Growthpoint is an international property company that provides space to thrive with innovative and sustainable property solutions.

INTRODUCTION

Growthpoint is the largest South African primary JSE-listed REIT with a quality portfolio of 432 directly owned properties in South Africa (RSA) valued at R68.8bn, including five hospitals and one medical chambers valued at R2.8bn owned by Growthpoint Healthcare Property Holdings (RF) Limited (GHPH). Growthpoint has a 62.2% shareholding in GHPH.

Growthpoint has a 62.2% interest in ASX-listed Growthpoint Properties Australia Limited (GOZ), which owns 55 properties in Australia valued at R49.5bn and a 52.1% interest in LSE-listed Capital & Regional Plc (C&R), which owns seven properties in the United Kingdom valued at R10.5bn.

Growthpoint has three equity-accounted investments valued at R15.0bn. Our 50.0% share of the V&A Waterfront (V&A) (R6.3bn) and 29.3% stake in London Stock Exchange AIM-listed Globalworth Real Estate Investments (GWI) (R8.6bn) are the largest of these investments.

Growthpoint has five unlisted investments, valued at R808.1m of which our 16.1% stake in Lango Real Estate Limited (Lango), formerly Growthpoint Investec African Properties Limited (GIAP) (R758.2m) is the largest.

GOZ owns a 15.0% stake in ASX-listed APN Industria REIT (ADI), valued at R1.1bn.

Growthpoint has a trading and development sector which develops commercial property internally and for third parties. Growthpoint also has a funds management sector with assets under management of R11.7bn (FY20: R10.0bn).

Growthpoint is included in the FTSE/JSE Top 40 Index (J200) with a market capitalisation of R51.1bn at 30 June 2021 (FY21). On average, 244.8m shares (FY20: 218.5m) with a value of R3.2bn (FY20: R3.9bn) were traded per month during the period. This makes Growthpoint a liquid and tradable way to own commercial property in South Africa. The value of Growthpoint’s property portfolio is split between South African (inclusive of the V&A) (60.1%) and international (39.9%) assets. It is well diversified in the three major sectors of commercial property, being retail, office and industrial. Most of the RSA portfolio is in economic nodes within major metropolitan areas.

For FY21 the SA REIT net asset value (SA REIT NAV) of the Group decreased by 12.3% to 2 023 (FY20: 2 307) cents per share.

IMPACT OF COVID-19 ON THE BUSINESS

Our tenants have continued to be impacted as South Africa has moved through the various lockdown levels and in particular by the restrictions on alcohol sales and curfews imposed as a result of both the second and third waves. Our retail tenants, particularly restaurants, gyms and cinemas are the worst affected. For the financial period we provided rental relief of R230.4m (FY20: R436.3m) to our tenants with R32.8m (FY20: R141.4m) in deferred rent and R197.6m (FY20: R277.5m) of rental discounts. We recovered R156.0m (FY20: R17.4m) of deferred rent in the period and incurred R6.0m (FY20: R6.8m) of Covid-19-related expenses. 90.1% of the total deferrals granted since the onset of Covid-19 have been recovered.

Historically the V&A has been a standout performer for Growthpoint. However, given its strong reliance on international and local tourism and heavy weighting to the hotel, retail and restaurant trade, it has suffered disproportionately to the rest of the South African portfolio with its contribution to distributable income dropping by 39.8% to R364.9m (FY20: R606.5m).

Our international investments in GOZ and GWI were less affected by Covid-19 at an operational level as a result of their focus on office and industrial properties with strong customer bases weighted toward listed corporates and government in Australia, and large multinational tenants in Poland and Romania. Dividends received from GWI decreased by 35.2% linked to the opportunity cost of holding significant cash balances which at 30 June 2021 amounted to EUR460m.

C&R with its 100% retail focus has faced extreme challenges with the UK experiencing its third full lockdown (6 January to 12 April 2021) since the first was imposed in March 2020.

While encouraging progress is being made in relation to vaccination of the population in the markets we operate in, the outlook remains unclear.

Growthpoint supports the respective national vaccination drives and has actively encouraged all its stakeholders and their staff to be vaccinated.

Notwithstanding all of the above, our geographic and sectoral diversity has placed us in a position of strength to weather the Covid-19 storm.

