Voluntary business and trading update for the six-month period ending 31 August 2019 Balwin Properties Limited (Incorporated in the Republic of South Africa) Registration number 2003/028851/06 Share code: BWN ISIN: ZAE000209532 (“Balwin” or “the company” or “the group”) VOLUNTARY BUSINESS AND TRADING UPDATE FOR THE SIX-MONTH PERIOD ENDING 31 AUGUST 2019 HIGHLIGHTS • Approximately 1 300 apartments sold and recognised in revenue in the current period (H1 2018: 1 058 apartments) • Continued focus on operational cash management resulting in an increase of approximately R200 million in cash resources from the prior interim cash balance reported • Registration of over 16 000 apartments as Excellence in Design for Greater Efficiency (EDGE) certified with the Green Building Council South Africa BUSINESS UPDATE Balwin continued to experience strong demand for its lifestyle apartments for the six-month period ended 31 August 2019, despite continued economic headwinds and increasing consumer pressure. The sustained demand is reflected in an approximate 23% increase in the number of apartments recognised in revenue during the period under review, when compared to the prior interim period. Cash management and capital allocation remained key focus areas in the period and the company is pleased to report that cash on hand is expected to improve to marginally more than R250 million at period end, an increase of approximately R200 million from the prior interim period. Cash management and cash utilisation remain a top priority for the group. Revenue growth is expected to increase by approximately 18% for the six months ended 31 August 2019, underpinned by the sale and hand-over of approximately 1 300 apartments during the reporting period (H1 2018: 1 058 apartments). Demand for one- and two-bedroom apartments remained strong and comprised approximately 70% of the apartments sold. Balwin responded to the continued depressed economic conditions by increasing its marketing campaigns. Whilst proving highly successful in driving sales, these campaigns have contributed to an approximate 5% reduction in the average selling price of apartments which is able to be absorbed by the healthy margins generated by the business. In light of the current economic climate, Balwin will continue to employ this approach to drive sales where necessary. Approximately 800 apartments have been pre-sold and have not been recorded in revenue during the current financial period. The gross margin is expected to be marginally down compared to the prior interim period. This is largely due to the increased inclusion of the elite model developments in the period. As previously communicated, the group does not intend on continuing the elite model developments and will phase these out once the existing developments are completed. Cost management remains a priority area, with overhead costs being carefully monitored. Overhead costs are nonetheless expected to substantially increase over the prior interim period, mainly due to an increase in head count and salary related costs as the company continues to grow its middle-to-top management team. Balwin will continue to review its development pipeline to ensure that the existing pipeline is complementary to its core business model. The company’s focus remains on the execution of its existing development pipeline and it is not actively exploring new land parcels. It does, however, remain alert to strategic opportunities in identified nodes and any such opportunities will be contracted in a manner that is not onerous on the cash resources of the company. SALES TO BALWIN RENTALS PTY LIMITED AND MODIFICATION IN SALES STRATEGY FOR GREEN PARK During the reporting period, Balwin handed over an additional 96 apartments at Green Park (Boksburg) to Balwin Rentals Pty Limited. In total, 240 apartments have been sold and transferred to Balwin Rentals to date. Based on strong demand from investors and homeowners, the company modified the sales strategy for the Green Park development during the reporting period by converting the remainder of the development to a build-for- sale product. The build-to-sale product was launched to the market in August 2019 with 46 sales being recorded in the first month. ANNUITY INCOME In addition to the rental business, the company remains committed to delivering annuity income to its shareholders through revenue generated by fibre line rentals to internet service providers. Balwin also has an existing partnership agreement for solar installations. Although contributions from annuity income initiatives currently constitute a negligible portion of the total profits of the company, it is expected to increase substantially over the medium-to-long term. Balwin remains alert to further annuity opportunities in partnership with leading providers that are complimentary to the company’s core business and enhances the lifestyle offering to its customers. OUTLOOK Notwithstanding robust demand for Balwin’s lifestyle products, the Board remains concerned about macro-economic growth, interest rates and policy uncertainty. In this context, and as advised at the year-end results in May 2019, the Board continues to place a greater emphasis on cash preservation, prudent capital allocation and cost containment, especially given the infrastructure requirements of several developments. TRADING UPDATE The following disclosure is made in accordance with Section 3.4(b) of the JSE Limited’s Listings Requirements: - Consolidated earnings per share and headline earnings per share for the six-month period ended 31 August 2019 are expected to increase by between 1% and 6% over the prior interim period, translating into an increase from last year’s 37.85 cents to a range of between 38 and 40 cents per share. The financial information on which this trading statement is based has not been reviewed and reported on by the company’s external auditors. It is expected that Balwin will release its results for the six-month period ended 31 August 2019 on or about 18 October 2019. Bedfordview 30 August 2019 Sponsor: Investec Bank Limited Date: 30/08/2019 03:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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