The Board provides strategic direction and leadership to benefit the company and all its stakeholders. Directors are required to adhere to Growthpoint’s Code of Ethics and policies that promote ethical behaviour to ensure that in addition to fulfilling their statutory and fiduciary duties, all members of the Board display the characteristics of integrity, competence, responsibility, accountability, fairness and transparency.

The Board Charter commits the Board of Directors (Board) to effective and ethical leadership. The Board is committed to the highest standards of good corporate governance and sets the tone from the top for effective leadership based on ethical imperatives.

The Board Charter, sets out the Board’s responsibilities, which includes:

• Governing, directing and monitoring the performance of the business as a going concern and presiding over material business decisions

• Approving the company’s strategic plans and objectives

• Managing risks through the Risk Management and Audit Committees

• Providing direction to and evaluating the performance of management.

An annual assessment of the Board and Committee performance is conducted based on several factors i.e., expertise, attitude, objectivity, independence, judgement understanding and commitment to the Board’s duties and responsibilities. The overall outcome from the annual assessments was positive, and feedback was provided to the Board and respective Committees at their meetings held in August / September 2023.

Through the Group’s Social, Ethics and Transformation Committee, (SET) the Board ensures Growthpoint is a responsible corporate citizen and measures the key performance indicators for effective corporate social responsibility, green initiatives and environmental sustainability.

Growthpoint has reviewed and updated its environmental policy, the review was undertaken to limit Growthpoint’s environmental liability and enhance reporting on environmental aspects (including but not limited to, initiatives in place to promote greater environmental responsibility and development of environmentally friendly technologies).

Growthpoint has a Code of Ethics which is applicable to all employees, officers, directors, contractors and suppliers of Growthpoint. The core values articulated in this code provides a firm and unshakeable foundation on which our organisational culture is built. Nonetheless, the code is a dynamic document that is constantly evolving as Growthpoint strives for even higher standards. Growthpoint is committed to upholding and enforcing the standards articulated in this code and will reconsider its dealings with individuals or entities not demonstrating the same level of commitment to organisational integrity.

Ethical standards are imbedded in processes for the recruitment, evaluation of performance and reward of employees as well as the sourcing of employees. The SET Committee is tasked with ensuring that the Group’s ethics are managed effectively. In addition to monitoring adherence to the Code of Ethics, the SET Committee is responsible for oversight of organisational ethics.

FY2023 Key focus areas:

The Human Resources and Remuneration Committee has embarked on a journey to enhance the company’s high performance and ethical culture. Growthpoint recognizes that challenging KPIs and their strong linkage to reward underpin high performance. It regularly assesses the culture and analyses leading indicators to determine how it can improve its employee value proposition.

Growthpoint has introduced a new company value “play fair” which was launched, specifically focusing on ethics and ethical conduct.

As part of Growthpoint’s commitment to improving the ethical culture within the organisation, Growthpoint engaged the Gordon Institute of Business Science (GIBS) to conduct an ethics risk assessment and after conducting a comprehensive and detailed analysis of the results, an ethics strategy was formulated and recommended to the Board for adoption.

An ethics survey was also conducted with employees and suppliers with focus being on service delivery and the promotion of fair and ethical practices with all Growthpoint stakeholders.

An Ethics Committee made up of representatives of various business units was established, and its priorities determined. This Committee reports to the SET Committee, enabling the Board to monitor the overall ethics programme of the organisation and ensure compliance with ethical standards.

A workshop was held with members of the Executive Committee and senior management on bullying and harassment with external subject matter experts, with a focus on ethical and moral aspects and providing guidance on the policies and procedures to be implemented in the event of harassment occurring in the workplace, as set out in the new Code of Good Practice on the Prevention and Elimination of Harassment in the workplace. In addition, the Ethics Committee attended a similar workshop in August 2023 at Constitutional Hill.

Policies have been implemented to promote and safeguard the ethical behaviour of management and employees and where necessary policies were updated to ensure alignment with the Company’s Ethics strategy.

In addition, Growthpoint has appointed a certified Ethics Officer to further enhance the ethics function.

Monitoring and reporting of ethics to the Board is through the SET Committee with Internal Audit providing assurance to the Audit Committee on the effectiveness of the function.

The Tip-offs Anonymous Helpline operated by Deloitte, provides a platform to report corruption, unethical behaviour and irregularities. The whistle-blowing mechanism and protected disclosures assist with the identification of possible unethical behaviour. Furthermore, substance abuse and harassment policies are in place prohibiting these practices within the organisation.

During FY2023 to date, Growthpoint had no incidents of major non-compliance, fines or prosecutions linked, for example, to anti-competitive practices or other governance and economic issues, or non-compliance with its Code of Ethics.

