For many businesses, the Covid-19 pandemic was simply the last straw, and for a time, the virus brought our already ailing economy to a halt. For us, this meant an increase in vacancies and arrears and a decline in lease renewals, particularly in the retail and office sectors. Industrial properties were less affected. FY21 was a challenging year for our clients, and maintaining close relationships was pivotal during this period. We continued to be proactive in making regular contact and easing pressure where we could.

There is no property management system or software programme available that can handle the nuances of each tenant's unique requirements, as we discovered when we engaged with tenants regarding Covid-19 discounts and deferrals. However, our staff stepped in and did an outstanding job of accomplishing what our regular systems and processes could not, from managing individual client relationships to agreeing to new terms, passing on discounts and adjusting rentals.

Many of our employees continued to work from home through the various levels of lockdown in FY21, and thanks to the efforts of our IT department, they were well equipped to do so. There were also many staff members who continued to operate at the coalface, and our retail teams excelled in implementing Covid-19 protocols while working tirelessly to keep the communities they serve safe.

Facilities management also continued to play an essential role across all Growthpoint sites. Last year, at the start of the pandemic, the facilities management team implemented a standard operating procedure (SOP) and the protocols to be followed by staff members, tenants, contractors and all visitors to our properties. In FY21, they continued to monitor and update these with changing regulations to ensure safe and healthy workspaces for all.

Our operations are guided by our health and safety policy, and to ensure that safety and compliance requirements are met, we have a number of initiatives in place. These include staff awareness of health and safety measures and operational staff training. Contractors are assessed regularly to ensure adherence to the necessary occupational health and safety regulatory and legislative requirements.

Our business operations are supported by a highly effective legal team. With the Protection of Personal Information Act (POPIA) coming into full effect on 1 July 2021, this team has been instrumental in the preparations for ensuring the business is compliant and staff members are well informed.

Although lockdown regulations in effect during the year hampered their ability to provide some services, we continued to pay our suppliers. Requests for proposals (RFPs) were sent out for security and cleaning contracts, and our procurement team worked quickly to contract these services at predetermined rates for a period of time. The team also procured essential items on behalf of our staff and handled the logistics around remote delivery.

Despite the pandemic, the launch of our new MRI IT system went ahead as planned on 1 July 2020, and the business adapted well to the move. There were teething issues of course, but we continued to work together to resolve these while providing regular updates on changes and training. Our credit controllers, in particular, had to navigate some unfamiliar territory, but took these challenges in their stride.

Our IT department continued to support the business well in FY21, including those staff working from home while getting the company ready to implement POPIA. We also developed new IT policies and procedures with new SOPs in place. Cybersecurity remains a key focus.

Sustainability is becoming a hot topic globally, and we want to remain a leader in that space. Green buildings are also very relevant to our client base, and we are working tirelessly to provide the market with properties that satisfy this need. In addition, changes in government regulations have allowed us to accelerate solar production, taking us one step closer to our Net Zero 2050 strategy.

Utilities remain a highly complex area of the business. Ensuring the accuracy of billing, minimising usage, and working with the different local municipalities are key focus areas. Our team has good relationships with the municipalities and has successfully chipped away at resolving our queries while enhancing our capabilities with technology for early detection and governance.

In everything we do, flexibility and client centricity are vital in meeting our clients' needs. We have balanced the sustainability of their businesses alongside our own, and where we have succeeded, we have been able to solidify these relationships and retain tenancies.

The broking community also plays a vital role in our business, however, the lockdown severely impacted the ability of brokers to work and it was essential for us to maintain regular contact with them to support their efforts and maintain our reputation as a responsive business partner. Unfortunately, our Operation Destination Russia trip has been postponed to 2022 due to travel restrictions, but we are looking forward to socialising with the 2020/21 winning brokers on a local trip later this year.

Our people are the engine room of our business, and they continued to live our values in FY21, despite the additional workload. Similarly, we continued to prioritise their wellbeing throughout the year with various programmes and workshops. Our Employee Assistance Programme proved well-placed to provide the necessary support, particularly during a time when mental health was affected.

