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GROWTHPOINT PROPERTIES LIMITED - Condensed unaudited results for six months ended 31 December 2018

Release Date: 13/03/2019 08:00
Code(s): GRT     PDF:  
Wrap Text
Condensed unaudited results for six months ended 31 December 2018

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

Condensed unaudited results for the six months ended 31 December 2018

Group salient features

Investment proposition:
- Sustainable quality of earnings                            
- 15-year track record of uninterrupted dividend growth      
- Underpinned by high-quality physical property assets       
- Diversified across international geographies and sectors       
- Dynamic and proven management track record                 
- Best practice corporate governance
- Transparent reporting                                       
- Level 3 B-BBEE contributor

- 5.9% growth in distributable income from FY18

- 105.8 (cents per share)                                                 
  Dividend per share growth of 4.5% from FY18

- R138.7bn in group property assets (4.3% growth from FY18)    

- 35.9% LTV
  Gearing levels remain conservative, increased from 35.2% at FY19

- 2 570 NAV (cents per share)
  An increase of 0.5% from FY18

- Baa3 global scale and AAA .za national scale rating from Moody's

- Included in major sustainability indices: FTSE/JSE Responsible Investment Index, 
  Dow Jones Sustainability Index (DJSI), FTSE4Good Emerging Index    


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

Introduction
Growthpoint is the largest South African primary listed REIT with a quality portfolio of 447 directly owned
properties in South Africa (RSA) valued at R77.2 billion. 

We have a 66.0% interest in ASX-listed Growthpoint Properties Australia (GOZ), which owns 59 properties in
Australia valued at R38.3 billion. 

Growthpoint has six equity-accounted investments, valued at R15.3 billion. Our 50% share of the V&A
Waterfront (V&A) (R7.5 billion) is the largest of these investments, followed by a 28.96% stake in London 
Stock Exchange (AIM)-listed Globalworth Real Estate Investments (GWI) (R5.2 billion) and a 21.6% stake in 
Warsaw Stock Exchange-listed Globalworth Poland Real Estate (GPRE) (R2.5 billion).

Growthpoint also has a listed investment which is an 18.2% investment in ASX-listed Industria REIT, owned by
GOZ, valued at R819.0 million.

In line with Growthpoint's vision "to be a leading international property company providing space to
thrive", the company's strategy incorporates the optimisation and streamlining of our South African portfolio, 
the introduction of new revenue streams via the Funds Management business, trading and development, and further
international diversification. 

The company's objective is to grow and nurture a diversified portfolio of quality investment properties,
providing accommodation to a wide spectrum of clients and delivering sustainable income distributions and 
capital appreciation, optimised by effective financial structures. Effectively, net property income received 
by the property portfolios of South Africa (RSA) and GOZ, including interest received, the distributable income 
received from the equity-accounted and listed investments, less administration and operating overheads, interest 
on debt and normal taxation, is distributed to Growthpoint shareholders bi-annually. Growthpoint's distributions
are based on sustainable income generated from rentals, trading profits, development fees and distributions
and management fees from its Funds Management business.

Growthpoint is included in the FTSE/JSE Top40 Index (J200) with a market capitalisation of R69.2 billion at
31 December 2018 (HY19). Over the reporting period, on average, more than 226.6 million shares traded per
month (HY18: 180.0 million). The monthly average value traded was R5.5 billion (HY18: R4.5 billion). This 
makes Growthpoint the most liquid and tradable way to own commercial property in South Africa. 

The value of Growthpoint's property portfolio is split between South African (inclusive of the V&A) (62.3%)
and international (37.7%) assets. The RSA portfolio represents 84.3% by gross lettable area (GLA). It is well
diversified in the three major sectors of commercial property, being retail, office and industrial. Most of
the value of the RSA portfolio is in economic nodes within major metropolitan areas. 

For the period under review the net asset value (NAV) of the group increased by 0.5% to 2 570 (FY18: 2 556)
cents per share.

Growth in distributions
Growthpoint delivered growth in distributions per share for HY19 of 4.5% and has declared an interim
dividend of 105.8 cents per share for the six months ended 31 December 2018. This growth is in line with 
the guidance given to the market for FY19.

Distributable income increased by R173 million or 5.9% to R3.1 billion. 

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

These summarised consolidated financial statements are not audited. Mr G Volkel (CA(SA)), Growthpoint's
Financial Director, was responsible for supervising the preparation of these summarised consolidated financial
statements.

Growthpoint Properties Australia (GOZ)
The investment in GOZ was accounted for in terms of IAS 21 The Effects of Changes in Foreign Exchange Rates.
The statement of financial position includes 100% of the assets and liabilities of GOZ, converted at the
closing exchange rate at HY19 of R10.12:AUD1 (HY18 of R9.66:AUD1).

On 29 November 2018, Growthpoint Properties Limited took up its full entitlement of a rights issue in GOZ.
The additional investment in GOZ totalled R907.6 million (AUD89.1 million).

A deferred tax liability of R2.8 billion (HY18: R2.4 billion) is included in the statement of financial
position. This relates to capital gains tax payable in Australia if Growthpoint were to sell its investment 
in GOZ.

The statement of profit or loss and other comprehensive income also includes 100% of the revenue and
expenses of GOZ, which were translated at an average exchange rate of R10.27:AUD1 (HY18: R10.45:AUD1) 
for HY19. The resulting foreign currency translation difference is recognised in other comprehensive income. 
A non-controlling interest was raised for the 34.0% (HY18: 34.9%) not owned by Growthpoint.

Included in the HY19 distributable income is R536.1 million income from GOZ, compared to R417.5 million 
for HY18. Included in normal tax in the statement of profit or loss and other comprehensive income is 
R51.5 million (HY18: R74.9 million) that relates to withholding tax paid on the distributions received 
from GOZ. The decreased withholding tax together with the additional investment made, had a positive 
impact on the distribution received from GOZ.

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

Included in the HY19 distributable income is R323.9 million from the V&A, compared to R287.0 million for 
HY18, R172.0 million from GWI, compared to R128.0 million for HY18, and R60 million from GPRE, compared 
to R nil for HY18.

Net property income
Gross revenue increased by 4.3% for HY19 compared to HY18. RSA increased revenues by 3.1%, and the GOZ
operations increased revenues by 8.4% compared to HY18.

The ratio of property expenses to revenue for the Group increased slightly to 22.7% at HY19 from 21.7% 
at HY18. For RSA the ratio increased to 25.2% from 24.0% at HY18 and for GOZ, increased to 14.8% from 
14.3% at HY18.

Fair value adjustments
The revaluation of properties in RSA and GOZ resulted in an overall increase of R1.0 billion (0.9%) to 
R115.5 billion for investment property (including investment properties classified as held for sale and 
trading and development). This was driven mainly by positive property fundamentals in Australia with a 
slight decrease in RSA due to low growth reflecting economic weakness. 

Interest-bearing borrowings and derivatives were fair valued using the South African or foreign exchange
denominated swap curves at HY19, increasing the overall liability by R165.0 million. 

These fair value adjustments and other non-distributable items, such as capital items, non-cash charges,
deferred taxation and the net effect of the non-controlling interests portion of the non-distributable 
items, were transferred to the non-distributable reserve.