Compliance with the laws of the country throughout the Group, including the Constitution of South Africa and the Bill of Rights is non-negotiable. The core purpose and values of Growthpoint, as well as its strategy and conduct, are congruent with it being a responsible corporate citizen. The Board oversees sustainability matters, risks and opportunities, which are part of its governance process and are highlighted within the SET Committee’s terms of reference. The Board has delegated responsibility for monitoring the Group’s overall responsible corporate citizenship performance to the SET Committee.

The scope of the Committee’s mandate in this regard includes the relevant activities of the Group in the workplace, in the economy, society and the environment including promotion of equality, prevention of unfair discrimination, reduction of corruption, contribution to the community in which the Company operates and recording of any sponsorship, donations and charitable giving which the Company may participate in. Where relevant, specific targets have been set against which the performance of the Group is monitored on an ongoing basis. 

Growthpoint made significant strides in its ESG journey by incorporating an ESG Impact Council in June 2023. This Council comprises of senior members of key functions and ESG leads from business units which contribute to driving and shaping the ESG strategy in the organization. The Council’s goal is to ensure good stewardship and to support the Executive Committee and Board subcommittees, specifically the SET Committee and Human Resource and Remuneration Committee, in overseeing Growthpoint’s environmental sustainability, ethical practices and social responsibility.

Our environmental commitment strategy highlights the importance of green technology and green buildings. Solar energy is a primary driver in achieving our carbon neutral goals while reducing dependence on fossil fuel-based energy sources and the electricity grid.

To achieve our greenhouse gas reduction targets, Growthpoint focuses on solar projects and green building certifications and has a well-established track record of investing in green buildings and solar energy. Our aim is to reach carbon neutrality by 2050 and safeguard our portfolio from energy insecurity.

This year, our ambitious solar power target was doubling our solar capacity installed in the preceding 10 years. We achieved this major milestone in reducing carbon emissions and transitioning from fossil fuels to renewable energy sources with a total of 27.32MWp solar power generation for our portfolio. We aim to reach a total of 40MWp by the end of FY2024.

The Company has considered its impact on the natural environment, bringing into play issues relating to pollution, waste management and climate change. This has resulted in the Board adopting an Environmental, Social and Governance (ESG) strategy and ensuring that the Company’s operations are well aligned with the strategy. In addition, a review of procurement processes is underway to further incorporate ESG considerations.

There has been greater focus on the impact of climate change risk on the long-term viability of Growthpoint’s assets. The primary contributing factor to these risks is greenhouse gases of which carbon emissions is the largest contributor. The proposed carbon neutral strategy has been aligned with Growthpoint’s current 5 pillar sustainability strategy and included the 20 I 20 I 20 I 2 targets which are being re-set against revised timelines. The focus is for the Company to be carbon neutral by 2050.

The 20 I 20 I 20 I 2 targets include, 20 net-zero buildings, 20MW of renewable energy, R20m worth of green lease recoveries, and two commercially implemented Greenovate Award innovations. The 20 I 20 I 20 I 2 targets remain important and relevant to Growthpoint and the net-zero, renewable energy and green lease recoveries are integrated into the carbon neutral strategy with revised timelines.

The complex nature of climate change means that it can also act as an amplifier of other risks across a company’s risk profile. As a result, climate-related risks have the potential to manifest across environmental, economic, or other systems.

The Company has formulated and adopted a Local Economic Development Policy which seeks to accelerate the empowerment of businesses owned by previously disadvantaged individuals operating in communities within the vicinity of Growthpoint’s assets and developments to foster community partnerships and to maintain Growthpoint’s reputation in local communities.

The Company has also considered its impact on the workplace and has revised its wellness offering and prioritised mental wellness and put in place structures to enable managers to better manage these issues which have been exacerbated by Covid-19 pandemic.

For more information on how the Group addressed its responsibilities as a responsible corporate citizen, refer to the Integrated Annual Report (IAR) available at www.growthpoint.co.za.  

Growthpoint’s approach to corporate governance is an essential part of its value creation process, which benefits all its stakeholders by ensuring the sustainability of the business and enhancing long-term performance.

This is also within the context of the difficult and unstable environment and trading conditions, with increased regulatory and financial pressures due to business failures which have been exacerbated by rising interest rates coupled with loadshedding. Loadshedding has placed added pressure on Growthpoint to provide backup power at all of its properties which has come at significant costs and further intensified operational challenges. The Company acknowledges the need to carefully maintain a balance between delivering on the expectations of shareholders, regulators and other stakeholders and ensuring a sustainable business.

The solid financial performance produced by Growthpoint during the financial year is proof that the Company’s governance processes and structures are resilient and robust. Growthpoint has been included in the FTSE/JSE Responsible Investment Index for thirteen consecutive years. Qualification for the index is based on environmental, economic and social standing.