STRATEGY

In line with Growthpoint’s vision “to be a leading international property company providing space to thrive”, the company’s strategy incorporates: the optimisation and streamlining of our RSA portfolio; the introduction of new revenue streams via the funds management business and trading and development for third parties and further international diversification, with a focus on markets where we have a competitive edge and direct access to capital.

While our strategic pillars remain intact, in the short to medium term our priority remains the protection of our balance sheet and liquidity position.

The Board is satisfied with the progress made in bolstering the balance sheet in FY21 through various initiatives, including the R4.3bn equity raise (excluding costs), the R577.0m proceeds received from the Distribution Re-investment Plan (DRIP), R559.0m of asset sales and R864.8m (after income tax of R149.0m) cash retained as a result of lowering the dividend pay-out ratio to 80%.

REDUCTION IN FUNDS FROM OPERATIONS (FFO) AND DISTRIBUTABLE INCOME PER SHARE (DIPS)

Group SA REIT FFO for FY21 decreased by R532m from R5 185m for FY20 to R4 653m or 10.3%. On a per share basis it decreased by 19.9% from 170.7c to 136.8c. Group distributable income decreased by R426m from R5 478m to R5 052m, or 7.8%. Distributable income per share (DIPS) decreased by 19.1% from 183.1c to 148.1c.

BASIS OF PREPARATION

The summarised consolidated financial statements are prepared in accordance with International Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and the requirements of the Companies Act of South Africa. The accounting policies applied in preparing these financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual financial statements.

These summarised consolidated financial statements are extracted from the audited information but are not themselves audited. The annual financial statements were audited by Ernst & Young Inc., who expressed an unmodified opinion thereon. The auditor’s report does not report on all the information contained in these summarised consolidated financial statements.

Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement, they should obtain a copy of the auditor’s report, together with the accompanying audited consolidated financial statements, both of which are available for inspection at the company’s registered office or on the company’s website. The directors of Growthpoint Properties Limited take full responsibility for the preparation of this report and confirm that the selected financial information has been correctly extracted from the underlying consolidated financial statements.

Mr G Völkel (CA(SA)), Growthpoint’s Group Financial Director, was responsible for supervising the preparation of these condensed consolidated financial statements.

GOZ

The investment in GOZ was accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates. The statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the closing exchange rate at FY21 of R10.70:AUD1 (FY20: R11.98:AUD1).

A deferred tax liability of R4.2bn (FY20: R3.8bn) is included in the statement of financial position. This relates to capital gains tax payable in Australia if Growthpoint were to sell its investment in GOZ.

The statement of profit or loss and other comprehensive income also includes 100% of the revenue and expenses of GOZ, which were translated at an average exchange rate of R11.49:AUD1 for FY21 (FY20: R10.49:AUD1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 37.8% (FY20: 37.8%) not owned by Growthpoint.

Included in the FY21 distributable income is a R987.0m dividend received from GOZ, compared to R1 010.1m for FY20. This is accounted for by the GOZ dividend per share for FY21 of AUD20.0c compared to AUD21.8c in FY20. Included in normal tax in the statement of profit or loss and other comprehensive income is R110.3m (FY20: R125.3m) which relates to withholding tax paid on the distributions received from GOZ.

C&R

The investment in C&R was accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates. The statement of financial position includes 100% of the assets and liabilities of C&R, converted at the closing exchange rate at FY21 of R19.75:GBP1 (FY20: R21.52:GBP1).

The statement of profit or loss and other comprehensive income also includes 100% of the revenue and expenses of C&R, which were translated at an average exchange rate of R20.71:GBP1 for FY21 (FY20: R20.75:GBP1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 47.9% (FY20: 47.9%) not owned by Growthpoint.

C&R did not declare a dividend for FY21.

C&R signed extensions of loan covenant waivers on The Mall and Ilford to January 2022 and April 2022 respectively and agreed terms on an extension to the Luton waiver until January 2022.

V&A, GWI AND OTHER EQUITY-ACCOUNTED INVESTMENTS

The investments in the V&A (joint venture), GWI and the other equity-accounted investments were accounted for in terms of IFRS 11 Joint Arrangements and IAS 28 Investments in Associates. The equity-accounting method was used – the Group’s share of the profit or loss and other comprehensive income of these investments were accounted for.

Included in the FY21 distributable income is R364.9m from the V&A (FY20: R606.5m) and R370.3m from GWI (FY20: R569.7m).

