Group annual financial statements 30 June 2017

Transcription

1 PROPERTIES Group annual financial statements 30 June 2017

2 GROWTHPOINT 2017 ABOUT THE GROWTHPOINT REPORTING In preparing these reports we have endeavoured to present a holistic and integrated representation of the company s performance in terms of both its profitability and its long-term sustainability. These reports aim to inform our stakeholders about the objectives and strategies of the company, as well as its performance with regard to financial, human and environmental issues. Growthpoint s reporting consists of the following: INTEGRATED ANNUAL REPORT (IAR) Incorporating an overview of our organisation, key operational matters, our strategic intent, performance reviews including reports from our Chairman, Chief Executive Officer and Financial Director, sectoral reviews, corporate social responsibility, corporate governance and risk management. The IAR should be read together with the statutory annual financial statements, which combined provide a complete overview of Growthpoint s performance and prospects. group ANNUAL FINANCIAL STATEMENTS (AFS) The statutory AFS prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Council, the JSE Listings Requirements and the requirements of the Companies Act 2008, as amended. (This document) ANNUAL GENERAL MEETING (AGM) NOTICE The booklet containing the AGM notice also includes the summarised audited AFS for FY17, relevant extracts from the IAR supporting the notice and the report to shareholders by the Social, Ethics and Transformation Committee. ESG Report The booklet containing additional information relating to environmental, social and governance elements.

3 Group annual financial statements 30 June NAVIGATING THIS REPORT CREATING SPACE TO THRIVE is essential in allowing us to extend our robust track record with clarity, and continue on the path of uninterrupted growth in distributions. LN Sasse, Chief Executive Officer Group property assets growthpointlimited About the Growthpoint reporting IFC About this report Group annual financial statements 4 Preparation of financial statements 5 Certificate by Company Secretary 6 Report of the Audit Committee 7 Directors report 9 Independent auditor s report 12 Statement of profit or loss and other comprehensive income Property portfolio 72 Property portfolio summary 74 Property portfolio detail General information 92 Shareholders analysis 95 Shareholders information 96 Directorate and administration 98 Abbreviations 100 Contact details 13 Statement of financial position 14 Statement of changes in equity 16 Statement of cash flows 17 Segmental analysis 23 Notes to the financial statements 58 Significant accounting policies About the Growthpoint reporting Annual financial statements Property portfolio General information This icon denotes cross-referencing and further reading between sections

4 2 Group annual financial statements 30 June 2017 For the year ended 30 June 2017 Picture caption to come. Bridge Park, Cape Town.

5 Group annual financial statements 30 June About the Growthpoint reporting Annual financial statements Property portfolio General information GROUP ANNUAL FINANCIAL STATEMENTS

6 4 Group annual financial statements 30 June 2017 Preparation of financial statements These Group annual financial statements have been audited by KPMG Inc. in compliance with section 30 of the Companies Act 2008, as amended, and the preparation of the Group annual financial statements has been supervised by Gerald Völkel CA(SA), Growthpoint s Financial Director. These Group financial statements are published on 30 August The complete annual financial statements of the Group for the financial years ended 30 June 2017 and 2016 may be obtained: from the transfer secretaries, Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196, or from the company s website at: or by request from the company. Gerald Völkel CA(SA) Financial Director 30 August 2017 Sandton

7 Group annual financial statements 30 June Certificate by Company secretary In terms of section 88(2)(e) of the Companies Act 2008, as amended (the Act), I hereby certify that the company has filed the required returns and notices in terms of the Act in respect of the financial year ended 30 June 2017 and that, to the best of my knowledge and belief, all such returns and notices are true, correct and up to date. RA Krabbenhöft Company Secretary 30 August 2017 Sandton About the Growthpoint reporting Annual financial statements Property portfolio General information

8 6 Group annual financial statements 30 June 2017 Report of the audit committee The activities of the Audit Committee (the committee) are determined by its terms of reference. The committee considers that it has adequately performed its functions in terms of its mandate, the King IV Report on Corporate Governance for South Africa 2016, and the Companies Act, No 71 of 2008, as amended. The committee carried out its duties by reviewing the following on a quarterly basis: internal audit reports financial management reports dashboard reflecting key financial, property and operational information/indicators information technology reports pertaining specifically to financial reporting related matters annual returns and tax status reports external audit reports Risk Management Committee minutes. The aforementioned information, together with the interactions with persons attending the meetings in an ex officio capacity, collectively enabled the committee to conclude that the systems of internal financial control had been designed effectively and were operating effectively during the financial period under review. Furthermore, the committee is satisfied: with the independence of the external auditor, including the provision of non-audit services and compliance with the company policy in this regard. The external auditor attended all meetings of the committee with the terms, nature, scope, quality and proposed fee of the external auditor for the financial year ended 30 June 2017 with the annual financial statements and the accounting practices utilised, as well as the significant matters considered in the preparation thereof and have recommended the financial statements for approval to the Board with the company s continuing viability as a going concern, which it has reported to the Board for its deliberation that the company s Financial Director had the necessary expertise and experience to carry out his duties with the effectiveness of the Head of Internal Audit and Risk Management and the arrangements for internal audit with the effectiveness of collaboration between the external auditor and internal audit. No concerns and complaints were received from within or outside the Group relating to accounting practices and internal financial controls, and the content or auditing of the company s financial statements. The committee assesses its performance on an annual basis to determine whether or not it had delivered on its mandate and continuously enhanced its contribution to the Board. The assessment takes the form of a questionnaire, which is independently completed by each member of the committee. The composition of the self-assessment questionnaire, as well as the consolidation of the related results, is the responsibility of the Company Secretary. LA Finlay Audit Committee Chairman 30 August 2017 Sandton

9 Group annual financial statements 30 June Directors report The directors are pleased to present their 29th annual report that forms part of the Group annual financial statements for the year ended 30 June MAIN BUSINESS AND OPERATIONS Growthpoint is a Real Estate Investment Trust (REIT) company and is the largest South African listed property company. It owns a property portfolio of 471 directly-owned properties in South Africa valued at R76.9bn, 57 properties valued at R32.5bn through its 65.1% investment in Growthpoint Properties Australia (GOZ), a 50% interest in the properties of the V&A Waterfront, valued at R8.7bn and a 26.9% interest in the properties of Globalworth, valued at R4.2bn. FINANCIAL RESULTS Year on year movement % change year on year % Net property income () Dividends (cents) Interim dividend (six months ended 31 December) Final dividend (six months ended 30 June) The interim dividends have been declared from distributable earnings. In line with IAS 10 Events after the reporting period, the declaration of the final dividend occurred after the end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial statements. The dividends meet the requirements of a REIT qualifying distribution for purposes of section 25BB of the Income Tax Act, No 58 of 1962, as amended. Investment property at fair value () ACQUISITION OF GLOBALWORTH On 20 December 2016, Growthpoint RSA acquired a 26.9% stake in the London Stock Exchange (Alternative Investment Market (AIM))- listed Globalworth, which is classified as an associate, for a consideration of R2.7bn (EUR186.4m). Globalworth owns a EUR1bn property portfolio consisting of mostly modern A-grade offices, industrial properties, a residential property complex as well as developments. Its portfolio is concentrated in Bucharest and one in Timisoara, Romania and is underpinned by Euro denominated leases with many multinational business brands. This acquisition was funded by loans of EUR100.0m and the remaining portion by Rand loans with crosscurrency interest rate swaps (CCIRS) of EUR86.4m at a weighted average term of 4.2 years. The Euro-based interest rates are fixed for a weighted average term of 9.9 years at a weighted average all-in cost of 2.6%. EQUITY RAISED During FY17, Growthpoint issued 102.4m shares and raised R2.5bn through the DRIP programme. The equity raised from the DRIP was utilised to finance Growthpoint s investment activities. About the Growthpoint reporting Annual financial statements Property portfolio General information INVESTMENT IN GROWTHPOINT PROPERTIES AUSTRALIA (GOZ) Growthpoint made further investments in its subsidiary GOZ during FY17 as follows: Date Nature Shares September 2016 DRIP November 2016 Capital Raise February 2017 DRIP

10 8 Group annual financial statements 30 June 2017 Directors report continued SUBSEQUENT EVENTS Information on material events that occurred after 30 June 2017 is included in note 23 of these group annual financial statements. DIRECTORS AND Secretary Brief curricula vitae of the directors and the Company Secretary have been included in the FY17 integrated annual report. Growthpoint s Financial Director was assessed by the Audit Committee (as is done annually) to be appropriately qualified and experienced for the position. The Board recommends Ms LA Finlay for re-election as Chairman of the Audit Committee. The directors to retire by rotation and, being eligible, hold themselves available for re-election at the annual general meeting to be held on 14 November 2017 are as follows: Mr JF Marais Mr R Moonsamy Mr FJ Visser Mr HS Herman will not hold himself available for re-election and will retire from the Board after close to 23 years of distinguished service. APPROVAL OF GROUP ANNUAL FINANCIAL STATEMENTS The Group annual financial statements of, as described in the first paragraph of this statement, were approved by the Board of Directors on 29 August 2017 and are signed by: LN Sasse Chief Executive Officer Authorised Director JF Marais Chairman Authorised Director 30 August August 2017 Sandton Sandton

11 Group annual financial statements 30 June Independent auditor s report To the shareholders of Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of and its subsidiaries (the Group) set out on pages 12 to 89, which comprise the statement of financial position as at 30 June 2017, the statement of profit or loss and other comprehensive income, the statement of changes in equity, the statement of cash flows, the segmental analysis for the year then ended, and the notes to the financial statements, the significant accounting policies and the property portfolio. In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of as at 30 June 2017, and its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the The key audit matter Property assets are the Group s most significant assets. The Group s accounting policy is to measure investment properties at fair value. Independent valuations are obtained on a rotational basis, ensuring that every property is valued at least once every three years by an external independent valuer. The directors use qualified internal valuers to value the remaining properties annually on an open-market basis. The fair value calculations are prepared by considering the aggregate of the net annual rent receivable from the properties and, where relevant, associated costs, using the discounted cash flow method. This method takes projected cash flows and discounts them at a rate which is consistent with comparable market transactions. The discount rates reflect the risks inherent in the net cash flows and are constantly monitored by reference to comparable market transactions. Significant judgements are made in the application of this method, particularly in relation to the unobservable inputs into the calculation as disclosed in note 21. Our audit focused on this fair value measurement of the property assets due to its impact on the Group s financial statements and the significance of the judgements involved in the determination of the fair value. Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of property assets Refer to notes 7 and 21 in the Notes to the financial statements, and the Critical accounting estimates, assumptions and judgements and Investment property accounting policy contained in the Significant accounting policies section. How the matter was addressed in our audit Our audit procedures performed included the following: We included our own valuation specialists as part of our audit team to assess the Group s valuation processes and to assist us in performing certain procedures set out below, based on their detailed market knowledge. In respect of the external independent valuations: We assessed the competence, independence and experience of the external independent valuers used and considered the extent of management influence over the external valuers. For properties valued by the external independent valuers, we agreed the property values in the property portfolio to the underlying valuation reports obtained from the valuers. In respect of properties valued internally: We used our valuation specialists to assist in our assessment of the reasonableness of the valuation methodologies and assumptions used, based on our knowledge of the industry and the markets in which the Group operates. We assessed the key valuation inputs against market benchmarks to ensure that they are within a reasonable range for the respective market, sector and asset. We assessed the reasonability of the valuation method used and the historical accuracy of that method by comparing the sale values of properties disposed of during the financial year to fair values previously determined for those properties. We assessed the adequacy of the disclosures in the financial statements in relation to the requirements of the financial reporting framework. About the Growthpoint reporting Annual financial statements Property portfolio General information

12 10 Group annual financial statements 30 June 2017 Independent auditor s report continued Other information The directors are responsible for the other information. The other information comprises the Certificate by Company Secretary, the Report of the Audit Committee and the directors report as required by the Companies Act of South Africa, and the rest of the information contained in the Group annual financial statements, which we obtained prior to the date of this report, and the integrated annual report, which is expected to be made available to us after that date. Other information does not include the consolidated financial statements and our auditor s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the consolidated financial statements The directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

13 Group annual financial statements 30 June Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements In terms of the IRBA Rule published in Government Gazette Number dated 4 December 2015, we report that KPMG Inc. has been the auditor of for 16 years. KPMG Inc. Registered Auditor Per GL de Lange Chartered Accountant (SA) Registered Auditor Director 30 August 2017 KPMG Crescent 85 Empire Road Parktown 2193 About the Growthpoint reporting Annual financial statements Property portfolio General information

14 12 Group annual financial statements 30 June 2017 Statement of profit or loss and other comprehensive income For the year ended 30 June 2017 Revenue, excluding straight-line lease income adjustment Straight-line lease income adjustment Total revenue Property-related expenses 2 (2 245) (2 126) Net property income Other administrative and operating overheads 3 (416) (308) Operating profit Equity-accounted investment profit net of tax Fair value adjustments, capital items and other charges Finance and other investment income Finance expense 5 (2 510) (2 466) Profit before taxation Taxation 17 (48) (841) Profit for the year Other comprehensive income Items that may subsequently be reclassified to profit or loss Translation of foreign operations (1 571) Total comprehensive income for the year Profit attributable to: Owners of the company Non-controlling interest Total comprehensive income attributable to: Owners of the company Non-controlling interests Notes Cents Cents Basic earnings per share Diluted earnings per share

15 Group annual financial statements 30 June Statement of financial position As at 30 June 2017 Assets Cash and cash equivalents Trade and other receivables Investment property classified as held for sale Derivative assets Listed investments Fair value of property assets Fair value of investment property for accounting purposes Straight-line lease income adjustment Long-term loans granted Equity-accounted investments Equipment 15 6 Intangible assets Total assets Liabilities and Equity Liabilities Trade and other payables Derivative liabilities Taxation payable Interest-bearing borrowings Deferred tax liability Total liabilities Shareholders interest Share capital 12, Retained income Other reserves Non-controlling interest Total liabilities and equity Notes About the Growthpoint reporting Annual financial statements Property portfolio General information

16 14 Group annual financial statements 30 June 2017 Statement of changes in equity For the year ended 30 June 2017 Share capital net of treasury shares Foreign currency translation reserve (FCTR) Non-distributable reserves (NDR) Amortisation of intangible assets Bargain purchase Fair value adjustment on investment property Other fair value adjustments and nondistributable items Balance at 30 June (2 077) Total comprehensive income: Profit after taxation Other comprehensive income Transactions with owners recognised directly in equity: Contributions by and distributions to owners: Shares issued Transfer non-distributable items to NDR (72) (678) Share-based payment transactions 46 Transfer to NDR with NCI Dividends declared Changes in ownership interest: Rights issue and acquisitions GOZ 36 Acquisitions of NCI without a change in control Balance at 30 June (2 755) Total comprehensive income: Profit after taxation Other comprehensive income (1 017) Transactions with owners recognised directly in equity: Contributions by and distributions to owners: Shares issued Transfer non-distributable items to NDR (71) Share-based payment transactions 14 Dividends declared Changes in ownership interest: Rights issue and acquisitions GOZ (13) Balance at 30 June (2 429) Dividend per share

17 Group annual financial statements 30 June Non-distributable reserves (NDR) Sharebased payments reserve Reserves with NCI Fair value adjustment on listed investments Total nondistributable reserves Retained earnings (RE) Shareholders interest Noncontrolling interest (NCI) Total equity (150) (25) (25) 25 (3 613) (3 613) (439) (4 052) (65) (65) 170 (12) (1 017) (1 017) (554) (1 571) (214) (2 002) (27) (27) (13) (13) (5 264) (5 264) (502) (5 766) About the Growthpoint reporting Annual financial statements Property portfolio General information (13) (13) (12) (154) Cents 2016 Cents

18 16 Group annual financial statements 30 June 2017 Statement of cash flows For the year ended 30 June 2017 Cash generated from operating activities Cash received from tenants Cash paid to suppliers and employees (3 271) (1 813) Interest paid (2 438) (2 538) Interest received Taxation paid (84) (78) Distribution to shareholders (5 766) (4 073) Cash flow from operating activities before changes in operating assets and liabilities (688) 754 Changes in: 85 (70) Trade and other receivables (211) (232) Trade and other payables Net cash from operating activities (603) 684 Cash flows from investing activities Investments in: (12 901) (7 126) Investment property (9 522) (6 799) Investment property held for sale (7) (85) Intangible assets (3) Equity-accounted investments (2 798) Equipment (9) Subsidiaries (172) Long-term loans (516) (35) Capital costs incurred on business acquisitions (49) (32) Proceeds from: Disposal of investment property Disposal of investment property held for sale Repayment or settlement of long-term loans granted Disposal of equity-accounted investment Net cash from investing activities (8 637) (5 266) Cash flows from financing activities Proceeds from: Borrowings raised Distribution re-investment Rights issues to non-controlling interest of GOZ Repayments of borrowings 15 (15 426) (5 427) Acquisition of treasury shares (25) Net cash from financing activities Note Effect of exchange rate changes on cash and cash equivalents (41) 55 Movement in cash and cash equivalents (288) 396 Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

