Balwin Properties : Voluntary Business and Trading Statement for the year ended 28 February 2022

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 STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2022

HIGHLIGHTS

• Approximately 2 960 apartments sold and recognised in revenue in the year (2021: 2 546 apartments).
• Growth of four new developments included in revenue in the year, namely, Thaba Eco Village (Johannesburg South), Izinga Eco Estate (KwaZulu-Natal, Umhlanga), De Aan-Zicht (Western Cape, Milnerton) and Greenbay (Western Cape, Somerset West).
• Broadening of funding base through introduction of term funding through new R560 million unsecured facilities from local lending institutions.
• Further improvement to level 4 B-BBEE rating (previously level 5 B-BBEE rating) as a result of the successful implementation of the BEE transaction.
• Achieved Six-Star Green ratings from The Green Building Council of South Africa ("GBCSA") for quality of design, construction and operation for six of our developments and a Net Zero Carbon rating due to the efficient usage of power by our lifestyle centres.
• Obtained Excellence in Design for Greater Efficiencies ("EDGE") Advanced Certification for approximately 6 990 apartments from the International Finance Corporation ("IFC").
• Received a further seven international awards at the Africa and Arabia Property Awards, with three awards subsequently winning in their respective category for "Best in Africa" for Greencreek, Munyaka and The Blyde developments.

VOLUNTARY TRADING STATEMENT

The following voluntary disclosure is made in accordance with Section 3.4(b) of the JSE Limited's Listings Requirements:

- Consolidated earnings per share for the year ended 28 February 2022 ("the period") is expected to increase by between 4% and 9% over the prior corresponding period. This translates into an increase from the prior financial year's 71.7 cents to a range between 74.5 and 78.1 cents per share.

• Consolidated headline earnings per share for the period is expected to increase by between 2% and 7% over the prior corresponding period. This translates into an increase from the prior financial year's 71.5 cents to a range between 72.9 and 76.5 cents per share.
• Consolidated core headline earnings per share for the period is expected to increase by between 12% and 17% over the prior corresponding period. This translates into an increase from the prior financial year's 71.5 cents to a range between 80.0 and 83.6 cents per share.1

1 Consolidated core headline earnings is a non-IFRS measure calculated as headline earnings for the period excluding certain non-operating items. Headline earnings in the current financial year were adjusted for a once-off IFRS 2 BEE charge to arrive at the consolidated core headline earnings figure. No adjustments were required to the prior year's headline earnings.

Balwin Properties Limited

Pre-close trading update

The board considers core headline earnings as an appropriate indicator of the operating performance of the group as it adjusts for the once-off accounting impact of the IFRS 2 BEE transaction.

The financial information which this business and trading statement is based on has not been reviewed and reported on by the Company's external auditors.

It is expected that Balwin will release its results for the year ended 28 February 2022 on or about 16 May 2022.

BUSINESS UPDATE

Balwin's results for the financial year ended 28 February 2022 demonstrate a continued steady recovery from the prior year. Sustained strong demand resulted in an approximate 16% increase in apartments recognised in revenue in the year.

Average selling prices remained largely consistent from the prior reporting period. The average selling price of the group is impacted by the mix of apartments sold, together with the continued increase in contribution from the Green Collection developments.

The group continues to focus on the roll-out of the Green Collection developments, a popular product due to the lower selling price which has grown to 31% of all apartments handed over in the year (2021: 23%) contributing 19% to revenue (2021:14%). The main source of revenue continues to be derived from the Classic Collection developments which constituted 60% of apartments recognised in revenue (2021: 70%) and contributed 65% of revenue (2021: 74%). The remaining 9% of apartments handed over comprises the Signature Collection developments (2021: 7%) contributing 16% of revenue (2021:12%).

Approximately 1 900 apartments have been pre-sold beyond the reporting period and have accordingly not been recorded in revenue in the current financial year.

Cash management and utilisation remain a focus area for the group and Balwin continues to engage with its funding partners to ensure that appropriate facilities and financial support remain in place. Through this focus on capital allocation, the group is pleased with the cash position of R659 million at year end, an increase of R328 million from the prior year.

The group secured R560 million in term loans from Stanlib and Sanlam during the year, representing a significant milestone for the group to broaden its funding base in a cost- effective manner. The group continues to evaluate alternative funding sources and models with respect to capital management to continue to grow the business and more effectively fund the working capital requirements.

Balwin continued its strategic drive to provide green home loans to customers through the offering of an eco-home loan product. Balwin's customers will benefit financially by receiving a reduction in the interest rate to assist in unlocking investment potential of green infrastructure technologies and services while offering value to the customer through improved affordability.

OUTLOOK

Whilst remaining vigilant over the post-Covid period, the Board is positive on the resilience of the Balwin product as demonstrated by sustained demand from its clients.

The impact of the recent increase in the repo rate from 3.75% to 4% and possible additional inflationary pressures which will likely result from recent geo-political events is being closely monitored and pro-actively managed by the Board.

Balwin Properties Limited

Pre-close trading update

The Board continues to place an emphasis on annuity business opportunities that are presented as a by-product of the development of the estates. Contributions from annuity income initiatives currently constitute a negligible portion of the total profits of the group, however, the Board has identified significant potential opportunities in this regard and intends to actively pursue these. Structures have been put in place to ensure the successful implementation of the annuity business with the initial annuity offerings expected to add to Group profitability in FY24.

As consistently advised in recent communication to the shareholders, the Board will continue to place an emphasis on appropriate cash management and cost containment throughout the business. Significant focus is placed on appropriate and cost-effective funding measures.

Any forward-looking statements are the responsibility of the board and have not been reviewed nor reported on by the company's auditors.

Bedfordview

23 March 2022

Sponsor: Investec Bank Limited