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 421 (FY21: 432) directly owned properties in South Africa (RSA) valued at R70.1bn (FY21: R68.8bn). Growthpoint has a 55.9% (FY21: 62.2%) shareholding in Growthpoint Healthcare Property Holdings (RF) Limited (GHPH) which owns six hospitals (FY21: five) and one medical chambers valued at R3.4bn (FY21: R2.8bn). Growthpoint acquired a 16.8% shareholding in the newly launched Growthpoint Student Accommodation Holdings (RF) Limited (GSAH) as part of Growthpoint Investment Partners, its funds management business, during the period. GSAH owns seven student accommodation properties with 4 979 beds valued at R2.0bn.

Growthpoint has a 62.2% (FY21: 62.2%) interest in ASX-listed Growthpoint Properties Australia Limited (GOZ), which owns 57 (FY21: 55) properties in Australia valued at R58.5bn (FY21: R49.5bn) and a 60.8% (FY21: 52.1%) interest in LSE and JSE-listed Capital & Regional Plc (C&R), which owns seven (FY21: seven) shopping centres in the United Kingdom valued at R11.2bn (FY21: R10.5bn). GOZ owns a 15.0% (FY21: 15.0%) stake in ASX-listed Dexus Industria REIT (DXI), valued at R2.0bn (FY21: R1.1bn).

Growthpoint has three (FY21: three) equity-accounted investments valued at R15.2bn (FY21: R15.0bn). Our 50.0% (FY21:  50.0%) share of the V&A Waterfront (V&A) ((R5.9bn) (FY21: R6.3bn)) and 29.4% (FY21: 29.3%) stake in London Stock Exchange AIM-listed Globalworth Real Estate Investments Limited (GWI) ((R9.3bn) (FY21: R8.6bn)) are the largest of these investments.

Growthpoint has four (FY21: five) unlisted investments, valued at R914.9m (FY21: R808.1m) of which our 16.3% (FY21: 16.1%) stake in Lango Real Estate Limited (Lango) ((R851.9m) (FY21: R758.2m)) is the largest.

Growthpoint has a trading and development division which develops commercial property internally and for third parties and has properties valued at R423.7m (FY21: R548.0m). Growthpoint, through its funds management business, Growthpoint Investment Partners, has assets under management of R15.0bn (FY21: R11.7bn) reaching its initial goal a year ahead of time.

Growthpoint is included in the FTSE/JSE Top 40 Index (J200) with a market capitalisation of R52.7bn at 31 December 2021 (HY22). On average, 244.8m shares (FY21: 244.8m) with a value of R3.1bn (FY21: R3.2bn) were traded per month during the period. This makes Growthpoint a liquid and tradable way to own commercial property in RSA. Growthpoint’s property portfolio comprises South African assets (inclusive of the V&A) (56.9%) and international (43.1%) assets. It is well diversified in the three major sectors of commercial property, being retail, office and industrial. Most of the portfolio is in economic nodes within major metropolitan areas.

For HY22 the SA REIT net asset value (SA REIT NAV) of the Group increased by 6.2% to 2 148 (FY21: 2 023) cents per share.

Continued impact of Covid-19 on the business

For the financial period we provided rental relief of R17.3m (HY21: R116.0m) to our tenants with R5.2m (HY21: R25.0m) in deferred rent and R12.1m (HY21: R91.0m) of rental discounts. We recovered R8.4m (HY21: R107.5m) of deferred rent in the period and incurred R1.2m (HY21: R3.0m) of Covid-19-related expenses. 92.4% (FY21: 90.1%) of the Rand amount of 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 suffered disproportionately to the rest of the South African portfolio with its contribution to distributable income dropping to R172.8m in HY21. It has since improved by 54.8% to R267.5m for HY22 as lockdown restrictions were lifted and tourism resumed.

Our international investments in GOZ and GWI were less affected by Covid-19 at an operational level as a result of their portfolios comprising office and industrial properties with strong customer bases weighted toward listed corporates and government in Australia and large multinational tenants in Poland and Romania.

