Good afternoon, everybody. Welcome to Redefine's annual results for the year ended 31 August, 2026. We will follow our usual format, as we always do. I will deal with the overview, Leon will deal with investing strategically from a South African perspective, and Ntobeko will touch on optimizing capital, operating efficiently, and then I will wrap up with engaging talent, growing reputation, and closure. We will then end up with some Q&A. If we just talk about this financial year, you will see a story here of recovery to growth, and that will be throughout the afternoon's presentation. I do not need to remind you about our mission, our purpose, our vision, and our primary goal, which, as you know, is to grow and improve cash flow.
That is exactly what we are going to demonstrate here today, how we are delivering the cash flow and why we believe it is sustainable and growing into the new financial year. Our property asset platform, as you will see, is a very similar number to the half-year number at ZAR 102-odd billion . I must just add that in that ZAR 102 billion is a stronger rand, which means that the Polish portfolio, compared to the 31 August, 2025 numbers, is written down by about ZAR 3.5 billion through a stronger rand, which appreciated by about 9.4% over the financial year. In terms of key financial outcomes, as you can see, everything positive. Our loan-to-value is at a very pleasing 38.8%. That is at the lower end of our comfort range of 38%-41%. Our interest cover ratio, 2.3 times , is healthy.
Our SA REIT NAV, which now has been restated for the revised best practices recommendations from SA REIT, sits at ZAR 857.8 per share. We have got very healthy undrawn committed cash facilities of ZAR 7.3 billion , and our net operating profit margin is improving to 77%. Our dividend per share for the year is up 7% at ZAR 0.49-odd , and our distributable income at ZAR 0.56 is at a similar percentage from a growth perspective.
In terms of strategic outcomes, you will see there that total assets have decreased. That is principally because of the exchange rates that I mentioned earlier, and we are very happy to report that fair value of property assets have gone up by ZAR 1.8 billion here in South Africa and just under ZAR 650 million in Poland. We are also very happy to report that eventually we restructured the M1 joint venture.
That was completed with an effective date of 1 October, and we will go into some detail on that restructure a little later. In terms of optimizing capital, I have already touched on the loan-to-value ratio improving. There has been a lot of work going on in terms of debt facilities that have been renewed on favorable terms, totaling ZAR 13.5 billion here in South Africa as well as in Poland, and we have already spoken about our liquidity profile being bolstered by ZAR 600 million . In terms of operating efficiently, our distributable income has grown by 7.5%.
We have spoken about our operating margin, which Mr. Nyawo will talk about more in due course, and we are very happy with our South African and ELI occupancy levels having advanced by 1.3% and 1.7% respectively. Leon will elaborate thereon in due course. In terms of engaging talent, we have a stable staff engagement.
We've got good net promoter scores, and our learnership is in its 13th year, and we would have produced 468 graduates by the end of this period. In terms of staff retention, very healthy at 94.4% and 94.5% in South Africa and Poland respectively. From a growing reputation perspective, we were honored to receive first place by EY in terms of Excellence in Integrated Reporting for 2026, based on our 2025 integrated annual report. Redefine maintained its GRESB score, whereas EPP, off a lower base, has been steadily improving, this year coming out at 85.7 versus 80.5 last year. We are very proud of our net zero waste level two certification for our Blue Route Mall. I'm going to hand over now to Leon, who's going to talk about the group as well as the South African portfolio. Thanks, Leon.
Good afternoon, everyone. Our group property asset platform now totals ZAR 102 billion. As you can see, in Poland, that 36 to 33 is where the rand strength comes through that Andrew spoke earlier about. Locally, we increased the portfolio roughly by ZAR 2 billion. That's a function of capital deployed, valuation growth, which is offset by some disposal activity, and you'll see in the next slide, just over ZAR 1 billion, similar to the year before.
From a uses of cash flow point of view, the ZAR 5.7 billion, the bulk of that was applied to our distribution, and then the SA development activities as well as the Polish development activities added that ZAR 1.9 billion. As you can see on the right there, it's more or less evenly split between our three local sectors, and then a similar amount offshore deployed in Polish retail as well as our self-storage business.
On the South African front, I think it's a set of results that we're very proud of, and we certainly are seeing the good work that's been coming through in the last number of years playing through in the numbers. On the South African side, our portfolio now is 46% invested in retail, 34% in the office side, and then 20% in industrial. That is roughly 3.6 million square meters of space across the three sectors, and it's uncanny, it's more or less 1.2 million square meters in each of those three sectors.
You can see also the impact of active asset management has taken place over the last five years, in particular in that reduction in number of properties, and that's purely, it was never been a target to reduce the number, but typically, your lower-valued properties are the ones that we regarded at end of its investment life cycle for us. But you can see that coming through very nicely in terms of the average value per property, now sitting just short of ZAR 312 million per property, and 216 properties under management. In terms of our outcomes, I looked just briefly at our staff app in terms of where, and since we tracked it from 2022, all of these metrics is the best we've printed since 2022, even prior to that, but I actually had it in front of me.
For the last five years, this is the best we have seen it to date. In terms of our occupancy, a number that we are extremely proud of, sitting now at 94.8%, that is a vacancy of 5.2%. As customary, we show you on the right-hand side where it sits. The vacancy by GMR, again, that is how we work out if we were to let what it would contribute, so that is kind of at advertised rates. As you can see in all three sectors, it is typically your lower quality where the vacancies sit. Hence the point that we make, the demand we do see across the three sectors certainly is at quality space. On our tenant retention, a very healthy 93.4%, particularly in a very competitive market such as ours, tenant retention is absolutely key, particular from a cash flow point of view.