19 Group annual financial statements 30 June Segmental analysis For the year ended 30 June 2017 Segment Analysis 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 six segments, namely Retail, Office, Industrial, Growthpoint Australia, V&A Waterfront and Globalworth. An operating segment s operating results are reviewed regularly by Exco to assess its performance and to make decisions about resources to be allocated to the segment for which separate financial information is available. Segment Retail Office Industrial Growthpoint Australia V&A Waterfront Globalworth Brief description of segment The Growthpoint retail portfolio consists of 56 properties, comprising shopping centres with the balance being vacant land or standalone single-tenanted properties. It includes regional, community, neighbourhood, speciality and small regional shopping centres as well as retail warehouses. The Growthpoint office portfolio consists of 182 properties which includes high rise and low rise offices, office parks, office warehouses, hospitals as well as mixed-use properties comprising both office and retail. The Growthpoint industrial portfolio consists of 233 properties which includes warehousing, industrial parks, retail warehousing, motor-related outlets, low and high grade industrial, high-tech industrial as well as mini, midi and maxi units. The GOZ portfolio consists of 57 properties which includes both industrial and office properties, all situated in Australia. The V&A Waterfront is a 122 hectare mixed-use property development situated in and around the historic Victoria and Alfred Basin, which formed Cape Town s original harbour, with Table Mountain as its backdrop. Its properties includes retail, office, fishing and industrial, hotel and residential as well as undeveloped bulk. The Globalworth portfolio consists of 18 properties which includes mostly modern A-grade office properties, industrial properties as well as a residential property complex concentrated in Bucharest and one in Timisoara, Romania. Geographic segments In addition to the main reportable segments, the group also includes a geographical analysis of net property income, excluding straightline lease income adjustment and investment property. The following geographic segments have been identified: South Africa Australia Eastern Europe v&a Waterfront About the Growthpoint reporting Annual financial statements Property portfolio General information

20 18 Group annual financial statements 30 June 2017 Segmental analysis continued For the year ended 30 June 2017 Profit or loss and assets and liabilities disclosure 2017 Retail Office Industrial Total South Africa Australia Total as reported V&A Waterfront Globalworth Total Profit or loss disclosures Revenue excluding straight-line lease adjustment Property-related expenses (792) (819) (290) (1 901) (344) (2 245) (204) (52) (2 501) Net property income Other administrative and operating overheads (289) (127) (416) (24) (16) (456) Equity-accounted investment profit net of tax Fair value adjustment on investment property Fair value adjustments (other than investment property) Capital items and other charges (91) (13) (104) (1) 8 (97) Finance and investment income (829) Finance expense (1 944) (566) (2 510) (108) (2 618) Consolidated profit before taxation (20) Assets Cash and cash equivalents Trade and other receivables Investment property classified as held for sale Derivative assets Listed investments Fair value of property assets Acquisitions made during the year Balance at year end Long-term loans granted Equity-accounted investments Equipment Intangible assets Total assets Liabilities Trade and other payables Derivative liabilities Taxation payable (4) Interest-bearing borrowings Deferred tax liability Total liabilities

21 Group annual financial statements 30 June Retail Office Industrial Total South Africa 2016 Australia Total as reported V&A Waterfront (814) (794) (256) (1 864) (262) (2 126) (177) (2 303) Total (204) (104) (308) (20) (328) (457) (321) (27) (348) (803) (151) (2) (153) (153) (1 989) (477) (2 466) (30) (2 496) About the Growthpoint reporting Annual financial statements Property portfolio General information

22 20 Group annual financial statements 30 June 2017 Segmental analysis continued For the year ended 30 June 2017 Distributable earnings reconciliation Revenue, excluding straight-line lease income adjustment Property-related expenses (2 245) (2 126) Other administrative and operating overheads (416) (308) Net interest (1 818) (1 776) Finance and other investment income Interest paid (2 510) (2 466) Profit on the sale of RSI 1 (Stor-Age) 51 Antecedent dividends Non-controlling portion of distribution (excluding fair value adjustments) GOZ (502) (439) Distributable income from GOZ retained (including NCI s portion) (165) (79) Realised foreign exchange gain/(loss) 31 (9) Current normal taxation (98) (76) Distributable earnings Distributions Total dividend Distributable earnings Actual net number of shares in issue Distribution per share Interim taxable dividend Cents Final taxable dividend Cents Number of shares Shares issued during the year Issued ordinary shares at beginning of year Effect of shares issued Shares in issue at end of year Effect of treasury shares held ( ) ( ) Net shares in issue at end of year

23 Group annual financial statements 30 June Cents Net asset value* Net asset value per share Tangible net asset value per share Net asset value per share is reconciled to tangible net asset value per share as follows: Net asset value attributable to shareholders Less: Net effect of business acquisitions and other intangibles (30) (79) Intangible assets (2 362) (2 461) Deferred tax liability Tangible net asset value Key reporting ratios* Best practice recommendations were issued by the SA REIT Association 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. Group 2017 % 2016 Cents Property cost-to-income ratio Gross Net Based on IFRS reported figures Property cost-to-income ratio is based on total property-related expenses divided by revenue, excluding straight-line lease income adjustments. The figures are adjusted for gross, net and IFRS reported expense. Operating cost-to-income ratio Gross Net Based on IFRS reported figures Operating cost-to-income ratio is based on total operating expenses divided by revenue, excluding straight-line lease income adjustments. The figures are adjusted for gross, net and IFRS reported expense. Total cost-to-income ratio Gross Net Based on IFRS reported figures Total cost-to-income ratio is based on total expenses divided by revenue, excluding straight-line lease income adjustments. The figures are adjusted for gross, net and IFRS reported expense. Interest cover ratio Interest cover ratio (excluding GOZ) Interest cover ratio for Growthpoint is based on operating profit excluding straight-line lease income adjustment plus investment income from equity-accounted investments, divided by finance costs, after deducting finance income from banks and long-term loans. Loan to value ratio Loan to value ratio (excluding GOZ) Loan to value ratio for Growthpoint is based on the nominal value of debt (net of cash), divided by the fair value of property assets, including investment property held for sale, equity-accounted investments and listed investments. * This information has not been audited by Growthpoint s independent external auditors % About the Growthpoint reporting Annual financial statements Property portfolio General information

24 22 Group annual financial statements 30 June 2017 Segmental analysis continued For the year ended 30 June 2017 Geographical split by revenue (%) Geographical split by fair value of property assets (%) South Africa Australia Europe V&A Waterfront South Africa Australia Europe V&A Waterfront Geographical split by net property income (%) Number of properties (%) South Africa Australia Europe V&A Waterfront South Africa Australia Europe V&A Waterfront

25 Group annual financial statements 30 June Notes to the financial statements For the year ended 30 June Revenue Contracted rental income Assessment rates recovered Casual parking Contracted operating cost recoveries Development fees earned 91 Other income Property management income Turnover rental Total revenue, excluding straight-line lease income adjustment Property-related expenses Electricity, water and other recoverable charges 28 (13) Cost Recovery (1 458) (1 412) Assessment rates Bad debts Cleaning Consulting fees Insurance Letting commissions Other property expenses Property management expenses Repairs and maintenance Salaries, bonuses and other employee-related costs Security Tenant installation costs Other administrative and operating overheads Administration costs Auditors remuneration Audit fee Other non-audit services 1 2 Development fees earned (30) (34) Directors fees Legal fees 3 2 Other fund expenses 12 9 Salaries, bonuses and other employee-related costs About the Growthpoint reporting Annual financial statements Property portfolio General information

26 24 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June FAIR VALUE ADJUSTMENTS, CAPITAL ITEMS AND OTHER CHARGES 4.1 Fair value adjustments Net investment property revaluation Gross investment property fair value adjustment Straight-line lease income adjustment (39) (455) Other gains or losses 39 (348) Interest-bearing borrowings Derivatives 622 (298) Derivatives (realised) (428) (249) Fair value of listed investment (214) 60 Long-term loans granted 10 (5) Capital items Capital costs incurred on business acquisitions (49) (38) Bargain purchase (32) 4.3 Non-cash charges Amortisation of intangible assets (99) (99) Increase in Staff Incentive Scheme cost (34) (22) (133) (121) Total fair value adjustments, capital items and non-cash charges Net finance expense and other investment income 5.1 Finance expense Interest paid on financial liabilities Less: Borrowing cost capitalised to investment property developments (at prime less 0.5%) (294) (224) Finance income Banks Listed investments 22 Long-term loans Investment income Dividends received from equity-accounted investments Other Total finance and investment income

27 Group annual financial statements 30 June BASIC AND HEADLINE EARNINGS PER SHARE 6.1 Summary of earnings per share (EPS), headline earnings per share (HEPS) and dividends per share (DPS) Total operations EPS EPS HEPS HEPS Earnings attributable () Weighted average number of shares Cents per share Basic Diluted Basic Diluted Actual number of shares DPS Reconciliation between basic earnings, diluted earnings and headline earnings Gross Total 2017 Profit for the year Bargain purchase 1 850* 256 (78) (6) Fair value adjustments on investment property 1 850* 256 (2 397) (1 342) Fair value adjustment: Net of straight-lining lease adjustment (1 993) (957) NCI portion of fair value adjustments (404) (385) Headline basic and diluted earnings Reconciliation of weighted average number of shares 2016 Weighted number of shares Weighted average number of shares Number of shares as at 1 July Shares issued during the year Effect of treasury shares held ( ) ( ) Effect of share option in issue Diluted average number of shares * Both the bargain purchase and fair value adjustment on investment property are 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. About the Growthpoint reporting Annual financial statements Property portfolio General information

28 26 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Property assets 7.1 Fair value of property assets Opening fair value of property assets Additions at cost Acquisitions Acquisitions Pinmill 178 Development expenditure Capital expenditure Disposal at fair value (1 746) (505) Transferred to investment property classified as held for sale (1 241) (1 938) Foreign exchange (loss)/gain (3 040) Gross fair value adjustment on investment property Less: Straight-line lease income adjustment (2 560) (2 478) Fair value of investment property for accounting purposes Straight-line lease income adjustment Closing fair value of property assets Cost Cumulative fair value surplus Straight-line lease income adjustment Opening balance Arising during the year Foreign exchange gain/(loss) 43 (95) Closing balance Investment property classified as held for sale Opening fair value of property assets Transferred from investment property Additions at cost capital expenditure 7 85 Disposal at fair value (1 945) (624) Closing fair value of property assets Cost Cumulative fair value surplus The investment property classified as property held for sale are properties that the directors have decided will be recovered through sale rather than through use. The opening balance relates to three investment properties in the office sector, three investment properties in the industrial sector and five Australian properties in the industrial sector. In the current year, all six of the South African investment properties were disposed of for R305m (FY16: R624m) and all five Australian properties for R1 674m (AUD152m). Sale agreements have been entered into for a further three South African properties, one in the retail sector and two in the industrial sector, with a fair value of R202m at year end, and one Australian property in the office sector, with a fair value of R1 039m (AUD104m).

29 Group annual financial statements 30 June Property assets (continued) 7.4 Capital commitments and guarantees Within 12 months More than 12 months Total Within 12 months More than 12 months Capital commitments South Africa GOZ V&A Waterfront Acucap Investments (Pty) Ltd, a wholly owned subsidiary of Acucap Properties Limited, has provided a suretyship in favour of Nedbank Limited as security for the loan facilities granted to Roeland Street Investment 2 (Pty) Ltd (RSI2) for R499m and a guarantee limited to an amount of R217m in favour of Standard Bank as security for loan facilities granted to RSI2 as well as Roeland Street Investment 3 (Pty) Ltd (RSI3). In addition to the suretyship, Acucap Investments (Pty) Ltd has provided Nedbank with an undertaking to fund any shortfall in instalments due by RSI2 to Nedbank in terms of these loan facilities. In addition to the guarantee, Acucap Investments (Pty) Ltd has provided Standard Bank with an undertaking to fund any shortfall in instalments due by RSI2 and RSI3 to Standard Bank in terms of these loan facilities. 7.5 Minimum contracted rental Minimum contracted rental income The group leases a number of retail, office and industrial properties under operating leases. Leases typically run for a period of three to five years for the South African portfolio. The leases for GOZ, on average, run for a period of eight to 10 years. Average lease terms South Africa 3 5 years Australia (GOZ) 8 10 years Contracted rental amounts receivable at year end Less than one year Between one and five years Total More than five years South Africa Australia (GOZ) Minimum contracted rental expense The Group is party to leasing contracts as the lessee with numerous properties under operating leases. Included in the minimum contracted rental expenses are obligations payable in Australia relating to 10 land leases for buildings owned by GOZ. These land leases generally expire in 2047 and 2048 and are common in the Australian property industry. Future land lease payments in Australia are contingent on a number of variable factors, such as whether the building is tenanted or not and market rent reviews which can take place during or after the expiration of the building occupancy lease. The net carrying amount at the end of the reporting period is R123m. Contracted rental amounts payable at year end Less than one year Between one and five years More than five years South Africa Australia (GOZ) About the Growthpoint reporting Annual financial statements Property portfolio General information

30 28 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Equity-accounted investments The V&A Waterfront is the owner of the developed and undeveloped land, which is held to earn rental income and for capital appreciation. Globalworth is a London Stock Exchange (AIM)-listed real estate company that focuses primarily on Romania s commercial real estate market. 8.1 Reconciliation of equity-accounted investments Opening balance Share in equity-accounted results Disposal of equity-accounted interest (51) Acquisition of equity-accounted interest Bargain purchase 78 Loans to equity-accounted investments 89 Loans to equity-accounted investments settled (161) (224) Closing balance Profit from equity-accounted investments Summarised financial information for material joint ventures and associates V&A Waterfront Joint venture 2017 Globalworth* Associate Primary place of business South Africa South Africa Romania Proportion of ownership interest 50.0% 50.0% 26.9% Quoted fair value per share EUR7.57 Statement of financial position ASSETS Non-current assets Closing fair value of property assets Opening balance of property assets Additions Capital expenditure Disposals (226) (60) Gross fair value adjustment on investment property Straight-line lease income adjustment (296) (281) Fair value of investment properties for accounting purposes Straight-line lease income adjustment Other assets Current assets Other current assets (excluding cash and cash equivalents) Cash and cash equivalents Total assets * This information has not been reviewed or audited by Growthpoint s independent external auditors.

31 Group annual financial statements 30 June Equity-accounted investments (continued) 8.2 Summarised financial information for material joint ventures and associates (continued) V&A Waterfront Joint venture Globalworth* Associate EQUITY AND LIABILITIES Equity Owners equity Shareholders debentures Total unitholders /shareholders interest Non-controlling interest Total equity Non-current liabilities Non-current financial liabilities (excluding trade and other payables and provisions) Current liabilities Trade and other payables (including current loan account with Growthpoint) Financial liabilities (excluding trade and other payables and provisions) Other current liabilities Total equity and liabilities Growthpoint s share in total unitholders / shareholders interest Statement of comprehensive income Revenue Property-related expenses (408) (354) (194) Net property income Fair value adjustments Capital items (3) (33) (15) Interest income Interest expense (403) Other costs (48) (40) (45) Profit from continued operations (104) Income tax expense Post-tax profit from continued operations (104) Other comprehensive income Total comprehensive income (104) Non-controlling interest (2) (3) Equity-accounted profit before interest paid to shareholders (104) Interest paid to shareholders (1 048) (958) Total equity-accounted profit (104) Growthpoint s share in equity-accounted interest (28) Interest received The financial year end of the V&A Waterfront is 31 March while Globalworth is 31 December. The financial information as at 30 June is used in applying the equity method. * This information has not been reviewed or audited by Growthpoint s independent external auditors About the Growthpoint reporting Annual financial statements Property portfolio General information

32 30 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Equity-accounted investments (continued) 8.3 Acquisition of Globalworth Acquisition date 20 Dec 2016 Interest acquired (%) 26.9% Total consideration transferred (discharged by cash) () On 20 December 2016, Growthpoint RSA acquired a 26.9% stake in the London Stock Exchange (Alternative Investment Market (AIM))-listed Globalworth, which is classified as an associate, for a consideration of R2.7bn (EUR186.4m). Globalworth owns a EUR1bn property portfolio consisting of mostly modern A-grade offices, industrial properties, a residential property complex as well as developments. Its portfolio is concentrated in Bucharest and one in Timisoara, Romania and is underpinned by Euro-denominated leases with many multinational business brands. This acquisition was funded by loans of EUR100.0m and the remaining portion by Rand loans with cross currency interest rate swaps (CCIRS) of EUR86.4m at a weighted average term of 4.2 years. The Euro-based interest rates are fixed for a weighted average term of 9.9 years at a weighted average all-in cost of 2.6%. 8.4 Summarised financial information for non-material joint ventures Loss from continued operations (15) (21) Post-tax loss from continued operations (15) (22) Total comprehensive income (15) (22) 9. Intangible assets Goodwill Rights to manage property Total Cost Opening balance Accumulated amortisation and impairment losses (1 558) (1 019) (2 577) Opening balance (1 558) (920) (2 478) Amortisation for the year (99) (99) Carrying value at 30 June Cost Opening balance Additions during the year software development 3 3 Accumulated amortisation and impairment losses (1 558) (920) (2 478) Opening balance (1 558) (798) (2 356) Impairment loss (23) (23) Amortisation for the year (99) (99) Carrying value at 30 June

33 Group annual financial statements 30 June Intangible assets (continued) Carrying amount of goodwill allocated to the different cash-generating units are as follows: Initial goodwill Accumulated impairment loss recognised Goodwill 30 June 2017 Acucap Retail (note 9.1) (949) 866 Acucap Office (note 9.1) (569) 518 Acucap Industrial (note 9.1) 76 (40) 36 Growthpoint Management Services (note 9.2) Carrying value at 30 June (1 558) Goodwill acquired as part of the Acucap business combination carries on the business of a property holding company through the ownership of investment properties by its wholly owned subsidiaries. Acucap has three cash-generating units: retail, office and industrial. Goodwill on the acquisition of Acucap Properties Limited has been allocated for impairment testing purposes to these individual cash-generating units (CGUs). Retail, office and industrial each represent the lowest level at which the goodwill is monitored for internal management purposes. The recoverable amounts of all these CGUs for the Acucap acquisition were based on fair value less costs of disposal, estimated using the average difference between the net asset value and the market capitalisation of Growthpoint over a period of five years. This indicates that a third party will be prepared to pay a premium over the net asset value for Growthpoint shares. The future expectations of the CGUs were considered by estimating the premium a third party is prepared to pay for Growthpoint s own shares as the properties form part of the Growthpoint portfolio. Growthpoint s net asset value and share price, together with Acucap s historical net asset value has been considered to provide an indication of how the portfolio is expected to perform in the future. The fair value measurement was categorised as a level 3 fair value based on the inputs in the valuation techniques used. The key assumptions used in the estimation of the recoverable amount are set out below. The values assigned to the key assumptions represent the quoted share price of Growthpoint at 30 June from FY13 until FY17, as well as the net asset value per share per the published results of the Group. FY13 FY14 FY15 FY16 FY17 Growthpoint (share price in cents) Growthpoint (net asset value per share in cents) Growthpoint (market capitalisation versus net asset value) 36.24% 11.25% 13.66% 3.80% (2.74%) The average net asset value versus market capitalisation for the Group for the previous five years (ie 12.44%) was used in the calculation of the fair value less costs of disposal of the Acucap CGUs. The recoverable amounts were calculated as follows: About the Growthpoint reporting Annual financial statements Property portfolio General information Acucap Retail 12 Acucap Office 66 Acucap Industrial No impairment loss has therefore been recognised during the current year, as the recoverable amount exceeds the carrying amount.