C&R’s strategic shift to focus on providing non-discretionary goods and services ensured that all seven of the company’s community shopping centres remained open to some degree throughout the entirety of 2021 calendar year, which included a full national lockdown from 6 January 2021 to 12 April 2021.

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

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 Growthpoint Investment Partners and trading and development for third parties
• 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, our priority remains the protection of our balance sheet and liquidity position.

The Board is satisfied with the progress made in further bolstering the balance sheet in HY22 through various initiatives, including R1.0bn of asset sales and R524.6m (before income tax) cash retained as a result of lowering the dividend payout ratio to 80%.

SA REIT funds from operations (FFO) and distributable income per share (DIPS)

Group SA REIT FFO for HY22 increased by R394.0m (17.6%) from R2 241m for HY21 to R2 635m. On a per share basis it increased by 17.4% from 65.9c to 77.4c. Group distributable income increased by R128.0m (5.1%) from R2 495m to R2 623m. DIPS increased by 5.2% from 73.1c to 76.9c.

Basis of preparation

The condensed reviewed 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, except for the amendment to IFRS 3 Business Combinations – Definition of a Business which became effective for the first time for the financial year starting 1 July 2021.

Ernst & Young Inc., the company’s independent auditor, has reviewed the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows, consolidated segmental information and notes to the condensed consolidated financial statements for the six months ended 31 December 2021, as set out in the group condensed reviewed interim financial results and have expressed an unmodified review conclusion. A copy of their review conclusion is available for inspection at the company’s registered office.

The condensed consolidated financial results for the six months ended 31 December 2020 are unaudited.

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 HY22 of R11.57:AUD1 (FY21: R10.70:AUD1).

A deferred tax liability of R5.2bn (FY21: R4.2bn) is included in the statement of financial position. This relates to capital gains tax payable at a rate of 30% 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 R11.0:AUD1 for HY22 (HY21: R11.75:AUD1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 37.8% (FY21: 37.8%) not owned by Growthpoint.

Included in the HY22 distributable income is a R527.0m dividend received from GOZ, compared to R494.7m for HY21. This is accounted for by the GOZ dividend per share for HY22 of AUD10.4c compared to AUD10.0c in HY21. Included in normal tax in the statement of profit or loss and other comprehensive income is R57.8m (HY21: R55.0m) 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 HY22 of R21.58:GBP1 (FY21: R19.75: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 R20.49:GBP1 for HY22 (HY21: R21.23:GBP1). The resulting foreign currency translation difference is recognised in other comprehensive income. A non-controlling interest was raised for the 39.2% (FY21: 47.9%) not owned by Growthpoint. C&R did not declare a dividend for HY22 (HY21: Rnil).

C&R undertook a GBP30m equity raise during the period which was fully underwritten by Growthpoint. This transaction resulted in an additional investment by Growthpoint of R480.0m (GBP23.7m) and increased our shareholding from 52.1% to 60.8%.

V&A, GWI and other equity-accounted investments

The investments in the V&A (joint venture), GWI and the third equity-accounted investment 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 HY22 distributable income is R267.5m from the V&A (HY21: R172.8m) and R149.8m from GWI (HY21: R186.8m).

Revenue and cost-to-income ratio

Revenue decreased by 4.8% for HY22 compared to HY21. RSA revenue decreased by 2.3%, and GOZ revenue decreased by 9.4% compared to HY21. C&R revenue decreased by 9.5% compared to HY21. The SA REIT cost-to-income ratio for the Group decreased to 41.2% at HY22 from 41.4% at HY21. For RSA the ratio increased to 44.2% from 42.5% at HY21 and GOZ increased to 24.0% from 22.3% at HY21. For C&R the ratio decreased to 59.3% from 82.9% at HY21.

