for the six months ended 31 December 2022
On 15 September 2022, through GOZ, the Group acquired 100% of the shares in Fortius Funds Management (Pty) Limited (Fortius). The acquisition involved a R530.2m (AUD45.0m) initial purchase price and a subsequent R95.4m (AUD8.1m) net assets adjustment, paid in cash and funded from GOZ’s existing debt facilities.
Fortius is one of Australia’s leading privately-owned real estate funds management businesses with an established track record of investing in Australian real estate markets and generating strong returns for its investors. The establishment of a funds management business had been a key priority for GOZ and this acquisition added R22.0bn (AUD1.9bn) of funds under management (FUM) to GOZ’s business.
As part of the purchase agreement, GOZ agreed to pay the selling shareholders any performance fees earned from existing funds during their current terms, net of any income tax. This earn-out component has been classified as variable consideration and forms part of the total purchase consideration. The acquisition date fair value of these fees was estimated at R48.3m (AUD4.1m).
As part of the purchase agreement, GOZ agreed to pay the selling shareholders an additional earn-out component of up to R116.0m (AUD10.0m), payable based on agreed milestones relating to FUM and funds management revenue growth targets being met over the period to 30 June 2024. This earn-out component has been classified as compensation for post-combination services and does not form part of the total purchase consideration.
Fortius contributed revenue of R32.5m (AUD2.8m) and net profit of R2.3m (AUD0.2m) to the Group for the period 15 September 2022 to 31 December 2022. If the acquisition had occurred on 1 July 2022, Fortuis would have contributed revenue of R53.4m (AUD 4.6m) and a net loss of R7.0m (AUD0.6m) to the Group for the period ended 31 December 2022.
GOZ incurred acquisition-related costs of R34.8m (AUD3.0m) relating to external legal fees and due diligence costs. R23.2m (AUD2.0m) of these costs have been incurred in the first half of the year and is included in “Other administrative and operating overheads” in the statement of profit or loss and other comprehensive income. The remaining R11.6m (AUD1.0m) was incurred in FY22.
Goodwill
The following table summarises the acquisition date provisional fair value of each component of purchase consideration as well as the provisional fair value of net assets acquired at the date of acquisition, the net of which represents the goodwill arising.
| Unaudited 15 September 2022 AUDm |
Unaudited 15 September 2022 Rm |
|
| Identifiable assets acquired and liabilities assumed | (15.8) | (186.3) |
| Cash and cash equivalents* | (3.4) | (40.1) |
| Unlisted investments | (3.3) | (38.9) |
| Trade and other receivables | (2.9) | (34.2) |
| Intangible assets (management rights) | (10.3) | (121.4) |
| Right-of-use assets | (0.6) | (7.1) |
| Equipment | (0.1) | (1.2) |
| Current taxation receivable | (0.3) | (3.5) |
| Lease liability | 0.8 | 9.4 |
| Deferred tax liability | 2.9 | 34.2 |
| Trade and other payables | 1.4 | 16.5 |
| Total purchase consideration | 57.5 | 677.4 |
| Cash – Initial purchase price* | 45.0 | 530.2 |
| Cash – Net asset adjustment* | 8.1 | 95.4 |
| Variable consideration – performance fee earn-out | 4.1 | 48.3 |
| Other consideration payable | 0.3 | 3.5 |
| Goodwill | 41.7 | 491.1 |
| * | The net cash acquired in the business combination of R585.5m (AUD49.7m) is the sum of the initial purchase price of R530.2m (AUD45.0m) and the net asset adjustment of R95.4m (AUD8.1m), less the cash and cash equivalents acquired of R40.1m (AUD3.4m). |
A critical judgement was the classification of future variable components included in the purchase agreement as either variable purchase consideration or compensation for post-combination services. Components that are contingent upon ongoing employee service conditions being fulfilled have been classified as compensation for post-combination services and do not form part of the total purchase consideration. Components that are not contingent upon ongoing employee service conditions being fulfilled have been classified as variable consideration and are included as part of the total purchase consideration.