34 32 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Intangible assets (continued) 9.2 Goodwill acquired Growthpoint Management Services For the purpose of impairment testing, goodwill, other than goodwill relating to the acquisition of Acucap, is allocated to the Group s historical management services entity. This represents the property administration and management business within the Group where goodwill allocated is monitored for internal management purposes. The recoverable amount of the cash-generating unit was based on its value in use. It was determined that the recoverable amount was higher than the carrying amount and therefore no impairment loss was recognised. The recoverable amount was calculated by discounting the future cash flows generated from the continuing use of the unit and was based on the following key assumptions from discussions with management of Growthpoint Management Services (Pty) Ltd, and past experience: (a) The management contract will continue on similar terms to the agreement that was in place before the acquisition transaction, which had the following terms: Asset management fee was calculated at 0.50% of the enterprise value Enterprise value was measured by taking the sum of the nominal value of external debt plus market capitalisation (b) Letting commission on new deals was calculated at 100% of recommended South African Property Owners Association (SAPOA) tariffs while letting commission on renewals was calculated at 50% of recommended SAPOA tariffs (c) Collection fees range from 1% to 4% of cash collected on a property-by-property basis (d) Salaries are in respect of functions that relate to property management (e) Operating expenditure was based on discussions with the previous property managers and after consideration of historic costs, which included rental of premises, IT systems and support, marketing and other expenses necessary for operating a listed company (f) A discount rate of 10% (FY16: 10%) was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the Group s weighted average cost of debt. There are no expected significant changes to the assumptions. The discounted cash flow was performed over a six-year period (FY16: seven-year period), which took into account the remaining period of the contract that existed and that the contract would be renewed for another 10-year period. 9.3 Amortisation The amortisation is recognised as a non-cash item and is excluded from the shareholders distribution calculation. The remaining amortisation period of the rights to manage the property is six years.

35 Group annual financial statements 30 June Long-term loans granted 10.1 Summary of loan balances Amount advanced Opening balance Advanced during the year Repaid during the year (375) (544) Accrued interest Opening balance Settled during the year (37) (54) Arising during the year Nominal value of long-term loans Fair value and equity-accounted adjustment (35) (10) Fair value of long-term loans Portion repayable within the next 12 months Portion repayable after the next 12 months The long-term loans granted were advanced to the following entities: Entity Interest rate Latest repayment date Rabie Property Group (Pty) Ltd Prime minus 1% 31 January Acucap Unit Purchase Scheme 6.19% 9.8% 17 January V&A Waterfront Prime 18 July Roeland Street Investment 2 (Pty) Ltd Prime 1 March Non-material loans advanced Prime to prime +2% 30 November Festival Street (Pty) Ltd 9.69% 1 March Significant terms and conditions Rabie Property Group (Pty) Ltd Acucap Unit Purchase scheme V&A Waterfront Roeland Street Investment 2 (Pty) Ltd The loan will be utilised for the completion of Bridgepark in Century City On completion of the building, Century City Trust is committed to pay for the development project expenditure in order to obtain 50% ownership in Bridgepark. This loan will therefore convert to a term loan with Century City Trust. Acucap linked units were issued on loan account to Acucap employees as part of a share purchase scheme The employees carry the risk of non-performance and have no restrictions placed upon them As a result of the business combination, the Acucap employees received Growthpoint shares in the same ratio as the other shareholders for each Acucap share held. The loan is used for the funding of capital expenditure by the V&A Waterfront as approved by the property committee of the V&A Waterfront the Government Employees Pension Fund (GEPF) has lent the same amount to the V&A Waterfront. The proceeds from the Silo 3 residential units will be utilised to repay both loans from Growthpoint and GEPF. The loan is used for the development and/or construction of self-storage facilities and for any cash flow shortfalls until such facilities are cash flow positive The intention is to sell the self-storage facilities to Stor-Age Property REIT Limited once they are cash flow positive. The proceeds of the sale will be utilised to redeem the loans. About the Growthpoint reporting Annual financial statements Property portfolio General information

36 34 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Trade and other receivables Rental debtors Impairment of debtors (26) (30) Prepaid expenses Deferred expenditure (including letting commissions and tenant installations) Sundry debtors Loans to joint ventures Accrued recoveries Distribution receivable from Globalworth Ordinary share capital Number of shares Amount 2016 Authorised Ordinary shares with no par value Issued Ordinary shares Issued at beginning of year Issued during year In issue at end of year Treasury shares Number of shares Amount 2016 Opening balance Acquired during the year Vested/exercised during year ( ) ( ) (67) (71) Closing balance Net share capital

37 Group annual financial statements 30 June Non-controlling interest Extracts from financial information for material non-controlling interest GOZ Primary place of business Australia Australia Proportion of ownership interest 65.1% 65.5% Statement of financial position Non-current assets Non-current liabilities (13 140) (13 928) Total non-current net assets Current assets Current liabilities (791) (705) Total current net assets Net assets Net assets attributable to NCIs Statement of profit or loss and other comprehensive income Revenue, excluding straight-line lease income adjustment Profit after taxation from continuing operations Other comprehensive income (1 571) Total comprehensive income (57) Dividends paid to non-controlling interest (502) (436) Statement of cash flows Cash flows from operating activities (47) Cash flows from investing activities (725) (3 734) Cash flows from financing activities (1 446) Translation effect on cash and cash equivalents of foreign operations (41) 55 Net movement in cash and cash equivalents (465) 529 The information above is the amount before intercompany eliminations and has been adjusted for fair value adjustments on acquisition and differences in the Group s accounting policies About the Growthpoint reporting Annual financial statements Property portfolio General information

38 36 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Financial Liabilities Summary of financial liabilities Interest-bearing borrowings Fair value adjustment on interest-bearing borrowings Fair value of interest-bearing borrowings Derivatives Interest-bearing borrowings Growthpoint has the following interest-bearing loans outstanding at year end: Secured variable rate loans by investment property South Africa Australia Unsecured variable rate loans Secured fixed rate loans by investment property South Africa Australia Unsecured fixed rate loans 555 Fair value adjustments Reconciliation of interest-bearing borrowings Opening balance Proceeds from borrowings raised Repayment of borrowings (15 426) (5 427) Fair value adjustments Foreign exchange differences (1 606) Closing balance Portion repayable within the next 12 months Portion repayable after the next 12 months

39 Group annual financial statements 30 June Financial Liabilities (continued) 15.1 Interest-bearing borrowings (continued) Secured variable rate borrowings South Africa Secured variable rate borrowings Australia Unsecured variable rate borrowings Interest rate Jibar+1.25% to Jibar+2.25%; Prime-1.80% to Prime-1.45% BBSW+1.00% to BBSW+1.60% Jibar+0.77% to Jibar+1.90% Latest repayment dates February 2024 September 2020 April 2024 Secured fixed rate borrowings 9.63% to 10.38% January Derivatives Significant terms and conditions All the above loans were utilised to purchase properties or to invest in shares of property-owning entities Nearly all loans have a bullet repayment profile Due to the nature of a REIT, the loans will typically be refinanced with new funding at expiry The secured loans are secured with mortgage bonds registered over properties. Forward exchange derivatives 2 23 Interest rate derivatives Cross currency interest rate derivatives Derivative Forward exchange derivative Interest rate derivative Cross currency interest rate derivative Risk mitigation The Group enters into forward exchange derivatives to manage its exposure to foreign exchange risk by forward selling foreign currency at predetermined prices. The Group enters into derivative financial instruments to manage its exposure to interest rates by fixing floating rate interest rates on loans. Rand denominated loans are obtained for certain foreign acquisitions and the Group then enters into cross currency interest rate derivatives to swap the Rand loan for a foreign currency loan. About the Growthpoint reporting Annual financial statements Property portfolio General information

40 38 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Total Employee benefits 16.1 Equity-settled share-based payments Opening balance Expense recognised for equity-settled share-based payment plan Personnel expense Asset management cost and directors fees Non-cash charge Units vested (88) (62) Closing balance Zero strike price share scheme Retention scheme Zero strike price share scheme Share incentive schemes were introduced for employees that were employed after the management "buy-in" transaction, as well as a scheme to replace the initial scheme after the last vesting in September The shares allocated will vest with the beneficiaries over a maximum period of five years, in tranches of 0% in year one and 25% per year thereafter. The share awards granted to employees have been valued using an intrinsic option valuation model, based on the market price of Growthpoint s shares at measurement date, adjusted for the present value of future distributions not receivable by employees before the vesting date. Retention scheme It was essential for Growthpoint to ensure the retention of its key staff and the alignment of management s interests with that of Growthpoint shareholders. To meet the retention objective, Growthpoint has implemented an option award under its existing scheme rules that offers participants retention value from the award date and provides alignment with the interests of shareholders over a relatively long period. Growthpoint issued reducing strike price options for the retention of key staff. Each option gives the option holder the right to acquire one Growthpoint share at the strike price at the vesting date. Each option s strike price will, on a material basis, be adjusted by: increasing the strike price by 8.25% per annum compounding on each distribution payment date decreasing the strike price by the actual distribution per share. The options simulate a share purchase scheme that is funded by 50% debt. These options vest over the remainder of the eight years as follows: : 10% per annum : 20% per annum : 10% per annum. The share awards granted to employees have been valued using an intrinsic option valuation model, based on 50% of the 30-day clean volume weighted average price of Growthpoint s shares at measurement date, adjusted for the present value of future distributions not receivable by employees before the vesting date.

41 Group annual financial statements 30 June Employee benefits (continued) 16.2 Inputs for fair value measurement Zero strike price scheme Retention scheme Maximum term 5 years 5 years 8 years 8 years Weighted average expected life 3.1 years 2.8 years 3.0 years 3.3 years Expected dividend growth rate 6.00% 6.00% 6.00% 6.00% Discount rate Interest rate curve Interest rate curve Interest rate curve Interest rate curve Interest rate on strike price 8.42% 8.42% Fair value of options granted R10.85 R12.02 R11.40 R11.74 Share price at grant date R22.85 R27.12 R22.85 Strike price at grant date R13.43 R11.43 R13.56 R11.43 Zero strike price share scheme The probability of staff leaving was estimated as 5% in the first year and 10% in subsequent years. Retention scheme The probability of staff leaving was estimated at 5% in the first year and an additional 5% in every second subsequent year Reconciliation of shares Number of shares Cumulative shares issued, acquired and held by Growthpoint for the purpose of share-based payments Cumulative shares issued and acquired Opening balance Shares acquired during the year Cumulative shares vested and exercised ( ) ( ) Shares available to the share scheme Outstanding share options granted to employees Opening balance Granted to employees Forfeited by employees ( ) ( ) Vested and exercised by employees ( ) ( ) Outstanding share options granted to employees About the Growthpoint reporting Annual financial statements Property portfolio General information

42 40 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June 2017 Zero strike price scheme Retention scheme Employee benefits (continued) 16.3 Reconciliation of shares (continued) Weighted average exercise prices Share options outstanding at beginning of year R26.18 R25.79 Share options outstanding at end of year R26.46 R26.18 Options granted during the year R26.60 R26.86 Options forfeited during the year R26.54 R26.33 Options exercised during the year R25.83 R25.83 Options outstanding during the year R26.46 R26.18 Weighted average price of shares exercised R12.76 R12.74 Range of exercise prices R11.78 R13.23 R11.81 R13.01 Maximum remaining term 8 years 6 years 17. Taxation and deferred taxation 17.1 Taxation Taxation expense South African normal taxation Foreign taxation Total Current tax expense (2) (4) (96) (72) (98) (76) Current year (2) (4) (96) (72) (98) (76) Deferred tax expense 50 (765) 50 (765) Current year Amortisation of intangible asset Capital gains tax on the sale of GOZ shares 28 (858) 28 (858) Other Total income tax expense 48 (769) (96) (72) (48) (841) Reconciliation of effective taxation charge Statutory taxation charge at 28% Non-deductible expenses 52 (74) Tax-exempt income (776) (430) Exempt income (77) 1 Deferred tax on assessed loss (1) (36) Fair value adjustments not taxable due to reit status (698) (395) Capitalised interest (87) Tax rate difference and withholding tax on GOZ (144) 766 Qualifying distribution (1 376) (1 327) Effective taxation charge Effective taxation rate 0.56% 12.35%

43 Group annual financial statements 30 June Taxation and deferred taxation (continued) 17.2 Deferred taxation Reconciliation of net deferred tax liability Opening balance Current year charge through profit or loss (50) 765 Closing balance Deferred taxation liability Tax effect of temporary differences between tax and book value for: Deferred taxation liability Investment in GOZ Amortisation of intangible asset Investment property allowances Deferred taxation asset (177) (175) Share-based payments (66) (64) Tax losses carried forward (82) (83) Other (29) (28) Net deferred taxation liability Section 25BB of the Income Tax Act allows for the deduction of the qualifying distribution paid to shareholders, but the deduction is limited to taxable income. To the extent that no tax will be payable in future as a result of the qualifying distribution, no deferred tax was raised on items such as the straight-line lease income adjustment and the fair valuation of non-current financial liabilities. IAS 12 Income Taxes (amended) requires the sale rate to be applied, unless rebutted, when calculating deferred taxation on the fair value adjustments on investment property. Capital gains taxation is not applicable on the sale of investment property in terms of section 25BB of the Income Tax Act. The deferred taxation rate applied to investment property at the sale rate is therefore 0%. Consequently, no deferred taxation was raised on the fair value adjustments on investment property. Allowances relating to immovable property cannot be claimed and if a REIT sells immovable property, the allowances claimed in previous years will be recouped. A deferred taxation liability was raised in this respect. The deferred taxation liability on the intangible asset relates to the right to manage the property assets. The deferred taxation on the investment in GOZ is based on the presumption that the investment will be realised through sale and capital gains tax will be payable in Australia. 18. Trade and other payables About the Growthpoint reporting Annual financial statements Property portfolio General information Accrued expenses Accrued interest Tenant deposits Trade creditors Value added tax Income received in advance Linked unitholders for distribution

44 42 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Related-party transactions 19.1 Simplified group organogram ownership and legal structure JSE GROWTHPOINT PROPERTIES LIMITED 150 properties R35.7bn 100% Domestic Treasury company Growthpoint Properties International (Pty) Ltd 65.1% 26.9% 50% 100% ASX Growthpoint Properties Australia Limited 57 properties R32.5bn LSE (AIM) Globalworth Real Estate Investments 18 properties R4.2bn V&A Waterfront Holdings (Pty) Ltd 1 property R8.7bn Management company Growthpoint Management Services (Pty) Ltd 630 employees 100% Property owning companies Metboard Properties Limited 121 properties R4.9bn Paramount Property Fund Limited 54 properties R5.7bn Growthpoint Securitisation Warehouse Trust 68 properties R10.1bn Growthpoint ABQ (Pty) Ltd 8 properties R1.3bn Growthpoint TPG (Pty) Ltd 19 properties R3.3bn Acucap Investments (Pty) Ltd 31 properties R10.7bn Other subsidiaries 20 properties R5.3bn The above organogram includes only material subsidiaries, joint ventures and associates. A full list of Growthpoint Properties Limited subsidiaries, joint ventures and associates, is available on request. The interest in joint operations refers to buildings in which the group has an undivided interest. The Group has joint control over the properties and the joint arrangements are not structured through separate legal entities. Therefore the group recognises its share of the assets and liabilities and income and expenses. South Africa is the principal place of business for all joint operations. All subsidiaries are wholly owned (either directly or indirectly) by except for Growthpoint Properties Australia (65.1%). Growthpoint Management Services (Pty) Ltd provides property management services for the group companies.