Fair value adjustments

The revaluation of properties in RSA, GOZ and C&R resulted in an overall increase of R2.7bn (2.0%) (FY21: R4.4bn or 3.3%) to R139.4bn (FY21: R128.2bn) for investment property (including investment properties classified as held for sale). The revaluation of properties resulted in a decrease in values of R282.0m (0.4%) (FY21: R5.4bn or 7.4%) for RSA, an increase of R3.2bn (5.7%) (FY21: R3.9bn or 8.7%) for GOZ and a decrease of R139.0m (1.2%) (FY21: R2.9bn or 21.7%) for C&R.

The RSA valuation decrease was driven mainly by negative reversions and increased vacancies in office, offset by decreased vacancies in retail and industrial. Property assets held for trading and development are held at the lower of cost or net realisable value. No impairment loss was recognised on property assets held for trading and development (FY21: R30.0m or 5.2%).

Interest-bearing borrowings and derivatives were fair valued using the RSA or foreign denominated swap curves at HY22, decreasing the overall liability by R947.4m (HY21: increase of R127.9m). 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, was transferred to the non-distributable reserve.

Finance costs

Finance costs, including finance costs and income received on interest rate swaps, increased by 0.7% to R1 640m (HY21: R1 629m). The interest cover ratio increased to 3.0 times for HY22 (FY21: 2.9 times). The weighted average interest rate for RSA borrowings was 7.6% (HY21: 8.1%) (5.8% including foreign-denominated loans and crosscurrency interest rate swaps (CCIRS) (HY21: 5.8%)). The weighted average maturity of debt for RSA borrowings decreased to 2.7 years (FY21: 3.1 years). Finance costs for GOZ decreased by 11.4% from R307.6m in HY21 to R272.4m in HY22 mainly due to a decrease in the AUD/ZAR exchange rate. Finance costs for C&R increased from R175.9m in HY21 to R213.3m in HY22.

Finance and other investment income

Finance and other investment income increased to R97.4m (HY21: R22.7m). This is mainly due to an increase in dividends received on investments and increased interest received from banks.

Acquisitions and commitments

Through GSAH, Growthpoint acquired seven purpose built student accommodation properties for R2.0bn. It also acquired four telecommunications assets in RSA for R5.2m (included in Industrial) during the period. The development and capital expenditure for RSA of R480.5m (HY21: R510.3m) was for various projects in the period, including the development at Samrand, Midrand and NTT Data Centre for R172.4m collectively. Growthpoint has commitments outstanding for RSA developments totalling R425.8m at HY22 (FY21: R310.8m) of which The Groove, Braamfontein, Johannesburg (R125.2m) and The Peak, Observatory, Cape Town (R104.2m), two student accommodation developments, are the largest.

GOZ acquired two office properties for R1.6bn (AUD143.9m) during the period and incurred development and capital expenditure totalling R153.0m (AUD14.2m), the largest relating to 75 Dorcas Street for R59.3m (AUD5.5m) and 12-16 Butler Boulevard for R18.3m (AUD1.7m).

GOZ has commitments outstanding totalling R2.0bn (AUD174.2m) at HY22 (FY21: R1.0bn (AUD97.1m)). These commitments relate to the acquisition of 141 Camberwell Road, Hawthorn East, VIC and tenant installation costs at 1 Charles Street, Parramatta, NSW.

C&R incurred capital expenditure of R95.0m (GBP4.9m) in HY22 (FY21: R83.1m (GBP:4.0m)) and has outstanding commitments of R81.6m (GBP3.8m) at HY22 (FY21: R53.5m (GBP2.7m)).

Growthpoint Investment Partners

Part of Growthpoint’s strategy is to build a funds management business with diversified assets. To this end we have achieved our initial goal by establishing three separately identifiable funds with total assets under management of R15.0bn (FY21: R11.7bn).