The following critical judgements and estimates were made by the Group in assessing the fair value of the variable consideration:
Business combination variable consideration
Performance fee earn-out liabilities under the purchase agreement are classified as variable consideration in the Fortius business combination. It has been designated on initial recognition to be treated at fair value through profit or loss. Movements in fair value during the period have been recognised in the statement of profit or loss and other comprehensive income. Fair value is based on market values, being the estimated amount for which the instrument could be exchanged on the date of the transaction between market participants in an orderly transaction after proper marketing. The fair value of the business combination variable consideration is classified as level 3 in the fair value hierarchy based on the significant unobservable inputs into the valuation techniques used.
2.1 Summary of earnings per share (EPS), headline earnings per share (HEPS) and distributable income per share (DIPS)
| Earnings attributable | Weighted average number of shares | Cents per share | |||||||||||||
| Unaudited six months 31 December 2022 Rm |
Reviewed six months 31 December 2021 Rm |
Audited 12 months 30 June 2022 Rm |
Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
Audited 12 months 30 June 2022 |
Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
Audited 12 months 30 June 2022 |
|||||||
| Total operations | |||||||||||||||
|
1 866 | 3 650 | 7 937 | 3 409 588 747 | 3 403 805 472 | 3 405 871 086 | 54.73 | 107.23 | 233.04 | ||||||
|
1 866 | 3 650 | 7 937 | 3 429 736 493 | 3 416 302 921 | 3 419 088 046 | 54.41 | 106.84 | 232.14 | ||||||
|
2 932 | 1 925 | 7 191 | 3 409 588 747 | 3 403 805 472 | 3 405 871 086 | 85.99 | 56.57 | 211.14 | ||||||
|
2 932 | 1 925 | 7 191 | 3 429 736 493 | 3 416 302 921 | 3 419 088 046 | 85.49 | 56.36 | 210.32 | ||||||
| Earnings attributable | Actual number of shares | Cents per share | |||||||||||||
| Unaudited six months 31 December 2022 Rm |
Reviewed six months 31 December 2021 Rm |
Audited 12 months 30 June 2022 Rm |
Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
Audited 12 months 30 June 2022 |
Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
Audited 12 months 30 June 2022 |
|||||||
| DIPS reconciliation | 2 662 | 2 623 | 5 307 | 3 411 622 222 | 3 406 439 781 | 3 407 663 028 | 77.9 | 76.9 | 155.6 | ||||||
2.2 Reconciliation between basic earnings, diluted earnings and headline earnings
| SOCI# | Total gross and net | |||||||
| Unaudited six months 31 December 2022 Rm |
Reviewed six months 31 December 2021 Rm |
Audited 12 months 30 June 2022 Rm |
Unaudited six months 31 December 2022 Rm |
Reviewed six months 31 December 2021 Rm |
Audited 12 months 30 June 2022 Rm |
|||
| Profit for the period | 1 866 | 3 650 | 7 937 | |||||
|---|---|---|---|---|---|---|---|---|
| Fair value adjustments on investment property | 1 066 | (1 725) | (746) | |||||
| Net investment property valuation | (1 286)* | 4 213* | 6 262* | 1 562 | (2 745) | (1 857) | ||
| Fair value adjustments: equity-accounted investments | (316)* | (420)* | (479)* | 500 | (46) | (13) | ||
| NCI portion of fair value adjustments | (1 286)* | 4 213* | 6 262* | (996) | 1 066 | 1 124 | ||
| Headline basic and diluted earnings | 2 932 | 1 925 | 7 191 | |||||
| # | Statement of profit or loss and other comprehensive income. |
| * | The fair value adjustment on investment property and NCI portions is included in the “Fair value adjustment, capital items and other charges” line item on the face of the statement of profit or loss and other comprehensive income, which total (R1 286m) for HY23 (HY22: (R4 213m); FY22: R6 262m). The fair value adjustments for equity-accounted investments are included in the “Non-distributable income” line item on the face of the statement of profit or loss and other comprehensive income, which totals (R316m) for HY23 (HY22: (R420m); FY22: (R479m)). |