45 Group annual financial statements 30 June Related-party transactions (continued) 19.2 Related-party transactions Various transactions were entered into between related parties. These transactions were entered into at market-related terms Income Receivables Income Receivables V&A Waterfront (Pty) Ltd The income received is interest received by the V&A Waterfront for the year. The receivables relate to all previous declared dividends that are still outstanding. Globalworth The income received is dividend declared by Globalworth for the year. The receivables relate to all previous declared dividends that are still outstanding. Roeland Street Investment 2 (Pty) Ltd The receivable relates to funds borrowed by the joint venture. Roeland Street Investment 3 (Pty) Ltd 3 6 The receivable relates to funds borrowed by the joint venture. Growthpoint owns 33% of Roeland Street Investment 2 (Pty) Ltd and 50% of Roeland Street Investment 3 (Pty) Ltd. Both these entities are equity-accounted in the Group Key management personnel The Group s key management personnel, and persons connected with them, are also considered to be related parties for disclosure purposes. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of (directly or indirectly) and comprise of the board of directors and the heads of the major business units and functions. Key management personnel compensation Short-term employee benefits Share-based payments About the Growthpoint reporting Annual financial statements Property portfolio General information

46 44 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Related-party transactions (continued) 19.4 Directors remuneration Basic salary R Contribution to defined contribution plan R Annual bonus R Total R Accounting IFRS charge in respect of staff incentive scheme awards R Total IFRS remuneration R Executive directors 2017 LN Sasse EK de Klerk G Völkel Executive directors 2016 LN Sasse EK de Klerk G Völkel The table above provides an indication of the total cost to company in relation to executive directors remuneration, which was paid by Growthpoint Management Services. The IFRS accounting charge reflects the cost that has been expensed by the company in profit or loss in the relevant year in relation to long-term incentive awards that have been granted to executive directors. The IFRS charge is a calculation based on the fair value of the awards made to employees, measured at the grant date, compared to the amount calculated in the prior year, arriving at the expense accounted for in profit or loss. It should be noted that the amount estimated here will differ significantly from the actual expense in the current and future years, which is based on the number of shares that vested, calculated at the price at which they were exercised. No attrition is taken into account and the calculation is based on the principal assumptions as set out in the employee benefits note 16. Service contracts are in place between Growthpoint Management Services (Pty) Ltd and Messrs LN Sasse, EK de Klerk and G Völkel, all of which provide for a six-month reciprocal notice period. Following a review of the definition of a prescribed officer in terms of the Companies Act, in the context of decision-making processes within the Group, executive management and the Board have concluded that no member of the Executive Committee can be regarded as a "prescribed officer". Growthpoint Australia (GOZ) V&A Waterfront AUD ZAR AUD ZAR ZAR ZAR Fees paid LN Sasse EK de Klerk JF Marais Services rendered by Growthpoint Board members paid to Growthpoint LN Sasse, EK de Klerk and JF Marais are directors of, the ultimate controlling entity of GOZ.

47 Group annual financial statements 30 June R Directors fees 19. Related-party transactions (continued) 19.4 Directors remuneration (continued) Non-executive directors MG Diliza PH Fechter LA Finlay JC Hayward HS Herman JF Marais HSP Mashaba SP Mngconkola R Moonsamy NBP Nkabinde FJ Visser Notes: (1) The increase in fees paid to non-executive directors for FY17 versus FY16 is as a result of the higher meeting attendance rate in FY17, one separate Nomination Committee meeting in FY17 and two Board offsite meetings in the FY17. * In addition to fees for services as directors Mr Fechter received R in consultation fees relating to Growthpoint s investment in GWI. Messrs Hayward and Visser received R each in consultation fees relating to Growthpoint s IT governance review Directors interests in ordinary shares Direct beneficial Indirect beneficial Nonbeneficial Direct Indirect Total beneficial beneficial Nonbeneficial Executive directors LN Sasse EK de Klerk * * G Völkel Non-executive directors MG Diliza (BEE interest) # # MG Diliza (associate) * * PH Fechter * * LA Finlay JC Hayward HS Herman * * JF Marais * * R Moonsamy NBP Nkabinde 4 000^ ^ R Total About the Growthpoint reporting Annual financial statements Property portfolio General information # BEE interest * Associates: Family trust ^ Associates: Spouse

48 46 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Related-party transactions (continued) 19.6 Unvested options for executive directors Zero strike price share scheme Number of unvested options Total 30 June June June options LN Sasse EK de Klerk G Völkel options LN Sasse EK de Klerk G Völkel options LN Sasse EK de Klerk G Völkel Key staff retention scheme notional awards Opening balance Vested options Closing balance Strike price Key staff retention scheme award 2014 LN Sasse ( ) EK de Klerk ( ) Key staff retention scheme award 2016 EK de Klerk Key staff retention scheme award 2017 G Völkel Unvested options for executive directors Retention scheme Total 30 June June June June June June June June 2025 Key staff retention scheme award 2014 LN Sasse EK de Klerk Key staff retention scheme award 2016 EK de Klerk Key staff retention scheme award 2017 G Völkel Other related-party transactions The group uses various legal services provided by Glyn Marais Inc. The founding partner, JF Marais, who is no longer responsible for directing the firm, is the Chairman and non-executive director of. Glyn Marais Inc. is a tenant in a Growthpoint building and pays rent. Glyn Marais legal fees paid 7 8 Glyn Marais rent received (5) (5)

49 Group annual financial statements 30 June Classification of financial assets and liabilities Held for trading Designated at fair value Loans and other receivables Outside scope of IAS Assets 2017 Cash and cash equivalents Trade and other receivables Derivative assets Listed investments Long-term loans granted Cash and cash equivalents Trade and other receivables Derivative assets Listed investments Long-term loans granted Liabilities 2017 Trade and other payables Derivative liabilities Taxation payable Interest-bearing borrowings Deferred tax liability Trade and other payables Derivative liabilities Taxation payable Interest-bearing borrowings Deferred tax liability Fair value estimation 21.1 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: Fair value Level 2 Level 3 Fair value Level 2 Total Level 3 Assets Recurring fair value measurement Fair value of property assets Listed investments Long-term loans granted Derivative assets Non-recurring fair value measurement Non-current assets held for sale Total assets measured at fair value About the Growthpoint reporting Annual financial statements Property portfolio General information

50 48 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Fair value estimation (continued) 21.1 Fair value measurement of assets and liabilities (continued) Fair value Level 2 Level 3 Fair value Level 2 Level 3 Liabilities Recurring fair value measurement Interest-bearing borrowings Derivative liabilities Total liabilities 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 Movement in level 3 instruments Property assets Listed investments Long-term loans Derivative Derivative Property Listed granted assets liabilities assets investments Long-term loans granted Opening balance (loss)/gain from fair value adjustments and translation of foreign operations (1 086) (214) (25) 107 (31) (6) Accrued interest Acquisitions Disposals (3 691) (1 129) Advancements Settlements (412) (598) Closing balance (31) Valuation process A number of the Group s accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial 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 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 (ie as prices) or indirectly (ie 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. Valuation techniques using observable inputs level 2 Fair values classified as level 2 have been determined using models for which inputs are observable in an active market. A valuation input is considered observable if it is obtained directly, such as quoted prices, or indirectly, such as those derived from quoted prices.

51 Group annual financial statements 30 June Fair value estimation (continued) 21.3 Valuation process (continued) Valuation technique using significant unobservable inputs level 3 Fair values are classified at level 3 if their determination incorporates significant inputs that are not based on observable market data. Valuation techniques and significant unobservable inputs Level 2 instruments Interest-bearing borrowings Description Interest-bearing borrowings Valuation technique Valued by discounting future cash flows using the South African swap curve plus an appropriate credit margin at the dates when the cash flows will take place. The estimated fair value would increase/(decrease) if the credit margin were lower/(higher). Derivative instruments Significant observable inputs Credit margins: 0.43% to 3.60% (FY16: 0.45% to 3.60%) Description Valuation technique Significant observable inputs Forward exchange contracts Interest rate swaps Cross currency interest rate swaps Valued by discounting the forward rates applied at year end to the open positions. Valued by discounting the future cash flows using the South African swap curve at the dates when the cash flows will take place. 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. Interest rate swap curve Interest rate swap curve Interest rate swap curve Level 3 instruments Investment property In terms of the Group s accounting policy, independent valuations are obtained on a rotational basis, ensuring that every property is valued at least once every three years by an external, independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The balance of the South African portfolio is valued by Growthpoint s qualified internal valuers. The South African properties were valued at FY17 using the discounted cash flow of future income streams method by the following valuers who are all registered valuers in terms of section 19 of the Property Valuers Professional Act, No 47 of 2000: Mills Fitchet PWV Mills Fitchet KZN ERIS Jones Lang LaSalle Rode and Associates PropVal Assist Spectrum Wolffs Valuation Services (Pty) Ltd PG Mitchell T Bates C Everatt J Karg K Scott C van Rooyen PL O Connell S Wolffs NDip (Prop Val), MIV (SA), CIEA, professional valuer MSc, BSc Land Econ (UK), MRICS, MIV (SA), professional valuer BSc (Hons) Estate management, MRICS, MIV (SA), professional valuer BSc, MRICS, MIV (SA), professional valuer BCom (Hons), professional valuer NDip (Prop Val), MIV (SA), professional valuer NDip (Prop Val), professional valuer NDip (Prop Val), professional associate valuer About the Growthpoint reporting Annual financial statements Property portfolio General information The Australian properties were valued at FY17 using the discounted cash flow of future income streams method by Savills, Jones Lang LaSalle, Urbis, Knight Frank, Colliers, M3property and LMW that are all members of the Australian Property Institute and certified practising valuers.

52 50 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Fair value estimation (continued) 21.3 Valuation process (continued) Valuation techniques and significant unobservable inputs (continued) At the reporting date, the key assumptions and unobservable inputs used by the Group in determining fair value of investment property were in the following ranges for the Group s portfolio of properties: Significant unobservable inputs and range of estimates used Description Valuation technique Discount rate (%) Exit capitalisation rate (%) Capitalisation rate (%) Retail sector Office sector Discounted cash flow Industrial sector model GOZ office GOZ industrial 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). Listed investments Description Valuation technique Significant unobservable inputs Stenham European Shopping Centre Fund (SESCF) Long-term loans granted Valued by discounting future cash flows using a floating rate that is applicable to this loan including an estimated counterparty credit spread. Not applicable Description Valuation technique Significant unobservable inputs Rabie Property Group (Pty) Ltd Acucap Unit Purchase Scheme V&A Waterfront Roeland Street Investment 2 (Pty) Ltd Derivative assets and liabilities Valued by discounting future cash flows using a floating rate that is applicable to this loan including an estimated counterparty credit spread. Valued by discounting future cash flows using a floating rate that is applicable to this loan including an estimated counterparty credit spread. Valued by discounting future cash flows using a floating rate that is applicable to this loan including an estimated counterparty credit spread. Valued by discounting future cash flows using a floating rate that is applicable to this loan including an estimated counterparty credit spread. Not applicable Not applicable Not applicable Not applicable Description Valuation technique Significant unobservable inputs 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 will take place. Credit curve 22. Financial risk management The board of directors has overall responsibility for the establishment and oversight of the group s risk management framework. The board established the Risk Management Committee, which is responsible for developing and monitoring the group s risk management policies. The Risk Management Committee reports regularly to the board of directors on its activities. The group s risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the group s activities. The Risk Management Committee oversees how management monitors compliance with the group s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The Risk Management Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to both the Audit Committee and the Risk Management Committee.

53 Group annual financial statements 30 June Financial risk management (continued) The financial instruments of the group consist mainly of cash and cash equivalents, including deposits with banks, long-term borrowings, derivative instruments, trade and other receivables, trade and other payables, long-term loans granted and linked unitholders for distribution. The group purchases or issues financial instruments in order to finance operations and to manage the market risks that arise from these operations and the source of funding. The group has exposure to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk (interest rate risk, foreign currency risk and market price risk) Capital risk management In terms of its Memorandum of Incorporation, Growthpoint has unlimited borrowing capacity. Growthpoint is funded partly by owners capital and partly by external borrowings. In terms of various covenants that Growthpoint is committed to in terms of its external borrowings, the maximum value of external borrowings as a percentage of the value of property assets is 50%. This percentage includes the investment in the V&A Waterfront, other equity accounted investments and listed investments. In practice, Growthpoint aims to keep gearing levels between 30% and 40% over the long term. Nominal value of borrowings, net of cash GOZ RSA Total 2017 Total borrowings Less: Cash and cash equivalents net of bank overdraft (298) (780) (315) (121) (613) (901) Net borrowings Total property assets Net borrowings/total property assets 39.3% 42.0% 37.8% 33.5% 38.2% 36.0% The group complied fully with the covenants in respect of all loan facilities during the year. The Board s policy is to maintain a strong capital base, comprising its shareholders interest, so as to maintain investor, creditor and market confidence and to sustain future development of the business. It is the group s stated purpose to deliver long-term sustainable growth in dividends per share. The Board monitors the level of dividends to shareholders and ensures compliance with the Income Tax Act and the JSE Listings Requirements. There were no changes in the group s approach to capital management during the year. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements. Dividend growth Interim dividend 2017 % 2016 % % 2017 Total dividend Year-on-year growth % About the Growthpoint reporting Annual financial statements Property portfolio General information Security on property assets Mortgage bonds have been registered over South African investment property, including investment property classified as held for sale, with a fair value of R42 852m (FY16: R43 652m) as security for long-term interest-bearing liabilities and facilities at a nominal value of R19 166m (FY16: R20 312m). First mortgage bonds have been registered over Australian investment property, with a fair value of AUD3 180m or R31 914m (FY16: AUD2 744m or R30 292m). Additional security was also provided in the form of other assets to a value of AUD148m or R1 484m (FY16: AUD170m or R1 874m).

54 52 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Financial risk management (continued) 22.1 Capital risk management (continued) Covenants In terms of covenants with certain banks, the nominal value of long-term interest-bearing borrowings may not exceed 50% of the value of investment property. This includes investment property reclassified as held for sale, equity-accounted investments and listed and unlisted investments. Value of investment property Investment property classified as held for sale Total investment property Equity-accounted investment Listed investment Total % of total Nominal value of long-term interest-bearing borrowings utilised at year end Percentage of nominal value long-term interest-bearing borrowings to total investment property 35% 34% Potential borrowing capacity Facilities available in terms of existing agreements at year end Credit risk Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from long-term loans granted, derivative assets, cash and cash equivalents and trade receivables. Credit risk is managed on a group basis. Long-term loans granted The Group provided loans to: Rabie Property Group (Pty) Ltd Acucap Purchase Scheme participants V&A Waterfront Roeland Street Investment 2 (Pty) Ltd. Rabie Property Group (Pty) Ltd The credit risk of this loan is mitigated by the security that is provided to Growthpoint: a cession of security agreement, in terms of which the borrower cedes the insurances and all of its rights under the building contract, including guarantees a continuing covering mortgage bond a suretyship by Century City Trust for the obligations of the borrower. Acucap Unit Purchase Scheme The credit risk of these loans are mitigated by the security that is provided to Growthpoint: a pledge and cession of the shares by the Acucap Unit Purchase Scheme participants. V&A Waterfront The credit risk of this loan is mitigated by the security that is provided to Growthpoint: a cession and pledge of 50% of the proceeds of the sale of the Silo 3 residential units

55 Group annual financial statements 30 June Financial risk management (continued) 22.2 Credit risk (continued) Roeland Street Investment 2 (Pty) Ltd The credit risk of this loan is mitigated by the following conditions: upon disposal of a self-storage facility, the proceeds will first be used to settle any third-party borrowings related to that facility and then to settle the shareholders loans no distributions will be made to the shareholders until such time as the shareholders loans have been repaid in full. Derivative assets and cash and cash equivalents Exposure to credit risk is limited by investing in liquid funds and entering into derivative financial instruments with counterparties that have a high percentage tier-one capital and strong credit ratings assigned by international credit rating agencies. Cash and cash equivalents includes R50.1m cash held on call account as security for municipal and other guarantees whose amounts are not available for use by the group. Trade receivables The group s exposure to credit risk is mainly in respect of tenants and is influenced by the individual characteristics of each tenant. The group s widespread tenant base reduces credit risk. Management has established a credit policy under which each new tenant is analysed individually for creditworthiness before the group s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at lease one month s rental. When available, the group s credit review includes external ratings. The UNdeposit campaign, which was launched in FY13, is a campaign whereby tenants pay a non-refundable fee at the inception of a lease period instead of the normal tenant deposit. Tenants are analysed individually for creditworthiness to determine if they are eligible for the UNdeposit facility fee and this also determines the exact extent of the non-refundable fee payable by them. The group s trade debtors are mainly listed and multinational companies which reduces the credit risk. The Group is not materially exposed to credit risk. Trade receivables were impaired with R26m (FY16: R30m) Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group s policy is to seek to minimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinance risk. In effect the group seeks to borrow for as long as possible at the lowest acceptable cost. The group regularly reviews the maturity profile of its financial liabilities and seeks to avoid concentration of maturities through regular replacement of facilities, and by using a selection of maturity dates. Cash flows are monitored on a regular basis to ensure that cash resources are adequate to meet the funding requirements of the group. About the Growthpoint reporting Annual financial statements Property portfolio General information

56 54 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Financial risk management (continued) 22.3 Liquidity risk (continued) The major sources of funding for the group are long-term interest-bearing borrowings. The tables below set out the maturity analysis of the group s financial liabilities based on the undiscounted contractual cash flows. Carrying amount 0 3 months 4 12 months 1 5 years >5 years 2017 Long-term borrowings, including derivative financial liabilities and assets GOZ liabilities Trade and other payables Long-term borrowings, including derivative financial liabilities and assets GOZ liabilities Trade and other payables Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the group s income, cash flows or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. (i) Interest rate risk The group is exposed to interest rate risk and adopts a policy of ensuring that at least 75% of its exposure to changes in interest rates on borrowings is on a fixed rate basis. This is achieved by entering into pay fixed and receive variable interest rate swaps. All such transactions are carried out within the guidelines set by the Risk Management Committee. As a consequence, the group is exposed to fair value interest rate risk in respect of the fair value of its fixed rate financial instruments, which will not have an impact on distributions. Short-term receivables and payables and investments are not directly exposed to interest rate risk. The below table depicts the percentage of long-term interest-bearing borrowings that were fixed % fixed Weighted average period % fixed Total Weighted average period South African operations years years Group years years