The ability to engage with colleagues socially and collaborate in person plays a vital role in the creativity and motivation of our people and our clients. As a result, workspaces continue to be a valuable tool for successful businesses, and we are confident that more people will return to their offices once it is safe to do so.

Despite the difficulties we faced over the past year, there are green shoots for the commercial real estate industry. In particular, the industrial sector is showing some promise, and there is a demand for this type of property. The events of the past 18 months were unprecedented, and we did not have the luxury of looking to the history books for guidance on how to move forward. We had to learn on the go, but the knowledge we gained and the relationships we forged as a result will, we believe, only serve to improve our business and operations in years to come.

Environmental

The financial year 2021 has been a year for reviewing and planning our efforts to reduce our environmental footprint and impact. The refinement of our environmental approach as part of the ESG strategy fullfilled our commitment to review these issues. We believe its integration into the business ensures that what we do at our properties is embedded better. Our carbon-neutral strategy is being rolled out and applied throughout all levels of the business, and there are high expectations for implementation going forward. We will strive to meet these objectives.

An extensive climate risk assessment was completed for the business. This is a complex subject. The findings have proven to be fundamental in refining our carbon strategy. Although we had decided to base this strategy on Science Based Targets initiative (SBTi) methodology, we will be withdrawing our formal commitment to the SBTi as it is proving to be onerous and inflexible for our specific business needs. We believe our approach and the annual tracking of our progress will provide our stakeholders with a sense of comfort of our progress. Furthermore, our GHG emissions are verified by a third party and will thus provide additional assurance of our process.

GHG emissions for 1 July 2020 to 30 June 2021

*     Increase due to better data availability.
**   Less refrigerant gas was used in FY21.
*** For FY21 all common area electricity was moved from scope 3 to scope 2.

Our environmental policy was updated in line with these efforts and guides our actions on the critical issues of climate change, carbon emissions, biodiversity and energy, water, waste and renewable energy investment.

There is a clear link between the environment, society and the economy. The negative impact of Covid-19 on our ability to deliver on our objectives has revealed how these elements are intertwined.

Procurement

Growthpoint values the role that suppliers and other stakeholders play in our ability to provide "space to thrive". Continuous engagement with our stakeholders is vital in ensuring that our standards are maintained while meeting our clients' expectations.

Collaboration with our internal and external stakeholders has resulted in several positive outcomes, including risk mitigation, costs efficiencies, elevated service delivery and enhanced commitment. Additionally, establishing national contracts and engaging directly with supply manufacturers has maximised our countrywide spending power.

We continue to focus on cost efficiencies, RFPs, supplier negotiations and measuring supplier development.

Due to the Covid-19 pandemic, we extended contracts for an additional year before opening them up for RFPs. This extension guaranteed another year of work for our suppliers, many of whom also faced a challenging year, and our commitment to them not only strengthened relationships but also helped to streamline negotiations on annual cost increases.

Growthpoint's policies came into sharp focus during FY21, and our procurement policy was updated. We also worked with other departments to develop a Local Economic Development and Transformation Policy, which outlines the principles and procedures for engaging with businesses in local communities where we operate. The purpose of this policy is to accelerate the empowerment of companies owned by previously disadvantaged individuals operating in communities near our assets and developments, and to foster community partnerships to maintain our reputation in local communities. The document aligns with the King Code IV principles of good corporate governance.

We work closely with Property Point to establish good relationships with community leaders and forums and recommend suppliers that are procurement ready. We also assist managers and together help these suppliers perform at acceptable levels. Contracts are often extended because of these efforts. We have seen this in the case of security and pest control offerings. Our process of issuing a national small works RFP is underway, and we hope this will be sourced in the same way.

Growthpoint's B-BBEE efforts continue, and we aim to engage with organisations with a minimum of a level 4 B-BBEE rating. There has been additional engagement with various departments to understand all the dynamics that require consideration. Particular attention has been placed on the practice of fronting and how to identify it. We have communicated extensively to internal and external stakeholders that any supplier guilty of fronting will face contract termination.