2.3 Reconciliation of weighted average number of shares
| Weighted number of shares | |||
| Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
Audited 12 months 30 June 2022 |
|
| Weighted average number of shares | 3 409 588 747 | 3 403 805 472 | 3 405 871 086 |
|---|---|---|---|
| Number of shares as at 1 July | 3 430 787 066 | 3 430 787 066 | 3 430 787 066 |
| Effect of treasury shares held | (21 198 319) | (26 981 594) | (24 915 980) |
| Dilutive effect of share options granted to employees | 20 147 746 | 12 497 449 | 13 216 960 |
| Diluted average number of shares | 3 429 736 493 | 3 416 302 921 | 3 419 088 046 |
| Designated as fair value through profit or loss Rm |
Fair value through profit or loss Rm |
Financial assets at amortised cost Rm |
Outside scope of IFRS 9 Rm |
Total Rm |
|
| Assets | |||||
| Unaudited | |||||
| 31 December 2022 | |||||
| Cash and cash equivalents | – | – | 3 354 | – | 3 354 |
| Trade and other receivables | – | – | 1 397 | 336 | 1 733 |
| Derivative assets | – | 2 563 | – | – | 2 563 |
| Listed investments | – | 1 654 | – | – | 1 654 |
| Long-term loans granted | 3 334 | – | – | – | 3 334 |
| Unlisted investments | – | 1 393 | – | – | 1 393 |
| Reviewed | |||||
| 31 December 2021 | |||||
| Cash and cash equivalents | – | – | 2 232 | – | 2 232 |
| Trade and other receivables | – | – | 1 915 | 316 | 2 231 |
| Assets classified as held for sale | – | – | 732 | 2 461 | 3 193 |
| Derivative assets | – | 1 177 | – | – | 1 177 |
| Listed investments | – | 1 992 | – | – | 1 992 |
| Long-term loans granted | 3 105 | – | – | – | 3 105 |
| Unlisted investments | – | 915 | – | – | 915 |
| Audited | |||||
| 30 June 2022 | |||||
| Cash and cash equivalents | – | – | 2 841 | – | 2 841 |
| Trade and other receivables | – | – | 2 114 | 207 | 2 321 |
| Derivative assets | – | 2 492 | – | – | 2 492 |
| Listed investments | – | 1 489 | – | – | 1 489 |
| Long-term loans granted | 3 313 | – | – | – | 3 313 |
| Unlisted investments | – | 921 | – | – | 921 |
| Liabilities | |||||
| Unaudited | |||||
| 31 December 2022 | |||||
| Trade payables | – | – | 3 272 | 224 | 3 496 |
| Derivative liabilities | – | 798 | – | – | 798 |
| Business combination variable consideration | 50 | – | – | – | 50 |
| Interest-bearing borrowings | 65 782 | – | – | – | 65 782 |
| Lease liability | – | – | 1 907 | – | 1 907 |
| Reviewed | |||||
| 31 December 2021 | |||||
| Trade payables | – | – | 3 092 | 370 | 3 462 |
| Derivative liabilities | – | 2 026 | – | – | 2 026 |
| Liabilities associated with assets classified as held for sale | 2 546 | – | 1 020 | – | 3 566 |
| Interest-bearing borrowings | 62 996 | – | – | – | 62 996 |
| Lease liability | – | – | 1 977 | – | 1 977 |
| Audited | |||||
| 30 June 2022 | |||||
| Trade payables | – | – | 3 277 | 264 | 3 541 |
| Derivative liabilities | – | 817 | – | – | 817 |
| Liabilities associated with assets classified as held for sale | – | – | 39 | – | 39 |
| Interest-bearing borrowings | 62 857 | – | – | – | 62 857 |
| Lease liability | – | – | 1 826 | – | 1 826 |
4.1 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:
| Unaudited 31 December 2022 |
Reviewed 31 December 2021 |
Audited 30 June 2022 |
||||||||||||||
| Fair value Rm |
Level 1 Rm |
Level 2 Rm |
Level 3 Rm |
Fair value Rm |
Level 1 Rm |
Level 2 Rm |
Level 3 Rm |
Fair value Rm |
Level 1 Rm |
Level 2 Rm |
Level 3 Rm |
|||||
| Assets | ||||||||||||||||
| Recurring fair value measurement | ||||||||||||||||
| Derivative assets | 2 563 | – | 2 563 | – | 1 177 | – | 1 177 | – | 2 492 | – | 2 492 | – | ||||
| Listed investments | 1 654 | 1 654 | – | – | 1 992 | 1 992 | – | – | 1 489 | 1 489 | – | – | ||||
