communication or, at any time and unconditionally, withdraw such consent whereupon such member shall be reinstated to receive company information in paper based hard copy format, provided that where a member has requested both electronic and paper based hard copy communication, the electronic communication shall have discharged the company s obligations to deliver such company information in compliance with its articles of association, the Companies act and the JSE Listings Requirements; Any reference elsewhere in the company s memorandum and articles of association to deliver, mail, post and words with a similar implication shall be deemed to include electronic communication Company information transmitted or made available to a member by electronic communication shall be deemed to have been received by such member on the day immediately following the day that the electronic communication containing the company information or advising the member that the company information is available shall have been sent to the member, to the address furnished for that purpose to the company or its agent or its transfer secretary, as evidenced by the electronic communication logs of the company or its agent or its transfer secretary, as the case may be Electronic Proxies The acceptance and recording of electronic proxies from members shall be in accordance with the proxy system and any such submitted electronic proxy shall be treated in the same manner as a paper based proxy submitted in accordance with the remainder of the provisions of the articles of association; The board of directors may from time to time prescribe conditions or criteria with which a member must comply in order to be eligible for use of electronic proxies; Insofar as the company s articles of association or the Statutes require members to sign forms of proxy, that requirement shall be have been met if the member shall have utilised an electronic communication in a format approved by the board of directors which identifies the member concerned and indicates the member s approval for consent Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require a signature of a member, that requirement shall be met in relation to electronic communication if a method is used to identify the member concerned and to indicate the member s approval of the information contained in the electronic communication and if, in the sole discretion of the board of directors, that method is as reliable as is considered appropriate for the purposes of the electronic communication Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require information to be in writing, that requirement shall be discharged if the information contained in electronic communication is accessible and usable for purposes of subsequent reference. 124

140 35.6 Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require information to be presented in its original form, that requirement shall be met in relation to electronic communication if the integrity of the information from the time of its generation in final form can be assured and is capable of display to anyone to whom it is to be presented, provided further that any such electronic information shall be deemed to have remained unaltered if it has been endorsed and signed by any director or official of the company for purposes of authentication Whenever the company s articles of association or the Statutes or the JSE Listings Requirements require any information or records to be retained in its original form for any period, that requirement shall be met by the retention of the original electronic communication so as to ensure its accessibility for subsequent reference in the format in which it was generated in its final form and that it is capable of identification as to its authenticity. the aforesaid 3% threshold is reached, and for each 3% in aggregate acquired thereafter, containing full details of such acquisitions; acquisitions of linked units in aggregate in any one financial year may not exceed 20% of the Company s issued ordinary share capital as at the date of passing of this special resolution; in determining the price at which ordinary linked units issued by the Company are acquired by it or any of its subsidiaries in terms of this general authority, the maximum premium at which such linked units may be acquired will be 10% of the weighted average of the market value at which such linked units are traded on the JSE over the five business days immediately preceding the date of repurchase of such linked units; the Company is duly authorised by its Articles of Association to acquire linked units issued by it; The reason for and the effect of this special resolution number 1 is to amend the Company s articles of association in order to permit it to disseminate company information to members by electronic means in electronic format and to enable the Company s members by electronic means to exercise their votes at general meetings. 7. To consider and, if deemed fit, to pass, with or without modification, the following special resolution: Special resolution No 2: Repurchase of linked units Resolved that the Company or any of its subsidiaries be and are hereby authorised, by way of a general approval, to acquire ordinary shares and debentures issued as linked units by the Company, in terms of Sections 85 (2) and 85 (3) of the Companies Act No. 61 of 1973, as amended, and in terms of the rules and requirements of the JSE Limited ( the JSE ), being that: any such acquisition of linked units shall be implemented on the open order book of the JSE and without any prior arrangement; this general authority shall be valid until the Company s next annual general meeting, provided that it shall not extend beyond 15 months from the date of registration of this special resolution; an announcement will be published as soon as the Company or any of its subsidiaries has acquired linked units constituting, on a cumulative basis, 3% of the number of linked units in issue prior to the acquisition pursuant to which at any point in time, the Company may only appoint one agent to effect any repurchase on the Company s behalf; the Company s sponsor must confirm the adequacy of the Company s working capital for purposes of undertaking the repurchase of linked units in writing to the JSE before entering the market to proceed with the repurchase; the Company shall remain in compliance with the minimum shareholder spread requirements of the JSE, and the Company and/or its subsidiaries may not repurchase any linked units during a prohibited period as defined by the JSE Listings Requirements. The reason for and the effect of this special resolution number 2 is to permit the Company or any of its subsidiaries, by way of a general approval, to acquire ordinary shares and debentures issued as linked units by the Company as and when suitable opportunities do so arise. Although no repurchase of linked units is contemplated at the present time, the directors, having considered the effects of a repurchase of the maximum number of ordinary shares and debentures issued as linked units in terms of the aforegoing general authority, are of the opinion that for a period of 12 (twelve) months after the date of the notice of annual general meeting: the Company and the Group will be able, in the ordinary course of business, to pay its debts; 125

141 NOTICE TO MEMBERs the assets of the Company and the Group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the Company and the group; the Company and the Group s ordinary share capital, reserves and working capital will be adequate for ordinary business purposes. The following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of the general authority: Directors and management pages 8 and 9; Major beneficial shareholders page 121; Directors interests in linked units page 45; and Share capital of the Company page 64. Litigation statement In terms of section of the JSE Listings Requirements, the directors, whose names appear on page 8 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 (twelve) months, a material effect on the Company s or group s financial position. Directors responsibility statement The directors, whose names appear on page 8 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information. Material changes Other than the facts and developments reported on in the annual report, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the date of signature of the audit report and up to the date of this notice. Notes: A member entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company. All proxy forms or other instruments of authority must be deposited with the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) so as to be received not less than 48 hours before the appointed time for the holding of the meeting (excluding Saturdays, Sundays and public holidays). If you are a certificated Growthpoint linked unitholder or an own name dematerialised Growthpoint linked unitholder and are unable to attend the annual general meeting of Growthpoint linked unitholders to be held at 09:00 on Tuesday, 4 December 2007 ( the Growthpoint annual general meeting ), but wish to be represented thereat, you must complete the form of proxy attached hereto in accordance with the instructions therein and return it to the Transfer Secretaries, Computershare Investor Services 2004 (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) so as to be received by no later than 09:00 on Friday, 30 November If you are a dematerialised Growthpoint linked unitholder and are not an own name dematerialised Growthpoint linked unitholder then you must instruct your CSDP or broker as to how you wish to cast your vote at the Growthpoint annual general meeting in order for them to vote in accordance with your instructions. If you wish to attend the Growthpoint annual general meeting in person, please request your CSDP or broker to issue the necessary letter of representation to you. This must be done in terms of the agreement entered into between the dematerialised Growthpoint linked unitholder (who is not an own name dematerialised Growthpoint linked unitholder) and the CSDP or broker. By order of the Board The directors have no specific intention, at present, for the Company to repurchase any of its shares but consider that such a general authority should be put in place should an opportunity present itself to do so during the year which is in the best interests of the Company and its shareholders. The reason for and effect of the special resolution is to grant the directors of the Company a general authority in terms of the Companies Act and the JSE Listings Requirements for the repurchase by the Company, or a subsidiary of the Company, of the Company s linked units. R A Krabbenhöft Company Secretary 21 August