57 Group annual financial statements 30 June Financial risk management (continued) 22.4 Market risk (continued) Sensitivity analysis The following table demonstrates the sensitivity of profit before taxation to a reasonable possible change in interest rate, with all other variables held constant Increase/decrease Increase/decrease Change in base points Interest expense Profit and equity Change in base points Interest expense Profit and equity South African operations Group The interest rate profile of interest-bearing financial instruments as reported by the management of the group is as follows: Variable rate instruments Fixed rate instruments Financial assets Cash and cash equivalents Long-term loans granted Derivative assets Financial liabilities Derivative liabilities Interest-bearing borrowings The below table depicts the expiry dates of the fixed rate loans and the expiry dates of the interest rate swaps. Expiry of fixed rate loans South Africa Expiry of interest rate swaps Expiry of fixed rate loans Australia Expiry of interest rate swaps About the Growthpoint reporting Annual financial statements Property portfolio General information

58 56 Group annual financial statements 30 June 2017 Notes to the financial statements continued For the year ended 30 June Financial risk management (continued) 22.4 Market risk (continued) (ii) Foreign currency risk The group s exposure to foreign currency risk relates to the investments in GOZ, the group s Australian subsidiary and Globalworth, the Group's Romanian associate. The investments in GOZ and Globalworth are denominated in Australian dollar (AUD) and Euro (EUR) respectively. Forward exchange contract derivatives are acquired to limit exposure to currency fluctuations with respect to future dividends receivable on investments. Growthpoint held the following open forward exchange contracts at year end: Amount sold Average exchange rate Maturity date Purpose AUD21.0m R11.22/AUD1 September 2017 GOZ final FY17 distribution AUD5.0m R10.70/AUD1 September 2018 GOZ final FY18 distribution EUR2.3m R15.42/EUR1 September 2017 Globalworth interim FY17 distribution EUR2.0m R16.17/EUR1 March 2018 Globalworth final FY17 distribution EUR2.0m R16.87/EUR1 September 2018 Globalworth interim FY18 distribution EUR2.0m R17.57/EUR1 March 2019 Globalworth final FY18 distribution EUR2.0m R18.29/EUR1 September 2019 Globalworth interim FY18 distribution EUR2.0m R19.05/EUR1 March 2020 Globalworth final FY18 distribution Growthpoint has entered into cross currency interest rate swaps where Growthpoint pays AUD fixed interest and receives ZAR fixed or floating interest. These swaps are effectively AUD loans with a ZAR deposit and partially fund the investment in GOZ. It means that Growthpoint's investment in GOZ is partially immunised against the AUD/ZAR currency risk movements. Furthermore there is a positive yield spread between the investment in GOZ and the implied interest cost on the AUD funding. The cross currency interest rate swaps total AUD700m and mature between September 2018 and March Growthpoint entered into EUR100m loans (maturing between December 2019 and December 2021), EUR186m interest rate swaps (maturing between September 2024 and September 2028) and EUR86m cross currency interest rate swaps for the investment in Globalworth. The cross currency interest rate swaps mature between March 2021 and September The Euro interest obligations will be serviced from the dividends received from the investment in Globalworth. Sensitivity analysis Change in spot rate ZAR/AUD or EUR Profit % of Profit before tax anticipated Change before tax increase/ distribution in spot rate increase/ decrease that is ZAR/AUD decrease hedged or EUR % of anticipated distribution that is hedged Final annual distribution from GOZ FY Annual distribution from GOZ FY Annual distribution from Globalworth FY Foreign currency exposure at the end of the reporting period: AUD EUR AUD EUR Foreign denominated loan 100 Linked unitholder for distribution Net statement of financial position exposure Derivative financial instruments (7) Net exposure

59 Group annual financial statements 30 June EVENTS AFTER REPORTING PERIOD Assets held for sale On 7 July 2017, GOZ transacted and settled Sandgate Road, Nundah, QLD, at a sale price of AUD106.2 million with the net proceeds used to pay down existing debt. Purchase of stake in Industria REIT (IDR) On 11 July 2017, GOZ acquired an 18.2% interest in IDR for approximately AUD68.1 million, representing AUD2.30 per IDR security. The acquisition was funded from undrawn debt facilities. Acquisition of industrial portfolio On 13 July 2017, GOZ announced that it has exchanged contracts for the acquisition of four adjoining, modern industrial warehouses at Lot 11 and Lot 1, Part Lot 9, Tarlton Crescent and Lot 6 and Lot 7, Hugh Edwards Drive, Perth Airport, WA for AUD46.0 million, providing an initial passing yield of 8.13%. The acquisition was funded from undrawn debt facilities. Declaration of dividend after reporting period In line with IAS 10 Events after 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. About the Growthpoint reporting Annual financial statements Property portfolio General information

60 58 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies Included below is a summary of the significant accounting policies applicable to the Group financial statements. These accounting policies include only the areas in IFRS where elections have been made or policy choices exercised (including the choice or election made) as well as measurement criteria applied. The accounting policies also include information where it will assist users in understanding how transactions, other events and conditions are reflected in reported financial performance and financial position and was included based on the materiality as determined by management. Corporate Information Reporting entity (Growthpoint) is a company domiciled in South Africa. The physical address of the company s registered office is The Place, 1 Sandton Drive, Sandton. Reporting period end Financial year ending 30 June Basis of preparation The financial statements have been prepared on the historical cost basis except for investment property and financial instruments which are stated at fair value. Materiality IFRS is only applicable to material items. Management applies judgement and considers both qualitative and quantitative factors in determining materiality applied in preparing these financial statements. Prepared in accordance with International Financial Reporting Standards (IFRS), SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council The JSE listings Requirements and the Companies Act, No 71 of 2008 The principle of going concern The historical cost and fair value basis of accounting, where applicable These financial statements have been prepared on a basis consistent with that of the prior year, unless otherwise indicated. Functional and presentation currency South African Rand Rounding policy All amounts are presented in Rand millions () The Group has a policy of rounding in increments of R1m amounts less than R1m will therefore be rounded down to Rnil and are presented as a dash. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations and future events are believed to be reasonable under the circumstances. Actual results may differ from the estimates made by management from time to time. In the process of applying the Group s accounting policies, the directors have made the following estimates and judgements that have the most significant affects on the amounts recognised and disclosed in the annual financial statements.

61 Group annual financial statements 30 June Fair value accounting of property assets Independent valuations are obtained on a rotational basis, ensuring that every property is valued at least once every three years by an external independent valuer. The directors value the remaining properties annually on an open-market basis. The calculations are prepared by considering the aggregate of the net annual rent receivable from the properties and, where relevant, associated costs, using the discounted cash flow method. This method takes projected cash flows and discounts them at a rate which is consistent with comparable market transactions. The discount rates reflect the risks inherent in the net cash flows and are constantly monitored by reference to comparable market transactions. Undeveloped land is valued in terms of the internationally accepted and preferred method of comparison. By obtaining external valuations from registered valuators, in terms of section 19 of the Property Valuers Professional Act, No 47 of 2000, for the majority of the portfolio, management is of the opinion that the risk relating to estimation uncertainty has been mitigated. For the valuation policy, refer to note 21.3, Investment property. Group accounting Basis of consolidation and equity accounting Typical shareholding in the assessment of entities that are not structured entities Nature of the relationship between the Group and the investee Subsidiaries and other structured entities Joint ventures Associates Joint operations Greater than 50% Between 20% and 50% Between 20% and 50% Subsidiaries are those entities controlled by the Group. The financial results of subsidiaries and controlled trusts are included in the Group financial statements from the date that control commences until the date that control ceases. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. An associate is an entity over which the Group has significant influence. Proportionate share of assets and liabilities A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations to the liabilities, relating to the arrangement. Determining control The existence and effect of potential voting rights are considered when assessing whether the Group controls an entity to the extent that those rights are substantive. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Initial and subsequent measurement of subsidiaries The Group accounts for business combinations by applying the acquisition method as at the acquisition date and measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, plus the fair value of any existing equity interest, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured at the acquisition date. If this amount is negative, the Group recognises a gain on bargain purchase in profit or loss. About the Growthpoint reporting Annual financial statements Property portfolio General information Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration. If a business combination results in the termination of pre-existing relationships between the Group and the acquiree, then the lower of the termination amount, as contained in the agreement, and the value of the off-market element is deducted from the consideration transferred and recognised in other expenses. A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. Acquisitions of non-controlling interests that do not result in a change in control are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.

62 60 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies continued Common control transactions Transactions in which combining entities are controlled by the same party or parties before and after the transaction, and that control is not transitory, are referred to as common control transactions. Where there are common control transactions in the Group, predecessor accounting is applied with no gain or loss recognised in profit or loss. Initial and subsequent recognition in the consolidated financial statements Inter-company transactions and balances Consolidation Equity accounting Joint arrangement The Group accounts for business combinations by applying the acquisition method as discussed above. Subsidiaries are accounted for by including 100% of the assets, liabilities, income, expenses and cash flows on a line-by-line basis in the financial statements from the date that control commences until the date that joint control ceases. The portion attributable to noncontrolling interest is recognised in the statement of profit or loss and other comprehensive income and transferred to a non-distributable reserve. Intra-group balances, transactions and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Interests in joint ventures and associates are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group s share of profit or loss and other comprehensive income of equity-accounted investees, until the date on which the Group loses joint control or significant influence. Dividends and interest received from equity-accounted investments are accounted for as investment income on the statement of profit or loss and other comprehensive income. Joint operations are accounted for by including the Group s share of joint assets, liabilities, income, expenses and cash flows on a lineby-line basis in the financial statements from the date that joint control commences until the date that joint control ceases. Unrealised gains arising from transactions with joint operations and equityaccounted investees are eliminated to the extent of the Group s interest in the joint operations and investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Assets Investment property Classification Investment property consists of land and buildings, installed equipment and undeveloped land held to earn rental income for the long term and subsequent capital appreciation. When properties comprise a portion that is held to earn rental or for capital appreciation, and another portion that is held for use in the production or supply of goods or services or for administrative purposes, then these portions are accounted for separately only if these portions could be sold separately. If they cannot be sold separately, the entire property is accounted for as an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Investment property held under an operating lease relates to long-term land leases and is recognised in the Group s statement of financial position at its fair value. This accounting treatment is consistently applied for all such longterm land leases.

63 Group annual financial statements 30 June Measurement Initial measurement Subsequent measurement Valuation of investment property Valuation frequency Valuation method Non-current assets held for sale Classification and measurement Leases Operating leases Properties are initially recognised at cost on acquisition, including all costs directly attributable to the acquisition. Subsequent additions that will result in future economic benefits of which the cost can be measured reliably are capitalised. Investment property under construction is valued at fair value. Direct costs relating to major capital projects are capitalised until the properties are brought into commercial operation. Subsequent to initial recognition, investment properties are measured at their fair value. Investment property is maintained, upgraded and refurbished where necessary in order to preserve or improve the capital value as far as it is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives are charged against profit or loss. Gains or losses on subsequent measurement or disposals of investment properties are recognised in profit or loss. Such gains or losses are excluded from the calculation of distributable earnings. Independent valuations are obtained on a rotational basis, ensuring that every property is valued at least once every three years by an external independent valuer. The directors value the remaining properties annually on an open-market basis. The calculations are prepared by considering the aggregate of the net annual rent receivable from the properties and, where relevant, associated costs, using the discounted cash flow method. This method takes projected cash flows and discounts them at a rate which is consistent with comparable market transactions. The discount rates reflect the risks inherent in the net cash flows and are constantly monitored by reference to comparable market transactions. Undeveloped land is valued in terms of the internationally accepted and preferred method of comparison. Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the measurement of assets (and all assets and liabilities in a disposal group) is brought up to date in accordance with applicable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of the carrying amount and fair value less costs to sell. Investment properties classified as held for sale are measured in accordance with IAS 40 Investment property at fair value with gains and losses on subsequent measurement being recognised in profit or loss. Group company is the lessor The Group is party to numerous leasing contracts as the lessor of property. All leases are operating leases, which are those leases where the Group retains a significant portion of the risks and rewards of ownership. Rental income is recognised on a straight-line basis over the period of the lease term. The Group provides certain incentives for the lessee to enter into lease agreements. Initial periods of the lease term may be agreed to be rent-free or at a reduced rent. All incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive s nature or form or the timing of payments. The Group recognises the aggregate cost of incentives as a reduction of rental income over the lease term, on a straight-line basis. Group company is the lessee The Group is party to leasing contracts as the lessee of some property and equipment. Leases are classified as operating leases where substantially all the risks and rewards associated with ownership of the asset are not transferred from the lessor to the lessee. Operating lease rentals with fixed escalation clauses are recognised in profit or loss on a straight-line basis over the lease term. The resulting difference arising from the straightline basis and contractual cash flows is recognised as an operating lease asset or operating lease liability. Investment property held under an operating lease relates to long-term land leases and is recognised in the Group s statement of financial position at its fair value. This accounting treatment is consistently applied for all such long-term land leases. About the Growthpoint reporting Annual financial statements Property portfolio General information

64 62 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies continued Property letting commissions and tenant installations Measurement Initial measurement Subsequent measurement When considered material, letting commissions incurred and tenant installation costs are capitalised and recognised in trade and other receivables. Letting commissions incurred and tenant installation costs are measured at cost minus amortisation written off over the period of the lease. Intangible assets Initial measurement Subsequent measurement Impairment Amortisation Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. The recoverable amount is estimated at each reporting date. For the purpose of impairment testing, assets are grouped together into the smaller group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of the other assets or groups of assets (the cashgenerating unit). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of the cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. Impairment losses in respect of goodwill are not reversed. Other intangible assets Other intangible assets that are acquired by the entity, which have finite useful lives, are recognised initially at cost. Subsequent to initial recognition, other intangible assets are measured at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits of the asset to which it relates. Other intangible assets are tested for impairment when there is an indication that the asset may be impaired. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The residual value of the intangible asset is assessed as Rnil and the estimated total useful lives for the current and comparative periods are as follows: Rights to manage investment property 15 years

65 Group annual financial statements 30 June Deferred tax Classification and measurement Deferred tax is recognised for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: The initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit Goodwill that arises on initial recognition Differences relating to investments in subsidiaries and jointly controlled entities to the extent that the Group is able to control the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. No deferred tax was recognised on the fair value of investment property as capital gains tax on investment property is not applicable to REITs in terms of section 25BB of the Income Tax Act. The amount of deferred tax recognised is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates expected to be applied to temporary differences when they reverse, based on tax laws enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to either settle current tax liabilities and assets on a net basis or realise the assets and settle the liabilities simultaneously. A deferred tax asset is recognised for deductible temporary differences and unused tax losses to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Financial instruments Classification Financial assets are classified into the following categories: financial assets at fair value through profit or loss and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. A financial asset is classified at fair value through profit or loss if it is classified as held-for-trading or designated as such on initial recognition. Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Loans and receivables are subsequently measured at amortised cost using the effective interest method, less accumulated impairments. Debt and equity instruments issued are classified as either financial liabilities or as equity instruments in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting liabilities. About the Growthpoint reporting Annual financial statements Property portfolio General information Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The classification depends on the nature and purpose of the financial liabilities and is determined at the time of initial recognition. Listed investment The listed investment in the Stenham European Shopping Centre Fund (SESCF) is designated as at fair value through profit or loss upon initial recognition as such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise. The underlying investment in SESCF is property and therefore it would give greater meaning to the financial statements if this was treated in the same way as the other property investment, ie at fair value through profit or loss. Financial assets at fair value through profit or loss are measured at fair value, with any resultant gain or loss recognised in profit or loss.