| Fair value of investment property assets | 136 039 | – | – | 136 039 | 137 056 | – | – | 137 056 | 134 712 | – | – | 134 712 | ||||
| Long-term loans granted | 3 334 | – | – | 3 334 | 3 105 | – | – | 3 105 | 3 313 | – | – | 3 313 | ||||
| Unlisted investments | 1 393 | – | – | 1 393 | 915 | – | – | 915 | 921 | – | – | 921 | ||||
| Non-recurring fair value measurement | ||||||||||||||||
| Assets classified as held for sale | 1 625 | – | – | 1 625 | 2 461 | – | – | 2 461 | 866 | – | – | 866 | ||||
| Total assets measured at fair value | 146 608 | 1 654 | 2 563 | 142 391 | 146 706 | 1 992 | 1 177 | 143 537 | 143 793 | 1 489 | 2 492 | 139 812 | ||||
| Liabilities | ||||||||||||||||
| Recurring fair value measurement | ||||||||||||||||
| Derivative liabilities | 798 | – | 798 | – | 2 026 | – | 2 026 | – | 817 | – | 817 | – | ||||
| Liabilities associated with assets classified as held for sale | – | – | – | – | 2 546 | – | 2 546 | – | – | – | – | – | ||||
| Business combination variable consideration | 50 | – | – | 50 | – | – | – | – | – | – | – | – | ||||
| Interest-bearing borrowings | 65 782 | 7 356 | 58 426 | – | 62 996 | 7 119 | 55 877 | – | 62 857 | 7 038 | 55 819 | – | ||||
| Total liabilities measured at fair value | 66 630 | 7 356 | 59 224 | 50 | 67 568 | 7 119 | 60 449 | – | 63 674 | 7 038 | 56 636 | – | ||||
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.
4.2 Movement in level 3 instruments
| Unaudited six months 31 December 2022 |
Reviewed six months 31 December 2021 |
||||||||||
| Invest- ment property Rm |
Long- term loans granted Rm |
Unlisted invest- ments Rm |
Assets classified as held for sale Rm |
Busi- ness combi- nation variable consider- ation Rm |
Invest- ment property Rm |
Long- term loans granted Rm |
Unlisted invest- ments Rm |
Assets classified as held for sale Rm |
|||
| Opening balance | 134 712 | 3 313 | 921 | 866 | – | 128 061 | 2 534 | 808 | 181 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gain/(loss) from fair value adjustments and translation of foreign operations | 478 | (128) | (90) | 15 | 1 | 7 795 | 447 | 107 | – | ||
| Transfer from investment property to held for sale | (1 567) | – | – | 1 567 | – | (2 461) | – | – | 2 461 | ||
| Transfer from tenant incentives to held for sale | (58) | – | – | 58 | – | – | – | – | – | ||
| Depreciation and amortisation | (237) | – | – | – | – | (126) | – | – | – | ||
| Accrued interest | – | 144 | – | – | – | – | 107 | – | – | ||
| Acquisition through Fortius business combination | – | – | 48 | – | – | – | – | – | – | ||
| Business combination variable consideration – as part of Fortius acquisition | – | – | – | – | (51) | – | – | – | – | ||
| Acquisitions | 3 341 | – | 514 | 1 | – | 4 408 | – | – | – | ||
| GSAH acquisitions | – | – | – | – | – | – | – | – | – | ||
| Reclassified from long-term loans granted to unlisted investments | – | – | – | – | – | – | – | – | – | ||
| Tenant incentives | 149 | – | – | – | – | 233 | – | – | – | ||
| Adjustment to right-of-use assets | 41 | – | – | – | – | – | – | – | – | ||
| Disposals | (782) | – | – | (882) | – | (836) | – | – | (181) | ||
| Deconsolidation of C&R Luton | – | – | – | – | – | – | – | – | – | ||
| Transfer to investment property held for trading and development | (38) | – | – | – | – | (18) | – | – | – | ||
| Advancements | – | 5 | – | – | – | – | 22 | – | – | ||
| Settlements | – | – | – | – | – | – | (5) | – | – | ||
| Closing balance | 136 039 | 3 334 | 1 393 | 1 625 | (50) | 137 056 | 3 105 | 915 | 2 461 | ||
| Audited 12 months 30 June 2022 |
||||
| Property assets Rm |
Long- term loans granted Rm |
Unlisted invest- ments Rm |
Assets classified as held for sale Rm |
|
| Opening balance | 128 061 | 2 534 | 808 | 181 |
| Gain/(loss) from fair value adjustments and translation of foreign operations | 4 652 | 587 | 77 | (2) |
