Announcement on property valuations and withdrawal of cautionary announcement Acsion Limited (Registration number 2014/182931/06) (Incorporated in the Republic of South Africa) Share code: ACS ISIN: ZAE000198289 (“Acsion” or the “Company” or the “Group”) ANNOUNCEMENT ON PROPERTY VALUATIONS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Shareholders are referred to the announcements released on SENS on 5 February 2021 and 26 February 2021 in respect of the preparation of valuations of the Company’s investment properties, including developments under construction as at 31 August 2020 (the “Valuations”). Acsion has now completed the preparation of the Valuations and is in a position to provide the following details: 1. RESTATEMENTS TO 31 AUGUST 2020 INTERIM RESULTS (“RESTATEMENTS”) In response to the announcement made on 26 February 2020, the Board has now determined, or obtained, valuations of the investment properties as at 31 August 2020. The effect of the Valuations provides greater clarity on the impact of COVID-19 on the 2020 Interim results. When performing valuations, valuers were required to use judgement while faced with unprecedented circumstances resulting from the COVID-19 pandemic. The impact of COVID-19 was incorporated in the final valuations by adjusting the valuation amounts directly and not by adjusting the forecasted cash flows. The valuations are based on inputs and assumptions reflecting the economic circumstances resulting from the outbreak. The impact of the Valuations on the previously published 2020 Interims on 26 November 2020 is as follows: Statement of financial position (R’000) Item Previously Restated % Change reported Investment property 8 213 406 8 035 965 (2.2%) Retained income 3 408 052 3 340 782 (2.0%) Deferred tax liability 1 494 499 1 475 081 (1.3%) Statement of Profit or Loss (R’000) Item Previously Restated % Change reported Fair value adjustment - (86 688) (100.0%) Profit before tax 135 408 48 720 (64.0%) Taxation (40 462) (21 043) (48.0%) Profit for the period 94 946 27 676 (70.8%) The profit for the period ended 31 August 2020 is less by R67 million from the profit of R94 million previously reported for the same period. This represents approximately 4% of the market capitalisation at 26 November 2020. Ratios Headline earnings per share (“HEPS”) and basic earnings per share (“EPS”) were previously reported at 23.8 cents. After the Restatements, the 2020 Interims reflect a HEPS and basic EPS of 6.7 cents per share. Net asset value per share decreased to 1 880.9 cents from the previously reported 1 898.1 cents, a decrease of 0.9%. The movement in the carrying value of investment properties for the 2020 Interims includes: - net negative fair value adjustments of R87 million; and - capital expenditure of R173 million incurred on developments under construction The net negative fair value adjustments of R86 million in investment properties for the 2020 Interims represents a reduction in value in the region of 4.0% of market capitalisation at the end of the reporting period. The information relating to the Restatements has not been reviewed or reported on by Acsion’s auditors. 2. DETAILS OF VALUATIONS AS AT 31 AUGUST 2020 2.1 Tenant concessions Up until 31 August 2020, no rent concessions had been granted to any tenants as a result of the impact of COVID-19. However, due to significant uncertainty over collectability of rent during the COVID-19 lockdown, rental income for this period was recognised only to the extent it was probable that it would be received. This resulted in R83 million of unrecognised rental income for the 2020 Interims, which subsequently will be recognised as revenue to the extent, and at the point in time, that collectability is considered probable. An insurance claim in the region of R98 million in respect of non-payment of rental by tenants during the lockdown periods was lodged with the Company’s insurer subsequent to 31 August 2020. The outcome of this claim is uncertain at this stage and not recognised in the results. 2.2 Methodology of the Valuations The Group uses a discounted cash flow and income capitalisation methodology as a basis when determining the fair value of investment properties. At least one third of the properties are valued externally and the balance is valued by the directors of Acsion. A property will be externally valued at least once every three years. The fair values of all investment properties for the Group are classified as Level 3 within the fair value hierarchy in IFRS 13 Fair value measurement. There were no transfers between Levels 1, 2 and 3 during the six months ended 31 August 2020. 