Finance costs
Finance costs increased by 5.6% to R1.4 billion (HY18: R1.3 billion). The weighted average interest rate 
for RSA borrowings was 9.1% (HY18: 9.1%) (6.8% including Euro loans and cross currency interest rate swaps
(CCIRS) (HY18: 7.5%)). The weighted average maturity of debt increased to 3.4 years (HY18: 2.8 years). 
Finance costs for GOZ decreased by 3.8% from R293.0 million in HY18 to R282.0 million in HY19. The interest 
cover ratio, where income from the equity-accounted investments and listed investments is included in the 
operating profit, increased to 3.7 times at HY19 (HY18: 3.5 times).

Finance and other investment income
Finance income increased by 93.1% to R695.0 million (HY18: R360 million) due to the inclusion of dividends
from GWI and GPRE for the first time as at 30 June 2018.

Acquisitions and commitments
There were no acquisitions during the period for Growthpoint's RSA portfolio. The development and capital
outlay for RSA of R1.2 billion (HY18: R1.1 billion) was for various developments and capital expenditure in the
period.

Growthpoint has commitments outstanding for RSA developments totalling R1.7 billion at HY19 (HY18: 
R2.2 billion) of which 144 Oxford, Rosebank is the largest at R708.0 million (which now includes commitments 
for phase 2). 

GOZ acquired two office properties for R3.7 billion (AUD341.3 million) and it incurred development costs of
R155.9 million (AUD15.6 million). 

GOZ has commitments outstanding totalling R800.5 million (AUD79.1 million) (HY18: R146.5 million 
(AUD14.8 million)). The majority of this commitment is for a new office development of Building 3 at 
the Botanica Corporate Park in Richmond, Victoria.

Our 50% development and capital expenditure at the V&A amounted to R86.0 million (HY18: R187.0 million) for
the period. Growthpoint's share of the V&A's commitments outstanding at HY19 amounted to R330.5 million 
(HY18: R99.7 million). The largest of these commitments includes Site B: "The Ridge" at R150.4 million, 
Woolworths extension at R69.8 million and the Cruise Liner Terminal at R67.3 million.

Additional investments in Globalworth (GWI) and GPRE
There were no additional investments made by Growthpoint in GWI and GPRE for the six months ended 
31 December 2018.

Funds Management
Part of Growthpoint's strategy is to grow a R15 billion Fund Management business over the next three to five
years. To this end we have already established two separately identifiable funds:
(1) Growthpoint Investec Africa Properties Fund (GIAP)
(2) Growthpoint Healthcare Properties Holdings Fund (The Healthcare Fund)

GIAP, a joint venture with Investec Asset Management, has raised USD212 million from third-party investors
which we expect will be fully invested in assets on the continent by FY19. 

The Healthcare Fund already owns five healthcare assets valued at R2.6 billion consisting of four hospitals
and one medical chambers. The Fund has attracted approximately R700 million in investments from third-party
investors so far. The focus is currently on developments and extensions to Hillcrest and Gateway hospitals for
approximately R100 million. Growthpoint has also undertaken the development of the new Neck and Head hospital in
Pretoria due for completion in August 2020. There is a significant pipeline of both acquisitions and 
greenfield developments.

Trading and Development
Adhering to the limits previously communicated, the value of projects pre-identified as opportunities for
trading and development for third-parties will not exceed 5.0% of the value of the South African portfolio and
assets developed for our own balance sheet will not exceed 10.0%. Trading profits of R49 million have been
realised on the sale of the units at Pine Industrial Park, 50% of Runway Park and Storage.

We continue to build a sustainable pipeline of opportunities that we believe should contribute a maximum of
2.0% of distributable income going forward.

Disposals and held-for-sale assets
Growthpoint disposed of twelve properties in the period (HY18: ten) for R2.8 billion (HY18: R478.6 million),
achieving a collective R1.2 billion (HY18: R230.8 million) profit on cost.

At HY19, two RSA properties (HY18: five) valued at R10.0 million (HY18: R159.9 million) and two (HY18: nil)
GOZ properties valued at R457 million (AUD45.2 million) (HY18: nil) were held for sale.

There were no disposals in GOZ for the six months ended 31 December 2018.

Arrears
Total RSA arrears at HY19 were R79.0 million (HY18: R76.6 million) with a provision for bad debts of 
R28.2 million (HY18: R28.9 million). Total RSA bad debt expenses were R4.0 million (HY18: R7.1 million).

Vacancy levels
At HY19, Growthpoint's vacancy levels as a percentage of its total portfolio GLA were:

                                                                     GLA                    Vacancy              
                                                                 m2             m2         %         %    
                                                               HY19           HY18      HY19      HY18    
Retail                                                    1 382 624      1 423 816       3.3       3.0    
Office                                                    1 728 986      1 757 898      10.2       8.4    
Industrial                                                2 240 791      2 244 535       5.7       4.1    
RSA total                                                 5 352 401      5 426 249       6.5       5.2    
GOZ                                                       1 038 683      1 003 529       1.5       2.4    
V&A Waterfront (50%)                                        233 596        229 315       1.8       1.2    
Total/Average %                                           6 624 680      6 659 093       5.6       4.6    
                                                                                                          
Vacancies increased across all the RSA sectors. Tenant retention remains a priority and we are driving 
it through various initiatives including the UNdeposit and Smartmove campaigns, as well as the launch 
of Growthpoint's resource efficient, sustainable Thrive Portfolio.

Equity raised
There were no share issues or DRIP Programmes for the six months ended 31 December 2018.

Borrowings and net working capital
At HY19, the consolidated loan-to-value ratio (LTV), measured by dividing the nominal value of
interest-bearing borrowings (net of cash) by the fair value of property assets including investment property 
held for sale and the equity-accounted investments and the listed investments, was 35.9% (HY18: 34.5%). 
Growthpoint has consistently applied its policy for measuring the fair value of long-term interest-bearing 
loans and derivatives. There were no changes in valuation techniques, nor were there any transfers between 
level 1, level 2 and level 3 during the period.

The Group has an unsecured interest-bearing borrowings balance of R19.5 billion (HY18: R14.3 billion). 
All other interest-bearing borrowings across the Group are secured.

Growthpoint had unused committed bank facilities of R5.1 billion in RSA and R2.5 billion (AUD244.0 million)
in Australia at HY19, which assures that it can meet its short-term commitments.

Events after the reporting period
In line with IAS 10 Events after the Reporting Period, the declaration of the dividend occurred after the
end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial
statements.

Edcon
Growthpoint participated in the restructuring of Edcon Ltd by providing it with an equity injection of 
R110 million, in return for an equity stake. Growthpoint was among the landlords approached in December 2018 
to consider a rental reduction for retail space leased to Edcon's brands. Given that our business model is 
based on contractual leases that provide a steady stream of annuity income, we did not want to compromise this 
by agreeing to the request for a rental reduction. Growthpoint has already decreased its exposure to the retail 
group by approximately 9 000m2 since 31 December 2017. This is expected to decrease further by at least 
18 000m2 over the next two years. This is a non-adjusting event.

Prospects
With 62.3% of properties by book value exposed to South Africa's macro-economic environment where property
fundamentals remain weak and are worsening, little to no growth is expected from the SA portfolio. The V&A
Waterfront, which benefits from local and international tourism, is positioned to deliver growth but is not 
immune to the erosion in the domestic economy and turnover rentals declined in HY19. The Cape Town water crisis 
is now under control and the V&A Waterfront is building its own desalination plant to take it entirely off the
water grid. 