| Transfer from investment property to held for sale | (866) | – | – | 866 |
| Transfer from tenant incentives to held for sale | – | – | – | – |
| Depreciation and amortisation | (387) | – | – | – |
| Accrued interest | – | 238 | – | – |
| Acquisition through Fortius business combination | – | – | – | – |
| Business combination variable consideration – as part of Fortius acquisition | – | – | – | – |
| Acquisitions | 4 990 | – | 11 | 3 |
| GSAH acquisitions | 2 060 | – | – | – |
| Reclassified from long-term loans granted to unlisted investments | – | (42) | 42 | – |
| Tenant incentives | – | – | – | – |
| Adjustment to right-of-use assets | (26) | – | – | – |
| Disposals | (1 773) | – | (17) | (182) |
| Deconsolidation of C&R Luton | (1 981) | – | – | – |
| Transfer to investment property held for trading and development | (18) | – | – | – |
| Advancements | – | 3 | – | – |
| Settlements | – | (7) | – | – |
| Closing balance | 134 712 | 3 313 | 921 | 866 |
4.3 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:
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.
There were no changes in valuation techniques, nor were there any transfers between level 1, level 2 and level 3 during the period.
4.4 Valuation techniques and significant unobservable inputs
Level 2 instruments
Interest-bearing borrowings
| Description | Valuation technique | Significant unobservable inputs | ||
| Interest-bearing borrowings | Valued by discounting future cash flows using the applicable swap curve plus a credit margin of between 1.0% and 2.2% for SA, 2.1% and 2.2% for GOZ, and 5% and 6.1% for C&R at the dates when the cash flow will take place (FY22: 1.0% to 2.0% across all sectors). | Not applicable |
The estimated fair value would increase/(decrease) if the credit margin were lower/(higher).
Derivative instruments
| Description | Valuation technique and inputs used | Significant unobservable inputs | ||
| Forward exchange contracts | Valued by discounting the forward rates applied at the reporting date to the open hedged positions using the swap curve of the respective currencies. | Not applicable | ||
| Interest-rate swaps | Valued by discounting the future cash flows using the basis swap curve of the respective currencies at the dates when the cash flows will take place. | Not applicable | ||
| Cross-currency interest-rate swaps | Valued by discounting the future cash flows using the basis swap curve of the respective currencies at the dates when the cash flows will take place. | Not applicable |
Level 3 instruments
Investment property
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, who has appropriately recognised professional qualifications and recent experience in the location and category of the property being valued.
8.7% of the SA portfolio was externally valued at HY23. The balance of the South African portfolio was valued by Growthpoint’s qualified internal valuers.
The majority of the SA properties were valued at HY23 using the discounted cash flow (DCF) of future income streams method by internal valuers and the following valuer who is registered in terms of section 19 of the Property Valuers Professional Act, No 7 of 2000:
| Company | Valuer | Qualification of the valuer | ||
| Real Insights (Pty) Limited | TLJ Behrens | NDip (Real Estate in Prop Val), professional associate valuer |
The Australian properties were valued at HY23 using the discounted cash flow of future income streams method by Acumentis Brisbane (Pty) Limited, CBRE Valuations (Pty) Limited, JLL Advisory Services (Pty) Limited, Knight Frank LLP, M3 Property Australia (Pty) Limited, Savills Valuation (Pty) Limited, Urbis Valuation (Pty) Limited, CIVAS (Pty) Limited and Black Box (Pty) Limited that are all members of the Australian Property Institute and certified practising valuers.