66 64 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies continued Long-term loans The long-term loans are designated as at fair value through profit or loss upon initial recognition as such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise. The underlying investments are property and therefore it would give greater meaning to the financial statements if this was treated in the same way as the other property investment, ie at fair value through profit or loss. Financial assets at fair value through profit or loss are measured at fair value, with any resultant gain or loss recognised in profit or loss. Derivative financial instruments Derivative assets comprising interest rate swaps, forward exchange contracts and cross currency swaps are classified at fair value through profit or loss. Non-derivative financial liabilities Non-derivative financial liabilities comprising interest-bearing borrowings are classified as at fair value through profit or loss as such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise. The interestbearing borrowings are used to fund property and/or property fund acquisitions. Investment properties are recognised as fair value through profit or loss and therefore it would give greater meaning to the financial statements if interest-bearing borrowings are treated in the same way. Trade and other receivables Trade and other receivables are classified as loans and receivables. Trade and other payables Trade and other payables are classified as other financial liabilities. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date and are classified as loans and receivables. Measurement Initial measurement Subsequent measurement Financial assets and liabilities are initially measured at fair value plus any transaction costs (other than financial instruments classified as fair value through profit or loss where the transaction costs incurred are immediately expensed in profit or loss). Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. Loans and receivables and other financial liabilities are subsequently measured at amortised cost using the effective interest method, less accumulated impairments. Derecognition The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expires, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the entity is recognised as a separate asset or liability. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

67 Group annual financial statements 30 June Equity Capital and reserves Type Share capital Treasury shares Foreign currency translation reserve Non-distributable reserves Type Overall description of non-distributable reserves Amortisation of intangible assets Bargain purchase Fair value adjustments on investment properties Other fair value adjustments and non-distributable reserves Share-based payment reserve Reserves in noncontrolling interest Description of reserve Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Shares in the company held by Growthpoint Management Services (Pty) Ltd and unvested restricted shares held for employee participants in the Staff Incentive Scheme Trust are classified as treasury shares. The cost price of these shares, together with related transaction costs, is deducted from equity, but disclosed separately in the statement of changes in equity. The issued and weighted average number of shares is reduced by the treasury shares for the purposes of the basic and headline earnings per share calculations. The issued number of shares is reduced by the treasury shares for the purpose of the dividend per share calculations. When treasury shares held for employee participants vest in such participants, the shares will no longer be classified as treasury shares, but included as part of issued share capital and will be taken into account for the purposes of basic and headline earnings per share calculations. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group s presentation currency (Rand) at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Rand at exchange rates at the dates of the transactions (an average rate per month is used). Foreign currency differences are recognised in OCI and accumulated in the foreign currency translation reserve, except to the extent that the translation difference is allocated to NCI. When the Group disposes of only part of its interest in a subsidiary that includes foreign operations while retaining control, the relevant proportion of the cumulative amount is re-attributed to non-controlling interests. If control is not retained, the cumulative amount is reclassified from equity to profit or loss as a reclassification adjustment. Description of reserve The non-distributable reserves relates to items that are not distributable to shareholders, such as fair value adjustments on the revaluation of investment property, long-term loans, borrowings and derivatives, the amortisation of intangible assets, share-based payment transactions, the straight-line lease income adjustment, non-cash charges, capital items, deferred taxation, bargain purchases and reserves with the non-controlling interest. The amortisation of intangible assets reserve relates to the right to manage property intangible assets. Where the net recognised amount of the identifiable assets acquired and liabilities assumed exceeds the fair value of the consideration transferred (including the recognised amount of any non-controlling interest in the acquiree and the fair value of any existing equity interest), this excess is recognised immediately in profit or loss as a gain on bargain purchase. The bargain purchase reserve relates to the cumulative gain on bargain purchase. The fair value adjustments on investment properties reserve related to the fair value movement on the investment properties. The other fair value adjustments and non-distributable reserves relates to all non-distributable items accounted for in profit or loss, such as the fair value adjustments (excluding the NCI portion of the fair value adjustments), straight-line lease income adjustments, non-cash charges, capital items and deferred taxation were transferred to the non-distributable reserve in the current year. The share-based payment reserve relates to the grant date fair value of share-based payment awards granted to employees. The reserves with NCI relate to further acquisitions of GOZ made by Growthpoint. About the Growthpoint reporting Annual financial statements Property portfolio General information

68 66 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies continued Non-distributable reserves (continued) Type Description of reserve Fair value adjustments on listed investments Non-controlling interest The movement in fair value of the listed investment is accounted for in profit or loss and transferred to the nondistributable reserve. The movement relates to the increase in the fair value of the listed investments. Type Non-controlling interest Dividends Type and description Dividends Description of reserve The non-controlling interest reserve relates to the portion of equity ownership in a subsidiary not attributable to the parent company. The Group elects on each acquisition to initially measure non-controlling interest on the acquisition date at either fair value or at the non-controlling interest s proportionate share of the investees identifiable net assets. Classification and measurement Dividends or other distributions to the holders of equity instruments, in their capacity as owners, are recognised directly in equity on the date of declaration. Income and expenses Income Type and description Revenue recognition Finance income and gains from investing activities Classification and measurement Revenue from the letting of investment property comprises gross rental income and recoveries of fixed operating costs, net of value added tax. Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Recoveries of costs from lessees, where the entity merely acts as an agent and makes payment of these costs on behalf of lessees, are offset against the relevant costs. The Group recognises the aggregate cost of incentives as a reduction of rental income over the lease term, on a straight-line basis. Interest earned on amounts invested is recognised on an accrual basis using the effective interest method. Dividends from listed investments are recognised in profit or loss when declared.

69 Group annual financial statements 30 June Expenses Type and description Capital items and other charges Share-based payment transactions (employee benefits) Finance cost Taxation Classification and measurement Costs incurred on business acquisitions and items reclassified from other comprehensive income to profit or loss are classified as capital items. Amortisation of intangible assets, as well as expenses relating to the Staff Incentive Scheme are recurring expenses and are classified as other charges. Impairment of goodwill, although not recurring, is also classified as other charges as the expense relates to intangible assets. The Group only has equity-settled share-based payment schemes. The equity-settled schemes (zero strike price share scheme and retention scheme) allows certain employees the option or rights to acquire ordinary shares in the company. Such equity-settled share-based payments are measured at fair value at the date of the grant. The fair value determined at grant date of the equity-settled share-based payment is charged as employee costs, with a corresponding increase in equity, on a straight-line basis over the period that the employee becomes unconditionally entitled to the options, rights or shares, based on management s estimate of the shares that will vest and adjusted for the effect of non-market-vesting conditions. These share options and rights are not subsequently revalued. Finance costs incurred on qualifying investment property assets are capitalised until such time as the assets are substantially ready for their intended use. Qualifying assets are those that necessarily take a substantial period of time to prepare for their intended use. Capitalisation is suspended during extended periods in which active development is interrupted. All other finance costs are expensed in profit or loss in the period in which they are incurred using the effective interest method. Income tax for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable on the taxable income, after deducting the qualifying distribution for that year of assessment, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. In accordance with the status as a REIT, dividends declared meet the requirements of a qualifying distribution for the purposes of section 25BB of the Income Tax Act, No 58 of 1962, as amended (Income Tax Act). Withholding tax relating to foreign distributions received is recognised as part of the tax expense, and the financial results are reflected at the gross amounts, before withholding tax. Estimates and judgements involved for taxation The Group is subject to income taxes in numerous jurisdictions and the calculation of the Group s tax charge and provision for income taxes necessarily involves a degree of estimation and judgement. There are transactions and tax computations for which the ultimate tax treatment or result is uncertain, or in respect of which the relevant tax authorities may or could indicate disagreement with the Group s treatment and accordingly the final tax charge cannot be determined until resolution has been reached with the relevant tax authority. About the Growthpoint reporting Annual financial statements Property portfolio General information Operating profit Operating profit included in profit or loss represents the net property income earned from investment property, adjusted for other operating expenses and income.

70 68 Group annual financial statements 30 June 2017 SIGNIFICANT Accounting policies continued Standards and interpretations issued and not yet effective The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the group s accounting periods beginning on or after 1 January 2018 or later periods. Accounting standard or interpretation Nature of change Impact on the financial statements IFRS 9 Financial instruments Effective for the financial reporting period ending 30 June 2019 IFRS 15 Revenue from contracts with customers Effective for the financial reporting period ending 30 June 2019 IFRS 16 Leases Effective for the financial reporting period ending 30 June 2020 Classification and measurement of financial assets all financial assets are initially measured at fair value debt instruments are subsequently measured at fair value through profit or loss equity instruments are measured at fair value through profit or loss. Classification and measurement of financial liabilities For liabilities measured at fair value through profit or loss, the change in the fair value of the liability attributable to changes in credit risk is presented in other comprehensive income. The remainder of the change in fair value is presented in profit or loss; and all other classification and measurement requirements in IAS 39 have been carried forward into IFRS 9. Impairment The impairment requirements are based on an expected credit loss (ECL) model. Entities are generally required to recognise 12-month ECL on initial recognition and thereafter, as long as there is no significant deterioration in credit risk. However, if there has been a significant increase in credit risk on an individual or collective basis, then entities are required to recognise lifetime ECL. Hedge accounting Hedge effectiveness testing is prospective and depending on the hedge complexity, can be qualitative. A risk component of a financial or non-financial instrument may be designated as the hedge item if the risk component is separately identifiable and reliably measurable. More designations of groups of items as the hedged item are possible, including layer designations and some net positions. New standard that requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to be applied to all contracts with customers. New standard that introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The group has limited exposure to financial assets, more specifically to loan receivables. While IFRS 9 is anticipated to accelerate the impairment provision on these, it is not expected to have a material impact. The Group classify its interest-bearing borrowings and derivative liability at fair value through profit or loss and all changes in fair value due to credit risk will therefore be presented in other comprehensive income. Impairment requirement might result in earlier recognition of credit losses. The group does not apply hedge accounting, therefore no expected effect. The majority of revenue earned relates to rental revenues, which are to be accounted for under IFRS 16. The Group is currently assessing the impact of IFRS 15, however, in light of the above, a significant impact is not anticipated, as the majority of the revenue is accounted for under IFRS 16 which largely doesn t impact lessors. Further disclosures may be required. As the Group is the lessor, no material changes are expected.

71 Group annual financial statements 30 June IAS 1 (amended) adoption The group adopted the amendment which clarified that materiality applies to the whole set of financial statements and the inclusion of immaterial information can inhibit the usefulness of financial disclosures. As a consequence of adopting the amendment, the group undertook a project to assess the effectiveness of disclosures in the annual financial statements and, where necessary, removed immaterial and unnecessary information. The following key enhancements resulted in a more streamlined and concise set of annual financial statements: the application of materiality to items resulting in the aggregation or deletion of immaterial items the removal of duplicated information and disclosures an updated sequence of information presented in the financial statements an updated format of notes and disclosures so as to make these clearer, more concise and easier to understand to the user Aggregating/disaggregating the following items: Long-term loans granted were aggregated under the new order of liquidity method and presented as one line item Non-current financial liabilities were aggregated under the new order of liquidity method and presented as one line item The previous statement of financial position was restructured from non-current/current split to order of liquidity Various lines in the income statement were disaggregated to display their constituent parts to better reflect the underlying cost drivers of the business The method used to prepare the cash flow statement was changed to the direct method. About the Growthpoint reporting Annual financial statements Property portfolio General information

72 70 Group annual financial statements 30 June Charles Street, Parramatta, NSW, Australia

73 Group annual financial statements 30 June PROPERTY PORTFOLIO About the Growthpoint reporting Annual financial statements Property portfolio General information

74 72 Group annual financial statements 30 June 2017 Property portfolio summary At 30 June 2017 Number of properties GLA m² Vacancy m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental Average (month/ annualised m²) yield Rand % RETAIL PORTFOLIO Regional shopping centres Community shopping centres Neighbourhood shopping centres Retail warehouses * 10.2 Speciality centres Small regional shopping centre Vacant land (including house) 2 9 Total retail OFFICE PORTFOLIO High-rise offices: Investec * 10.2 High-rise offices Low-rise offices Office parks Mixed-use: office and retail Hospitals Vacant land Total office INDUSTRIAL PORTFOLIO Warehousing Industrial parks Retail warehousing Motor-related outlets Mini units Midi units Maxi units Low-grade industrial High-tech industrial High-grade industrial Vacant land Total industrial Total Growthpoint (RSA excluding V&A Waterfront)

75 Group annual financial statements 30 June Number of properties GLA m² Vacancy m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Average annualised yield % V&A WATERFRONT Retail property Office property Fishing and industrial property Hotel and residential Undeveloped bulk 496 Total V&A Waterfront Total Growthpoint (RSA) GROWTHPOINT AUSTRALIA Industrial ** 7.3 Office ** 6.7 Total Australia ** 6.9 Total Growthpoint Gross rental/m 2 per month is the weighted average actual gross rental, consisting of net rental, operating cost recoveries and recovery of assessment rates. Notes to the property portfolio summary and details by sector (page 72 to 89): * Single tenanted properties. ** Based on rental per annum in AUD. *** Equity-accounted buildings. About the Growthpoint reporting Annual financial statements Property portfolio General information

76 74 Group annual financial statements 30 June 2017 Property portfolio detail South Africa At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand RETAIL PORTFOLIO Regional shopping centres Alberton City Alberton Bayside Mall Table View Brooklyn Mall and Design Square (75%) Brooklyn, Pretoria City View Greyville, Durban Festival Mall Kempton Park Greenacres Greenacres, Port Elizabeth Key West Shopping Centre Krugersdorp Kolonnade (50%) Montana Park, Pretoria La Lucia Mall La Lucia, Durban Lakeside Mall Benoni Longbeach Mall Noordhoek, Cape Town N1 City Mall (42%) Goodwood Northgate (50%) North Riding, Johannesburg Paarl Mall Paarl River Square Shopping Centre Three Rivers, Vereeniging The Avenues Springs Vaal Mall (66.6%) Vanderbijlpark Walmer Park Shopping Centre Walmer, Port Elizabeth Waterfall Mall Rustenburg Woodmead Retail Park Woodmead Community shopping centres th Avenue Hyper Roodepoort Beacon Bay Retail Park Beacon Bay, East London City Mall Klerksdorp Gardens Centre Gardens, Cape Town Golden Acre CBD, Cape Town Hatfield Plaza Hatfield, Pretoria Helderberg Centre Somerset West, Cape Town Hillcrest Corner (50%) Durban Howard Centre Pinelands, Cape Town Mark Park Vereeniging Meadowdale Value Centre Germiston Middestad Mall Bellville, Cape Town Sunward Park Boksburg The Bridge (27.5%) Greenacres, Port Elizabeth The Constantia Village Constantia, Cape Town Village Square Randfontein Westville Mall Durban

77 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Neighbourhood shopping centres Campus Building Hatfield, Pretoria Edgars Bloemfontein Bloemfontein * 3 Grand Parade Centre CBD, Cape Town Hatfield Mall Hatfield, Pretoria Jet Bloemfontein Bloemfontein * 6 Norkem Mall Norkem Park, Kempton Park OK Empangeni Empangeni, Durban Palm Springs Springs Sportsmans Warehouse Bellville, Cape Town Standard Plaza Hatfield, Pretoria Stanger Stanger, Durban Retail warehouses * 1 Amrel Alberton Alberton * Speciality centres East Rand Value Mall Boksburg Fourways Crossing (50%) Fourways, Johannesburg Virgin Active Three Rivers, Vereeniging * 4 Waterfall Mall Value Centre Rustenburg Small regional shopping centre Watercrest Mall (50%) Durban Vacant land 9 * 1 River House Three Rivers, Vereeniging 3 * 2 Waterfall Cashan Rustenburg 6 * 56 TOTAL RETAIL OFFICE PORTFOLIO High-rise offices: Investec * 1 Investec Cape Town CBD, Cape Town * 2 Investec Sandton Sandton * High-rise offices Adderley CBD, Cape Town Bree Street and 30 Waterkant CBD, Cape Town on Grand Central Midrand ENS House Foreshore, Cape Town Fredman Towers Sandton Infotech Building Hatfield, Pretoria Menlyn Corner Menlyn, Pretoria Newlands on Main Claremont, Cape Town Paramount Place Claremont, Cape Town Roggebaai Place Foreshore, Cape Town Salga House Cape Town Sanofi House Midrand The District Woodstock, Cape Town The Terraces CBD, Cape Town The Towers (50%) Sandton About the Growthpoint reporting Annual financial statements Property portfolio General information

78 76 Group annual financial statements 30 June 2017 Property portfolio detail South Africa continued At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Low-rise offices Sixty Jan Smuts Avenue Rosebank, Johannesburg West Street Sandton * Central Street Houghton, Johannesburg Alice (50%) Sandton * West Sandown Georgian Crescent Bryanston, Sandton on 5th Sandton * on Main Claremont, Cape Town Flanders Drive Mount Edgecombe, Durban * Rudd Road Illovo, Sandton Veale Street Brooklyn, Pretoria * Fricker Road Illovo, Sandton The Terrace Westville, Durban * William Nicol Bryanston, Sandton and 36 Fricker Road Illovo, Sandton Wierda Road West Wierda Valley, Sandton Fricker Road Illovo, Sandton Pencarrow Umhlanga Ridge, Durban Wierda Road Wierda Valley, Sandton * Oak Avenue Centurion, Pretoria Wessels Road Rivonia, Sandton * Grayston Sandton Rivonia Road Illovo, Sandton * Grayston Drive Bryanston, Sandton ADT House Goodwood, Cape Town * 26 Advocates Chambers Sandton Albion Springs Rondebosch, Cape Town Anslow Park (Nestlé) Bryanston * 29 Anslow Phase 2 Bryanston Autopage Midrand * 31 Autumn Road Rivonia, Sandton BCX Faerie Glen Faerie Glen, Pretoria * 33 Boundary Place Illovo, Sandton Bridgeway Park Milnerton, Cape Town Brookfield Office Park Brooklyn, Pretoria Deloitte & Touche La Lucia Ridge, Durban * 37 Devcon Place Rivonia, Sandton Eastgate 20 Kramerville, Sandton * 39 Engen House Parktown, Johannesburg Eton Road Sandhurst, Sandton Grayston Place Sandton * 42 Grosvenor Corner Parktown North, Johannesburg