Information Technology (IT)

Our IT service supports the South African sectors of the business across all geographic regions by providing information technology services and support. We have robust governance frameworks and policies guiding our IT activities and processes. Our policies and governance are managed within the IT (COBIT) good practice framework. More detail on our policies can be found in the Policies and Documents section of our ESG report.

In FY21, Growthpoint continued to play a pivotal role in our employees' ability to work from remote locations with the appropriate security.

We consider cybersecurity to be the primary risk for IT. This is a huge challenge that requires a combination of disciplines and commitment as well as personal and financial resources. The landscape is ever-changing, and this further complicates the task. We believe in doing the basics correctly, and this includes monitoring and being proactive. Our environment is scanned regularly, and we act timeously on the outcomes of these scans. Regular patching occurs while updating and new fixes are continuously installed across our environment. Measuring and monitoring happen constantly, and findings are regularly reported to the relevant committees.

We have access to both intelligence through relevant partnerships, and implementable solutions for our environment. There are various levels of protection with clear steps on how to deal with breaches. Awareness training programmes allow staff to become more familiar with cybercrime and teach them how to protect both the company and themselves from various threats.

A material consideration for IT is having access to underlying data and making this available and relevant to Growthpoint. Using data analytics and business intelligence to extract information from the data enables us to make meaningful decisions. Data must therefore be securely available to the business to provide consistent information.

Consistent business logic also needs to be built into the data across all the sectors. This can be challenging because of how the data is stored in different environments and because we sometimes do not have access to the raw, underlying data. A new IT challenge is working with a global business partner that currently does not give us access to its server in the "cloud". We are, however, working to find a solution. The situation is complex due to various security considerations, and we have found ourselves pioneering an approach that could become a standard. We are also looking at new types of replication and virtual networks.

In the year under review, we focused on embedding the MRI system, although there were many hurdles in implementing a new design and business process in an organisation such as Growthpoint. However, it is now well-embedded, and the business process is well-established. We are starting to see the benefits of MRI as a real-time online system, and this will aid us in achieving consistent business logic.

When procuring IT systems and equipment, Growthpoint likes to buy "tier 1" products with strong reputations, build consistency and good support. Better quality equipment has served us well over extended periods, and we are also careful to buy appropriate infrastructure that is well-suited to the business.

Growthpoint keeps up to date on new technology to assess whether we may want to adopt it. In FY21, we also decommissioned our Sandton data centre and moved to a hosted data centre that provides the appropriate energy efficiencies and power supply protection, cooling and fire protection. This move offers greater efficiencies and cost savings compared to maintaining our own data centre. We are not using the data centre to its full capacity and this is a big drive going forward, although we have to be very careful in moving our data to ensure it is safe, secure and replicable.

Legal

Our legal team supports the South African sectors of the business across all geographic regions and the service divisions by providing legal services and support.

In FY21 the department played an active role in ensuring that the company would be fully compliant with POPIA when it came into effect on 1 July 2021. A compliance framework was developed, an impact assessment was done, a manual was compiled and staff members were trained. In addition, data processing agreements were concluded with all third-party suppliers that process information for which we are responsible, and our standard contracts were amended to include the requisite consent to process personal information clauses.

We are actively involved in discussions with the Competition Commission, together with SAPOA and SA REIT, regarding an agreed code of conduct which the Competition Commission has requested be concluded by retail landlords.

The team also continues to assist the business with the structuring and implementation of trading and development deals; the drafting and implementation of acquisition and disposal transactions; negotiations with potential tenants to ensure the legal terms of the transaction are suitably agreed and recorded; reviewing and drafting various service level agreements (SLAs), including our CSR transactions; and managing legal disputes with local authorities.

Facilities management

Facilities management is responsible for fostering a culture of collaboration that enhances the performance of our assets. The department achieves this by delivering maintenance solutions, value-added client experiences and quality facilities for the whole lifecycle of each asset, guided by best practice and legislation. By tracking and managing the capital and operational budgets, the team continued in FY21 to keep the physical assets safe and functional within the prescribed budgets. It also focused on driving down costs without compromising service levels.