It is far better to retain a tenant than go vacant to hold out for higher rates, but that certainly for us has been a good achievement. Similar with our weighted unexpired lease term, as you can see, maintaining or slightly improving it to 3.3 years speaks to that underlying leasing activity coming through. The other nice feature to see is, particularly from a valuation point of view, where all three our sectors managed to improve the underlying value of the sector. As you can see in terms of our valuation cap and discount rates, that is not where the movement came through. In fact, those average exit cap rates are very similar to what we printed at August as well as at half year. That improvement in valuation was driven by actual income performance.
The other point which we are extremely proud of is that increase in our solar capacity, so it is 70.1 MWp, that is a 20% increase to what we showed in August last year. That will certainly stand us in good stead going forward, and Ntobeko will touch on that contribution that came from that, but that was certainly for us a good feature. The bulk of that increase was driven by our installation at Brackengate, where we are part of that City of Cape Town pilot project, and we are certainly looking forward to potentially doing more installations such as that. On our retail portfolio, again, the anchor of the South African performance, given that 46% is invested in that, and I think a big feature of our retail portfolio is that it is well-diversified across the various formats.
As you can see, strong representation within the larger format, the regional centers, as well as within the convenience centers, almost equally split between those two, but that will certainly stand us in good stead to capture any emerging trends that come through in the retail space. As you can see from a valuation performance point of view, across the formats, equally good performance. Retail occupancy at 95.2%, good outcome. For us, the key feature within the portfolio was to work on those renewal reversions. So +3% for us is a fantastic outcome. If you just balance that with what we achieve on the rent to turnover at 7.4%, we think it is a great outcome and certainly suggests to us that we have further ability to grow those renewal reversions.
With our trading density growth, or trading density at ZAR 37,000 per square meter, we believe that supports further renewal reversion growth within the leasing expiry profile. As you can see, we have 22% coming up next year, and we do think that will support our retail sector for growth going into the next year. The one area where we got a bit of pressure is on our weighted average lease escalation at 5.8%, and there is continued pressure on that front. Based on what we have seen so far, we are hoping to stay at that 5.8, closer to a six kind of range, but there certainly is a pressure point, particular in the retail sector.
On the renewal reversions, as you can see, that is where the bulk of our reversions were in positive territory, and typically where we see the negative reversions coming through, again, it is driven by trading density. In your weaker centers, typically that is where we have a negative reversion. On the office front, the portfolio value now at ZAR 22.6 billion. Again, the key feature within our office portfolio is that 96% of our portfolio is invested in Premium and A-grade. That certainly, in our view, stands in good stead to capture whatever demand comes through. We have seen that SAPOA occupancy rates have improved, and in the next slide we will touch on that, but the real demand sits in the well-located, good-quality assets, and we certainly see that coming through in the numbers, as you can see with the valuation performance similarly.
If you are going to call it capital markets, we said we are going to target a vacancy of 10%, maybe in 2027 to go single digits. I am very happy to report that we are at 9.5%, which I think is a fantastic outcome. That is driven by very decent letting activity. Yes, we also benefited of selling some of those secondary buildings which had large vacancy, which supported that, but I think that is a fantastic outcome and certainly will stand us, we are quite confident that we can get that 9.5% even lower within this year and possibly target a 7% vacancy by the end of the year. As you can see on the vacancy analysis, SAPOA similarly, I mean, that is the national vacancy within office, reduced to 11.8% versus the Redefine at 9.5%.
We just give you a glimpse of how we perform in the other key segments. Within Sandton in particular, our vacancy at 4.5%. Earlier I did an analysis, roughly a third of our office portfolio sits in Sandton, so we got a portfolio value of about ZAR 7.2 billion in Sandton. That 4.5% again speak to the quality and the location of our assets there. Similarly, you can see the strength coming through from a Cape Town point of view, as well as in the larger Johannesburg region. On the renewal reversions, yes, there is still negative reversions, and that will continue to be a pressure point whilst we have got an excess supply within the office and fairly limited rental growth come through.
In certain nodes, for instance, in Rosebank, certain elements of Sandton, and certain segments within Bryanston, we do see some real rental growth coming through, and that will help us to mitigate that. Going forward in 2027, we still anticipate that our renewal reversions will remain negative. We are hoping to go below 10, but that is the kind of number that it will continue to be for the foreseeable future. So after 2027, our kind of large vacates is out, or sort of large lease expiries would be out the base, and then hopefully from 2028 forward, we can hope to get a far lower reversion level than what we printed this year.
But in terms of all the other metrics, our unexpired lease term at 3.5 years, and in terms of our tenant retention and renewal success rate, and also that lease escalation, we think the office portfolio is positioned to start contributing more favorably to our ambitions to achieve organic growth. On the industrial front, at ZAR 13.6 billion, again, another strong delivery from our industrial portfolio. Over the last number of years, our industrial portfolio has certainly outperformed the other two sectors and is a cornerstone of our local growth. We certainly would look to see if there is opportunity to increase the sector from a development point of view. We have got access to land, but similarly, potentially from acquisition opportunities and such like. It certainly is a sector that has performed extremely well for us.