79 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Low-rise offices continued 43 Homestead Place Rivonia, Sandton Honeywell Midrand * 45 Hunts End Wierda Valley, Sandton Inanda Greens Wierda Valley, Sandton Inyanda 1, 3 and 4 Parktown North, Johannesburg Inyanda 2 Parktown North, Johannesburg * 49 Lincoln on the Lake Umhlanga Ridge, Durban Longkloof Studios Gardens, Cape Town Lumley House Parktown North, Johannesburg Mayfair on the Lake Umhlanga Ridge, Durban Merck Longmeadow 2 Edenvale * 54 Microsoft Office Park Bryanston, Sandton MLT House Gardens, Cape Town Morningside 1331 Morningside, Sandton Nautica Granger Bay Oxford Corner Rosebank, Sandton Peter Place 24 Lyme Park, Sandton Pharos House Westville, Durban Piazzas Illovo Illovo, Sandton PwC Paarl * 63 Ricoh Bedfordview * 64 Ridgeview Umhlanga Ridge, Durban SA Weather Erasmusrand, Pretoria * 66 Sandown Erf 169 Sandhurst, Sandton Sandown Erven Sandhurst, Sandton * 68 Sandown Mews Sandown, Sandton Senderwood Bedfordview Sovereign Quay Greenpoint, Cape Town St Davids Park Parktown, Johannesburg Strathavon 11 Strathavon, Sandton Summit Place Gardens, Cape Town * 74 Tata 1 and 2 (50%)*** Illovo, Sandton The Annex (50%) Sandton The Boulevard Westville, Durban The Place Sandton Tiger II Bryanston, Sandton * 79 Tsebo House Rosebank, Johannesburg Turbine Square Hall Newton, Johannesburg * 81 Tyger Hills Investments Plattekloof, Cape Town Tyger Hills Office Park Plattekloof, Cape Town Wierda Court Wierda Valley, Sandton Wierda Gables Wierda Valley, Sandton About the Growthpoint reporting Annual financial statements Property portfolio General information

80 78 Group annual financial statements 30 June 2017 Property portfolio detail South Africa continued At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Office parks Montgomery Mount Edgecombe, Durban Riviera Road Killarney, Johannesburg Impala Road Chislehurston Impala Road Chislehurston * 5 23 Impala Road Chislehurston Oxford Road Illovo, Sandton Impala Road Chislehurston Impala Road Sandton Fricker Road Illovo, Sandton and 37 Wierda Road West Sandton Impala Road Sandton * 12 9 Frosterley Crescent La Lucia, Durban Absa Frosterley Umhlanga, Durban * 14 BCX Durban 1 La Lucia Ridge, Durban BCX Durban 2 La Lucia Ridge, Durban * 16 BCX Durban 3 La Lucia Ridge, Durban * 17 BCX Midrand ABC Midrand * 18 BCX Midrand DQE Midrand * 19 Belmont Office Park Rondebosch, Cape Town Belvedere Office Park Bellville, Cape Town Bogare Menlyn, Pretoria British Consol General Dunkeld West, Johannesburg * 23 Centennial Place Milnerton, Cape Town Central Park Midrand Chislehurston Chislehurston Constantia Office Park Roodepoort Country Club Estate Woodmead Ditsela Place Hatfield, Pretoria * 29 Dunkeld Office Park Dunkeld West, Johannesburg * 30 Edgecombe Office Park La Lucia, Durban EOH Business Park Bedfordview Equity House Dunkeld West, Johannesburg Eton Office Park Bryanston, Sandton Freestone Park Kramerville, Sandton Golf Park Mowbray, Cape Town Grayston Office Park Sandton Hatfield Gardens Hatfield, Pretoria Healthcare Park Woodmead Homestead Park Rivonia, Sandton Illovo Corner Illovo, Sandton Kirstenhof Office Park Sunninghill, Sandton Lakeside 3 Centurion, Pretoria * 43 Morningside Close Morningside, Sandton

81 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Office parks continued 44 Ogilvy Building Bryanston, Sandton * 45 Pavilion Office Park Rivonia, Sandton Peter Place Office Park Bryanston, Sandton Pinewood Office Park Woodmead Pinmill Farm 100% Kramerville, Sandton River Park Mowbray, Cape Town Riverwoods Bedfordview Riviera Road Office Park Killarney, Johannesburg Rosebank Office Park Parktown North, Johannesburg Sandton Close 2 Sandton Standard Bank Umhlanga Umhlanga Ridge, Durban Sunnyside Office Park Parktown, Johannesburg The Estuaries Montague Gardens, Cape Town The Oval Bryanston, Sandton The Oval (Newlands) Newlands, Cape Town The Village Faerie Glen, Pretoria The Woodlands Woodmead Waterfall Park Midrand * 62 Willowbridge Place Bellville, Cape Town Woodmead Estate Woodmead Mixed-use: office and retail De Waterkant Centre Greenpoint, Cape Town Menlyn Piazza Menlyn, Pretoria MontClare Place Claremont, Cape Town Hospitals Gateway Private Hospital Umhlanga Ridge, Durban Hillcrest Private Hospital Hillcrest, Durban Louis Leipoldt Hospital Bellville, Cape Town N1 City Hospital Goodwood, Cape Town N1 Medical Chambers Goodwood, Cape Town Vacant land/land under development Oxford Road Rosebank, Johannesburg Richefont Umhlanga Ridge, Durban on Kloof Gardens, Cape Town 29 4 Discovery Phase 1 Sandhurst, Sandton Draper on Main Claremont, Cape Town 34 6 IBM Sandton Lakeside 1 Centurion, Pretoria 66 8 Lakeside 2 Centurion, Pretoria 17 9 Ncondo Place Umhlanga Ridge, Durban Quarry Hill Tyger Valley Site B, Foreshore Foreshore, Cape Town TOTAL OFFICE About the Growthpoint reporting Annual financial statements Property portfolio General information

82 80 Group annual financial statements 30 June 2017 Property portfolio detail South Africa continued At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand INDUSTRIAL PORTFOLIO Warehousing Richard Carte Road Mobeni, Durban Teakwood Road Umbilo, Durban * Bofors Epping, Cape Town * 4 20 Rustic Close Westmead, Durban Herman Road Meadowdale, Germiston * 6 28 Sacks Circle Bellville, Cape Town * 7 3 Spartan Crescent Eastgate, Sandton * 8 57 Mobile Road Airport Industria, Cape Town * 9 57 on Gibson Aeroton, Johannesburg * 10 Aeroton 7 of 17 Aeroton, Johannesburg * 11 African Gabions Mahogany Ridge, Durban * 12 Afship Isando, Kempton Park * 13 Alrode 706 Alrode, Alberton * 14 Alrode Erf 34 Alrode, Alberton * 15 Alternator Montague Gardens, Cape Town * 16 Astron Denver, Johannesburg * 17 Belgrade Aeroport, Kempton Park * 18 Bunkers Hill Isipingo, Durban Cempark Industria, Boksburg Chain Avenue Montague Gardens, Cape Town Chemserve Randjespark, Midrand * 22 Coldcem Industria, Boksburg * 23 Commerce Corner Kramerville, Sandton Covora Jet Park, Boksburg * 25 DCD Dorbyl Boksburg Boksburg * 26 DCD Dorbyl Duncanville Vereeniging * 27 Dominic Corner Boksburg * 28 Elvan Fishers Hill, Germiston * 29 Engine Avenue Montague Gardens, Cape Town * 30 Epping 1 Epping Industria, Cape Town * 31 Epping 2 Epping Industria, Cape Town Epping 3 Epping Industria, Cape Town * 33 Epping 4 Epping Industria, Cape Town Epping 5 Epping Industria, Cape Town Epping 6 Epping Industria, Cape Town * 36 Equitable Dev Co Florida, Roodepoort * 37 Eskom Road New Germany Fitzmaurice Epping, Cape Town Flemming Meadowdale, Germiston * 40 Foreshore Maydon Wharf, Durban * 41 Fourwinds Montague Gardens, Cape Town * 42 Gemini Frankenwald, Sandton *

83 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Warehousing continued 43 Gewel Isando, Kempton Park * 44 GIE 4 Erf 307(JV) Meadowdale, Germiston * 45 GIE Portion 3 of Erf 306 Meadowdale, Germiston * 46 GIE Remainder of Erf 306 Meadowdale, Germiston * 47 Gillitts Road Industrial Park Pinetown Global Isando, Kempton Park * 49 Goodenough Epping, Cape Town * 50 Goodrich Prospecton, Durban * 51 Greenbushes Port Elizabeth Port Elizabeth * 52 Greenfield Industrial Park Airport Industrial, Cape Town Grenville Epping, Cape Town * 54 Greystones Factory Glen Anil, Durban * 55 Greystones Heliport Glen Anil, Durban Growthpoint Industrial Estate Meadowdale, Germiston Hawland Midrand * 58 Hewett Epping, Cape Town * 59 Hulley Isando, Kempton Park * 60 Independence Square Ottery, Cape Town Isobar Isando, Kempton Park * 62 Isowrench Isando, Kempton Park * 63 Laser Commercial Erf 2 and 3 Clayville, Midrand Laser Commercial Erf 64 Clayville, Midrand * 65 Laser Commercial Erf 65 Clayville, Midrand Low Cost Marketing Sunnyrock ext 4, Germiston * 67 Mandy Road Reuven, Johannesburg * 68 Meadowbrook Meadowbrook, Germiston Meadowbrook Estate (Gundle Site) Meadowbrook, Germiston Metkor Umbilo, Durban Metprop Cape Epping, Cape Town Midrand Central Business Park Midrand Midrand Central Business Park 518 Midrand Montani Wynberg, Johannesburg * 75 Monte Carlo New Germany Moorsom Epping, Cape Town * 77 Neon Fulcom Park, Springs * 78 Newmarket Industrial Estate Alrode, Alberton Novex Kramerville, Sandton * 80 Nuffield Nuffield, Springs * 81 Paul Smit Anderbolt Boksburg Penraz Industria, Johannesburg * 83 Pick n Pay Pinetown Mahogany Ridge, Durban * 84 Portion 35 Alrode Alrode, Alberton * 85 Premier Equipment Boksburg * 86 Prolecon Prolecon, Johannesburg About the Growthpoint reporting Annual financial statements Property portfolio General information

84 82 Group annual financial statements 30 June 2017 Property portfolio detail South Africa continued At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Warehousing continued 87 Propower Parow, Cape Town * 88 Protrans Jet Park, Boksburg PS Props Boksburg North, Boksburg * 90 Range Industrial Park Blackheath, Bellville Sebenza 137 Sebenza, Edenvale * 92 Serenade Elandsfontein * 93 Trafford Park Pinetown Vereeniging Street 36 Alrode, Alberton * 95 Vinimark Building Linbro Park Linbro Park * 96 Watt Meadowdale, Germiston * 97 Westmead Factory Westmead, Durban Whitworth Heriotdale ext 8, Johannesburg * 99 Wingfield Jet Park, Boksburg * 100 Zandfontein Zandfontein, Pretoria * Industrial parks Celtis Business Park Stormill, Roodepoort * 2 Central Park Cape Town Elsiesrivier, Cape Town Gold Reef Park Booysens, Johannesburg Hilltop Industrial Park Elandsfontein Maitland Industrial Park Maitland, Cape Town Omni Park Aeroton, Johannesburg Pine Industrial Park New Germany Route 24 Meadowdale, Germiston Runway Park Mobeni, Durban Retail warehousing Builders Market Middelburg * 2 Commercial City Strijdom Park, Randburg Fountains Motown CBD, Pretoria Gateway Alberton Greenhills Centre Elandsfontein Isipingo 2257 Prospecton, Durban * 7 M1 Place Eastgate, Sandton Meadowdale Meadowdale, Germiston Motor-related outlets Acacia Rosslyn, Pretoria * 2 Bardene Bardene, Boksburg * 3 Cornick Midrand * 4 Ellenby Motors Hatfield, Pretoria * 5 Kentyre Randburg * 6 N1 Tyre N1 City, Cape Town * 7 Pasteur Northcliff, Johannesburg * 8 Rushair Aeroton, Johannesburg * 9 Stormain Stormill, Roodepoort *

85 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Mini units Alumina Silvertondale, Pretoria Chelsea Road Industrial Park New Germany Clayville Mini Units Clayville, Midrand Devro Park Pinetown Eastgate Business Park Eastgate, Sandton Ferndale Commercial Park Strijdom Park, Randburg Ferntowers Ferndale, Randburg Fusie 142 Silvertondale, Pretoria Gallagher Place Midrand Glen Murray Industrial Park Redhill, Durban Greystones Industrial Glen Anil, Durban Isando Industrial Isando, Kempton Park Isando Industrial Park Isando, Kempton Park Knightsgate Driehoek, Germiston Palm River Pinetown Scientia Pretoria East, Pretoria Thynk Industrial Park Briardene, Durban Midi units Anchor Industrial Park Jet park, Boksburg City Deep Industrial Park City Deep, Johannesburg Eagle Industrial Park (50%) Richards Bay Galaxy Linbro Park Northreef Elandsfontein * 6 Rojolea Lea Glen, Roodepoort Route 41 Roodepoort Westgate (50%) Pinetown Maxi units Lanner Place Falcon Park, Pinetown Low-grade industrial Airport View Spartan, Kempton Park * 2 Allen Road Elandsfontein Belgor Spartan, Kempton Park * 4 Bofors 2 Epping, Cape Town Chamroy Krugersdorp * 6 Dacres Epping, Cape Town * 7 Dekema Wadeville, Germiston * 8 Gunners Epping, Cape Town Isando 103 Isando, Kempton Park * 10 Isando 104 Isando, Kempton Park * 11 Isando 107 Isando, Kempton Park * 12 Janhope Duncanville, Vereeniging Kinghall 1 Epping, Cape Town * 14 Kinghall 2 Epping, Cape Town * About the Growthpoint reporting Annual financial statements Property portfolio General information

86 84 Group annual financial statements 30 June 2017 Property portfolio detail South Africa continued At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand Low-grade industrial continued 15 Loper Corner Spartan, Kempton Park Loper View Spartan, Kempton Park Maitland Maitland, Cape Town Monteer Isando, Kempton Park New Germany New Germany Romatile Jet Park, Boksburg Spartan View Spartan, Kempton Park Sparticor Spartan, Kempton Park Westmead Industrial Park Pinetown High-tech industrial Adcock Ingram Midrand Midrand * 2 Altergen Wadeville, Germiston * 3 Cummings Eastgate, Sandton * 4 Eagle Freight Meadowdale, Germiston * 5 Fifers Spartan, Kempton Park * 6 Highland Meadowdale, Germiston * 7 Impala Road Eastgate, Sandton Linbro Linbro Park * 9 Midrand Central Business Park 520 Midrand Montague Business Park (25%) Montague Gardens, Cape Town N1 Business Park (20%) Midrand National Data Systems Selby, Johannesburg * 13 Protec Park Chloorkop, Kempton Park * 14 Stormill 51 Stormill, Roodepoort * 15 Tripark Kelvin View, Johannesburg High-grade industrial Baker Street Marconi Beam, Cape Town Aeroport Spartan, Kempton Park African Products Meadowdale, Germiston * 4 Albert Amon 212 Meadowdale, Germiston * 5 Aviation Place Airport Industrial, Cape Town * 6 Corobrik Meadowdale, Germiston Ebony Meadowdale, Germiston Electron Isando, Kempton Park Flamon Meadowdale, Germiston GIE Portions 1 and 2 of Erf 308 Meadowdale, Germiston Gillets Pinetown * 12 Growthpoint Business Park Midrand Highway Wilbart, Germiston * 14 Hillclimb Road Pinetown * 15 Inanda Road Springfield Springfield Park, Durban Mount Joy Elandsfontein * 17 Nestlé Bellville, Cape Town *

87 Group annual financial statements 30 June Property name Location GLA m² Vacancy % Value Value/m² (excluding additional bulk) Rand Gross rental (month/ m²) Rand High-grade industrial continued 18 Oude Moulen Maitland, Cape Town Racetrack Midrand * 20 Rectron Umhlanga Umhlanga Ridge, Durban * 21 Rivonia Crossing 1 Sunninghill, Sandton Rivonia Crossing 2 Sunninghill, Sandton The Grove Business Estate Somerset West, Cape Town Trade Centre Mount Edgecombe Mount Edgecombe, Durban * 25 Triangle Wilbart, Germiston * 26 Western Province Park Goodwood, Cape Town Vacant land/land under development Ferntowers Erf 2019 Ferndale, Randburg 4 2 GIE 4B Erf 307 (Remainder) Meadowdale, Germiston 48 3 GIE Common Roadway Meadowdale, Germiston 4 GIE Marketing Office Meadowdale, Germiston 2 5 Maskew Isando, Kempton Park 6 6 Midas Meadowdale Meadowdale, Germiston 51 7 Midrand Central Business Park 519 Midrand 18 8 Mill Road Park Bellville, Cape Town 46 9 Neon Erf 26 Fulcom Park, Springs 4 10 Protrans Erf 6 Jet Park, Boksburg 6 11 Sailor Malan Erf 115/156 Aeroton, Johannesburg 8 12 Saligna Boksburg Samrand Development 88 Midrand Samrand Erf 5437 Midrand Samrand Erf 5437 Remainder Midrand Samrand Erf 5456 Midrand Wadeville 100% Germiston TOTAL INDUSTRIAL About the Growthpoint reporting Annual financial statements Property portfolio General information

88 86 Group annual financial statements 30 June 2017 Analysis of Growthpoint RSA TENANT BASE 30 June 2017 Retail % of GLA 30 June June 2016 Number of % of GLA tenants GLA GLA Number of tenants A. Large tenants 66% % B. Medium tenants 17% % C. Other tenants 17% % Total 100% % Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between 1 000m² and m² of space. Category C consists of tenant groups occupying less than 1 000m² of space. Office % of GLA 30 June June 2016 Number of % of GLA tenants GLA GLA Number of tenants A. Large tenants 33% % B. Medium tenants 43% % C. Other tenants 24% % Total 100% % Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between 1 000m² and m² of space. Category C consists of tenant groups occupying less than 1 000m² of space. Industrial % of GLA 30 June June 2016 Number of % of GLA tenants GLA GLA Number of tenants A. Large tenants 42% % B. Medium tenants 49% % C. Other tenants 9% % Total 100% % Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between 1 000m² and m² of space. Category C consists of tenant groups occupying less than 1 000m² of space. Rental escalation (%) Retail Office Industrial Lease expiry by sector (% of GLA) RSA (excluding V&A Waterfront) Vacant Monthly By FY18 By FY19 By FY20 By FY21 By FY22 FY23 and beyond Retail Office Industrial