In response to the Covid-19 pandemic, Growthpoint compiled an SOP that detailed the required protocols for staff members, tenants, contractors and visitors to our sites.

The facilities management team also concentrated on managing and implementing the ongoing changes to the regulations and directives from the World Health Organisation (WHO) to create a safe and healthy workplace for staff, service providers and our clients.

New technology continues to change the built environment and our team also made great strides in this regard, in line with the company's goals.

We drive a professional client and customer-service culture throughout the business, and extract maximum value from our assets through optimum pricing models. This is achieved by ensuring that the appropriate technical organisations and professionals are appointed to improve customer service and asset performance.

Growthpoint undertook and completed a successful project to future-proof our buildings against further water shortages in South Africa. We installed additional storage tanks, introduced water-saving initiatives, and provided buildings with treated water to potable standards for non-potable use and sanitary flushing purposes. We have also applied for a water user licence (WULA) to secure water stability and register and license all boreholes in the portfolio.

Due to disruptions in electrical supply and specifically load shedding, Growthpoint established an integrated process to support and ensure the continuity of power to our clients by securing bulk diesel storage facilities and introducing a dedicated diesel replenishment team. This was expanded by contracting a third-party supplier to improve the bulk storage and assist with diesel deliveries across the country.

We undertook multiple roofing replacement projects, many in support of PV panel installations. In addition, there was a continuous drive to ensure Automatic Sprinkler Insurance Bureau (ASIB) compliance throughout the Growthpoint portfolio.

Articulating our strong emphasis on safety and compliance, we initiated several measures to improve our risk information management system (RIMS) and raised awareness about safety among our employees and service providers.

Growthpoint's health and safety activities are based on identified risks and legal requirements linked to the physical work environment. These issues are handled by the Health and Safety Committee, as well as our team, and are addressed on an ongoing basis. Besides the minimum requirements, we have a clear vision to achieve a zero rate of workplace-related accidents.

Health and safety

Growthpoint undertakes all its activities in accordance with our Health and Safety Policy, which aligns with the Occupational Health and Safety Act (OHSA) No 85 of 1993. This policy is for the health and safety of employees at work.

Additionally, quarterly Occupational Health and Safety Forum meetings are held and minuted, providing feedback to the SET Committee.

Growthpoint makes use of risk assessment companies, particularly for development projects, to ensure that all contractors adhere to the necessary occupational health and safety regulatory and legislative requirements. We comply with all safety and compliance requirements and consistently have initiatives to drive staff awareness of health and safety measures, as well as operational staff training. During the financial year under review, no fines were imposed.

We engage with a system called "Worktrainer" that requires quarterly reporting and reviews of documentation pertinent to the management of our buildings. It is used as a key performance indicator (KPI) for operational staff. In addition, user engagement is tracked and managed to ensure all necessary data is updated. This method ensures that we meet the criteria specified in our RIMS process for building inspections and regulations.

Other avenues used to facilitate health and safety include vendor vetting management. The system provides KPIs for contractors, which are assessed quarterly. Any issues are discussed with the vendor to ensure swift resolution of any concerns. The continuous fostering of relationships between tenants and operational staff is vital to ensure good communication and compliance with building regulations.

All contracted suppliers sign SLAs and are obliged to adhere to these agreements or risk termination of their services after a consultative process. As per the mandatory signing of a Section 37 (2) agreement, vendors are liable for all health and safety on their contracted projects. Quarterly meetings are held with contractual service providers, with monthly meetings held for larger contracts. Any concerns are addressed at these meetings.

Health and Safety is a key objective for ESG compliance and is assessed in the RFP process before allocating contracts to vendors. If the minimum standards are not met, the company is considered risky, and we will not engage with that supplier.

A dedicated Risk Officer ensures compliance with building and fire regulations and the OHSA by performing independent building inspections and liaising with tenants when conducting building inspections, as well as facilities and property management personnel and insurers. Growthpoint's insurers undertake inspections of some buildings each year to ensure that the insured cover corresponds with the insurable risk underwritten.