As you can see in terms of our profile there, a well-diversified portfolio across the various formats, and similarly, across the formats, all our formats have performed well from a valuation point of view, supported by strong underlying income performance. Our vacancy, negligible at 2.8%, hence the point where we would like to see if we can further expand our industrial portfolio. Renewal reversions at 4.6% speaks to underlying demand and real market rental growth coming through, which is very positive. Our retention very high, renewal success rate similarly quite high. Then, weighted unexpired lease term at 3.9 years, still a very healthy kind of low-risk lease maturity profile there. The lease escalations still maintain at about 6.4%.
That is where you can see in the solar PV capacity was within our Massmart distribution center in Brackenfell, where we installed that 7 MWp that came through in that, and that is where the big increase came from. Lastly, just to close off on the alternative income, last year, you can recall, we celebrated the milestone of reaching ZAR 100 million.
This year, we managed to grow on top of that, and that is now at ZAR 107 million. This is going to be a key focus area for us to sort of see how we can further potentially get out of kind of inflation type of growth within this, and it is a key focus area to extract maximum value of all our well-located assets. In particular, our LED network is a feature within our portfolio which we are extremely proud of, and as you can see in terms of the numbers of how many people we reach through that network. With that, I am going to hand over to Andrew to cover Poland.
Thank you, Leon. Okay, just moving on to Poland. As you can see, this slide here is just to demonstrate that in euro terms, our portfolio remains intact and is actually increasing to EUR 1.8 billion from the, I am sorry, euros, from the EUR 1.7 billion euros reported last year, and GLA is essentially flat at just over 1.7 million square meters. Just in terms of some key outcomes for Poland for this financial year, it is important to note that Poland is starting to become, I say starting because it is not yet completely there yet, but it is contributing now at a level that is becoming significant to Redefine's group distributable income at just under 29% from just under 24% a year ago. In time, it will mirror its asset allocation of around 33 odd percent.
In terms of the Horse or M1 JV, I have got a separate slide on that, so we will talk about that in due course. EPP has rolled out its solar rooftop program involving 13 properties totaling 7.1 MWp. We are very happy that EPP is now improving its payout ratio to 81% off a very low base at 65%, and Ntobeko will give you some insight as to what is driving that improvement. It is principally around managing the debt book a lot more aggressively and very successfully. In terms of two transactions, we sold Power Park Kielce this year. We sold undeveloped land in ELI called Targówek, that was in Warsaw, and we had an advanced stage of selling Power Park Tychy. ELI's dividend has lifted to just under 6%. We still got a lot of work to do there.
We would like it to be much higher, and in due course, it will improve, but that was all on the back of improved occupancy, which we will talk about in due course. As regards self-storage, we completed two developments this period, one in Wrocław, one in Warsaw, and they are awaiting occupancy certificates. We are now expanding into small business units with shorter stabilization periods, roughly 6-12 months, and this leverages off our self-storage infrastructure. In terms of the M1 joint venture restructure, which was completed with an effective date of 1 October, you will note there that we bought back PIMCO shares, which was slightly less than net asset value. We introduced RMBA- RMBIA, rather, into the mix as an equity partner.
They invested EUR 66 million, and the balance of the funding was provided by Redefine as well as proceeds from the sale of Power Park Kielce. The distribution waterfall has been simplified. We are happy to explain it to you, but just in simple terms, RMBIA's shares per share was EUR 1, and they have a distribution per quarter of EUR 0.018, so you don't need to calculate it to work out that that equates to a yield of 7.2% on an annual basis. We will now focus this joint venture on realizing value from undeveloped or surplus land parcels through disposals to residential developers. In Kraków, we developed a portion of land for self-storage, and there's possibly an expansion of M1 Marki as well on the cards.
In terms of EPP's core portfolio, it's pretty static, being the five properties that we hold, translating into a value of ZAR 17.7 billion. That reduction is completely exchange rate-related, so don't read anything into the rand value. From a euro value point of view, as I explained earlier, flat. Slightly higher due to valuation improvements, and as I said, pretty consistent in terms of the carrying value in joint ventures as well. In terms of EPP's core portfolio, we are very happy with its high levels of occupancy at 99.3%. It's virtually the same as last year, and at that level, you can assume fully let, a bit of churn giving that 0.7 odd percent vacancy level. Renewal reversions, slightly positive, better than the previous period. Tenant retention very healthy at 94.7%. Renewal success rate by GLA, healthy at 76.5%. Annual footfall, essentially flat.
Very importantly is that rent-to-sales ratio, which, as you can see, is at 8.9% below the prior period of 9%. As you know, that magical 10% is where you don't want to be in terms of exceeding that from a tenant affordability perspective. In terms of the joint ventures, Henderson is an outlier in terms of performance because, as you know, it is an office-biased or office-only portfolio operating in Poznań, Kraków, and [inaudible], which are not strong office nodes. As you can see, occupancy levels at 80%, renewal reversions - 15. Offices in Poland, thank heavens we only got roughly 1% of our total portfolio exposed to this sector, but a sector that is structurally challenged from an effective rental perspective.
Turning our attentions to the retail side, being Horse, EPP Community, and Galeria Młociny, you'll see very healthy occupancy levels, all in excess of 97%. Renewal reversions are there from a negative point of view, but that is because we are changing the mix of tenants to be more sustainable in the future and also offering a more compelling experience to our visitors, to our shopping centers. Like-for-like footfall, as you can see, is generally flat. Bit of a negative at Młociny, but that's not anything to be concerned about. Also, rent-to-sales ratios in the Horse Group, EPP Community, very healthy at 7 odd percent, and Galeria Młociny now under 10%, which stands us in good standing from a sustainability perspective on the tenant side. ELI, as you can see, pretty consistent. We haven't had any developments in this period.