REVENUE AND COST-TO-INCOME

Revenue increased by 6.2% for FY21 compared to FY20. RSA revenue increased by 4.0%, and GOZ revenue decreased by 0.4% compared to FY20. C&R is not comparable as revenue was only included for six months in FY20. The SA REIT cost-to-income ratio for the Group decreased to 38.8% at FY21 from 40.1% at FY20. For RSA the ratio decreased to 41.8% from 44.5% at FY20 and GOZ increased to 23.5% from 22.1% at FY20. For C&R the ratio increased to 55.6% from 54.8% at FY20.

FAIR VALUE ADJUSTMENTS

The revaluation of properties in RSA, GOZ and C&R resulted in an overall decrease of R4.4bn (3.3%) (FY20: R8.4bn or 5.7%) to R128.2bn (FY20: R139.1bn) for investment property (including investment properties classified as held for sale). The revaluation of properties resulted in a decrease of R5.4bn (7.4%) (FY20: R7.1bn or 8.8%) for RSA, an increase of R3.9bn (8.7%) (FY20: R1.1bn or 2.2%) for GOZ and a decrease of R2.9bn (FY20: 21.7%) (FY20: R2.4bn or 14.1%) for C&R.

Property assets held for trading and development are held at the lower of cost or net realisable value. The RSA valuation decrease was driven mainly by lower market rental growth assumptions on the back of a weak macro-economic environment and the impact of Covid-19. An impairment loss of R30.0m (5.2%) (FY20: Rnil) was recognised on property assets held for trading and development.

Interest-bearing borrowings and derivatives were fair valued using the RSA or foreign exchange denominated swap curves at FY21, decreasing the overall liability by R615.1m (FY20: increase of R1.7bn). These fair value adjustments and other non-distributable items, such as capital items, non-cash charges, deferred taxation and the net effect of the non-controlling interests’ portion of the non-distributable items, were transferred to the nondistributable reserve.

FINANCE COSTS

Finance costs, including finance costs and income received on interest rate swaps, increased by 7.1% to R3.3bn (FY20: R3.1bn). The interest cover ratio decreased to 2.9 times for FY21 (FY20: 3.1 times). The weighted average interest rate for RSA borrowings was 7.8% (FY20: 8.2%) (6.0% including foreign-denominated loans and cross-currency interest rate swaps (CCIRS) (FY20: 5.9%)). The weighted average maturity of debt for RSA borrowings decreased to 3.1 years (FY20: 3.6 years). Finance costs for GOZ increased by 3.3% from R547.6m in FY20 to R564.4m in FY21 mainly due to interest that is no longer capitalised on development projects, partially offset by reduced cost of debt and lowering borrowings. Finance costs for C&R were R352.5m in FY21.

FINANCE AND OTHER INVESTMENT INCOME

Finance and other investment income increased by 34.0% to R138.5m (FY20: R103.4m). This is mainly due to an increase in dividends received on investments partially offset by a decrease in interest from Workshop 17 loans converted into preference shares.

ACQUISITIONS AND COMMITMENTS

Growthpoint acquired one office property for R21.5m, one healthcare property for R193.5m, one trading and development property for R70.0m and 20 telecommunications assets in South Africa for R23.6m (included in Industrial) during the period. The development and capital expenditure for RSA of R1.0bn (FY20: R2.0bn) was for various developments and capital expenditure in the period, including the refurbishment of the Altron office in Woodlands Office Park, for R177.5m and Longkloof Studios for R111.6m. Growthpoint has commitments outstanding for RSA developments totalling R310.8m at FY21 (FY20: R634.0m) of which E-shelter, Samrand (R141.7m) and the Kent sectional title residential at La Lucia Mall (R105.8m) are the largest.

GOZ made no further acquisitions during the period but incurred capital costs of R125.9m (AUD9.6m). The largest are the refurbishment of 75 Dorcas Street, South Melbourne, VIC for R71.0m (AUD6.2m) and 1 Charles Street, Parramatta, NSW for R41.2m (AUD3.6m).

GOZ has commitments outstanding totalling R1.0bn (AUD97.1m) at FY21 (FY20: R608.5m (AUD50.8m)). These commitments relate to ongoing capital expenditure at 1 Charles Street, Parramatta, NSW of R482.8m (AUD45.1m) and the acquisition of 11 Murray Rose Avenue, Sydney Olympic Park, NSW for R556.6m (AUD52.0m).