More information on the vision and future direction of the Group as well as the value created for the Group and its material stakeholders is available in the IAR at www.growthpoint.co.za.

The Board sets key performance measures and targets in order to continuously monitor and assess the achievement of strategic objectives and agreed plans for value creation over the short, medium and long term. Management is expected to implement and execute on the approved strategy and business plans. Management is furthermore expected to continually assess and respond, in a responsible manner, to any negative consequences that may arise, as a result of the Group’s activities and outputs in all areas of the business. 

In addition, the HR and Remuneration Committee has reviewed the remuneration policy and its implementation extensively with appropriate input from Growthpoint’s advisers. Growthpoint believes that the company’s remuneration policy is fair, responsible and aligned with best practice and that its consistent application will ensure the attraction and retention of requisite talent and skills, sustain the performance culture of the company and lead to sustained value creation for all stakeholders.

The Board has a focus on the general viability of the business and its status as a going concern. For this reason, the solvency and liquidity of Growthpoint is monitored on a continuous basis.

The Board is responsible for the governance of risk, which it manages through an independent Risk Management Committee. This Committee also monitors the Company’s compliance with the qualifying REIT criteria laid down by the JSE Listings Requirements (section 13). The governance of risk is covered later in this report.

The IAR, is available at www.growthpoint.co.za and presents material information in an integrated manner providing stakeholders and users with a holistic presentation of the Group’s performance. The IAR is part of a suite of reports issued for the financial year end and should be read in conjunction with the AFS, AGM notice and the ESG report. The Group’s external auditor, Ernst & Young Inc, provided assurance on the annual financial statements (AFS) for the year ended 30 June 2023.

The Board, with the assistance of the Audit and Risk Management Committees, ensures that reports are issued as is necessary to comply with legal requirements and/or to meet the legitimate and reasonable information needs of material stakeholders. The integrity of all reporting is ensured with the assistance of relevant internal and external role players forming part of the integrated assurance process, to ensure that the information is a true reflection of Growthpoint’s activities.

Growthpoint has undertaken moderate independent assurance engagement in respect of selected environmental, social and governance information. This engagement was conducted by a multi-disciplinary team including social, environmental and assurance specialists with relevant experience in sustainability and reporting. As part of the assurance engagement, the assurers determined whether Growthpoint adheres, in all material respects, to the AA1000 Accountability Principles of Inclusivity, Materiality, Responsiveness and Impact. The review of the annual carbon footprint was externally verified by a third party, under the international standard ISO 14064-3 (2006) specification with guidance for validation and verification of greenhouse gas assertions.

Annual Sustainability reporting and disclosure is overseen by the Audit and SET Committees, including Compliance with the Global Reporting Initiative.

The Board is the custodian of Growthpoint's governance framework. Board-approved strategies, policies, standards, practices and procedures are designed to support the Company’s achievement of a high standard of corporate governance. The role and functions of the Board are set out in the Board charter and incorporated into the Board’s annual workplan. The Board Charter is reviewed annually and includes the Board’s responsibility to ensure that governance is effectively administered. Furthermore, the Board Charter makes provision for directors to take independent professional advice at the Company’s expense.

The Board meets a minimum of four times annually. An additional meeting is scheduled for the review of strategic issues and approval of the IAR. Formal minutes of all meetings are kept as a permanent record.

Growthpoint’s Board Charter stipulates that the Board shall have unrestricted access to all Company information, records, documents and property. The Board Committees are all entitled to obtain external legal / professional advice, and to secure the attendance at meetings of outside parties with the relevant experience and expertise. The Board confirms that it is satisfied that it has fulfilled its responsibilities in accordance with its charter for the period under review.

Growthpoint’s good governance standards are reflected in the Company’s track record of consistent performance over the years.

The Company optimizes the use of available funds and addresses its key risks while taking advantage of existing opportunities. Sound corporate governance practices are implicit in the Company’s values, culture and processes, and internal controls promote an awareness of risk, compliance, and good governance in every area of the business. By ensuring that our structured operational frameworks are firmly in place, and that the various governance processes are incorporated in all the Company’s activities, the Board can focus on the business and make well-informed decisions in the Company’s best interests.

Refer to the IAR available on the website (www.growthpoint.co.za) for information and disclosure regarding the number of Board meetings and attendance during the reporting period.

Composition:

The Board has an appropriate mix of knowledge, skills and experience. With legal, financial and tax management, corporate finance, Strategy development and implementation, Business financial restructuring, Private equity and investments, Analytics and risk assessment, IT, ICT and related risks, Transformation and Human resources, Supply chain management and property and international M&A experience represented amongst the independent non-executive directors.

These skills complement the extensive skills and experience of the Chairman and executive directors. The composition of the Board also introduces the required element of diversity and independence. The Board is therefore comfortable with its composition under current circumstances and considering the challenges faced by the business. 