The United Kingdom properties were valued at HY23 by independent qualified professional valuers from CBRE Limited and Knight Frank LLP in accordance with RICS (Royal Institution of Chartered Surveyors) standards.
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:
| Significant unobservable inputs and range of estimates used | |||||||
| Description | Valuation technique |
Fair value Rm |
Discount rate % |
Exit capitalisation rate % |
Capitalisation rate % |
Rental growth rate % |
|
| Retail sector | 24 736 | 12.70 | 7.98 | 8.26 | 4.35 | ||
| 12 269 | 12.25 – 12.75 | 7.50 – 8.75 | 7.50 – 8.75 | 3.99 – 5.00 | |||
| 8 753 | 13.00 – 13.25 | 8.00 – 9.25 | 7.75 – 9.00 | 3.50 – 5.00 | |||
| 3 714 | 13.50 – 14.00 | 8.50 – 10.00 | 8.00 – 9.75 | 3.49 – 5.00 | |||
| Office sector | 24 993 | 12.73 | 8.48 | 8.90 | 3.69 | ||
| 8 151 | 11.00 – 12.75 | 8.50 – 9.75 | 8.00 – 9.25 | 2.50 – 4.50 | |||
| 4 818 | 13.00 – 13.25 | 8.25 – 11.00 | 8.00 – 10.50 | 2.50 – 5.00 | |||
| 6 203 | 13.50 – 13.75 | 8.50 – 10.00 | 8.25 – 9.75 | 2.99 – 5.00 | |||
| 5 821 | 14.00 – 14.00 | 9.25 – 10.50 | 9.00 – 10.00 | 2.99 – 4.70 | |||
| Industrial sector | 11 267 | 12.75 | 8.72 | 9.12 | 3.95 | ||
| 5 213 | 12.75 – 13.50 | 8.75 – 10.50 | 8.50 – 10.25 | 3.55 – 5.00 | |||
| 4 527 | 13.75 – 14.25 | 9.25 – 11.25 | 9.00 – 10.75 | 4.75 – 5.00 | |||
| 1 389 | 14.50 – 15.00 | 9.75 – 11.50 | 9.25 – 11.00 | 4.75 – 5.00 | |||
| Discounted cash flow model |
138 | 15.25 – 16.00 | 10.75 – 13.00 | 10.25 – 12.00 | 3.50 – 4.70 | ||
| GHPH sector | 3 443 | 12.09 | 7.82 | 8.01 | 4.02 | ||
| 2 682 | 13.50 – 14.50 | 8.50 – 9.50 | 8.50 – 9.50 | 5.00 – 5.00 | |||
| 761 | 15.25 – 15.50 | 10.25 – 10.50 | 10.25 – 10.75 | 5.00 – 5.00 | |||
| GSAH sector | 2 087 | 15.00 – 15.50 | 10.00 – 10.25 | 9.75 – 10.00 | 5.11 | ||
| GOZ office sector | 37 968 | 6.10 | 5.68 | 5.38 | 3.30 | ||
| 12 646 | 5.50 – 5.88 | 4.63 – 5.50 | 4.00 – 5.25 | 2.80 – 3.80 | |||
| 19 307 | 6.00 – 6.38 | 5.25 – 6.63 | 5.00 – 6.38 | 2.80 – 3.80 | |||
| 6 015 | 6.50 – 6.75 | 6.25 – 7.00 | 5.75 – 6.50 | 2.80 – 3.80 | |||
| GOZ industrial sector | 19 925 | 5.97 | 5.63 | 4.95 | 3.35 | ||
| 9 139 | 5.25 – 5.75 | 4.25 – 5.87 | 4.25 – 5.08 | 2.90 – 3.80 | |||
| 1 088 | 5.75 – 5.75 | 9.97 – 10.11 | 6.90 – 7.24 | 2.90 – 3.80 | |||
| 442 | 6.00 – 6.00 | 9.95 – 10.11 | 7.07 – 7.24 | 2.90 – 3.80 | |||
| 5 782 | 6.00 – 6.25 | 4.88 – 10.11 | 4.25 – 7.24 | 2.90 – 3.80 | |||
| 3 474 | 6.25 – 6.75 | 5.92 – 6.85 | 5.38 – 6.08 | 2.90 – 3.80 | |||
| Total | 124 419 | ||||||
| Description | Valuation technique |
Fair value Rm |
Value/m2 range R |
|
| Retail sector | 360 | 5 604.09 | ||
| 78 | 1 117.32 – 2 028.72 | |||
| 282 | 6 807.85 – 14 572.67 | |||
| Office sector | 896 | 3 619.98 | ||
| Market- comparable approach |
478 | 1 536.54 – 4 071.28 | ||
| 418 | 25 983.16 – 25 983.16 | |||
| Industrial sector | 938 | 1 744.15 | ||
| 563 | 462.73 – 1 557.60 | |||
| 96 | 2 709.93 – 4 509.59 | |||
| 279 | 6 540.22 – 9 892.02 | |||
| GHPH sector | 144 | 12 807.84 | ||
| GOZ held for sale | 1 512 | 80 117.20 | ||
| Total | 3 850 |
| Significant unobservable inputs and range of estimates used |
|||||
| Description | Valuation technique |
Fair value Rm |
Income capitalisation rate % |
Exit capitalisation rate % |
|
| 6 760 | 7.31 | 8.08 | |||