2.3 Independent valuer The Group has employed the services of Mrs A de Wet of Amanda De Wet Consultants and Investors, a professional valuer registered in accordance with section 20(2)(a) of the Property Valuers Professional Act 47 of 2000 (Registration number 5542) for external valuations for the six months ended 31 August 2020. Mrs de Wet is not connected to the Group and has recent experience in location and category of the investment properties valued. She holds BProc and LLB qualifications and has completed a National Diploma in real estate. 2.4 Completed developments Completed developments were valued using the discounted cash flow of future income streams method by internal valuation. External valuers have the discretion to use their own valuation method. Mrs A de Wet has used the income capitalisation method based on future cash flows, being her preferred method of valuation. 2.5 Developments under construction The Group measures investment properties under construction at cost until either its fair value becomes reliably determinable or construction is completed. For the six months ended 31 August 2020, Mall@Larnaca has been valued by Mrs A de Wet using the income capitalisation method, being her preferred method of valuation. Acsiopolis has been valued by Mrs A de Wet using a residual valuation technique, resulting in the highest and best use appraisal for this property. 3. PROPERTY PORTFOLIO INFORMATION 3.1 Developed investment properties The developed investment properties as at 31 August 2020 consisted of the following ten properties: Property name Directors GLA Value/m2 Percentage independent (m2) (excluding bulk, of total valuation where portfolio 31 August 2020 applicable) by value (Rm) (%) Mall@Reds* 1 411 54 740 25 667 2.5 Mall@Emba 580 24 605 23 572 9.2 Mall@Moutsiya 228 14 703 15 507 3.6 Mall@Carnival* 2 595 90 615 28 031 41.3 Mall@Lebo 566 23 534 24 050 9.0 Mall@Mfula 353 17 930 19 688 5.6 Mall@55* 318 15 969 18 681 5.1 Moreleta Square 130 8 579 15 153 2.1 Simarlo Rainbow 49 6 891 7 111 0.8 Hyde Park Terrace 53 - - 0.8 6 283 257 566 177 460 100.0 3.2 Developments under construction Developments under construction as at 31 August 2020 consisted of the following properties classified as investment properties: Independent GLA Value/m2 Anticipated valuation (m2) (excluding opening 31 August 2020 bulk, where (Rm) applicable) Acsiopolis* 919 37 437 22 851 During 2021 calendar year Larnaca* 1 062 39 000 27 242 July 2021 Trade @ 55* 40 10 000 4 000 Negotiating 2 021 86 437 54 093 *Independently valued No investment properties were acquired during the six months ended 31 August 2020, however additional capital expenditure was incurred during this period. 3.3 Reconciliation of investment properties carrying values and property valuation values as at 31 August 2020 R’000 Investment properties at fair value 8 035 965 Investment properties leased assets and equipment 112 979 Operating lease asset 155 749 Property valuation values 8 304 693 3.4 Reconciliation of investment properties carrying values for the six months ended 31 August 2020 R’000 Opening balance at 1 March 2020 7 854 029 Capital expenditure 172 672 Disposal (1 434) Foreign currency translation 97 386 Fair value adjustment (86 688) Closing balance at 31 August 2020 8 035 965 3.5 Sensitivity analysis The estimated impact of a change in the significant unobservable inputs would result in a change in the investment properties fair value estimation: Properties excluding mixed use development R’000 An increase of 50 basis points in the discount rate: (27 921) A decrease of 50 basis points in the discount rate: 28 505 An increase of 50 basis points in the capitalisation rate: (384 689) A decrease of 50 basis points in the capitalisation rate: 432 731 Mixed use development R’000 An increase of 50 basis point in the exit cap rate (296 561) A decrease of 50 basis points in the exit cap rate 336 102 An increase of 50 basis points in the discount rate (6 000) A decrease of 50 basis points in the discount rate 6 000 An increase of 1% in selling price per sqm 9 000 A decrease of 1% in selling price per sqm (9 000) 4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Following the completion of the Valuations, Acsion shareholders are advised that caution is no longer required to be exercised when dealing in the Company’s securities. Full details of the Valuations, together with supporting documentation, are available on the Company’s website at https://www.acsionsa.co.za/results.htm. Johannesburg 5 March 2021 Sponsor Nedbank Corporate and Investment Banking Date: 05-03-2021 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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