Refer to the Growthpoint website (www.growthpoint.co.za) for information and disclosure regarding the composition of the Board and each of the directors.

Nomination, election, and appointment of members to the governing body:

The Governance and Nominations Committee is responsible for assessing the Board composition and identifying appropriate candidates for appointment to the Board and making recommendations to shareholders regarding the re-election of retiring non-executive directors at the AGM.  This has assisted Growthpoint to ensure that the skillsets of newly appointed directors are complementary to those of the current directors. Skills gaps identified during the assessment have been addressed.

The process of rejuvenating the Board started in 2019 with an independent skills profiling and assessment to enable proper succession planning. This ensured that the skill sets of newly appointed Directors are complementary to those of the current Directors. Skills gaps identified during the assessment have now been addressed and the rejuvenation is concluded.

Succession planning to ensure complimentary skill sets and experience is an ongoing exercise. The Board considers candidates who represent a diverse spectrum of age, race, gender and cultural communities and is committed to women holding Board positions. There are Board statements on gender and racial diversification.

Independence and conflicts:

In FY2023, the Board conducted its annual independence assessment of the Non-executive Directors and is satisfied that all Non-Executive Directors are deemed independent as per King IV definition.

The Board has resolved that to ensure independence, the maximum tenure of a director on the Board would be 12 years, effective at the financial year end of the 12^th year. However, if requested by shareholders, a director’s tenure could be extended, but such a director would be required to resign at each subsequent annual general meeting (AGM) and be reappointed.

It was further resolved that non-executive directors on the Board should not hold more than four directorships, including Growthpoint, or one chairman position outside Growthpoint and two non-executive director positions including Growthpoint. The Chairman would also be limited to two other, or one other Chairman position. The reason for this is that the individual directors need to ensure that they have necessary capacity in order to prepare adequately for meetings and attend all Board and Committee meetings.

Members of the Board are required to declare their interests as provided for in the Companies Act, both on an annual basis, by means of a Disclosure of Interests and prior to the commencement of each meeting in regard to the business of the meeting. Board members are also encouraged to declare interests as and when changes occur.

There are race and gender targets in place, at Board level and progress against targets are measured annually. The Board has adopted a Board level gender diversification policy with a voluntary 30% target for female representation, including black women. The three female directors represented 25% of the total number of directors as at FY2023. Subsequent to this, Ms Olive Chauke tendered her resignation with effect from 9 October 2023, which resulted in the female representation reducing to 18%. More female representation is required at Board level, and this is currently an area that is work in progress. There is sufficient racial representation at an NED level.

Furthermore, the Board Charter includes a statement on racial diversification, in terms of which the Board will strive to meet legislated and / or regulated employment equity targets applicable from time to time.

Messrs Norbert Sasse (Group: CEO), Estienne de Klerk (CEO:SA) and Gerald Völkel (Group Financial Director) serve on the Growthpoint Board in the capacity of Executive Directors, to ensure that the Board has more than one point of direct interaction with Management.

Chair of the governing body:

The role of the Chairman and CEO are distinct. The Chairman, Mr Rhidwaan Gasant, is an independent non-executive director. His responsibilities are outlined in, but not limited to what is contained in the Chairman’s charter. Growthpoint’s Group CEO is Mr Norbert Sasse. During FY2022 the Board appointed Mr Andile Sangqu as the Lead Independent Director to strengthen independence on the Board.

The Chairman’s charter is explicit in that it only makes provision for the appointment of an independent non-executive director in the role of Chairman, as defined by the King IV Code and the JSE Listings Requirements.

The following Board committees are in place:

• Audit Committee
• Risk Management Committee
• Human Resources and Remuneration Committee
• Governance and Nomination Committee
• Social, Ethics and Transformation Committee
• Property and Investment Committee

The committees established by the Board assist it in the discharge of its duties and the organisation’s overall governance.

Each Committee has a minimum of three independent non-executive members as recommended by the King IV Code. The composition of each Committee is aligned with the King IV recommendations.

The Board is also comfortable that the current composition of the Board Committees contributes to effective collaboration as well as a balanced distribution of power so that no individual has the ability to dominate decision-making and no undue reliance is placed on any individual.  During FY2023 all the Committees have satisfied themselves that they have fulfilled their responsibilities according with their TOR.

Formal TOR are in place for all the Board Committees, which are reviewed and recommended by the various Committees for Board approval on an annual basis. Refer to the website (www.growthpoint.co.za) for access to the IAR which provides the following information:

• Composition of each Committee, qualifications and experience of members
• Information on external advisors or invitees who regularly attend committee meetings
• Key areas of focus of each Committee during the reporting period
• Number of Committee meetings and attendance
• Confirmation by each Committee that it is satisfied that it has fulfilled its responsibilities for the reporting period.