All we did was dispose of one undeveloped property. Other than that, it is the same state. From an outcomes point of view, the occupancy levels is the story for ELI this period, coming out at 98.5%. It is an improvement from the 96.8% in the prior year. Renewal growth at 2.1%. It has slowed somewhat off a high base at 6.9% the prior year. Tenant retention is healthy at just under 87%. Everything positive here. This portfolio is now transitioning from development-led growth to a structural maturity point of view. As you can see from those prime Polish yields, kind of settling at the 6.5%. Warsaw, a bit lower, but nonetheless, a very attractive market to be in and a very attractive sector similarly. Just in terms of self-storage, here we are growing our exposure here through development activity.
I spoke about the two developments that were completed, and we are awaiting occupancy certificates. Then there are two developments, one in Warsaw and one in Gdańsk, that are underway, which will add a further just under 11,000 sq m of net lettable area in FY 2027. We are almost at the end of our EUR 50 million equity commitment here, and we will look at another three developments with some external investment of EUR 10 million in equity coming through in the new financial year. In terms of strategic priorities for 2027, here, it is about refining and expanding the portfolio mix. That is an ongoing process. Our work will never be done in this area. The simplification of the offshore joint ventures is a slow process, I am sorry.
I know there is frustration because we have shared with you our strategic priorities, which I have not mentioned for the other joint ventures because they have not changed since the Capital Markets Day. Believe you me, are receiving constant focus, and I think it is very exciting for us to note that for the nine months to September, the transactional investment activity in Poland as a market totaled EUR 4.7 billion, which is already ahead of the full 12 months of 2025 as well as 2024.
Things are starting to improve from a transactional perspective in Poland, which assists us in terms of simplification of those joint ventures. Then ongoing, once again, is responding to our evolving users' needs to ensure relevance and, very importantly, durability of our asset base. With that, I am going to hand over to Ntobeko. He is going to take you through optimizing capital, operating efficiently, and basically take you to the end of the preso, where I will then wrap up.
Thank you, Andrew.
Thank you, buddy.
It is such a great pleasure to share with you our solid sets of results for the year ended 31 August, 2026. I think in our strategic focus area of optimizing capital, one thing that we focus on is efficiently sourcing capital to drive our long-term growth. I think if we just unpack some of the key outcomes for the period that we are reporting, it is really, for us, it is around consistent and very prudent risk management that is giving strength to our balance sheet. We know we have a very strong balance sheet now. If we look at some of the key metrics, our LTV is printing at 38.8% compared to the 41.2%. I have got a slide earlier on which I will show you the peaks and over the much more longer period, just to show you the work, the ground that has been covered.
Also an important metric, our ICR is improving, quite healthy now. It is getting to those levels. 2.3 times is really where it is starting to be healthy. We would like it to get to 2.5 times in the medium term. Liquidity, quite strong as well, which improved to ZAR 7.3 billion if you look at the cash on hand plus the facilities that are committed but have not been drawn. Our journey on the cost of debt from a group weighted average cost of debt, it decreased from 7% to 6.9%. Also, if you look at and you break that up into our rand-denominated debt, that weighted average cost is at 8.5%, which is an improvement from last year, which was 8.9%.
A little bit of an uptick in our FX debt to 4.6% from 4.5%, largely driven just by the rising Euribor rates in that part of our book. I think hedging is quite important for us, that over a three-year period, we achieve a 75% hedging of our earnings. We are pleased that in this period, we have maintained a 79% of our total percentage of debt hedged as a group. You can break it up between the rand -denominated, which is at 80%, and then the FX debt added at 77.2%. More pleasing for us, just around, especially given the big refinancings that we did in the period, we also extended our weighted average term of debt to 3.3 years. I think we are quite happy as well that we maintained our Moody's Baa2 ratings.
Then just to unpack the LTV a bit, I think it is really firmly within our medium term, which is also for us, it is pleasing. I mean, we have been engaging and chatting to you guys about this is where we are comfortable, and it is pleasing for us to have this print this year. Largely, I think it is a function, you can see, of our cash generation, the valuation uplifts that Andrew and Leon touched on at a group level, and also which is the SA ZAR 1.8 billion, and then the ZAR 600-odd million that is coming from offshore. The ZAR 1.1 billion of disposals in SA, also that bringing down the LTV.
Then the huge issue in terms of the strength of the rand, which I think if you compare where the rand was against the euro at the end of last year to where it is in our reporting, it is a 9.4% strength in the rand, and that has got a 0.5% impact on our LTV. Then I think the other big thing is just on the end, it is just around our dividend. But what we always provide and share with you is on the bottom left of the slide, we share with you the LTV sensitivities in terms of the property values, both in South Africa and in EPP. Also, the other one, which is probably very topical now given the rand strength, is around the rand depreciating or appreciating by 5%, we will have a 0.1% on our LTV.
We are pleased to report that all covenants were maintained and there were no covenant breaches during this period. Then let us touch a bit on our funding profile. I think what we have seen in this period is really that the opportunities to early refinance has really been improving our maturity profile. Giving us ability to actually claw some margins, and I will touch on that in the next slide after this one. But a key outcome for us here is really the extension of tenure of debt to 3.3 years, while if you look then at the weighted average group margin, which improved to 1.7% in the period. A lot of activity in the South African part of our business. We had ZAR 2.6 billion of bonds that came up.