C&R incurred development costs of R83.1m (GBP4.0m) (FY20: R130.0m or GBP6.7m) and has commitments outstanding of R53.3m (GBP2.7m) at FY21 (FY20: R86.1m or GBP4.0m).

FUNDS MANAGEMENT

Part of Growthpoint’s strategy is to build a funds management business with assets of R15.0bn under management over the next three to five years. To this end we have already established two separately identifiable funds with total assets under management of R11.7bn.

• Lango Real Estate Limited (Lango). Growthpoint’s stake is 16.1%.

  Lango, a joint venture with Ninety One Limited, owns eight quality office and retail assets and three plots of land valued at USD600.9m (FY20: USD601.0) and has a NAV of USD330.2m at FY21 (FY20: USD329.6m). Lango paid its maiden distribution of USD1.6m to shareholders in December 2020 followed by a final distribution of USD1.3m in June 2021 translating into a total distribution of R6.6m for Growthpoint for the year.

  Growthpoint followed a DRIP for both distributions. Growthpoint furthermore received R14.0m (USD1.0m) from the Lango Manco (Lango Real Estate Management Limited) during the year.

• Growthpoint Healthcare Property Holdings (RF) Limited (GHPH). Growthpoint’s stake is 62.2%.

  GHPH has to date attracted approximately R1.0bn in investments from third-party investors. There is a significant pipeline of both acquisitions and greenfield developments.

  Growthpoint has an effective 62.2% interest in GHPH (R358.4m equity (FY20: R348.6m) and a convertible loan of R887.0m (FY20: R881.8m)).

TRADING AND DEVELOPMENT

Adhering to the limits previously communicated, the value of projects pre-identified as opportunities for trading and development for third parties in South Africa will not exceed 3.0% of the value of the South African portfolio and assets developed for our own balance sheet will not exceed 5.0%. In the present environment we have, however, scaled back all non-essential capital and development spend and will only proceed with opportunities which are client-driven or substantially pre-let.

DISPOSALS AND HELD-FOR-SALE ASSETS

Growthpoint disposed of eight properties in the period (FY20: 13) for R559.0m (FY20: R581.8m), the largest being the Exxaro Corporate Centre at R243.0m. GOZ disposed of three properties, 120 Northcorp Boulevard, Broadmeadows, VIC for R604.0m (AUD50.2m), Quad 2, 6 Parkview Drive for R338.5m (AUD33.1m) and Quad 3, 102 Bennelong Parkway for R338.5m (AUD33.1m). At FY21, eight RSA properties (FY20: two) valued at R181.2m (FY20: R84.4m) were classified as held for sale. No Australian or United Kingdom properties were classified as held for sale.

ARREARS

Total RSA arrears at FY21 were R308.2m (FY20: R511.0m) with a loss allowance of R174.5m (FY20: R254.0m). This includes rental deferments granted to tenants as a result of Covid-19 of R18.2m (FY20: R141.4m). Total net RSA bad debt write-offs and provisions were R29.9m (FY20: R236.5m).

Total GOZ arrears at FY21 were R5.7m (FY20: R9.7m) with a loss allowance of R1.1m (FY20: R2.8m). Total C&R arrears at FY21 were R471.9m (FY20: R300.0m) with a loss allowance of R164.0m (FY20: R13.2m).

Growthpoint’s GLA and vacancy levels as a percentage of its total portfolio GLA were:

Vacancies increased across all the RSA sectors, except healthcare and trading and development. Tenant retention remains a priority and we are driving it through various initiatives including the UNdeposit, SmartMove and Growthpoint’s resource efficient, sustainable Thrive Portfolio.

BORROWINGS, NET WORKING CAPITAL AND LIQUIDITY

The SA REIT loan-to-value ratio for the Group (SA REIT LTV) was 40.0% for FY21 (FY20: 43.9%). The RSA LTV decreased to 35.1% (FY20: 39.8%), the GOZ SA REIT LTV decreased to 27.6% (FY20: 31.2%) and the C&R SA REIT LTV increased to 65.5% (FY20: 51.4%).