The Audit Committee has satisfied itself with:

• The independence of EY as the external auditor, including reference to the nature of non-audit services rendered, the audit firm and designated audit partner tenure and any significant management changes at EY
• The quality of the external audit
• Significant matters relating to the FY2023 AFS
• The effectiveness of the internal audit function
• The expertise, resources and experience of the Company’s finance function and of the Group Financial Director’s suitability.

The Audit Committee also ensured that:

• Adequate processes are in place to safeguard the company’s assets
• Appropriate accounting records are maintained
• The design effectiveness of internal controls is reviewed and effective systems of internal control are maintained
• An open channel of communication is maintained between the Board, management and accounting staff, as well as both internal and external auditors
• The financial position and performance of the business are reviewed quarterly
• The company is compliant with accepted corporate governance practices and codes as well as with international reporting standards.

• The AFS are reviewed prior to them being recommended to the Board for approval
• The external auditor is nominated for appointment by the Board and subsequent approval at the next AGM
• Approval of the external auditor’s fees as well as the scope of the external audit

• The Audit Committee is satisfied that the external auditor is independent and that the FY23 audit has been carried out without restricting the audit’s scope

The Board Charter incorporates an annual self-assessment or self-evaluation based on several factors i.e., expertise, attitude, objectivity, independence, judgement understanding and commitment to the Board’s duties and responsibilities.

A self-evaluation of the Board and Committees’ performance during the financial year is performed annually and an overview of the results and remedial actions to be taken is shared with the Board and the respective Committees at the meetings held in August / September 2023.

The Board is satisfied that the assessment contributes towards the Board’s improvement in performance and effectiveness. The Board’s overall performance assessment was noted as being positive with the exception of the following areas which warranted intervention:

• Succession planning for executive and senior management, particularly with respect to the Group CEO’s role which remains a key focus area for the Board. Significant progress has been made in this regard. Furthermore, the SET Committee actively monitors succession from a transformation perspective.
• Gender diversification on the Board. The Board has committed to a 30% target for female representation. This remains an ongoing target, female representation for FY2023 was 25%. Subsequent to this, Ms Olive Chauke tendered her resignation with effect from 9 October 2023, which resulted in the female representation reducing to 18%.

Outcomes of the annual assessment of the Board and respective Committees, including remedial actions taken was highlighted as follows:

Audit Committee:

The results of the Committee self-evaluation were noted as being satisfactory with no specific areas warranting the Committee’s attention.

Risk Management Committee:

The results of the Committee self-evaluation were noted as being satisfactory with no specific areas warranting the Committee’s attention.

IT experience on the Committee has been strengthened through the appointment of additional Committee members. Risks surrounding the international investments, including Growthpoint’s investment in funds management businesses requires ongoing focus.

Human Resources and Remuneration Committee:

The results of the Committee self-evaluation were noted as being satisfactory, except for succession planning for executive and senior management.

The Committee has extensively considered succession planning in the Company. All positions have been realigned and roles specified to ensure the execution of the Company’s strategy. In addition, a new corporate structure has been approved by the Board on recommendation of the Committee.  The final phase of this project was completed in FY2023 and involved placing existing employees and/or new recruits in the relevant positions in the new structure and ensuring succession for each position.

Social, Ethics and Transformation Committee:

The results of the Committee self-evaluation were noted as being satisfactory with no specific areas warranting the Committee’s attention, though it was noted that greater focus is required on emerging issues namely impact of climate change on the business going forward.

Property and Investment Committee:

The results of the Committee self-evaluation for FY2023 were noted as being positive overall, and it was evident that Committee members are well-versed in the South African property market though still scope for more exposure of Eastern European, Australian and UK market.

The Board has the authority to exercise all the powers and perform any of the functions, except as otherwise provided in the Act or the Memorandum of Incorporation (MOI) of Growthpoint. Specific authority and powers of the Board have been delegated to management and such delegation is captured in a formal delegation of authority framework that is reviewed by the Audit Committee and thereafter recommended to the Board for approval. The Board is comfortable and satisfied that this framework contributes to role clarity and the effective exercise of authority and responsibilities. 

The Board is assisted by a competent, suitably qualified and experienced Company Secretary who is not a director and who maintains an arm’s length relationship with the Board.

Growthpoint Executive Directors may only hold other directorships in Growthpoint subsidiaries and associated companies, or in companies set up for personal and/or family purposes that are not in competition with Growthpoint. Any exceptions are subject to the discretion of the Board.

The performance of the Group CEO and SA CEO is evaluated by the HR & Remuneration Committee and ultimately the Board against agreed performance measures and targets. The Governance and Nomination Committee is responsible for ensuring that succession plans are in place for the position of the Group CEO and SA CEO.