They had a margin, an expiring margin of 1.5%, and we issued ZAR 2.4 billion of new notes, which were for a six-year period at a very attractive margin of 1.3%. We also settled some small syndicated bank facility of ZAR 155 million, which was at a margin of 1.7%. We did a bit of a big refi here in terms of our bank debt at ZAR 4.1 billion in SA, which we extended it for six years. Also similarly, at a quite attractive margin of 1.3%, and that resulted in a 16 basis point margin compression. We had two facilities, which was a dollar and a euro facility that we combined into a single euro facility for a four-year term, which gave us a margin of 2%. Even in that, we also achieved about 65 basis point margin compression.
In EPP, we had a big refi, which was EUR 323.9 million, which we secured for a period of five years at a margin of 2%, and that also achieved a 56 basis point margin. If you look at that, quite healthy appetite for our debt in the market, and if we look at the graph that we share with you on the right, we only have about 12% of our debt in FY 2027. That is ZAR 5.5 billion, quite comfortable, no issues in terms of refinancing and rolling all of that debt. Even in a highly unlikely event, we've got quite solid liquidity at ZAR 7.3 billion. We can deal with that quite comfortably. Let's just touch on some debt margins a bit.
I think here for us, it's our appreciation that the base rate will do what it does, but a variable which is under our control is the margin. I think, so we try to proactively manage it through the cycle to drive quite predictable cost of debt. If you look just on the 1.7, which is the group print of cost of debt margin for 2026, take you back to FY 2024, that was 1.9%. That is a 20 basis point reduction over the past two years, and I think on average, our debt of book across the group sitting at ZAR 40 billion is quite a meaningful contribution in terms of why we proactively manage this part of our business. We've also made progress similarly in South Africa. In FY 2024, 1.8 is now coming at 1.6.
What is pleasing for us is the opportunity that we spoke to you about in terms of trying to also get into Poland debt market and start shaping our margins of debt. You can see that FY 2024 at 2.5% margin, pleasingly coming down with the big refi that we've done, taking the weighted average margin of debt in EPP to 2.1%. Let's touch on some hedging. I think the big outcome for us just around when we last spoke, we said to you we're going to focus on extending our hedges, so that we can mitigate the rising interest rate environment that we find ourselves in.
I'm pleased to report that for the period that we're reporting, we've increased our hedge rate to 1.7 years, and the activity largely coming out of South Africa, where we had ZAR 13 billion of interest rate swaps that expired at 7.4%, and we took the opportunity to enter into new swaps of ZAR 11 billion, which we attractively fixed at 6.9%, and then we extended tenure and did it for two years. We replaced, which is in line with what we've communicated to you before, that we'll just maintain our cross currencies, and we replaced the expiring EUR 270 million of cross currencies at a rate of 4.4% that we entered into for a period of two years. In EPP, as part of that big refi, we then concluded a collar of EUR 259.1 million, which is about 80% of the total facility.
It's got a floor of 2% and it's got a cap of 3%. We basically float between 2% and 3% in terms of the Euribor. I think the one big thing for us that we're focusing on is that earning certainty is very central to our hedging. Our target, which we've shared with you as well during Capital Markets Day, is that on a rolling three-year period, we're not going to try to time the markets in terms of where interest rates are going to go, but we'll do it for earning certainty. In our assessment and work that we've done with the team is that 75% is a prudent anchor in terms of thinking of a hedge ratio across the group.
I think in our funding sources, we're quite pleased, we always share this with you, is well diversified, and it really has broadened over the years. What it does for us is that it strengthens our liquidity profile, because you can see, we kind of think of it on a fashion that we don't want a single counter exposure of more than 15%, and we've kept to that, and we think there's enough appetite in the market, and we'll continue keeping to that because it just gives us so much flexibility in terms of how we're able to transact and sell our debt in the market. For me, one of the big points out of these results is really that the balance sheet strength has been restored.
I mean, it's been a journey, and I think if you look at where our LTV peaked at 50% in FY 2020, and that has come down to 38.8% in the current period, which I've touched and unpacked. Similarly, also on the peak of our see-through LTV at 54.5%, which has improved by more than 9% to get us to 44.8%, which is pleasing. As Andrew touched on, over time, we want to get our see-through LTV to actually look exactly like our group LTV as we simplify the joint ventures, which is a big focus of ours. Similar also on the ICR, we're going to continue to build that. More importantly, the balance sheet for us is where we're efficiently sourcing capital and with a primary focus of driving our business long-term growth.
Some of the focus areas for optimizing capital is really to continue broadening our funding sources. It is to reduce our see-through LTV, especially in terms of disposing and recycling capital out of our non-core assets in Poland. On the interest rates, I think it goes without saying in the environment that we are in, we have to continue hedging in a far much more responsible way just to reduce the earnings sensitivity to the interest rate movement. Let us move on to operating efficiently, which is also another strategic focus area of ours. I think here for us, the big takeaway is that our positive organic growth, which Leon and Andrew has touched on, is really what is driving the solid earnings performance that you are seeing for these results. Let us just unpack it a little bit.