Most of FY19's growth will come from our international investments. Property fundamentals in Australia remain 
strong and GOZ is expected to deliver on its guidance. Dividend withholding tax will be lower this financial
year and we have taken advantage of exchange rate weakness with favourable hedge rates. Additional offshore
growth will come from our Central and Eastern Europe investments in GWI and GPRE, which enhance the diversity
and defensiveness of the Growthpoint portfolio. Romania and Poland continue to attract large multinational
tenants seeking a young, educated, affordable and ambitious labour force and relatively lower rentals. Property
fundamentals are solid in these strong growth markets with low vacancies, long leases and blue-chip covenants.
There is a solid development pipeline in Romania and accretive acquisition opportunities in Poland.
 
Assuming no further deterioration in the South African business environment, the Growthpoint Board expects 
growth in dividends per share for the financial year ending 30 June 2019 of approximately 4.5%.  This forecast 
has not been subject to audit or review by the company's independent external auditor.

Interim dividend with the election to reinvest the cash dividend in return for Growthpoint shares
Notice is hereby given of the declaration of the interim dividend number 66 of 105.8 cents per share for the
period ended 31 December 2018. Shareholders will be entitled to elect to reinvest the net Cash Dividend, in
return for Growthpoint shares (Share Alternative), failing which they will receive the net cash dividend in
respect of all or part of their shareholdings. The entitlement of shareholders to elect to participate in the
share re-investment alternative is subject to the Board, either itself or through a Board sub-committee 
appointed to set the pricing and terms of the share re-investment alternative, having the discretion to 
withdraw the entitlement to elect the share re-investment alternative should market conditions warrant 
such action. A withdrawal of the entitlement to elect the share re-investment alternative would be 
communicated to shareholders before the publication of the finalisation announcement on Friday, 22 March 2019.

Other information: 
- issued shares at 31 December 2018: 2 970 981 288 ordinary shares of no par value.
- Income Tax Reference Number of Growthpoint: 9375/077/71/7.

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

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

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

Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT will not be taxable as income and instead will
be treated as ordinary dividends which are exempt from income tax in terms of the general dividend exemption
section 10(1)(k) of the Income Tax Act. Any dividend received by a non-resident from a REIT is subject to
Dividend Tax at 20%, unless the rate is reduced in terms of any applicable agreement for the avoidance of double
taxation (DTA) between South Africa and the country of residence of the non-resident shareholder. Assuming
Dividend Tax will be withheld at a rate of 20%, the net amount due to non-resident shareholders is 84.64 cents 
per share. A reduced dividend withholding tax rate in terms of the applicable DTA may only be relied on if the
non-resident shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect
of uncertificated shares, or the company, in respect of certificated shares: 
- a declaration that the dividend is subject to a reduced rate as a result of the application of the DTA; and 
- a written undertaking to inform the CSDP broker or the company, as the case may be, should the
  circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner, 
  both in the form prescribed by the Commissioner of the South African Revenue Service.

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

Cash dividend payment                                 2019                                                             
Publication of declaration data and finalisation 
info (SENS)                                           Wednesday, 13 March (together with HY19 results announcement)    
Announcement of share re-investment alternative 
issue price and finalisation information published 
on SENS                                               Monday, 25 March                                                 
Last day to trade cum dividend                        Tuesday, 2 April                                                 
Shares trade ex dividend                              Wednesday, 3 April                                               
Record date (last date to register 
to receive payment)                                   Friday, 5 April                                                  
Payment date (EFTs and posting of cheques)            Monday, 8 April                                                  

Appointment of Company Secretary
In compliance with paragraph 3.59 of the JSE Limited Listings Requirements, shareholders are advised that
FluidRock Co Sec Proprietary Limited (FluidRock) has been appointed as Company Secretary to Growthpoint with
effect from 13 March 2019. 

The Board is confident that FluidRock has the knowledge and ability to fulfil the role of assisting the
Board in fulfilling its mandate and ensuring the Company maintains good corporate governance.

By order of the Board

Growthpoint Properties limited
13 March 2019

Directors
JF Marais (Chairman), O Chauke* (Human Resources Director), EK de Klerk* (Chief Executive Officer 
South Africa), MG Diliza, PH Fechter, LA Finlay, JC Hayward (Lead Independent Director), SP Mngconkola, 
R Moonsamy, NBP Nkabinde, LN Sasse* (Group Chief Executive Officer), N Siyotula, FJ Visser, 
G Volkel* (Group Financial Director)
* Executive

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

Company Secretary
FluidRock Co Sec Proprietary Limited (represented by Claire Middlemiss)

Transfer Secretary
Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
PO Box 61051, Marshalltown, 2107

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


Statement of profit or loss and other comprehensive income
For the six months ended 31 December 2018
                                                                      Unaudited         Reviewed        Audited    
                                                                     six months       six months      12 months    
                                                                    31 December      31 December        30 June    
                                                                           2018             2017           2018    
                                                           Notes             Rm               Rm             Rm    
Revenue, excluding straight-line lease                   
income adjustment                                                         5 724            5 487         10 976    
Straight-line lease income adjustment                                       (93)               7            (50)    
Total revenue                                                             5 631            5 494         10 926    
Property-related expenses                                                (1 297)          (1 192)        (2 366)    
Net property income                                                       4 334            4 302          8 560    
Other administrative and operating overheads                               (232)            (213)          (437)    
Operating profit                                                          4 102            4 089          8 123    
Equity-accounted investment (loss)/profit - net of tax                       (3)             555            711    
Fair value adjustments, capital items and other charges                     909            2 926          1 407    
Finance and other investment income                            1            695              360            904    
Finance expense                                                          (1 381)          (1 308)        (2 574)    
Profit before taxation                                                    4 322            6 622          8 571    
Taxation                                                                   (158)            (179)          (666)    
Profit for the year                                                       4 164            6 443          7 905    
Other comprehensive income                                                                                         
Items that may subsequently be reclassified              
to profit or loss                                                      
Translation of foreign operations                                           (10)            (917)           241    
Total comprehensive income for the year                                   4 154            5 526          8 146    
                                                                                                                   
Profit attributable to:                                                   4 164            6 443          7 905    
Owners of the company                                                     3 520            5 748          6 663    
Non-controlling interests                                                   644              695          1 242    
Total comprehensive income attributable to:                               4 154            5 526          8 146    
Owners of the company                                                     3 548            5 092          6 803    
Non-controlling interests                                                   606              434          1 343    
                                                                                                                   
                                                                          Cents            Cents          Cents    
Basic earnings per share                                                 119.48           200.07         229.14    
Diluted earnings per share                                               118.91           198.80         228.00    
Headline earnings per share                                    2          81.77           101.04         159.84    
Diluted headline earnings per share                            2          81.38           100.40         159.05    