The governance and oversight of risk management has always been an integral part of the strategic objectives setting process.  This function is fulfilled with the assistance of the Risk Management Committee. The Committee’s responsibilities in respect of risk include, amongst others:

• Developing an integrated risk management strategy for approval by the Board.
• Assisting the Board in setting the levels of risk tolerance and appetite.
• Ensuring effective communication of all risk related information, instructions and recommendations.
• Monitoring external developments that could affect corporate accountability.
• Reviewing and assessing the integrity of risk control systems.

A comprehensive risk management process is in place for identifying, evaluating and monitoring the nature and extent of risks affecting the business. The Risk Management and Compliance function assists management in evaluating the process for managing key operational, financial and compliance risks.  Key risks and opportunities and responses thereto are identified by the Group CEO and presented to the Risk Management Committee annually. The detailed report, setting out the key risks and opportunities presented to the Risk Management Committee and monitored on a quarterly basis.

The top ten risks and responses thereto are identified based on their probability, as well as their potential impact on Growthpoint as a whole. Each risk has been mapped to the related strategic objective on which it could impact.

The Risk Management Committee meets at least four times a year and is chaired by an independent non-executive director.

Key focus areas for this Committee during FY2023:

• Monitoring  operating performance of IT systems including business continuity in the face of disruptions to electricity supply as well as an enhanced focus on cybersecurity.

• Monitoring and reporting on the implementation of the Protection of Personal Information Act (POPIA) requirements.
• Ongoing monitoring of liquidity and funding. The committee particularly focused on the refinancing of the USD bond which was refinanced in the current year, as well as the impact of increasing interest rates on borrowings. Monitoring actions taken and management’s processes designed to ensure compliance with environmental legislation.
• Monitoring structures, funding and obligations associated with the funds management business (Growthpoint Investment Partners).
• Formalising the risk function through finalisation of the risk compliance policy and risk management strategy. Monitoring of implications on certain insurance categories following KwaZulu-Natal social unrest in 2022 (e.g. SASRIA).

Technology and information governance are ultimately the responsibility of the Board, via the Risk Management Committee, and in respect of financial reporting risk, under the auspices of the Group Financial Director, via the Audit Committee. The Chief Information Officer (CIO), who attends the Risk Management Committee meetings, is responsible for the IT governance framework and the external auditor will periodically assess IT governance against King IV.

A formal IT governance framework is in place, and is overseen by an IT Steering Committee, which is chaired by an independent IT expert who reports to the Risk Management Committee on the activities, findings and recommendations of the IT Steering Committee in respect to potential material IT investments and expenditure to ensure that IT infrastructure is managed efficiently.

Furthermore, the framework is customised to the Growthpoint environment, integrated into our key business objectives and monitored for compliance and performance. The key aims of the framework are to standardise business processes across the Group, reduce internal costs and ensure sound governance.

IT forms an integral part of the Company’s risk management and IT internal audits are performed periodically by experienced outside parties. An IT governance charter formalises lines of delegation from the Board and Risk Management Committee through to the CIO, as well as sets out policies, procedures and performance metrics which work together in the IT governance framework. The IT governance policy has considered the material issues affecting all relevant stakeholders including the Board, employees and specific departments, for instance finance.

The Board receives a quarterly update on IT risks from the CIO. All risks presented in the year were deemed to be within defined tolerance levels and not considered material. In addition, the IT team continues to introduce innovation to the business that enhances Growthpoint’s service delivery capacity.

Key focus areas during FY2023:

• Continued focus on IT Risk Management, including cyber security monitoring, detection, prevention and awareness training of security breaches. In addition, specific cyber awareness training was presented to the Board.
• In accordance with IT Management Framework, implementation of further IT Governance Frameworks such as Service Level Management (SLM).
• Ongoing monitoring of Protection of Personal Information Act (POPI) project to ensure adoption of the POPI policy.
• Ongoing training for all Growthpoint employees in key aspects of Protection of Personal Information Act (POPI).
• Ongoing monthly Protection of Personal Information Act (POPI) forum to monitor and strengthen compliance with POPI Act.
• Upgrade of new commercial management property system to latest version completed. This was necessary to take advantage of new features released by the vendor and to remain up to date with the latest release by the vendor which has fixes for reported issues in the version that Growthpoint is currently running.
• Bi-annual upgrade of the procure to pay system to latest version was completed during the 2023 financial year. This was necessary to take advantage of updated new features released by the vendor and to stay up to date with the latest release by the vendor which has fixes for known reported issues in the version that Growthpoint is currently running.
• A complete update to the digital strategy was carried out.