I think if you look at the growth in our group distributable income at 7.5% to ZAR 3.9, what is also more pleasing for us is that that is complemented by an expansion in our operating margin to 77%. The positive trading metrics coming out of, if you look at the SA active NPI growth at 4.1% compared to what we achieved last year at 1.2%, quite strong and very pleasing. Similarly, in EPP core, also there an active NPI growth of 4.8% in euro terms, which compares quite favorable to what we printed last year of 4.2%. I think I always say it is really one of our proud moments for us around the cash generation of our group.
If you look at the four points that we share with you there from the net arrears that are reducing both in South Africa and in EPP core, but also the cash collection that really is quite strong in our group, both in South Africa and Poland coming out at 99.7%. I will touch on the solar savings just shortly, but I think the bottom right in terms of the margins, if you also just take you back to FY 2024, our group net operating profit margin was sitting at 75.1%, and that has improved by 1.9% to 77%. If we share with you the metrics it requires to actually move a margin in our group by 50 basis points, you actually require close to ZAR 200 million of revenue to actually move our group net operating profit margin by 50 basis point.
Similarly, on the cost side, you will need close to ZAR 50 million of cost to actually achieve a 50 basis improvement. So we are quite pleased with the 1.9%, which has been a combination of being disciplined with cost, but also driving the leasing, which is the core engine of our business. Just to unpack a bit the waterfall in terms of our group distributable income, I have touched on the like-for-like NPI growth from SA, which is quite pleasing. You can see that coming through from our active properties, contributing a strong ZAR 195 million in terms of year-to-year analysis. Also, I think the point that Andrew touched on, which is very pleasing for us, I think in March 2022, when our group restructured EPP, it was a non-yielding asset. We are pleased that it is contributing to group earnings.
It is getting close to the 30% levels, and that is EPP being restored as an income-generating asset. I think we are also pleased in terms of, you will see the stronger rand in terms of the FX gains that are coming through, but also pleasing some of the margins and the base rates that we are talking about in the funding cost. Those are things that are contributing and tallying up to us producing a ZAR 3.9 billion group distributable income for the period. Just to touch on a bit briefly, I think also if you unpack the EPP contribution, it is in euros. Last year, it had EUR 52.2 million, and which is coming out at EUR 55.3 million on this period. You can see the core portfolio also quite healthy in terms of its trading metrics operationally, giving us an additional EUR 3 million NOI.
But pleasingly, for that funding cost line, which is a combination, that is where Andrew was mentioning earlier, that is really our opportunity that we identified, and we have been working quite closely to sell our debt in EPP on far much more attractive terms, and that is coming through. Over and above that coming through the funding line is that in terms of reducing debt amount, we have really made meaningful progress. That is why EPP can also open up its payout ratio, which over time, which is in the next medium term, we want that to move from the 81% to get close to the group's payout ratio of 87.5%. I think also, we continue with our focus in terms of being disciplined around cost in EPP. The JVs, you can also see the growth there. I think the like-for-like NPI is sitting at 1.6%.
To break down our NAV a bit, I think largely in our NAV story is really that a stronger rand has muted our NAV growth to 2.1%. You can see the two columns that we draw the net impact of ZAR 0.372 on the asset leg, which take the hammering on the stronger at ZAR 0.516 and then on the liabilities side, which gave us ZAR 0.144 , and then you net that. That has really been a big improvement. Other than that is the valuation impacts uplift as well as our statutory profit, and then a little bit of the fair values on our mark-to-market on the hedges. I think 2026 for us is largely characterized by a very solid organic growth, both from SA and in Poland.
I think some of the quality of these earnings you can see in the bottom left, 99.6% is recurring earnings, which is really pleasing for us, and then the contribution and the asset mix in terms of income that Andrew touched on earlier. I think the journey that we have been on solar, that Leon touched on, you can see that 5.3% of this group earnings is really coming from what we have been achieved out of our SA solar savings.
If you take, cast your mind back to FY 2023, that came from 2.1%, and it has been building up quite nicely. We have also shared with you, in terms of our quick review in terms of assessment of our like-for-like growth, quite a green board on the right that you see with pressures that Leon touched on about in office. But still, I mean, it is coming out flat at 0.3.
I think it's commendable, and that part of our business is probably the toughest in SA, but our quality portfolio is defending very well there. We're confident that is going to turn. It's one of the opportunities for growth. We've touched on the joint ventures in Poland, which Andrew has touched on. I think then other than that, we're really pleased with our like-for-like organic growth profile. Then just to touch on the final dividend for the year ended 31 August, 2026, we're pleased to report to you a 7% dividend per share growth, which is really, as you've seen and we've touched on now, is driven by high-quality earnings. We're consistent in our 87.5% payout ratio, which is in line with our range at 80%-90%.
Out of the normal considerations that we give in paying out a dividend, I think we're quite comfortable with those, but more from a shareholder and preserving value, we're also pleased that at this payout ratio, there is no leakage in terms of tax. Then the last point that I will make on this slide is just that for this, the merits of a DRIP, we consider them on a case-by-case, and we concluded that, the board concluded that we will not be offering a DRIP to the shareholders for this period. Focus areas to touch on here is really just around driving operational excellency through improving our leasing and growing revenue and being disciplined of value in exchange on our cost so that we can get to 80% profit margin in the medium term, and then drive distributable income growth.
Also, I think we've really embraced technology, and it's where we think some of the operational efficiencies and how we transact and our tenants' experiences will come from those investments that we continue to make in technology. If I can cover engaging talent briefly, I think for us in this strategic focus area, it's really around empowering creativity, driving innovation in our business, and really leading with purpose. So, if you look at some of the key outcomes, I think our focus here, building a high-performance workforce to support and sustain this income growth that we are sharing with you, it's our focus area. High retention in South Africa.