Statement of financial position
As at 31 December 2018
                                                                      Unaudited         Reviewed        Audited    
                                                                    31 December      31 December        30 June    
                                                                           2018             2017           2018    
                                                                             Rm               Rm             Rm    
Assets                                                                                                             
Cash and cash equivalents                                                 2 507              631          2 320    
Trade and other receivables                                               4 377            3 697          3 645    
Investment property classified as held for sale                             467              160          3 180    
Investment property held for trading and development                        368                -            131    
Derivative assets                                                           720              697            476    
Listed investments                                                          819              722            801    
Investment in subsidiaries                                                    -                -              -    
Fair value of property assets                                           114 696          111 145        109 046    
Fair value of investment property for accounting purposes               112 307          108 557        106 543    
Straight-line lease income adjustment                                     2 389            2 588          2 503    
Long-term loans granted                                                      82              353            370    
Equity-accounted investments                                             15 306           12 142         15 096    
Equipment                                                                    10               14             12    
Intangible assets                                                         2 244            2 314          2 279    
Total assets                                                            141 596          131 875        137 356    
Liabilities and Equity                                                                                             
Liabilities                                                                                                        
Trade and other payables                                                  2 230            2 739          2 305    
Derivative liabilities                                                      687              566            741    
Taxation payable                                                             46               71             72    
Interest-bearing borrowings                                              50 867           43 810         48 234    
Deferred tax liability                                                    2 945            2 441          2 844    
Total liabilities                                                        56 775           49 627         54 196    
Shareholders' interest                                                   75 740           75 371         75 273    
Share capital                                                            47 138           45 993         47 092    
Retained income                                                           3 116            2 943          3 191    
Other reserves                                                           25 486           26 435         24 990    
Non-controlling interest                                                  9 081            6 877          7 887    
Total liabilities and equity                                            141 596          131 875        137 356    


Statement of changes in equity
For the six months ended 31 December 2018

                                               Attributable to owners of the company
                                                           Non-distributable 
                                                            reserves (NDR)
                                           Share       Foreign                                                                   
                                         capital      currency            Non-                                 Non-              
                                          net of   translation   distributable   Retained       Share   controlling              
                                        treasury       reserve         reserve   earnings    holders'      interest     Total     
                                          shares         (FCTR)           (NDR)       (RE)   interest          (NCI)   equity    
                                              Rm            Rm              Rm         Rm          Rm            Rm        Rm    
Balance at 30 June 2017                   44 876         1 572          22 711      2 886      72 045         6 709    78 754    
Total comprehensive income:                                                                                                      
- Profit after taxation                        -             -               -      5 748       5 748           695     6 443    
- Other comprehensive income                   -          (656)              -          -        (656)         (261)     (917)    
Transactions with owners recognised                                                                                  
directly in equity:                                                                                                  
Contributions by and                                                                                                 
distributions to owners:                                                                                             
Shares issued                              1 107             -               -          -       1 107             -     1 107    
Transfer non-distributable                                                                                           
items to NDR                                   -             -           2 805     (2 805)          -             -         -    
Share-based payment transactions              10             -               3          -          13             -        13    
Dividends declared                             -             -               -     (2 886)     (2 886)         (266)   (3 152)    
Balance at 31 December 2017               45 993           916          25 519      2 943      75 371         6 877    82 248    
Total comprehensive income:                                                                                                      
- Profit after taxation                        -             -               -        915         915           547     1 462    
- Other comprehensive income                   -           796               -          -         796           362     1 158    
Transactions with owners recognised                                                                                  
directly in equity:                                                                                                  
Contributions by and                                                                                                 
distributions to owners:                                                                                             
Shares issued                              1 048             -               -          -       1 048             -     1 048    
Transfer non-distributable                                                                                           
items from NDR                                 -             -          (2 275)     2 275           -             -         -    
Share-based payment transactions              51             -              31          -          82             -        82    
Dividends declared                             -             -               -     (2 942)     (2 942)         (247)   (3 189)    
Changes in ownership interest:                                                                                                   
Change of ownership in Healthcare Fund         -             -               -          -           -           285       285    
Rights issue and acquisitions - GOZ            -             3               -          -           3            63        66    
Balance at 30 June 2018                   47 092         1 715          23 275      3 191      75 273         7 887    83 160    
                                                                                                                                 

                                               Attributable to owners of the company
                                                           Non-distributable 
                                                            reserves (NDR)
                                           Share       Foreign
                                         capital      currency            Non-                                 Non-
                                          net of   translation   distributable   Retained       Share   controlling             
                                        treasury       reserve         reserve   earnings    holders'      interest     Total   
                                          shares         (FCTR)           (NDR)       (RE)   interest          (NCI)   equity   
                                              Rm            Rm              Rm         Rm          Rm            Rm        Rm   
Balance at 30 June 2018                   47 092         1 715          23 275      3 191      75 273         7 887    83 160    
Total comprehensive income:                                                                                                      
- Profit after taxation                        -             -               -      3 520       3 520           644     4 164    
- Other comprehensive income                   -            28               -          -          28           (38)      (10)    
Transactions with owners                                                                                             
recognised directly in equity:                                                                                       
Contributions by and                                                                                                 
distributions to owners:                                                                                             
Shares issued                                  -             -               -          -           -             -         -    
Transfer non-distributable                                                                                           
items to NDR                                   -             -             429       (429)          -             -         -    
Share-based payment transactions              46             -              11         -           57             -        57   
Dividends declared                             -             -               -     (3 166)     (3 166)         (296)   (3 462)    
Changes in ownership interest:                                                                                                 
Change of ownership in Healthcare Fund         -             -               -          -           -           395       395    
Rights issue and acquisitions - GOZ            -            28               -          -          28           489       517    
Balance at 31 December 2018               47 138         1 771          23 715      3 116      75 740         9 081    84 821    
                                                                                                            
                                                                                                               2018      2017    
                                                                                                              Cents     Cents    
Dividend per share                                                                                            105.8     101.2    


Statement of cash flows
For the six months ended 31 December 2018
                                                                      Unaudited         Reviewed        Audited    
                                                                    31 December      31 December        30 June    
                                                                           2018             2017           2018    
                                                                             Rm               Rm             Rm    
Cash flows from operating activities                                                                               
Cash generated from operations                                            4 603            3 796          8 060    
Finance expense paid                                                     (1 381)          (1 008)        (2 574)    
Finance and other investment income received                                984               29            312    
Taxation paid                                                               (75)             (43)          (126)    
Distribution paid to shareholders                                        (3 462)          (3 153)        (6 341)    
Net cash inflow/(outflow) from operating activities                         669             (379)          (669)    
Net cash outflow from investing activities                               (2 629)          (1 917)        (5 241)    
Net cash inflow from financing activities                                 2 196            2 331          7 386    
Movement in cash and cash equivalents                                       236               35          1 476    
Translation effects on cash and cash equivalents              
of foreign operations                                                       (49)             (17)           231    
Cash and cash equivalents at beginning of period                          2 320              613            613    
Cash and cash equivalents at end of period                                2 507              631          2 320    


Segmental analysis 
For the six months ended 31 December 2018

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 Eastern Europe. 
An operating segment's operating results are reviewed regularly by EXCO to make decisions about resources 
to be allocated to the segment and assess its performance, and for which discrete financial information 
is available.

Segment             Brief description of segment                                                               
Retail              The Growthpoint retail portfolio consists of 49 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.                                    

Office              The Growthpoint office portfolio consists of 178 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.                                          

Industrial          The Growthpoint industrial portfolio consists of 220 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.          