Key focus areas for the June 2024 reporting period:

• Upgrade of commercial management property system to the latest version is underway and scheduled for completion during FY2024. This is necessary to take advantage of updated new features released by the vendor and to remain up to date with the latest release by the vendor, which has fixes for reported issues in the version that Growthpoint is currently running.
• Implement contract lifecycle management solution (CLM) to improve robustness of the contract negotiations with tenants and vendors and to fully digitise this area.
• Investigate Facilities Management Systems to improve operational efficiency and reporting.
• Upgrade of the procure to pay system to the latest version is underway and scheduled for completion during 1^st half of FY2024. This is necessary to take advantage of updated new features released by the vendor and to remain up to date with the latest release by the vendor which has fixes for known reported issues in the version that Growthpoint is currently running. It additionally offers artificial intelligence (AI) capability to automate key processes.
• Expand our focus on IT Governance deploying COBIT (IT Management Framework) to additional areas such as Business Process management.
• Develop Robotics Process Automations (RPA) solutions for Accounts Payable.
• Further enhancements to our Business Intelligence (BI) Strategy developing and delivering additional models. Focus on key data driven decision processes for the group.

• Continuous investigation of the capabilities of Internet of things (IOT) solutions in operations.

The Board is ultimately responsible for the governance of compliance with applicable laws and adopted, codes and standards in setting the direction for how compliance should be approached and addressed. Compliance is considered by the Board not only for the obligations it creates but also the rights and protection it affords. 

In ensuring that the Board and Company Secretary is aware of legislation that may impact the Company, the Company has formulated a legislative framework, which is a comprehensive document which identifies legislation applicable to Growthpoint and its subsidiaries. The Framework is reviewed on an annual basis and noted by the Board. Growthpoint has developed and established a risk management policy and strategy as well as a compliance policy and strategy to formalise risk management and compliance activities across the business.

The compliance policy clearly demonstrates the commitment of executive management to consistently comply with and adhere to applicable laws, rules, codes and regulations and is based on the best practice standards and principles outlined in the King IV Report. The policy further outlines the roles, responsibilities and reporting requirements for all stakeholders.

The regulatory universe is continually monitored by management to identify changes and developments that may have an impact on the Group. New legislation that impacts the Group is discussed at the relevant Board Committee meetings as well as at the Board meetings. Growthpoint Properties annually submits a REIT compliance declaration and an annual compliance certificate to the JSE, confirming its compliance with the JSE Listings Requirements.

The Group has a formal mandatory authorisation process for dealings in the Company’s shares, formal policies and procedures for accepting and granting gifts, disclosure of conflicts of interest and anti-corruption as well as formal levels of authority and delegated signing authorities for business transactions.

There were no material or repeated regulatory penalties, sanctions or fines for contraventions of, or non-compliance with, statutory obligations. No compliance inspections by environmental regulators had taken place during the period under review and no incidences of non-compliance with environmental laws were identified. The Company has updated and reviewed its Environmental policy to ensure compliance with environmental laws and the SET Committee’s terms of reference have been enhanced regarding environmental considerations.

The Human Resources and Remuneration Committee and the Governance and Nomination Committee support the Board with the governance of remuneration throughout the Group, ensuring fair and responsible remuneration practices.

The Human Resources and Remuneration Committee, in consultation with executive management and an external advisor to the Committee, ensures that the Group’s directors and executives are fairly rewarded for their contribution, in line with the Group remuneration policy. The Committee has reviewed the remuneration policy and its implementation extensively with appropriate input from its advisers. The company’s remuneration policy is fair, responsible, and aligned with best practice, and to all South African legislation, including “Equal Pay for Work of Equal Value” code of good practice.

Furthermore, its consistent application will ensure the attraction and retention of requisite talent and skills, sustain the performance culture of the company and lead to sustained value creation for all stakeholders. Central to this philosophy is the principle that overall compensation at Growthpoint is linked to performance at employee, business unit and company levels.

The remuneration of each individual director is contained in the remuneration report.

The shareholders vote on the remuneration policy and remuneration implementation report at the annual general meeting. Arrangements to meet with shareholders are made, should the remuneration policy and remuneration implementation report not be accepted at the annual general meeting.

During November 2022, Growthpoint’s Chairman and the Chairman of the HR and Remuneration Committee, conducted the annual remuneration roadshow to major shareholders. The remuneration structure and the 2022 remuneration report were discussed and were well received. The total votes for the remuneration policy, and the implementation thereof, by Growthpoint’s shareholders at its November 2022 AGM were pleasing, given the positive engagement during the roadshow, as well as Growthpoint’s consistent approach to remuneration which demonstrates the Company’s ongoing commitment to the highest levels of corporate governance, transparency and disclosure.

Detailed disclosure regarding remuneration, including key themes of the roadshow are contained in the remuneration report and remuneration Implementation report in the IAR that is available at www.growthpoint.co.za. 