We really have done a lot in terms of deploying AI that is starting to shape how we think about processes and insights so that we can sustain the peak performances that can we derive from our workforce, both here in South Africa as well as in Poland. If I can then cover some of the focus areas for us here, it's really, I think, to really strive to be the most diverse and inclusive REIT. That for us is taking into account that many talent profiles will help us grow our business better. Then we also want to build digital confidence and further encourage AI adoption, because I think this is, we're at the early stages of that. We want to continue strengthening that. And then, of course, we also want to build leadership that is going to run this long-term asset class business into its future.
On growing reputation, I think we have demonstrated over the years that we are embedding ESG as an operational imperative across our value chain in the business. For us, it is doing the right thing. By doing the right thing, that is why we want to deliver long-term value through measurable impacts. We share with you across the environmental aspects, social, and governance. The one that is also pleasing for us is starting to address some of the behaviors from a consumption point of view. You will see a 2% reduction in energy consumption that we recorded, which is quite pleasing for the period. We will continue with those initiatives because that is what makes this journey quite meaningful over time.
On the solar, Leon has touched on that, also some exciting things that we have done in terms of water backups, which is just making sure that our assets can continue to operate in a tough environment. I think in terms of Poland, here also similarly, we are excited that across ESG, we have installed in 13 properties 7 MWp of solar as well in Poland, which also contributes to their broader renewable strategy. We will continue with those and seek further investments where it makes attractive yields in terms of driving the profitability of our business going forward.
If I can touch on the focus areas of this area in our business, I think really in the noisy world that we find ourselves in, we want to extend our upside to all our stakeholders so that we maintain a disciplined positivity as we look into the future. We want to leverage our ESG advancements so that we can drive returns in our portfolio, and it goes without saying, our continued investment to embrace digital solutions. With that, I will hand you back to Andrew.
Thank you, Ntobeko. Okay, just in terms of wrap-up, I am sure you will agree with me that as we have demonstrated through the successive slides, Redefine is in a very good space to address the challenges that we face in FY 2027. We are going to stay focused on the variables under our control, capital allocation, capital sourcing, rental growth, cost containment. That is a given. Similarly, from a team and culture point of view, as well as from a stakeholder experience perspective as well, the focus stays on what we can control. There is a lot of noise out there. There is a lot of distractions. The Polish situation over the weekend is a distraction. We know what to do. Our strategic priorities are clear.
And then, once again, in terms of the flywheel, I think we're moving now into the space where the Middle East situation is becoming a prolonged one, so geopolitical friction will be pitting against the operational momentum that we've got. Our focus will be on maintaining that operational momentum, driving the occupancies, driving the rental growth, focusing on improving our operating profit margin, and delivering organic net property income. The funding line, yes, is expected to be challenged given that interest rates are expected to increase as a consequence of the higher inflationary environment brought on by elevated fuel costs and the like.
But just in terms of our outlook, we believe that we are able to deliver 3%-5% growth in distributable income per share, as well as maintain our dividend payout policy in a market that will, as I said earlier, be challenged as a consequence of a prolonged situation in the Middle East. With that, I want to thank you. It does seem that today took a little bit longer than usual. We had a lot to cover, a lot of good things to cover, and I want to thank you for always showing an interest in Redefine. It encourages us to realize our vision, which is to be the best South African REIT. We'll now move onto questions and answers. But before we do that, we're just going to play you a short AV whilst we do a little bit of a makeover here in the studio. Thank you.
[Presentation]
Thank you. Can we start? We now move on to questions and answers. In my excitement to address any questions you've got, I inadvertently to look how many questions we've got. Clearly today, we've done a fabulous job. I only see one question, and thank you, Tshepo, for your question. I'm going to Okay, Fayaz, thank you. You've just given us two questions. But Tshepo's question is actually to Leon, and it is, to what extent do you believe office-to-resi conversions in Sandton have supported demand for your office assets?
Tshepo, no doubt that the conversion of office-to-resi has mopped up some vacancy within the Sandton node, and that's what we see nationally also, where we had a number of those conversions. But I wouldn't suggest that it actually support demand for our offices, because the type of asset that lends itself to conversion is typically not your P-grade or well-located assets. It's kind of lesser assets that you are able to sell at the level that makes sense for a resi player. So that certainly didn't do that. Yes, it does support the overall supply improvement in vacancy. We've seen that resi-to-office conversion, and also as we covered in capital markets, we've also seen a number of large corporates preferring not to lease their assets but to buy, and that would have similarly taken some vacancy out the mix.
Leon? Okay, we'll move on to Sure. Fayaz has now suddenly woken up. He's got lots of questions for us. His first question is, could you expand on the Polish development over the weekend you refer to, and whether it has any implications for the EPP portfolio, tenants, or the JV simplification timetable? Fayaz, the short answer is we do not Although it's early days, we do not believe that it is an issue. Just to explain, like South Africa, Poland has got a coalition party that governs the country. The coalition party that governs the country is a different set of parties to the president, who comes from the ex-ruling party's coalition, which is a different coalition, obviously.
What has happened over the weekend was there was dissatisfaction and frustration in that the president has a veto right over decisions, in this case involving judges and so forth. As a consequence of his veto, he is able to frustrate the coalition party that is ruling the government in terms of making change. We do not believe that it has economic consequences or operational consequences at this point in time. It is similar to South Africa.