• Lango Real Estate Limited (Lango). Growthpoint’s stake is 16.3%

Lango, a joint venture with Ninety One Limited, owns eight quality office and retail assets and three plots of land valued at USD601.0m (FY21: USD600.9m) and has a NAV of USD327.9m at HY22 (FY21: USD330.2m). Growthpoint invested a further R11.2m (USD0.7m) into Lango and received a R16.6m (USD1.0m) dividend during the period.

• Growthpoint Healthcare Property Holdings (RF) Limited (GHPH). Growthpoint’s stake is 55.9%

During the period, the International Finance Corporation invested equity of USD20.0m into GHPH. GHPH has to date attracted approximately R1.3bn in investments from third-party investors. There is a significant pipeline of both acquisitions and greenfield developments.

Growthpoint’s interest in GHPH consists of R358.4m equity (FY21: R358.4m) and a convertible loan of R886.0m (FY21: R887.0m).

Growthpoint received a R67.3m (HY21: R62.2m) dividend and management fees of R19.4m (HY21: R15.7m) from GHPH during the period.

• Growthpoint Student Accommodation Holdings (RF) Limited (GSAH). Growthpoint’s stake is 16.8%

GSAH was launched during the period and attracted R1.2bn in investments from third-party investors. In addition, Growthpoint invested R240.0m into the fund. There is a significant pipeline of both acquisitions and greenfield developments.

Growthpoint received a R11.3m (HY21: Rnil) dividend and asset management fees of R2.1m (HY21: Rnil) from GSAH during the period.

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 RSA 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 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 19 properties in the period (HY21: five) for R1.0bn (HY21: R497.7m), including the Helderberg Centre at R200.0m. GOZ did not dispose of any properties during the period. C&R disposed of an office block at Maidstone for R153.2m (GBP7.1m). At HY22, three RSA properties (FY21: eight) valued at R30.8m (FY21: R181.2m) were classified as held for sale. Two United Kingdom properties (FY21:0) valued at R2.3bn (GBP107.7m) were classified as held for sale at HY22. No Australian properties were classified as held for sale.

Arrears

Total RSA arrears at HY22 were R295.8m (FY21: R308.2m) with a loss allowance of R164.8m (FY21: R174.5m). This includes rental deferments granted to tenants as a result of Covid-19 of R15.0m (FY21: R18.2m). Total net RSA bad debt write-offs and provisions were R10.1m (FY21: R29.9m).

Total GOZ arrears at HY22 were R9.7m (FY21: R5.7m) with a loss allowance of R1.2m (FY21: R1.1m). Total C&R arrears at HY22 were R294.5m (FY21: R471.9m) with a loss allowance of R125.4m (FY21: R164.0m).

Vacancy levels

At HY22, Growthpoint’s GLA and vacancy levels as a percentage of its total portfolio GLA were:

Vacancies increased in the RSA office and healthcare sectors, but decreased in the retail and industrial sectors. Vacancies at the V&A, GOZ and C&R also decreased. 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 and net working capital

The SA REIT loan-to-value ratio for the Group (SA REIT LTV) was 39.2% for HY22 (FY21: 40.0%). The RSA LTV decreased to 33.8% (FY21: 35.1%), the GOZ SA REIT LTV increased to 28.8% (FY21: 27.6%) and the C&R SA REIT LTV decreased to 55.1% (FY21: 65.5%).

Growthpoint has consistently applied its policy for measuring the fair value of interest-bearing borrowings and derivatives. The Group has unsecured interest-bearing borrowings of R21.0bn at HY22 (FY21: R21.6bn). All other interest-bearing borrowings across the Group are secured. Growthpoint has unused committed bank facilities of R6.2bn (FY21: R6.5bn) in RSA and separately R3.6bn (AUD315.5m) (FY21: R4.1bn or AUD387.5m) in GOZ. Growthpoint also has cash of R515.8m (FY21: R709.8m) in RSA, R453.7m (AUD39.2m) (FY21: R358.1m or AUD33.5m) in GOZ and R1.3bn (GBP58.5m) (FY21: R1.6bn or GBP78.7m) in C&R at HY22. The cash balance in C&R excludes cash of R253.0m (GBP12.0m) classified as part of assets held for sale. These bank facilities and cash balances assure Growthpoint’s ability to meet its short-term commitments.