Refer to the IAR available at www.growthpoint.co.za for information on assurance provided by both the Internal Audit and Risk Management & Compliance functions.  Assurance provided regarding the Company’s external audit reports are disclosed in the respective reports as follows:

• Annual Financial Statements.
• CEO and FD Responsibility Statement and Independent Auditor’s Report.
• IAR – Assurance and Responsibility Statement.
• ESG Report – about this report.

The Board ensures that there is an effective risk-based internal audit function in place.

Internal Audit follows a risk-based approach and provides written assessments quarterly to the Audit Committee as to the adequacy of the internal control environment and any significant breakdown in internal controls.

The Audit committee is responsible for overseeing internal audit.

The Head of Internal Audit is a senior manager and reports to the Chairman of the Audit Committee and has unrestricted access to the Chairman and Members of the Audit Committee.

The application of the combined assurance model (CAM) is reflected in the AFS in the report of the Audit Committee. The Growthpoint CAM is designed to optimise the assurance provided over the Group’s top 10 risks, risk management and internal financial controls. The Audit and Risk Management committees monitor and review the Group’s risk profile and the efficacy of management activities, and monitors adherence to Board-approved risk appetite and tolerance. Other board committees perform additional risk oversight through rigorous analysis of management’s assertions for their assigned Group risks as disclosed in the IAR.

The Board has identified material stakeholders of the Group and considers the legitimate and reasonable needs, interests and expectations of such stakeholders on an ongoing basis as part of the decision-making process and in acting in the best interest of Growthpoint.

Growthpoint’s stakeholder engagement approach is driven by the identification of key groups that it impacts and that have an impact on its business. It is a multi-faceted approach, in that the nature and degree of engagement varies to meet each specific stakeholder group’s needs. This approach is further supported by a stakeholder governance structure which comprises of the Board, who is the ultimate owner of stakeholder management matters and is responsible for managing response strategies.

The Board is assisted by the SET Committee in fulfilling its responsibilities and ensuring that key stakeholder relationships are effectively managed. The Group Chief Executive Officer through the support of Group Executive Committee and management ensures that the overall stakeholder engagement process is implemented, and that stakeholder management is effective.

Focus areas FY2023:

• An ethics survey was conducted with employees and suppliers in the current financial year, to focus on service delivery and promote fair and ethical practices within all Growthpoint’s stakeholders.
• Growthpoint is committed to transparency with all its stakeholders and strives to engage with and respond to stakeholder concerns appropriately and in a timely manner.
• Growthpoint has carried out an extensive exercise to identify key stakeholder groups which comprise of employees, tenants, suppliers, providers of finance, Government and Regulatory bodies, Property Brokers, Industry and business organisations, Communities and Investors and Analysts. The interests and expectations of the various stakeholder groups are clearly articulated in the IAR, to ensure that there is a healthy balance of these needs, and that value is created for the various stakeholder groups.

• Growthpoint has an appointed Head of Investor Relations and Strategy, who is responsible for managing investor relations for Growthpoint.
• The Fund managers of the respective funds, with the assistance of Realfin, are responsible for stakeholder management, which has been delegated to them by the Boards of the respective funds.
• The Board recognises that stakeholder perceptions can affect the Company’s reputation and seeks to ensure the equitable treatment of all stakeholders.
• Management proactively deals with stakeholder relationships by balancing various stakeholder interests appropriately and in the Company’s best interests.
• The Board ensures that disputes are resolved as effectively, efficiently and expeditiously as possible.
• Where necessary, resolution of both internal and external disputes relies on the Association of Arbitrators of SA. Employees involved in any such process will be assisted by the Company’s legal advisers.
• Communication processes and policy for interaction with the media and stakeholders are ultimately approved by the Board.
• The Board also engages with shareholders at the results presentations, the AGM and on an ad hoc basis as and when required.

Refer to the website and IAR available at www.growthpoint.co.za for additional information on the management of stakeholder relationships.

A formal governance framework is in in place between Growthpoint as holding Company and its operating subsidiaries. The Board recognises the separate legal existence of each subsidiary as well as the statutory and fiduciary duties of the directors of such subsidiaries.  The Audit Committee as well as the SET Committee fulfils oversight functions in respect of South African based subsidiaries. Group policies are applied in all subsidiaries unless regarded as not being in the interest of a subsidiary in which event the directors of the subsidiary may recommend appropriate amendments to such policy. 

In addition, a significant amount of work was being done by Property Point with local communities and business forums with respect to stakeholder engagement. Growthpoint bolstered its procurement department, which continues to collaborate with the Property Point team to implement the Company’s Local Economic Development (LED) policy. This policy encourages local suppliers to provide services and other functions to Growthpoint’s shopping centres, creating jobs and opportunities in those communities.