We similarly have had Government of National Unity issues that have spiraled. Once again, I do not think it is something at this stage to be concerned with, although it does get mentioned in the headlines given what had happened over there. Fayaz's other question is regarding hedging, and it is for Ntobeko. His question is, your hedge cover falls to about 66% in FY 2028 and 22% in FY 2029 against your 75% rolling three-year target. How much of the FY 2028 swap maturities has already been pre-hedged, and at what indicative rate?
Yes, Fayaz, I think that what we share with you there is the majority profile. It does not factor what it is like it is static because it is like we have not done anything. In 20- Let's start with 2027. We have got about ZAR 7 billion of swaps that are coming up for maturity. We will deal with those. Then similar as well, you are right, in 2028, that comes to close to ZAR 9 billion of swap as well that come up.
We are proactively in the market looking for opportunities. The question you ask around what indicatively we are seeing in the market is quite expensive, which is really given the expectations in the interest rate environment. For a two-year swap, at the moment, you are looking at 7.6%. Compare that to our average fixed rate of 7%. It is a 60 basis points daylight, and that is where the pain comes from.
Thank you, Ntobeko. Fayaz has got another question here for Ntobeko. One, I am afraid I do not think he can answer, Fayaz, but we will put it to him nonetheless. This is a higher grade question, so thank you, Fayaz, for challenging us this afternoon. The question is, could you split FY 2027 DPS growth of 3%-5% between SA operations, Poland, funding costs, FX hedge income, and JV distributions? Effectively, the whole income statement is what Fayaz is asking for over here.
Fayaz, yes, we will attempt to answer you. I think the slide that gives you a better feel of that is actually our slide 44, where we tell you where we are targeting our like-for-like NPI growth. In SA retail, we would like that to be between 4% and 6% over time. In the office, where we are expecting pressure, we are expecting that to be between 1% and 3%. EPP Core, we expect that to be between 3% and 4%. The JVs, we expect an improvement of between 2% and 3%. ELI to normalize to between 2% and 4% in terms of NPI growth. The second component of that is your funding costs. I think our base case is that the interest rates, the policy rate in South Africa peaks at 7.25% to 7.5%.
We will hear now on the 19th of November what the SARB is going to do in relation to that. In terms of, and we give the sensitivities then, I think, for us, that a 50 basis point hike in interest rates has got, which it has got about in euro terms, close to ZAR 0.01 impact on earnings, and then ZAR 0.7 on the ZAR denominated debt. The last part of your question, I think, on the hedging of the income, we already have our buckets for FY 2027. We already have filled that to EUR 27 million at an attractive rate of 23.5, which we provide in the supplementaries.
Thank you, Ntobeko. That was a comprehensive answer. Fayaz, you should rather come see us, man. These are questions for one-on-ones. The next question from Fayaz is, after RMBIA's 7.2% preference return, what incremental annual cash do you expect the restructured Horse Group to send up to Redefine? Well, to EPP, effectively, Ntobeko.
Yeah. Let us take what changes, Fayaz, is that at the moment, our share of cash earnings of M1 is EUR 4.2 million goes to EPP, and then two and a half goes to Redefine Europe. That is EUR 6.7 million at 50. Post the restructure, 77%. That will probably, if given cash flows and all the other things in terms of CapEx that we normally cater for, we expect our share to jump closer to EUR 10 million over the period, yeah.
Thank you. Okay. Another question from Fayaz is, with Polish deal volumes at EUR 4.7 billion for nine months, which JV exit or simplification steps are realistic in FY 2027? Fayaz, just in terms of that, as I said earlier, the first is with the M1 portfolio, we will continue selling off parcels of undeveloped land to residential developers. We will look at expanding M1 Marki. That is not a transaction, but it is more an expansion. But then similarly on the EPP Community portfolio, we will be looking to sell off some non-core assets.
Młociny, we will still weigh up our odds whether we dispose or buy a controlling stake, i.e., 100% of that portfolio in due course. The office assets, Henderson Park, in particular, being the weaker of the office portfolios. As you know, EPP Community also have some properties in Warsaw, in [inaudible], as well as in Kielce, better markets.
Nonetheless, we look to try and trade out of those assets. Would we want to do more? Yes, but I think we need to also be realistic. That, I think, answers your question. Then we have another question here from Kopano. Thank you, Kopano. Could you provide details on the pipeline for non-core assets and JV disposals as capital allocated into high-yielding opportunities or green? I think, Kopano, once again, my answer to Fayaz kind of answers your JV disposals point of view. From a non-core point of view here in South Africa, in a normal environment, there are always assets that you want to dispose of that are non-core. From a South Africa perspective, we do not really have a disposal list, but there are about ZAR 3-odd billion of properties. If the offer comes, we will look to dispose of them.
They are not necessary assets we have to sell at this point in time. We are still happy investors in them. Then just in terms of high-yielding opportunities, at our Capital Markets Day, I think we were quite clear about growing into energy assets, for example, as a start. Then when equity becomes better priced, we can look possibly at other sectors to invest in. Okay. That looks to me as all the questions for this afternoon. We welcome one-on-ones with all of you, so please reach out to our investor relations to set up one-on-ones with us. We would be happy to attend to any detailed questions that you may have. But I once again want to thank you for your time this afternoon and, very importantly, for your support. Thank you.