Growthpoint         The GOZ portfolio consists of 59 properties which includes both industrial and             
Australia           office properties, all situated in Australia.                                              

V&A Waterfront      The V&A Waterfront is a 23 hectare mixed-use property development situated in              
                    and around the historic Victoria and Alfred Basins, which formed Cape Town's               
                    original harbour, with Table Mountain as its backdrop. Its properties include retail,      
                    office, fishing and industrial, hotel and residential as well as undeveloped bulk.         

Eastern Europe      The Eastern Europe portfolio (GWI and GPRE) consists of 52 properties which                
                    includes mostly modern A-grade office properties, industrial properties as well as a       
                    residential property complex.                                                              

Geographic segments
In addition to the main reportable segments, the Group also includes a geographical analysis of net property 
income, excluding straight-line lease income adjustment and investment property.

The following geographic segments have been identified:
- South Africa                                                                
- Australia                                                                
- V&A Waterfront                                                                
- Eastern Europe                                                                


Segmental analysis continued 
For the six months ended 31 December 2018

Material profit or loss disclosures
                                                                Unaudited 31 December 2018
                                                                     Total                             V&A                           
                                                                     South               Total as   Water-   Eastern                 
                                     Retail   Office   Industrial   Africa   Australia   reported    front    Europe    Total        
                                         Rm       Rm           Rm       Rm          Rm         Rm       Rm        Rm       Rm        
Material profit or loss disclosures                                                                                                  
Revenue excluding                                                                                                     
straight-line lease adjustment        1 675    1 873          768    4 316       1 408      5 724      455       685    6 864        
Property-related expenses              (441)    (480)        (168)  (1 089)       (208)    (1 297)    (140)     (186)  (1 623)       
Net property income                   1 234    1 393          600    3 227       1 200      4 427      315       499    5 241        
Other administrative and                                                                                              
operating overheads                                                  (170)        (62)       (232)     (13)      (67)    (312)       
Equity-accounted investment                                                                                           
profit net of tax                                                      (3)           -         (3)       -         -       (3)       
Fair value adjustment on                                                                                              
investment property                      26      (16)         (30)     (20)      1 038      1 018        -         4    1 022        
Fair value adjustments                                                                                                
(other than investment property)                                      (54)         (87)      (141)       -         -     (141)       
Capital items and non-cash charges                                    (61)           -        (61)     (13)       (2)     (76)       
Finance and investment income                                          692           3        695       13        20      728        
Finance expense                                                    (1 099)        (282)    (1 381)      (9)     (117)  (1 507)       
Consolidated profit before taxation                                  2 512       1 810      4 322      293       337    4 952        
                                                                                                                                     
Assets                                                                                                                               
Cash and cash equivalents                                            2 093         414      2 507      304     1 248    4 059        
Trade and other receivables                                          3 490         887      4 377      100       282    4 759        
Investment property                                                                                                   
classified as held for sale               -        -           10       10         457        467        -         -      467        
Investment property held for                                                                                          
trading and development                   -      213          155      368           -        368        -         -      368        
Derivative assets                                                      720           -        720        -         -      720        
Listed investments                                                       -         819        819        -         -      819        
Fair value of property assets        30 019   33 633       13 149   76 801      37 895    114 696    9 227    13 964  137 887        
Long-term loans granted                                                 82           -         82        -         -       82        
Equity-accounted investments                                        15 306           -     15 306        -        42   15 348        
Equipment                                                                2           8         10        -       293      303        
Intangible assets                                                    2 244           -      2 244        -         -    2 244        
Total assets                                                       101 116      40 480    141 596    9 631    15 829  167 056        
Liabilities                                                                                                                          
Trade and other payables                                             1 615         615      2 230      138       387    2 755        
Derivative liabilities                                                 671          16        687        -       124      811        
Taxation payable                                                       (6)          52         46        -         -       46        
Interest-bearing borrowings                                         35 934      14 933     50 867      188     7 099   58 154        
Deferred tax liability                                               2 945           -      2 945        -       547    3 492        
Total liabilities                                                   41 159      15 616     56 775      326     8 157   65 258        

Material profit or loss disclosures (continued)
                                                                     Reviewed 31 December 2017
                                                                     Total                             V&A   Central                
                                                                     South               Total as   Water-   Eastern                
                                     Retail   Office   Industrial   Africa   Australia   reported    front    Europe    Total       
                                         Rm       Rm           Rm       Rm          Rm         Rm       Rm        Rm       Rm       
Material profit or loss disclosures
Revenue excluding                                                                                 
straight-line lease adjustment        1 612    1 871          705    4 188       1 299      5 487      420       356    6 263        
Property-related expenses              (420)    (426)        (160)  (1 006)       (186)    (1 192)    (121)     (123)  (1 436)        
Net property income                   1 192    1 445          545    3 182       1 113      4 295      299       233    4 827        
Other administrative and                                                                                              
operating overheads                                                   (150)        (63)      (213)     (12)      (66)    (291)        
Equity-accounted investment                                                                                           
profit net of tax                                                      555           -        555        -        10      565        
Fair value adjustment on                                                                                              
investment property                     763      544          202    1 509       1 253      2 762        -        32    2 794        
Fair value adjustments                                                                                                
(other than investment property)                                       176          65        241        -       131      372        
Capital items and non-cash charges                                     (70)          -        (70)      86       (52)     (36)        
Finance and investment income                                          359           1        360       11         7      378        
Finance expense                                                     (1 015)       (293)    (1 308)     (10)     (176)  (1 494)        
Consolidated profit before taxation                                  4 546       2 076      6 622      374       119    7 115        
                                                                                                                                     
Assets                                                                                                                               
Cash and cash equivalents                                              326         305        631      395     1 191    2 217        
Trade and other receivables                                          3 011         686      3 697      101       112    3 910        
Investment property                                                                                                   
classified as held for sale               -      126           34      160           -        160        -         -      160        
Investment property held for                                                                                          
trading and development                   -        -            -        -           -          -        -         -        -        
Derivative assets                                                      695           2        697        -         -      697        
Listed investments                                                       -         722        722        -       123      845        
Fair value of property assets        31 245   35 698       12 954   79 897      31 248    111 145    8 660     7 739  127 544        
Long-term loans granted                                                353           -        353        -         -      353        
Equity-accounted investments                                        12 142           -     12 142        -        95   12 237        
Equipment                                                                3          11         14        -         -       14        
Intangible assets                                                    2 314           -      2 314        -        53    2 367        
Total assets                                                        98 901      32 974    131 875    9 156     9 313  150 344        
Liabilities                                                                                                                          
Trade and other payables                                             1 962         777      2 739      153       231    3 123        
Derivative liabilities                                                 455         111        566        -         -      566        
Taxation payable                                                         -          71         71        -         4       75        
Interest-bearing borrowings                                         31 836      11 974     43 810      192     3 751   47 753        
Deferred tax liability                                               2 438           3      2 441        -       429    2 870        
Total liabilities                                                   36 691      12 936     49 627      345     4 415   54 387        
                                                    