Growthpoint has consistently applied its policy for measuring the fair value of long-term interest-bearing loans and derivatives. There were no changes in valuation techniques, nor were there any transfers between level 1, level 2 and level 3 during the period. The Group has unsecured interest-bearing borrowings of R21.6bn (FY20: R24.5bn). All other interest-bearing borrowings across the Group are secured. Growthpoint has unused committed bank facilities of R6.5bn (FY20: R3.1bn) in RSA and separately R4.1bn (AUD387.5m) (FY20: R4.3bn or AUD360.0m) in GOZ and cash of R709.8m (FY20: R140.8m) in RSA, R358.1m (AUD33.5m) (FY20: R476.8m or AUD42.7m) in GOZ and R1.6bn (GBP78.7m) (FY20: R1.8bn or GBP82.1m) in C&R at FY21, which assures their ability to meet their short-term commitments.

CHANGE IN DIRECTORATE

Andile Sangqu and Prudence Lebina were both appointed as Independent Non-executive Directors on 21 September 2020. Andile is Chairman of the Social, Ethics and Transformation Committee and also serves as a member of the Audit Committee and the Governance and Nomination Committee.

Prudence serves as a member of the Risk Management and Audit Committees. Mzolisi Diliza, Ragavan Moonsamy and Eric Visser all retired from the Board at the AGM on 8 December 2020 after 19, 15 and 18 years, respectively.

Rhidwaan Gasant was appointed as Deputy Chairman on 16 March 2021 and will take over from Francois Marais as Chairman when he retires at the AGM on 16 November 2021.

John Hayward will also retire at the AGM on 16 November 2021 after 19 years of service.

Melt Hamman was appointed as an Independent Non-executive Director on 14 September 2021.

We thank all the retiring directors for their dedicated service to Growthpoint.

GOING CONCERN

The directors have assessed the Group’s ability to continue as a going concern. As at 30 June 2021, the Group had a substantial positive net asset value and a robust liquidity position with access to R6.5bn in RSA and separately R4.1bn in GOZ of committed undrawn credit facilities. The following uncertainties were considered as part of the going concern assessment.

Access to liquidity

Stressed market conditions may impact debt funders’ risk appetite and limit access to liquidity.

Covenants

Loan-to-value and interest cover ratio covenants may come under pressure due to decreasing property valuations and rental income because of the expected economic downturn related to the pandemic. The maximum loan-to-value covenants the Group is exposed to is 55.0%, which is well above the current Group SA REIT LTV of 40.0%.

Provision for credit losses

The provision for credit losses and write-off of unrecoverable amounts may increase as tenants’ businesses may continue to be impacted by the pandemic globally.

Conclusion

After due consideration, the directors have concluded that the Group has adequate resources and debt facilities to continue operating for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the financial statements.

EVENTS AFTER THE REPORTING PERIOD

Declaration of dividend after reporting period

In line with IAS10 Events after the Reporting Period, the declaration of the dividend occurred after the end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial statements.

Political unrest

In July 2021, the KwaZulu-Natal and Gauteng provinces of South Africa experienced significant protest action. These protests were accompanied by violence, theft and destruction of property.

Regrettably, these actions have been disruptive to the broader South African society and to the country’s struggling economy. The company had two retail and five industrial assets impacted, none of which suffered material damage. We continue to work with our business partners to safeguard our assets.

IFC loan

On 31 August 2021 the International Finance Corporation (IFC) invested USD20 million into GHPH. The Group signed a four-year USD60 million convertible loan facility from the IFC, with the IFC having the option to convert the loan into GHPH equity.

Long-term loan granted – V&A Waterfront

On 7 September 2021 the Group signed an extension of the long-term loan granted to the V&A Waterfront. The loan is now payable on 30 September 2026.

PROSPECTS

The majority of the Group’s assets are in South Africa, both by EBIT (70.9%) and by market value of property assets (60.1%), where the macro-economic environment coupled with the recent domestic unrest remains deeply concerning. The effects of the pandemic, on top of a depressed economy, have negatively impacted all three of our domestic sectors where property fundamentals are expected to remain under pressure, notwithstanding the emergence of some green shoots, in particularly retail sales. The recovery of the V&A is dependent on the resumption of international tourism. GOZ and GWI have been relatively unaffected by the pandemic and have robust balance sheets, liquidity positions and strong tenancies. C&R has been severely impacted by the pandemic which has accelerated the structural trends that were already underway in the UK retail industry with the downturn being faster and more profound than expected. However, we believe that UK retail is close to the bottom of the downward cycle.