| Income capitalisation approach |
5 872 | 5.04 – 7.55 | 7.00 – 7.79 | ||
| Capital & Regional retail sector | 672 | 11.28 – 11.28 | 11.49 – 11.49 | ||
| 216 | 14.49 – 14.49 | 17.49 – 17.49 | |||
| Total | 6 760 | ||||
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).
Unlisted investments
Business combination variable consideration
| Description | Valuation technique |
Significant unobservable inputs |
Range of inputs (probability- weighted average) |
Relationship of unobservable inputs to fair value |
|
| Lango Real Estate Limited | Valued by calculating the Group’s percentage of investment in the fund by the net asset value | Discount rate (%) | 13.25% – 16.75% (14.16% average) |
A change in the discount rate by 50 bps would increase/(decrease) the fair value by R168.4m/(R162.8m). | |
|---|---|---|---|---|---|
| Exit capitalisation rate (%) | 8.75% – 12.0% (8.86% average) |
A change in the exit capitalisation rate by 50 bps would increase/(decrease) the fair value by R155.3m/(R144.2m). | |||
| Description | Valuation technique |
Significant unobservable inputs |
Range of inputs |
Relationship of unobservable inputs to fair value |
|
| V&A Waterfront | Valued by discounting future cash flows using the SA prime rate curve at the dates when the cash flows will take place |
Counterparty credit risk impacting the discount rate |
Discount rate at prime + 2.0% | A change in the discount rate by 50 bps would increase/ (decrease) the fair value by R62.1m/(R61.0m). |
|
|---|---|---|---|---|---|
| Acucap Unit Purchase scheme | Valued by discounting future cash flows using the SA swap curve at the dates when the cash flows will take place, capped at the Growthpoint share price at HY23 |
Counterparty credit risk impacting the interest rate |
6.55% – 8.36% | A change in the interest rate would not have an impact on the valuation as the loans were fair valued to the Growthpoint share price at HY23. The Growthpoint shares are held as security for the loans. |
|
| Impact on earn-out liability fair values |
||||||
| Description | Valuation technique |
Significant unobservable inputs |
Description | Increase in the input |
Decrease in the input |
|
| Fortius business combination | Valued by discounting future cash flows using the appropriate discount factor at the dates when the cash flows will take place |
Current property valuation |
The fund’s current property
valuation, used as proxy for
the sale price at expected
exit date of the fund in the
valuation cash flow, has a significant influence on the performance fee outcome. |
Increase | Decrease | |
|---|---|---|---|---|---|---|
| Forecast fund distributions |
The forecast cash flow
from fund distributions through to the expected exit date of the fund, reflecting the net income of the fund, primarily net property income from the underlying property, offset by borrowing costs and any fund level expenses. |
Increase | Decrease | |||
| Discount rate | The rate of return used
to discount cash flows, payable or receivable in the future, into present value. The rate is determined with regard to comparable acquisition fair value assessments. Includes additional risk premium to allow for volatility in property valuations and capitalisation rates over the remainder of each fund’s expected term. |
Decrease | Increase | |||