89 Group annual financial statements 30 June Analysis of V&A waterfront tenant base (100%) 30 June 2017 Tenant base (excluding vacancies) Retail Office Fishing and industrial Hotels and residential GLA Number GLA Number GLA Number GLA Number (m 2 ) of tenants (m 2 ) of tenants (m 2 ) of tenants (m 2 ) of tenants A. Large tenants B. Medium tenants C. Other tenants Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between 1 000m² and m² of space. Category C consists of tenant groups occupying less than 1 000m² of space. Rental escalation (%) Retail Office Fishing and industrial Hotel and residential Lease expiry (% of GLA) V&A Waterfront Vacant By FY18 By FY19 By FY20 By FY21 By FY22 FY23 and beyond About the Growthpoint reporting Annual financial statements Property portfolio General information

90 88 Group annual financial statements 30 June 2017 Property portfolio detail Australia At 30 June 2017 Property name Location GLA m² Vacancy % Value Value/m² Rand Gross rental (annum/m²) AUD Industrial Pope Court Beverley, SA Butler Boulevard Adelaide Airport, SA Link Road Tullamarine, VIC Northcorp Boulevard Broadmeadows, VIC Atlantic Drive Keysborough, VIC Butler Boulevard Adelaide Airport, SA Business Street Yatala, QLD Sharps Road Tullamarine, VIC Ferntree Gully Road and 8 Henderson Road Knoxfield, VIC Southern Court Keysborough, VIC Colquhoun Road Perth Airport, WA Southern Court Keysborough, VIC Lenore Drive Erskine Park, NSW Millennium Court Knoxfield, VIC Viola Place Brisbane Airport, QLD Garden Street Kilsyth, VIC Reddalls Road Kembla Grange, NSW Annandale Road Tullamarine, VIC South Centre Road Tullamarine, VIC Viola Place Brisbane Airport, QLD Lenore Drive Erskine Park, NSW Wellington Road Mulgrave, VIC Main North Road Gepps Cross, SA Kingston Park Court Knoxfield, VIC Annandale Road Tullamarine, VIC John Morphett Place Erskine Park, NSW Distribution Street Larapinta, QLD Annandale Road Tullamarine, VIC Derby Street Silverwater, NSW Drake Boulevard Keysborough, VIC Lots 2, 3 and 4, Raglan Street Preston, VIC Office Charles Street Parramatta, NSW Mort Street Canberra, ACT Sandgate Road Nundah, QLD London Circuit Canberra, ACT Murray Rose Avenue Sydney Olympic Park Ann Street Brisbane, QLD Richmond Road Keswick, SA Murray Rose Avenue Sydney Olympic Park Laffer Drive Bedford Park, SA Dorcas Street South Melbourne, VIC Cambridge Park Drive Cambridge, TAS A1, 32 Cordelia Street South Brisbane QLD A4, 52 Merivale Street South Brisbane QLD Building 2, Swan Street Richmond, VIC Building B, 211 Wellington Road Mulgrave, VIC Building C, 211 Wellington Road Mulgrave, VIC

91 Group annual financial statements 30 June Property name Tenant base (excluding vacancies) (%) GLA % Office Number of tenants GLA % Industrial Number of tenants A. Large tenants B. Medium tenants C. Other tenants, large Category A consists of tenant groups occupying more than m² of space. Category B consists of tenant groups occupying between 1 000m² and m² of space. Category C consists of tenant groups occupying less than 1 000m² of space Rental escalation (%) Location Office Industrial GLA m² Vacancy % Value Value/m² Rand Gross rental (annum/m²) AUD Office continued 17 Building C, Pacific Highway Artarmon, NSW Buildings 1 and 3, Swan Street Richmond, VIC Car Park, 32 Cordelia Street and 52 Merivale Street South Brisbane QLD Car Park, Swan Street Richmond, VIC CB1, 22 Cordelia Street South Brisbane QLD CB2, 42 Merivale Street South Brisbane QLD Optus Centre, 15 Green Square Close Fortitude Valley Quad 2, 6 Parkview Drive Sydney Olympic Park Quad 3, 102 Bennelong Parkway Sydney Olympic Park Vantage, 109 Burwood Road Hawthorn Total Australia ANALYSIS OF GROWTHPOINT Australia TENANT BASE 30 June 2017 About the Growthpoint reporting Annual financial statements Property portfolio General information Lease expiry by sector (% of GLA) Australia Vacant By FY18 By FY19 By FY20 By FY21 By FY22 FY23 and beyond Gross monthly rental

92 90 Group annual financial statements 30 June 2017 Discovery, Sandhurst, Sandton

93 Group annual financial statements 30 June GENERAL INFORMATION About the Growthpoint reporting Annual financial statements Property portfolio General information

94 92 Group annual financial statements 30 June 2017 SHAREHOLDERS ANALYSIS As at 30 June 2017 Number of shareholders % of total shareholders Number of shares % of issued capital Shareholder spread shares shares shares shares shares shares shares shares shares shares shares and over Total Distribution of shareholders Collective investment schemes Retirement benefit funds Empowerment companies Retail shareholders Trusts Sovereign wealth funds Private companies Assurance companies Organs of state Stockbrokers and nominees Insurance companies Treasury Foundations and charitable funds Scrip lending Custodians Investment companies Medical aid funds Close corporations Other companies Hedge funds Share schemes Unclaimed scrip and control accounts Total Shareholder type Non-public shareholders Directors and associates (excluding Staff Incentive Scheme) Government Employees Pension Fund Treasury shares Growthpoint Staff Incentive Scheme Public shareholders Total

95 Group annual financial statements 30 June Total shareholding % of issued capital Beneficial shareholders holding greater than 1% of the issued shares Government Employees Pension Fund Southern Palace Properties (Pty) Ltd Old Mutual Group Stanlib Vanguard Investec Prudential Eskom Pension and Provident Fund Investment Solutions BEE Consortium (Quick Leap) MMI Sanlam Coronation Unemployment Insurance Fund (PIC) Ishares Funds SPDR Funds Fund managers holding greater than 1% of the issued shares Public Investment Corporation Limited Liberty Holdings (STANLIB Asset Management) Investec Group Old Mutual plc Prudential plc The Vanguard Group BlackRock, Inc Sesfikile Capital Sanlam Limited Coronation Fund Managers MMI Holdings (Momentum Asset Management) Meago Asset Managers State Street Corporation Mondrian Investment Partners Eskom Pension and Provident Fund Dimensional Fund Advisors Group Barclays (Absa Asset Management) June June 2016 Share performance 12 months ended Shares traded Monthly average Shares in issue Shares traded as % of number of shares in issue 61.40% 66.61% Value traded R R Monthly average R R Opening price 1 July 2016 and 3 July 2017 R24.42 R26.46 Closing price 30 June R24.48 R25.68 Intraday high for the period R28.17 R28.50 Intraday low for the period R23.61 R17.96 About the Growthpoint reporting Annual financial statements Property portfolio General information

96 94 Group annual financial statements 30 June 2017 SHAREHOLDERS ANALYSIS continued As at 30 June 2017 Regional beneficial holdings June 2017 June 2016 South Africa Americas Europe Asia Africa Middle East Categories of holders June 2017 June 2016 Collective investment schemes Retirement benefit funds Empowerment companies Retail shareholders Trusts Private companies Other holdings Fund manager holdings by country June 2017 June 2016 South Africa United States United Kingdom Netherlands Singapore Rest of Europe Rest of World Non-institutional and below threshold (<100K shares)

97 Group annual financial statements 30 June SHAREHOLDERS INFORMATION Shareholders diary Financial year end 30 June Annual financial statements posted September Annual general meeting (09:00) 14 November 2017 Announcement of results and analyst presentations Interim Annual March August Dividends Declared Paid Interim February/March March/April Final August September Updates and further information posted from time to time can be found on the company s public website at: investor-relations/shareholder-information Notice of annual general meeting The notice of the company s annual general meeting to be held on 14 November 2017 is contained in a separate booklet, posted to shareholders, incorporating the company s summarised audited annual financial statements for FY17 and other information relevant to the annual general meeting. The notice will also be available on the company s public website at: About the Growthpoint reporting Annual financial statements Property portfolio General information

98 96 Group annual financial statements 30 June 2017 Directorate and administration Directors JF Marais (Chairman)^ EK de Klerk (Managing Director)* MG Diliza PH Fechter LA Finlay^ JC Hayward (Lead Independent Director)^ HS Herman^ SP Mngconkola^ R Moonsamy^ NBP Nkabinde^ LN Sasse (Chief Executive Officer)* FJ Visser^ G Völkel (Financial Director)* ^ Independent BEE structure stakeholder * Executive directors Auditors KPMG Inc. (Registration number: 1999/021543/21) KPMG Crescent 85 Empire Road, Parktown, 2193 Private Bag 9, Parkview, 2122 Transfer secretaries Computershare Investor Services (Pty) Ltd (Registration number: 2004/003647/07) Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 PO Box 61051, Marshalltown, 2107 Sponsor Investec Bank Limited (Registration number: 1969/004763/06) 100 Grayston Drive, Sandton, 2196 PO Box , Sandton, 2146 Registered office (Registration number: 1987/004988/06) The Place, 1 Sandton Drive, Sandton, 2196 PO Box 78949, Sandton, 2146 Management company Growthpoint Management Services (Pty) Ltd (Registration number: 2004/015933/07) The Place, 1 Sandton Drive, Sandton, 2196 PO Box 78949, Sandton, 2146 Audit Committee LA Finlay (Chairman) PH Fechter JC Hayward The Audit Committee members are all independent non-executive directors. Risk Management Committee JC Hayward (Chairman) SP Mngconkola NBP Nkabinde FJ Visser The following parties attend or are represented at Audit Committee and/or Risk Management Committee meetings: D Bouma (Corporate Treasurer) O Chauke (Head of Human Resources) AL Davis (Chief Information Officer) EK de Klerk (Managing Director) RA Krabbenhöft (Company Secretary) SA Nizetich (Head of Internal Audit and Risk Management) M Pinto (Deputy Company Secretary) LN Sasse (Chief Executive Officer) FJ Schindehütte (Financial Manager) G Völkel (Financial Director) By invitation: E Binedell (Fund Director Industrial) SA le Roux (Fund Director Retail) RG Pienaar (Fund Director Office) The external auditors, KPMG Inc., attend or are represented at all regular meetings and ad hoc meetings as required of the Audit Committee, as well as Risk Management Committee meetings. Company Secretary RA Krabbenhöft The Place, 1 Sandton Drive, Sandton, 2196 PO Box 78949, Sandton, 2146

99 Group annual financial statements 30 June Property Committee PH Fechter (Chairman) MG Diliza HS Herman R Moonsamy The following members of management attend Property Committee meetings: LN Sasse (Chief Executive Officer) E Binedell (Fund Director Industrial) K Bourhill (Valuer) EK de Klerk (Managing Director) RA Krabbenhöft (Company Secretary) SA le Roux (Fund Director Retail) S Mills (Management Accountant) RG Pienaar (Fund Director Office) M Pinto (Deputy Company Secretary) G Völkel (Financial Director) Social, Ethics and Transformation Committee MG Diliza (Chairman) LA Finlay SP Mngconkola R Moonsamy NBP Nkabinde The following members of management attend Transformation Committee meetings: O Chauke (Head of Human Resources) EK de Klerk (Managing Director) P Engelbrecht (Development Head) RA Krabbenhöft (Company Secretary) S Paul (Assistant Company Secretary) M Pinto (Deputy Company Secretary) C Rennison (Group Services and Procurement) SD Theunissen (CSR Manager) G Völkel (Financial Director) Nomination Committee JF Marais (Chairman) MG Diliza PH Fechter LA Finlay JC Hayward HS Herman Standing attendees: LN Sasse (Chief Executive Officer) EK de Klerk (Managing Director) RA Krabbenhöft (Company Secretary) Remuneration Committee FJ Visser (Chairman) HS Herman JF Marais Standing attendees: O Chauke (Head of Human Resources) EK de Klerk (Managing Director) RA Krabbenhöft (Company Secretary) M Pinto (Deputy Company Secretary) LN Sasse (Chief Executive Officer) PricewaterhouseCoopers Inc. (independent adviser to the committee) Executive Committee of Management (Exco) LN Sasse (Chief Executive Officer) (Committee Chairman) O Chauke (Head of Human Resources) EK de Klerk (Managing Director) E Binedell (Fund Director Industrial) D Bouma (Corporate Treasurer) AL Davis (Chief Information Officer) G de Klerk (Regional Head Durban) N Kuzmanich (Head of Marketing) SA le Roux (Fund Director Retail) G Muchanya (Executive Corporate Finance) RG Pienaar (Fund Director Office) DS Stoll (Regional Head Cape Town) SD Theunissen (CSR Manager) L Turner (Head of Investor Relations) G Völkel (Financial Director) Standing attendees: RA Krabbenhöft (Company Secretary) M Pinto (Deputy Company Secretary) About the Growthpoint reporting Annual financial statements Property portfolio General information

100 98 Group annual financial statements 30 June 2017 ABBREVIATIONS Acucap AdmedGap AFS AGM Alsi 40 A-REIT ASX AUD B-BBEE CCI CDLI CDP CEO CGU CIPC CO Acucap Properties Limited Hospitalisation Gap Cover Annual financial statements Annual general meeting JSE/Actuaries All Share Top 40 Companies Index Australian REIT Australian Stock Exchange Australian Dollar Broad-based black economic empowerment FNB/BER Consumer Confidence Index JSE100 Carbon Disclosure Leadership Index Carbon Disclosure Project Chief Executive Officer Cash-generating unit Companies and Intellectual Property Commission Carbon dioxide Companies Act Companies Act 2008 COSO CPLI CRISA CSI CSR DJSI DRIP EAP ERM ERS EUR Exco FCTR FY GAI Committee of Sponsoring Organisations JSE 100 Carbon Performance Leadership Index Code for Responsible Investment in South Africa Corporate social investment Corporate social responsibility Dow Jones Sustainability World Index Distribution re-investment plan Growthpoint Employee Assistance Programme Enterprise risk management Executive retention scheme Euro Executive Management Committee Foreign currency translation reserve Financial year Governance assessment instrument GBCSA GCTC GDP GEPF GLA GOZ GRI Growthpoint GSIS HALO IAR IAS IASB IFRS IIRC Green Building Council of South Africa Guaranteed cost to company Gross domestic product Government Employees Pension Fund Gross lettable area Growthpoint Properties Australia Global Reporting Initiative Growthpoint Staff Incentive Scheme Helping and loving others Integrated annual report Investment Analysts Society International Accounting Standards Board International Financial Reporting Standards International Integrated Reporting Council Income Tax Act Income Tax Act, No 58 of 1962 IoD IT JSE JSE Listings Requirements JV King III KPA KPI kwh LTI LTV MOI MOCAA Moody s MSCI NDR NGO Institute of Directors Information technology JSE Limited Listings Requirements of the JSE Limited Joint venture King Report and Code of Governance for South Africa 2009 Key performance area Key performance indicator Kilowatt hours Long-term incentive Loan to value ratio Memorandum of Incorporation Museum of Contemporary Art Africa Moody s Investor Services Morgan Stanley Capital International Non-distributable reserve Non-government organisation

101 Group annual financial statements 30 June OCI PIC REIT Remco RFP RSA SA REIT SAPOA SESCF SENS SME SRI STI Sycom Tiber TFR The Board The company The Group VWAP WALE ZAR Other comprehensive income Public Investment Corporation (SOC) Limited Real Estate Investment Trust Remuneration Committee Request for proposal Republic of South Africa South African Real Estate Investment Trust South African Property Owners Association Stenham European Shopping Centre Fund Securities Exchange News Service Small medium enterprises JSE Socially Responsible Investment Index Short-term incentive Sycom Property Fund Tiber group of companies Total fixed remuneration The Board of Directors of Growthpoint Properties Limited Group Volume weighted average price Weighted average lease expiry South African Rand About the Growthpoint reporting Annual financial statements Property portfolio General information

102 100 Group annual financial statements 30 June 2017 CONTACT DETAILS Johannesburg office Physical address: The Place, 1 Sandton Drive, Sandton, 2196 Postal address: PO Box 78949, Sandton, 2146 Switchboard tel: +27 (0) General fax: +27 (0) Durban office Physical address: 4th Floor, Lincoln On The Lake, 2 The High Street, Parkside, Umhlanga Ridge, KwaZulu-Natal, 4319 Postal address: PO Box 1330, Umhlanga Rocks, 4320 Switchboard tel: +27 (0) General fax: +27 (0) Cape Town office Physical address: 2nd Floor, MontClare Place, Main Road, Claremont, 7700 Postal address: PO Box 44392, Claremont, 7735 Switchboard tel: +27 (0) General fax: +27 (0) /06 Growthpoint Australia office Physical address: Level 22, 357 Collins Street, Melbourne, VIC, Australia, 3000 Switchboard tel: +61 (0) General fax: +61 (0) info@growthpoint.com.au twitter.com/growthpoint facebook.com/growthpoint info@growthpoint.co.za

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104 The Place, 1 Sandton Drive, Sandton Gauteng, 2196, South Africa Tel: +27 (0) , Fax: +27 (0) PO Box 78949, Sandton, 2146, South Africa Docex: 48 Sandton Square info@growthpoint.co.za