                                                     
Material profit or loss disclosures (continued)
                                                                           Audited 30 June 2018
                                                                     Total                             V&A   Central            
                                                                     South               Total as   Water-   Eastern            
                                     Retail   Office   Industrial   Africa   Australia   reported    front    Europe    Total   
                                         Rm       Rm           Rm       Rm          Rm         Rm       Rm        Rm       Rm   
Material profit or loss disclosures
Revenue excluding                                                                                           
straight-line lease adjustment        3 244    3 779        1 420    8 443       2 533     10 976      813       207   11 996    
Property-related expenses              (834)    (848)        (325)  (2 007)       (359)    (2 366)    (242)      (76)  (2 684)    
Net property income                   2 410    2 931        1 095    6 436       2 174      8 610      571       131    9 312    
Other administrative and                                                                                              
operating overheads                                                   (309)       (128)      (437)     (30)      (28)    (495)    
Equity-accounted investment                                                                                           
profit net of tax                                                      711           -        711        -         -      711    
Fair value adjustment on                                                                                              
investment property                    (439)      53          250     (136)      1 671      1 535      375       100    2 010    
Fair value adjustments                                                                                                
(other than investment property)                                      (120)       (113)      (233)       -         -     (233)    
Capital items and non-cash charges                                    (190)        245         55       87        (4)     138    
Finance and investment income                                          901           3        904       62         5      971    
Finance expense                                                     (2 027)       (547)    (2 574)     (24)      (16)  (2 614)    
Consolidated profit before taxation                                  5 266       3 305      8 571    1 041       188    9 800    
                                                                                                                                 
Assets                                                                                                                           
Cash and cash equivalents                                            2 000         320      2 320      248     2 708    5 276    
Trade and other receivables                                          2 966         679      3 645       75       484    4 204    
Investment property                                                                                                   
classified as held for sale               -    2 187          340    2 527         653      3 180        -         -    3 180    
Investment property held for                                                                                          
trading and development                   -      131            -      131           -        131        -         -      131    
Derivative assets                                                      476           -        476        -         -      476    
Listed investments                                                     801           -        801        -         -      801    
Fair value of property assets        29 878   33 134       13 094   76 106      32 940    109 046    9 141    11 564  129 751    
Long-term loans granted                                                370           -        370        -         -      370    
Equity-accounted investments                                        15 096           -     15 096        -        40   15 136    
Equipment                                                                3           9         12        -         -       12    
Intangible assets                                                    2 279           -      2 279        -        57    2 336    
Total assets                                                       102 755      34 601    137 356    9 464    14 853  161 673    
Liabilities                                                                                                                      
Trade and other payables                                             1 665         640      2 305      188       249    2 742    
Derivative liabilities                                                 671          70        741        -         -      741    
Taxation payable                                                         -          72         72        -         -       72    
Interest-bearing borrowings                                         35 699      12 535     48 234      170     6 594   54 998    
Deferred tax liability                                               2 838           6      2 844        -       538    3 382    
Total liabilities                                                   40 873      13 323     54 196      358     7 381   61 935    


Segmental analysis continued 
For the six months ended 31 December 2018
Distributable earnings reconciliation                                                                              
                                                                      Unaudited         Reviewed          Audited    
                                                                    31 December      31 December          30 June    
                                                                           2018             2017             2018    
                                                                             Rm               Rm               Rm    
Revenue excluding straight-line lease income adjustment                   5 724            5 487           10 976    
Property related expenses                                                (1 297)          (1 192)          (2 366)    
Other administrative and operating overheads                               (232)            (213)            (437)    
Net interest                                                               (686)            (948)          (1 670)    
Finance and other investment income                                         695              360              904    
Interest paid                                                            (1 381)          (1 308)          (2 574)    
Less: GWI dividend declared for FY18                                       (157)               -                -    
GWI dividend declared after period end based                                                      
on the reporting period earnings                                            164              128              157    
GPRE dividend declared for FY18                                             (64)               -               64    
Antecedent dividends                                                          5               22               33    
Non-controlling portion of distribution                                                              
(excluding fair value adjustments) - GOZ                                   (296)            (266)            (513)    
Non-controlling portion of distribution (excluding                                                   
fair value adjustments) - Healthcare                                        (26)               -                -    
Distributable income from GOZ retained (including NCI's portion)              -                -              (22)    
Profit on disposal of Roeland Street Investment 2 (Pty) Ltd                   7                -                -    
Realised foreign exchange loss                                               26               (1)              46    
Current normal taxation                                                     (52)             (74)            (160)    
Distributable earnings                                                    3 116            2 943            6 108    
Distributions                                                                                                         
Total dividend                                                                                                        
Distributable earnings                                                    3 116            2 943            6 108    
Actual number of shares in issue                                  2 947 368 431    2 906 954 088    2 945 510 719    
Distribution per share                                                    105.8            101.2            208.6    
- Interim taxable dividend                                                105.8            101.2            101.2    
- Final taxable dividend                                                      -                -            107.4    
                                                                                                     
                                                                                      Number of shares
                                                                      Unaudited         Reviewed          Audited    
                                                                    31 December      31 December          30 June    
                                                                           2018             2017             2018    
Shares issued during the yea:                                                                                     
Issued ordinary shares at the beginning of year                   2 970 981 288    2 888 462 582    2 888 462 582    
Effect of shares issued                                                       -       45 739 890       82 518 706    
Shares in issue at period end                                     2 970 981 288    2 934 202 472    2 970 981 288    
Effect of treasury shares held                                      (23 612 857)     (27 248 384)     (25 470 569)    
Net shares in issue at half year                                  2 947 368 431    2 906 954 088    2 945 510 719    
Net asset value*                                                                                                     
Net asset value per share (cents)                                         2 570            2 593            2 556    
Tangible net asset value per share (cents)                                2 594            2 597            2 575    
Net asset value per share is reconciled to tangible                                               
net asset value per share as follows:                                                             
                                                                             Rm               Rm               Rm    
Net asset value attributable to shareholders                             75 740           75 371           75 273    
Less: Net effect of business acquisitions and                                                        
other intangibles                                                           701              127              565    
Intangible assets                                                        (2 244)          (2 314)          (2 279)    
Deferred tax liability                                                    2 945            2 441            2 844    
Tangible net asset value                                                 76 441           75 498           75 838    
* This information has not been reviewed or audited by Growthpoint's independent external auditors.


Key reporting ratios*
Best practice recommendations were issued by the SA REIT Association during the financial year, 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
                                                                    31 December      31 December          30 June    
                                                                           2018             2017             2018     
                                                                              %                %                %    
Property cost-to-income ratio                                                                                      
Gross                                                                     32.39            31.29            31.11    
Net                                                                       17.11            16.82            16.64    
Based on IFRS reported figures                                            22.66            21.72            21.56    
Property cost-to-income ratio is based on the total                                                  
property, related expenses divided by the revenue,                                                   
excluding straight-line lease income adjustments.                                                    
The figures are adjusted for gross, net and IFRS                                                     
reported expenses.                                                                                   
Operating cost-to-income ratio                                                                                     
Gross                                                                      3.54             3.41             4.17    
Net                                                                        4.34             4.13             3.98    
Based on IFRS reported figures                                             4.05             3.88             3.98    
Operating cost-to-income ratio is based on the total                                                 
operating expenses divided by the revenue, excluding                                                 
straight-line lease income adjustments. The figures                                                  
are adjusted for gross, net and IFRS reported expenses.                                              
Total cost-to-income ratio                                                                                         
Gross                                                                     35.93            34.70            34.72    
Net                                                                       21.46            20.95            20.87    
Based on IFRS reported figures                                            26.71            25.61            25.54    
Total cost-to-income ratio is based on the total                                                     
expenses divided by the revenue, excluding straight-line                                             
lease income adjustments. The figures are adjusted for                                               
gross, net and IFRS reported expenses.                                                               
Interest cover ratio                                                       3.66             3.46             3.65    
Interest cover ratio (excluding GOZ)                                       3.55             3.42             3.62    
Interest cover ratio for Growthpoint is based on the                                                 
operating profit excluding straight-line lease income                                                
adjustment plus the investment income from equity-accounted                                          
investments divided by the finance costs, after deducting                                            
finance income from banks and long-term loans.                                                       
Loan to value ratio                                                       35.87            34.53            35.17    
Loan to value ratio (excluding GOZ)                                       35.87            33.84            35.37    
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 reviewed or audited by Growthpoint's independent external auditors.