Change in directorate

Melt Hamman was appointed as an Independent Non-executive Director on 14 September 2021. Melt is Chairman of the Audit Committee and serves as a member on the Property and Investment Committee.

Eileen Wilton was appointed as an Independent Non-executive Director on 9 February 2022. Eileen is Chairman of the HR and Remuneration committee and serves as a member on the Risk Management Committee.

Clifford Raphiri was appointed as an Independent Non-executive Director on 1 March 2022. Clifford will serve as a member of the Audit and Social, Ethics and Transformation Committees.

Francois Marais and John Hayward retired at the AGM on 16 November 2021 after 18 and 20 years of service, respectively. Rhidwaan Gasant assumed the Chairmanship of the Board on the retirement of Francois Marais.

We thank the retiring directors, Francois and John, for their leadership and dedicated service to Growthpoint.

Going concern

The directors have assessed the Group’s ability to continue as a going concern. As at HY22, the Group had a substantial positive net asset value and a robust liquidity position with access to R6.2bn (FY21: 6.5bn) in RSA and separately R3.6bn (FY21: 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.

The company continuously reviews its funding and maturity profile and monitors the debt capital markets to ensure that it is well positioned for any refinancing opportunities, including the USD bond maturing in 2023.

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 39.2% (FY21: 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

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.

On 23 December 2021, GOZ entered into a contract to purchase a modern A-grade office asset, 141 Camberwell Road Hawthorn East, Victoria, for R1.4bn (AUD125.0m) (excluding transaction costs). The building was completed in 2020 and has a GLA of 10,249m² of office and ground floor retail accommodation with 304 undercover parking bays. At HY22, the property is 99% occupied. Settlement occurred on 22 February 2022.

Growthpoint has exposure to Eastern Europe through its 29.4% investment in GWI. GWI is a real estate company whose investment properties are situated in Poland and Romania and generate rental income from predominantly high-quality offices in numerous prime locations. The recent events and circumstances in the Ukraine could influence these properties in a manner which is not necessarily in GWI’s control. The situation in the Polish and Romanian commercial property markets will be closely monitored.

Prospects

The majority of the Group’s assets are in RSA, both by EBIT (72.0%) and by market value of property assets (56.9%), where the macro-economic environment, coupled with last year’s 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 positive indicators in the retail and industrial sectors. 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, however we believe that the UK retail industry has reached the bottom of the downward cycle, with property valuations stable in the last six months.

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.

Interim dividend

Notice is hereby given of the declaration of the interim dividend number 72 of 61.5 cents per share for the period ended 31 December 2021.

Other information

• Issued shares at 31 December 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 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 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) 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 RSA 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 49.2c 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

Notes:

By order of the Board

Growthpoint Properties Limited

15 March 2022

Directors

R Gasant (Chairman), FM Berkeley, NO Chauke* (Human Resources Director), EK de Klerk* (Chief Executive Officer South Africa), M Hamman, KP Lebina, SP Mngconkola, NBP Nkabinde, CD Raphiri, AH Sangqu, LN Sasse* (Group Chief Executive Officer), JA van Wyk^#, G Völkel* (Group Financial Director), E Wilton

* 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 six months ended and at 31 December 2021

The second edition of the SA REIT Association's best practice recommendations (SA REIT BPR) 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. The SA REIT BPR ratios are provided below.

* Includes C&R assets and liabilities classified as held for sale on a line by line basis. Refer to note 1.

Statement of profit or loss and other comprehensive income

for the six months ended 31 December 2021

Statement of financial position

as at 31 December 2021

Statement of changes in equity

for the six months ended 31 December 2021

Statement of cash flows

for the six months ended 31 December 2021

* Refer to note 2.