Our prospects are inextricably linked to our operating environment. As the world and the RSA economies recover gradually, we will benefit from this. We are a strong and diversified business and our conservative approach to managing the business together with our robust balance sheet and liquidity position will stand us in good stead.

We are committed to retaining our REIT status and intend to continue to pay dividends twice a year, of at least 75% of distributable income.

FINAL DIVIDEND

Notice is hereby given of the declaration of the final dividend number 71 of 60.0c per share (80% of DIPS) for the period ended 30 June 2021.

OTHER INFORMATION

• Issued shares at 30 June 2021: 3 430 787 066 ordinary shares of no par value
• Income tax reference number of Growthpoint: 9375/077/71/7.

Shareholders are advised that the dividend meets the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No 58 of 1962 (Income Tax Act). The dividends on the shares will be deemed to be taxable dividends for South African tax purposes in terms of section 25BB of the Income Tax Act.

TAX IMPLICATIONS FOR SOUTH AFRICAN RESIDENT SHAREHOLDERS

Dividends received by or accrued to South African tax residents must be included in the gross income of such shareholders and will not be exempt from the income tax in terms of the exclusion to the general dividend exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act, because they are dividends distributed by a REIT. These dividends are, however, exempt from dividend withholding tax (dividend tax) in the hands of South African resident shareholders provided that the South African resident shareholders have provided to the Central Securities Depository Participant (CSDP) or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares, a DTD(EX) (dividend tax: declaration and undertaking to be made by the beneficial owner of a share) their form to prove their status as South African residents.

If resident shareholders have not submitted the above mentioned documentation to confirm their status as South African residents, they are advised to contact their CSDP or broker, as the case may be, to arrange for the documents to be submitted prior to the payment of the dividend.

TAX IMPLICATIONS FOR NON-RESIDENT SHAREHOLDERS

Dividends received by non-resident shareholders from a REIT will not be taxable as income and instead will be treated as ordinary dividends which are exempt from income tax in terms of the general dividend exemption section 10(1)(k) of the Income Tax Act. Any dividend received by a non-resident from a REIT is subject to dividend tax at 20%, unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation (DTA) between South Africa and the country of residence of the non-resident shareholder. Assuming dividend tax will be withheld at a rate of 20%, the net amount due to non-resident shareholders is 48.0c per share. A reduced dividend withholding tax rate in terms of the applicable DTA may only be relied on if the non-resident shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:

• A declaration that the dividend is subject to a reduced rate as a result of the application of the DTA; and
• A written undertaking to inform the CSDP broker or the company, as the case may be, should the circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner, both in the form prescribed by the Commissioner of the South African Revenue Service.

If applicable, non-resident shareholders are advised to contact the CSDP, broker or the company to arrange for the above mentioned documents to be submitted prior to payment of the dividend if such documents have not already been submitted.

SALIENT DATES AND TIMES

Shares may not be dematerialised or rematerialised between commencement of trade on Wednesday, 20 October 2021 and the close of trade on Friday, 22 October 2021. The above dates and times are subject to change. Any changes will be released on SENS.

By order of the Board

Growthpoint Properties Limited
14 September 2021

Directors
JF Marais (Chairman), FM Berkeley, NO Chauke*
(Human Resources Director), EK de Klerk* (Chief Executive
Officer South Africa), R Gasant (Chairman Elect), M Hamman,
JC Hayward^# (Lead Independent Director), KP Lebina,
SP Mngconkola, NBP Nkabinde, AH Sangqu, LN Sasse*
(Group Chief Executive Officer), JA van Wyk^#, G Völkel*
(Group Financial Director)

* Executive ^#British

Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
A Real Estate Investment Trust, listed on the JSE
Share code: GRT ISIN: ZAE000179420

Registered office
The Place, 1 Sandton Drive, Sandown, Sandton, 2196
PO Box 78949, Sandton, 2146

Company Secretary
Johan de Koker

Transfer Secretary
Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue
Rosebank, Johannesburg, 2196
Private Bag X9000, Saxonwold, 2132

Sponsor
Investec Bank Limited
(Registration number 1969/004763/06)
100 Grayston Drive, Sandown, Sandton, 2196
PO Box 785700, Sandown, Sandton, 2146

for the year ended 30 June 2021

The second edition of the SA REIT Association’s best practice recommendations was issued in November 2019, outlining the need to provide consistent presentation and disclosure of relevant ratios in the SA REIT sector. This will ensure information and definitions are clearly presented, enhancing comparability and consistency across the sector.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 30 June 2021