Notes 
For the six months ended 31 December 2018

Note 1: Finance and other investment income
                                                                      Unaudited        Unaudited          Audited    
                                                                     six months       six months        12 months    
                                                                    31 December      31 December          30 June    
                                                                           2018             2017             2018    
                                                                             Rm               Rm               Rm    
Finance income                                                                                                       
Banks                                                                        60               28               45    
Long-term loans granted                                                       4               17               46    
Other                                                                        11                -               54    
                                                                             75               45              145    
Investment income                                                                                                    
Dividends received from the V&A                                             324              287              591    
Dividends received from GWI                                                 168                -              131    
Dividends received from GPRE                                                121                -               37    
Other                                                                         7               28                -    
                                                                            620              315              759    
Total finance and investment income                                         695              360              904    

Note 2: Headline earnings per share
Reconciliation between basic earnings, diluted earnings and headline earnings
                                                     Gross                                            Total
                                  Unaudited         Reviewed        Audited        Unaudited         Reviewed        Audited    
                                 six months       six months      12 months       six months       six months      12 months    
                                31 December      31 December        30 June      31 December      31 December        30 June    
                                       2018             2017           2018             2018             2017           2018    
                                         Rm               Rm             Rm               Rm               Rm             Rm    
Profit for the year                                                                    3 520            5 748          6 663    
Bargain purchase                       909*           2 926*         1 407*                -               (1)            (9)    
Fair value adjustments        
on investment property                 909*           2 926*         1 407*           (1 111)          (2 845)        (2 006)    
Fair value adjustment:        
Net of straight-lining lease  
adjustment                                                                            (1 149)          (2 486)        (1 290)    
NCI portion of fair 
value adjustments                                                                         38             (359)          (716)    
Headline earnings                                                                      2 409            2 902          4 648    
* Both the bargain purchase and fair value adjustment on investment property are included on the "Fair 
  value adjustments, capital items and other charges" line item on the face of the statement of profit or 
  loss and other comprehensive income.

Note 3: Fair value disclosure
Classification of financial assets and liabilities
Assets                                                                                                     Outside
                                                    Held at fair      Designated   Loans and other        scope of               
                                                           value   at fair value       receivables          IAS 39     Total    
                                                              Rm              Rm                Rm              Rm        Rm    
Unaudited six months 31 December 2018                                                                                           
Cash and cash equivalents                                      -               -             2 507               -     2 507    
Trade and other receivables                                    -               -             3 331           1 046     4 377    
Derivative assets                                            720               -                 -               -       720    
Listed investments                                             -             819                 -               -       819    
Long-term loans granted                                        -              82                 -               -        82    
Reviewed six months 31 December 2017                                                                                            
Cash and cash equivalents                                      -               -               631               -       631    
Trade and other receivables                                    -               -             2 929             768     3 697    
Derivative assets                                            697               -                 -               -       697    
Listed investments                                             -             722                 -               -       722    
Long-term loans granted                                        -             353                 -               -       353    
Audited 30 June 2018                                                                                                            
Cash and cash equivalents                                      -               -             2 320               -     2 320    
Trade and other receivables                                    -               -             2 836             809     3 645    
Derivative assets                                            476               -                 -               -       476    
Listed investments                                             -             801                 -               -       801    
Long-term loans granted                                        -             370                 -               -       370    

Liabilities                                                                                                                   
                                                                                                          Outside               
                                                   Held at fair       Designated         Financial        scope of              
                                                           value   at fair value       liabilities          IAS 39     Total    
                                                              Rm              Rm                Rm              Rm        Rm    
Unaudited six months 31 December 2018                                                                                           
Trade payables                                                 -               -             1 974             256     2 230    
Derivative liabilities                                       687               -                 -               -       687    
Tax payable                                                    -               -                 -              46        46    
Interest-bearing borrowings                                    -          50 867                 -               -    50 867    
Deferred tax liabilities                                       -               -                 -           2 945     2 945    
Reviewed six months 31 December 2017                                                                                            
Trade payables                                                 -               -             2 395             344     2 739    
Derivative liabilities                                       566               -                 -               -       566    
Tax payable                                                    -               -                 -              71        71    
Interest-bearing borrowings                                    -          43 810                 -               -    43 810    
Deferred tax liabilities                                       -               -                 -           2 441     2 441    
Audited 30 June 2018                                                                                                            
Trade payables                                                 -               -             2 074             231     2 305    
Derivative liabilities                                       741               -                 -               -       741    
Tax payable                                                    -               -                 -              72        72    
Interest-bearing borrowings                                    -          48 234                 -               -    48 234    
Deferred tax liabilities                                       -               -                 -           2 844     2 844    


Fair value estimation
Fair value measurement of assets and liabilities
The below table includes only those assets and liabilities that are measured at fair value including non-recurring items 
measured at fair value:                                                                                      
                                                            Unaudited 31 December 2018
                                                Fair value      Level 1       Level 2        Level 3         
                                                        Rm           Rm            Rm             Rm         
Assets                                                                                                       
Recurring fair value measurement                                                                             
Fair value of property assets                      114 696            -             -        114 696         
Listed investments                                     819          819             -              -         
Long-term loans granted                                 82            -             -             82         
Derivative assets                                      720            -           423            297         
Non-recurring fair value measurement                                                                         
Non-current assets held for sale                       467            -             -            467         
Non-current assets held for trading 
and development                                        368            -             -            368      
Total assets measured at fair value                117 152          819           423        115 910         

Liabilities                                                                                                
Recurring fair value measurement                                                                             
Interest-bearing borrowings                         50 867            -        50 867              -         
Derivative liabilities                                 687            -           375            312         
Total liabilities measured at fair value            51 554            -        51 242            312         

                                                              Reviewed 31 December 2017
                                                Fair value      Level 1       Level 2        Level 3    
                                                        Rm           Rm            Rm             Rm    
Assets                                                                                                  
Recurring fair value measurement                                                                        
Fair value of property assets                      111 305            -             -        111 305    
Listed investments                                     722          722             -              -    
Long-term loans granted                                353            -             -            353    
Derivative assets                                      697            -           590            107    
Non-recurring fair value measurement                                                                    
Non-current assets held for sale                       160            -             -            160    
Total assets measured at fair value                113 237          722           590        111 925    
  Liabilities                                                                                           
Recurring fair value measurement                                                                        
Interest-bearing borrowings                         43 810            -        43 810              -    
Derivative liabilities                                 566            -           535             31    
Total liabilities measured at fair value            44 376            -        44 345             31    