Segmental analysis

for the six months ended 31 December 2021

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 10 segments, namely Retail, Office, Industrial, Healthcare (GHPH), Student Accommodation (GSAH), Trading and Development, Growthpoint Australia, V&A Waterfront, Central and Eastern Europe and the United Kingdom. GSAH is a new segment as it was launched during the period. In accordance with the new definition of a business contained in IFRS 3, the transaction was accounted for as an asset acquisition rather than a business combination as substantially all the fair value of the gross assets acquired was concentrated in the seven student accommodation properties. All operating segments’ operating results are reviewed regularly by Exco to make decisions about resources to be allocated to the segment and assess its performance, 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
• United Kingdom
• V&A Waterfront
• Central and Eastern Europe.

Segmental analysis continued

Segmental analysis continued

Segmental analysis continued

Segmental analysis continued

^* Having included our proportionate share of the V&A and GWI (loss)/profit and assets to the left, we exclude their inclusion in the reported numbers.

Segmental analysis continued

^* Having included our proportionate share of the V&A and GWI (loss)/profit and assets to the left, we exclude their inclusion in the reported numbers.

for the six months ended 31 December 2021

1. Assets classified as held for sale

As at HY22, it was concluded that the two C&R "Managed Assets", Hemel Hempstead and Luton, met the criteria to be reclassified as assets held for sale. This conclusion was reached as C&R, in conjunction with the respective lenders who have effective ultimate control of the entities, had decided to seek to dispose of whole or part of the investments as at that date. While no transaction has been agreed as at the time of the results, it is viewed as highly probable that it will be concluded within 12 months of the balance sheet date.

This has resulted in all of the assets and liabilities associated with the respective investments being reclassified to separate lines on the face of the statement of financial position of Assets Classified as Held for Sale and Liabilities Classified as Held for Sale. The reclassification has been measured at the lower of carrying amount and fair value less costs to sell. Given each of the investments is in a net liability position and that the Group would not expect to realise any proceeds from a disposal (nor be obligated to clear the net liabilities) the reclassification has been made at the reporting date carrying value.

In addition to the C&R assets classified as held for sale, three South African properties valued at R30.8m (HY21: R55.5m) (FY21: R181.2m) were classified as held for sale. No direct liabilities were associated with the South African properties held for sale.

The following are the amounts as at HY22:

2. Restatement of statement of cash flows

In December 2020, the statement of cash flows reflected an unrealised foreign exchange movement in borrowings as a cash outflow as part of financing activities with a corresponding cash inflow as part of operating activities. In addition, a cash outflow for the repayment of borrowings and a corresponding cash inflow from borrowings raised were reflected under financing activities as a result of GOZ cash flows being incorrectly reported. The statement of cash flows has been restated to correct the disclosure. The restatement does not affect the statement of profit or loss and other comprehensive income, statement of financial position or the statement of changes in equity. We confirm that the statement of cash flows included in the audited published results for the 12 months ended 30 June 2021 is correct and will not require any restatement.

3. Basic and headline earnings per share

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

3.2 Reconciliation between basic earnings, diluted earnings and headline earnings

3.3 Reconciliation of weighted average number of shares

4. Classification of financial assets and liabilities

* An additional column has been added to distinguish between financial assets and liabilities designated at fair value through profit or loss and those mandatory through profit or loss.

5. Fair value estimation

5.1 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:

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.

5.2 Movement in level 3 instruments

5.3 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.

There were no changes in valuation techniques, nor were there any transfers between level 1, level 2 and level 3 during the period.

5.4 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 annually by an external, independent valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The majority of the South African properties were valued at HY22 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 HY22 using the discounted cash flow of future income streams method by CBRE, Colliers, Cushman and Wakefield, JLL, Knight Frank, m3property, Savills and Urbis who are all members of the Australian Property Institute and certified practising valuers.

The United Kingdom properties were valued at HY22 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:

Investment property