STATEMENT OF FINANCIAL POSITION

as at 30 June 2021

STATEMENT OF CHANGES IN EQUITY

for the year ended 30 June 2021

Statement of changes in equity continued

Statement of changes in equity continued

STATEMENT OF CASH FLOWS

for the year ended 30 June 2021

SEGMENTAL ANALYSIS

for the year ended 30 June 2021

Segments

The Group determines and presents operating segments based on the information that is provided internally to the Executive Management Committee (Exco), the Group’s operating decision-making forum. The Group comprises nine segments, namely Retail, Office, Industrial, Healthcare, Trading and Development, Growthpoint Australia, V&A Waterfront, Central and Eastern Europe and the United Kingdom. An operating segment’s operating results are reviewed regularly by Exco to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Geographic segments

In addition to the main reportable segments, the Group also includes a geographical analysis of net property income, excluding straight-line lease income adjustment and investment property. The following geographic segments have been identified:

• South Africa
• Australia
• V&A Waterfront
• Central and Eastern Europe
• United Kingdom.

*  The Pretoria Head and Neck Private Hospital is classified as Investment Property for the Group. This property is currently managed as part of the Trading and Development segment.

Segmental analysis continued

Segmental analysis continued

Segmental analysis continued

^# The previous year has been re-presented for comparability.

for the year ended 30 June 2021

Note 1: Basic and headline earnings per share

1.1 Summary of earnings per share (EPS), headline earnings per share (HEPS) and distributable income per share (DIPS)

1.2 Reconciliation between basic earnings, diluted earnings and headline earnings

1.3 Reconciliation of weighted average number of shares

Note 2: Classification of financial assets and liabilities

2.1

2.2

Note 3: Fair value estimation

3.1 Fair value measurement of assets and liabilities

The below table includes only those assets and liabilities that are measured at fair value including non-recurring items measured at fair value:

3.1 Fair value measurement of assets and liabilities continued

* Listed USD-denominated Eurobonds are level 1. The previous year has been re-presented for comparability.

The carrying amount of assets and liabilities that are not measured at fair value reasonably approximate their fair value due to their short-term nature. These include trade and other receivables, cash and cash equivalents and trade and other payables.

3.2 Movement in level 3 instruments

3.2 Movement in level 3 instruments continued

3.3 Valuation process

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including level 3 fair values, and reports directly to the Group Financial Director.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group’s Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

3.4 Valuation techniques and significant unobservable inputs

Level 2 instruments

Interest-bearing borrowings

The estimated fair value would increase/(decrease) if the credit margin were lower/(higher).

Derivative instruments

Level 3 instruments

In terms of the Group’s policy, at least 75% of the fair value of investment properties should be determined by an external, independent valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

92.8% of the South African portfolio was externally valued at FY21. The balance of the South African portfolio was valued by Growthpoint’s qualified internal valuers.

The majority of the South African properties were valued at FY21 using the discounted cash flow (DCF) of future income streams method by the following valuers who are all registered valuers in terms of section 19 of the Property Valuers Professional Act, No 47 of 2000:

The Australian properties were valued at FY21 using the discounted cash flow of future income streams method by JLL, Savills, Urbis, CBRE, Knight Frank, Colliers, m3property and Cushman and Wakefield that are all members of the Australian Property Institute and certified practising valuers.

The United Kingdom properties were valued at FY21 by independent qualified professional valuers from CBRE Limited and Knight Frank LLP in accordance with RICS (Royal Institution of Chartered Surveyors) standards. The yield of the seven retail properties ranged from 4.6% to 11.6%.

Investment property

At the reporting date, the key assumptions and unobservable inputs used by the Group in determining fair value were in the following ranges for the Group’s portfolio of properties:

Further assumptions are used in the valuation of investment property. The estimated fair value would increase/(decrease) if the expected market rental growth was higher/(lower), expected expense growth was lower/(higher), the vacant periods were shorter/(longer), the occupancy rate was higher/(lower), the rent-free periods were shorter/(longer), the discount rate was lower/(higher) and/or the reversionary capitalisation rate was lower/(higher).

The property portfolio on page 77 to 99 of the Group annual financial statements provides further detail on each of the Group’s investment properties.

Long-term loans granted

Unlisted investments