                                                                 Audited 30 June 2018
                                                Fair value      Level 1       Level 2        Level 3    
                                                        Rm           Rm            Rm             Rm    
Assets                                                                                                
Recurring fair value measurement                                                                        
Fair value of property assets                      109 046            -             -        109 046    
Listed investments                                     801          797             -              4    
Long-term loans granted                                370            -             -            370    
Derivative assets                                      476            -           252            224    
Non-recurring fair value measurement                                                                    
Non-current assets held for sale                     3 180            -             -          3 180    
Total assets measured at fair value                113 873          797           252        112 824    

Liabilities                                                                                           
Recurring fair value measurement                                                                        
Interest-bearing borrowings                         48 234        5 772        42 462              -    
Derivative liabilities                                 741            -           511            230    
Total liabilities measured at fair value            48 975        5 772        42 973            230   

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
                                        Unaudited six months 31 December 2018                  Reviewed six months 31 December 2017
                                                        Long-term                                                       Long-term    
                              Property        Listed        loans   Derivative    Derivative    Property       Listed       loans    
                                assets   investments      granted       assets   liabilities     assets   investments     granted    
                                    Rm            Rm           Rm           Rm            Rm         Rm            Rm          Rm    
Opening balance                112 226             4          370          224          (230)   109 442           226         709    
Gain/(loss) from fair value                                                                                            
adjustments and translation                                                                                            
of foreign operations              843             -            -           73           (82)     1 298            10          37    
Accrued interest                     -             -            -            -             -          -             -           -    
Acquisitions                     5 231             -            -            -             -      2 744             -           -    
Disposals                       (2 769)           (4)           -            -             -     (2 179)         (236)          -    
Advancements                         -             -            -            -             -          -             -          50    
Settlements                          -             -         (288)           -             -          -             -        (443)    
Closing balance                115 531             -           82          297          (312)   111 305             -         353    
                                                                                                                                     
                                                                   
Movement in level 3 instruments (continued)
                                                          Audited 12 months 30 June 2018
                                                                 Long-term                                       
                                 Property            Listed          loans       Derivative        Derivative    
                                    assets      investments        granted           assets       liabilities    
                                        Rm               Rm             Rm               Rm                Rm    
Opening balance                    109 442              226            709              107               (31)    
Gain/(loss) from fair value   
adjustments and translation   
of foreign operations                2 005                -             12              117              (199)    
Accrued interest                         -                -             71                -                 -    
Acquisitions                         3 978                -              -                -                 -    
Disposals                           (3 199)            (222)             -                -                 -    
Advancements                             -                -             77                -                 -    
Settlements                              -                -           (499)               -                 -    
Closing balance                    112 226                4            370              224              (230)    

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

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

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

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as
 possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs 
 used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or 
  liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data 
  (unobservable inputs).

Valuation techniques using observable inputs - Level 1 and 2
Fair values classified as level 1 and 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.                                    

Valuation techniques 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 1 instruments
Listed investment
Description                             Valuation technique                                Significant observable inputs        
Industria REIT                          The fair value is based on the last traded         Market price of AUD2.73 per          
                                        market price from the Australian Securities        listed share                         
                                        Exchange (ASX) as at 31 December 2018.                                                  
The estimated fair value would increase/(decrease) if the listed share price was higher/(lower).

Level 2 instruments
Interest-bearing borrowings
Description                             Valuation technique                                Significant observable inputs        
Interest-bearing borrowings             Valued by discounting future cash flows            Credit margins: 0.46% to 3.60%       
                                        using the South African swap curve plus an         (FY18: 0.46% to 3.60%)               
                                        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
Description                             Valuation technique                                Significant observable inputs        
Forward exchange contracts              Valued by discounting the forward rates            Not applicable                       
                                        applied at period end to the open hedged                                                
                                        positions.                                                                              
Interest rate swaps                     Valued by discounting the future cash flows        Not applicable                       
                                        using the South African swap curve at the                                               
                                        dates when the cash flows will take place.
Cross-currency interest rate swaps      Valued by discounting the future cash flows        Not applicable                       
                                        using the basis swap curve of the respective
                                        currencies at the dates when the cash flows
                                        will take place.

Level 3 instruments
In terms of the Group's policy, at least 75% of the fair value of investment properties should be determined 
by an external, independent valuator, 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 was valued by Growthpoint's qualified internal valuers.

The South African properties which were valued at HY19, using the discounted cash flow of future income 
streams method, were done so 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                PG Mitchell        Ndip (Prop Val), MIV (SA), CIEA, professional valuer                    
Eris Property Group (Pty) Ltd    C Everatt          BSc (Hons) Estate Management, MRICS, MIV (SA), professional valuer      
Jones Lang LaSalle               J Karg             BSc , MRICS, MIV (SA), professional valuer                              
Spectrum                         PL O'Connell       Ndip (Prop Val), MRICS, professional valuer                             
Sterling                         AS Greybe-Smith    BSc (Hons), MIV (SA), professional associate valuer                     

The Australian properties were valued at HY19 using the discounted cash flow of future income streams method 
by Savills, Urbis, m3property, JLL, CBRE and Colliers. The fair value of properties not externally valued as 
at 31 December 2018 were based solely on director valuations.

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

Investment property
                                          Significant unobservable inputs and range of estimates used
                                                                       Exit       
                                               Discount      capitalisation   Capitalisation 
Description         Valuation technique            rate                rate             rate    
Retail sector                               12.5 - 16.5          6.8 - 11.0       6.8 - 11.0    
Office sector       Discounted cash         13.0 - 16.0          8.0 - 10.5       8.0 - 10.0    
Industrial sector   flow model              13.5 - 17.0          8.0 - 11.5       8.0 - 11.5    
GOZ office                                    6.5 - 7.8           5.5 - 7.5       5.3 - 14.9    
GOZ industrial                                6.5 - 8.5           5.8 - 9.8        5.5 - 8.9    
Further assumptions are used in the valuation of investment property. The estimated fair value would 
increase/(decrease) if the expected market rental growth was higher/(lower), expected expense growth was 
lower/(higher), the vacant periods were shorter/(longer), the occupancy rate was higher/(lower), the 
rent-free periods were shorter/(longer), the discount rate was lower/(higher) and/or the reversionary 
capitalisation rate was lower/(higher).

Long-term loans granted
Description                     Valuation technique                                    Significant unobservable inputs      
Acucap Unit Purchase Scheme     Valued by discounting future cash flows using the      Counterparty credit risk             
                                South African swap curve at the dates when the cash                                         
                                flows will take place.                                                                      
Workshop 17 (previously OPEN)   Valued by discounting future cash flows using the      Counterparty credit risk             
                                South African swap curve at the dates when the cash                                         
                                flows will take place.                                                                      
Sakhumnotho Group Holdings      Valued by discounting future cash flows using the      Counterparty credit risk             
                                South African swap curve at the dates when the cash                                         
                                flows will take place.                                                                      
                                                                                      
Derivative instruments                                                                                                    
Description                     Valuation technique                                    Significant unobservable inputs      
Cross-currency interest         Valued by discounting the future cash flows using      Credit Curve                         
rate swaps                      the basis swap curve of the respective currencies at                                        
                                the dates when the cash flows will take place.                                          
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